Sins of the publisher

By Lawyer Rob Clark

The Corby family is back in the news, following recent litigation against Allen & Unwin, publishers of an 'expose' of the Corby family, Sins of the Father.

The Corby family sued Allen & Unwin, in two separate proceedings for defamation and copyright infringement. The decision in the copyright infringement proceedings was swiftly handed down following trial in Corby v Allen & Unwin Pty Ltd [2013] FCA 370.

The swiftness of the decision was likely due to the infringement of copyright being clear cut. The book reproduced five photographs which were the property of one of Mercedes Corby (Schapelle's sister), Michael Corby Jnr (Schapelle's brother) and Rosleigh Rose (Schapelle's mother). The judge effectively found that Allen & Unwin knowingly launched the book at risk of not checking whether they had a licence from the copyright owner, or, in most cases, who the copyright owner was. The Corby family were awarded more than $50,000 in damages and additional damages (less than the $300,000 originally sought).

As the infringement was so straight forward, there are few lessons to take away from the decision, aside from the fact that if you want to launch a book knowingly at risk of copyright infringement, be prepared to wear the consequences, including significant additional damages.

The discussion in regards to the moral rights claim, however, was more interesting.

Moral rights

Since 2000, moral rights have sat alongside copyright in the Copyright Act in Australia but are usually forgotten or dismissed as copyright's melodramatic little Gallic brother, concerned with artistic 'honour' and 'integrity' rather than money. There is some truth to the view, given the difficulty of proving certain aspects of moral rights, and fairly extensive exceptions to the application of the rights. However, there has been some action of late in the field of moral rights, with the decision of Perez v Fernandez [2012] FMCA 2. That decision involved the rapper Pitbull using the right of integrity of authorship (the right not to have one's work subject to 'derogatory treatment') to gain $10,000 in damages (in addition to damages for copyright infringement) from a DJ who had inserted a promotion for his own services into one of Pitbull's songs.

The relevant moral right in the Corby litigation was the right of attribution, or the right (in those proceedings) of a photographer to have their name placed reasonably prominently with their photograph when it is reproduced. As Allen & Unwin in most cases did not know who the copyright owner was, they certainly could not satisfy the right of attribution. The publisher tried to argue that it did not need to attribute the names because the standard practice in the publishing industry was not to (one of the significant exceptions to the application of the rules). The judge rejected this argument because the publisher had not failed to attribute because of the industry practice; it had failed to attribute because it did not bother to check who the photographers of the photos were.

Despite the obvious and flagrant breach of the right of attribution, the judge awarded no damages. This was because Corby family's grievance was not directed at the fact that they, as artists, had been wronged by the lack of attribution of their names to their photos – rather it was directed towards the subject matter of the book. In fact, the judge found, they would have preferred that their names not be attributed with the photographs, as this may have suggested that they somehow approved of or were affiliated with the book.

The case emphasises the principles which underlie moral rights, which are quite distinct from copyright. Allen & Unwin arguably flagrantly ignored and infringed both the copyright and moral rights of Mercedes, Michael and Rosleigh, yet only one of those infringements led to any monetary award. Therefore, this decision will do little to change the somewhat secondary status of moral rights.

Use it or lose it – lessons in how to use a trade mark in the course of trade

By Lawyer Tessa Meyrick

It pays for owners of registered trade marks to remember that the golden rule in maintaining a healthy portfolio is 'use it or lose it'.

A trade mark can be removed from the register if the trade mark has not, at any time during the last three years (ending one month before the non-use application) been used, or been used in good faith, by its registered owner or licensee. Since you can't prove a negative (well, maybe you can, but that's a subject for another blog), where an allegation of non-use is made, section 100 of the Trade Marks Act 1995 places the burden on the party opposing the removal of the trade mark to prove the positive. That is, it is the opposing party's job to establish that the mark has in fact been used, or used in good faith, by its registered owner or licensee in relation to the goods and/or services in respect of which the mark is registered. 

Much can be said – both from a commercial and public policy point of view – about the strategy of registering a trade mark pre-emptively (because you anticipate that you'll want to use the mark at some point in the future), defensively (to prevent someone else from using the trade mark), or even 'just-in-case' (throwing a wide net over the goods and services in respect of which a mark is registered, 'just in case' you might want to broaden or shift the focus of your business later).  Unless you are in a position to establish that the mark has been used as a trade mark (as a 'badge of origin') in the course of trade, however, these strategies may ultimately disappoint.

A recent decision of the Australian Trade Marks Office gives some clarity to what's required in order to establish use in the course of trade by providing a handy warning of what kind of use will not constitute use in that sense. (There's that positive/negative thing again).

US-based children's apparel company, The Gymboree Corporation, and its Australian subsidiary applied to have the GYMBAROO trade mark partially removed from the register on the ground of non-use. In opposing the application, child development centre franchisor Toddler Kindy Gymbaroo Pty Ltd in effect conceded that the GYMBAROO mark had indeed not been used on the goods or (with a few exceptions) in relation to the services the subject of the application, but submitted that it 'commonly' used those goods in connection with many of the goods and services in relation to which it did use the trade mark. For example: Kindy sends newsletters to the parents of the children attending its classes; the newsletters are presumably made of 'paper, cardboard and goods made from these materials' (Class 16), constitute 'printed matter' (Class 16) and feature 'photographs' (also, Class 16); the newsletter is ancillary to the service Kindy provides. Kindy uses the trade mark in relation to the service of providing child development classes. Kindy therefore argued that it uses the trade mark in relation not only to 'newsletters', but also to 'paper, cardboard and goods made from these materials', 'printed matter' and 'photographs', in the course of trade.

The Delegate responded delicately: 'at the heart of Kindy's arguments … lie certain misconceptions about what constitutes use of the trade mark in the course of trade'; namely, using your trade mark on or in relation to a good that you 'make use' of in the course of operating your business is not the same as using your trade mark in relation to those goods 'in the course of trade'. So, for example, emblazoning your trade mark on a company car does not constitute use of the trade mark in relation to motor vehicles in the course of trade. Likewise, a book might be composed of paper, glue etc, but the publisher is not dealing in those materials in the course of trade – it is dealing in books.

Ultimately, where the evidence showed that Kindy had been a mere consumer of a particular good (as part of the manufacture of another), the Delegate determined that the registration for that good be removed: newsletters were in; 'paper, cardboard and goods made from these materials', 'printed matter' and 'photographs' were out.

Kindy's submissions may well have been driven by the realisation that it had made absolutely no relevant use of – to use another example – 'plastic materials for packaging' (Class 16) in the course of trading as a child development centre business, but that it was still keen to protect its 'just-in-case' registrations and thought it was worth a shot. That said, and to be fair to Kindy, the concept of 'use in the course of trade' underpinning those submissions is not entirely fanciful; we have elsewhere commented on the Federal Court's willingness to take a broad reading of the expression, finding even a small amount of promotional conduct in Australia to constitute use in the course of trade. Still, it is consistent even with that broad reading that the goods or services in question must bear a close connection to the particular trade in which the trade mark owner is engaged.

Opponents to a non-use application cannot rely on an established use in the course of trade in relation to one good in order to make a claim that the trade mark is also used in relation to the goods that have been consumed as part of the manufacture of the first good.

Release of Australian Intellectual Property Report 2013

By Lawyers James Gonczi and Anastasia Hardman

IP Australia recently released the Australian Intellectual Property Report 2013. This annual report provides key statistics about Australia's IP system and considers how Australia measures up in terms of IP protection against other countries.

The report identified several key trends, including that:

• innovation in Australia is increasingly being driven from beyond our shores, with a majority of patent and design applications coming from overseas applicants;
• commercial opportunities continue to attract Australian innovators in North America, and increasingly in Asia; and
• Australia's IP system ranks highly in comparison with other countries, however Australian businesses are lagging behind their counterparts in other OECD countries in terms of investment in innovation and ideas.

Some of the most interesting of this year's statistics are considered in more detail below.

IP applications in Australia

Patents 

• A staggering 90 per cent of the 26,358 standard patent applications in 2012 were made by non-residents.
• US residents filed the highest number of applications in Australia (11,376).
• Patent applications from South Korea and China increased by 48 per cent and 34 per cent respectively. 
• Applications for innovation patents have risen steeply, from 1341 in 2009, to 1856 in 2012. Most of the increase is as a result of overseas filings, with China accounting for more than half of the total increase. 

Designs  

• 59 per cent of design applications are made by overseas and non-resident applicants.
• Applications by Australian residents have declined slightly since 2006.

Plant Breeder's Rights (PBR) 

• More non-residents applied to register Plant Breeder's Rights than did Australians, however of the successful registrations, 56 per cent were registered to Australian applicants.

Trade Marks  

• Trade mark applications now exceed pre-GFC levels.
• Australian residents filed 66 per cent of total applications for 2012.
• The majority of non-resident applications originated in USA, UK and Germany, with the UK and Japan showing the biggest growth.

Australians filing overseas

Australians appear to be taking their innovations elsewhere, reflecting the continued importance of the USA as a market for Australian innovations, as well as the increasing market opportunities and regional advantages arising in a rapidly developing Asia.

Patents

• Australians filed 58 per cent more patent applications overseas than in Australia.
• 44 per cent of overseas applications were in the USA, while 30 per cent were in Asia.

Trade Marks

• Almost 40 per cent of Australian trade mark filings overseas are in Asia, with China receiving 19 per cent of the total overseas applications and New Zealand receiving 17 per cent.  

 

State of play in Australia

Patents

• In 2012, the number of patent applications rose in all states other than South Australia and the Northern Territory. 
• NSW, Victoria and Queensland were the states of origin of more than 90 per cent of the applications in 2012, with most of these applications being made from their capital cities.
• Growth was highest in the east coast states. Queensland showed the biggest real growth (22 per cent). The number of applications from Tasmania grew by 40 per cent, but this was from base of less than 100 applications.
• In Australia, 30 per cent of patent applications generate 90 per cent of market value.

Trade marks

• Most trade mark applications originated in NSW and Victoria, with the majority of these applications being made from their capital cities.
• There was a 2.6 per cent rise in Australian trade mark applications from 2011 to 2012.
• Queensland and South Australia represent the two biggest growth states for trade mark applications between 2011 and 2012, with 7 per cent and 9 per cent increases respectively. Trade mark applications from Tasmania and the Northern Territory rose by 20 per cent and 30 per cent respectively, but this was from a low base.

IP and innovation in Australia

• In the latest Global IP Index, Australia's system ranked third in terms of effectiveness and administrative performance.
• Innovative firms are increasingly using IP rights to protect their ideas. Commercialised inventions in Australia are on average 40 per cent – 50 per cent more valuable when protected by patents.
• However, Australia lags behind other OECD countries in IP innovation. For example, in the US intangible capital (such as IP, research and design) is equal to 91 per cent of tangible assets (such as machinery and factories). In Australia that number is as low as 4 per cent.

Trade opportunities

• In 2011, Australia spent $8.3 billion on technology imports, while earning only $4.9 billion in IP and technology exports. This represents a potential growth opportunity for Australian companies willing to invest in innovation.
• Australia has strong potential as a producer and exporter of innovative agricultural products.  However, growth of Australian products in Asia is limited by the weak protection of plant breeders' rights in the region.
• Despite the positive ranking of Australia's IP system, Australia's trade opportunities are affected by issues such as the length of time taken to grant patents in Australia. Patents granted in 2012 took an average of three-and-a-half years from filing for IP Australia to grant a patent.

The Australian IP Report 2013 has provided a very useful snapshot of Australia's IP system, particularly by placing it into its appropriate regional and global context. Over the coming year IP Australia will be seeking to expand on this picture, with a particular focus on issues such as consumer understanding of IP and the efficiency of global IP systems. Allens will seek to update you as new data or analysis becomes available. 

All that glitters is guano?

By Lawyer Rob Clark

Guano seller proves you should not leave your damages claim up to kismet*

The recent Federal Court decision of Kismet International v Guano Fertilizer Sales [2013] FCA 375 is a salutary lesson to plaintiffs of the need to provide evidentiary support for a claim for damages.

Guano is a phosphate fertiliser created from bird and bat droppings. The proceedings involved two sellers of guano which originated from the same region of Indonesia. The applicant, John Jashar, had sold guano under the name 'Guano Gold' or 'Guano Kwik Start' since 1996, and had a substantial reputation in the relevant market for the sale of guano under those marks. The respondent, James McMahon, placed two advertisements in a local classifieds advertising 'Guano Gold' fertiliser from 2009-2011. Mr Jashar sued Mr McMahon for misleading and deceptive conduct and passing off.

Mr McMahon admitted the misleading and deceptive conduct, the goodwill and reputation of Mr Jashar in the marks and the passing off claim – he had mistakenly believed the trade mark to refer to the type of guano sold by the Indonesian seller, rather than the guano of Mr Jashar. Therefore, the only issue at trial was the remedy for the misleading and deceptive conduct and passing off. Mr Jashar sought to argue that he should get damages for lost sales, damages for loss of reputation and an injunction.

In order to make out the claim to lost sales, it was incumbent on Mr Jashar to prove that the lost sales were due to the use of his trade mark by Mr McMahon. Despite this, no evidence was put on by Mr Jashar. He simply sought to rely on the methodology for assessing damages discussed in GM Holden v Paine, where Justice Gordon essentially assumed that proven sales of the infringer were lost sales of the trade mark owner, subject to a discount to take into account varying circumstances.

Justice Murphy rejected this approach in the circumstances of the case, finding that such methodology was only suitable where it was difficult to provide evidence in relation to lost sales. This was not the case in the present circumstances, as Mr McMahon put on detailed evidence from a number of individuals who, between them, purchased the majority of the guano sold by Mr McMahon. Those people said that they had not been influenced to buy the product based on Mr McMahon's use of trade mark 'Guano Gold' – most had purchased from Mr McMahon because the guano was cheaper than Mr Jashar's or that they did not like dealing with Mr Jashar. Further, Mr McMahon did not extensively promote his guano under the trade mark, only referring to it as 'Guano Gold' in his advertisements, which were small, and on some of the packing of guano – though most of the guano sold was sold in bulk without packaging. In discussions with purchasers Mr McMahon referred to his product as guano, as did his purchasers.

Overall, Justice Murphy was unable to find that any of the sales of guano by Mr McMahon were motivated by the use of Mr Jashar's trade mark, and therefore that they were lost sales of Mr Jashar. Justice Murphy  found that while it would often be difficult to provide evidence in relation to damages and in those situations the court would do the best job it could, this did not excuse an applicant from having to provide evidence where it was available, and certainly to rebut evidence which is put on by the respondent.

In relation to the reputational damage claim, Justice Murphy awarded Mr Jashar a mere $5000 in damages due to that fact that the guano was treated largely as a commodity by purchasers and the fact that, on the evidence before the court, most purchasers did not care what trade mark the guano was sold under. Justice Murphy refused to award an injunction because Mr McMahon had already ceased selling the guano under the trade mark.

While Kismet v Guano breaks no new legal ground regarding damages, it is a useful reminder for those contemplating or conducting litigation that evidence regarding damages cannot be an afterthought following proof of infringement. The remedy is what makes the litigation worthwhile, and the applicant has the onus of proof. For Mr Jashar, kismet has not been kind.

* fate

Google updates AdWords policy

By Lawyer Sarah Lux

As of today, Google has a new policy on the 'invisible' use of trade marks as AdWords (keywords purchased by advertisers to trigger the display of advertisements in Google search results).

Google's approach around the world has been to allow competitors to use each others' trade marks as AdWords. Until yesterday, however, this general policy did not apply in Australia, where a trade mark owner could complain about and ultimately prevent the use of its registered mark as an AdWord by a competitor. From today, Google's general policy has been extended to Australia.

The changes to Google's policy mean that:

• Google will no longer prevent the use by an advertiser of another person's registered trade mark as an AdWord; and
• AdWords that had previously been restricted as a result of a trade mark complaint will no longer be restricted.

Today's policy change also applies in China, Hong Kong, Macau, Taiwan, New Zealand, South Korea and Brazil, which had similarly been carved out of Google's general policy regarding AdWords.

In all of these jurisdictions, Google will continue to investigate, and in some cases restrict, use of trade marks within the text of sponsored advertisements on Google, as distinct from the invisible keywords used to trigger the display of those advertisements.

Today's changes follow Google's recent High Court win against the ACCC, on which we reported in a recent Focus article. The High Court cleared Google from liability for misleading or deceptive conduct arising from the publication of certain sponsored advertisements. This led commentators to anticipate the lessening of intervention by Google in trade mark disputes, which has been reflected in today's policy change.

Apple appeals unappealing 'app store' outcome

By Lawyer Sarah Lux

Today will mark the first directions hearing in what is likely to be a hotly contested Federal Court appeal by Apple, Inc. against the recent rejection by the Australian Trade Marks Office of its application to register the mark APP STORE in classes 35, 38 and 42.
 
Background

Earlier this year, a Delegate of the Registrar of Trade Marks found that the mark APP STORE is not capable of distinguishing Apple's software retail services (class 35), telecommunication services (class 38) or web-based services (class 42), and rejected the application under sub-section 41(6) of the Trade Marks Act 1995 (Cth).

Apple's experience in the Office was vexed. Its application was originally objected to by the Examiner under section 44 of the Act, on the basis that it was too close to existing registered trade mark 1156967 for APPSTORE. Apple subsequently purchased that mark, the objection was withdrawn and the application was accepted. However, this acceptance was revoked by the Registrar under sub-section 41(6) of the Act in respect of class 35 services (retail store services featuring computer software), on the basis that APP STORE is only to some extent capable of distinguishing those services. Apple's evidence of use was regarded by the Examiner as insufficient to overcome this objection, and Apple requested a hearing before a Delegate of the Registrar.

Decision

The hearing produced an unfavourable outcome for Apple. The Delegate not only upheld the objection in relation to class 35 services, but went much further, deciding that APP STORE has no capacity at all to distinguish any of the services in classes 35, 38 or 42 to which the application related, pursuant to the much more stringent ground of objection under sub-section 41(6) of the Act.

The Delegate noted that APP STORE can be defined in ordinary English as 'a store (or retail outlet) that sells or provides computer application programs', and considered that the term is 'relatively straight forward, easily defined and well understood by modern digital-savvy consumers'. She pointed to examples from Apple's own evidence that indicated that Apple has sometimes used the mark descriptively.

Apple had pointed out that the previous registration it had acquired for APPSTORE had not attracted any similar distinctiveness objection at the examination stage. However, the Delegate responded that 'it is not possible to ascertain whether the examiner ever assessed or conducted appropriate research to determine if the expression APPSTORE had any descriptive meaning.' In addition to insinuating that the prior mark had been registered in error, the Delegate suggested that the fact that APPSTORE was previously registered by a third party actually supported the conclusion that traders other than Apple would legitimately wish to use the term in relation to their goods and services.

The Delegate noted Apple's evidence that over 850 million applications had been downloaded in Australia through Apple's Australian App Store service since its launch in July 2008, and accepted that the APP STORE mark had been used extensively in Australia.  (It is worth noting that the App Store launch occurred only seven days before the application's priority date, and that strictly only use within that seven day period should have been relevant to the sub-section 41(6) objection).  However, the Delegate noted that in most cases APP STORE was used in combination with the well known trade mark APPLE, as well as other expressions such as iTunes, iPhone, iPad or iMac. This made APP STORE a 'limping mark', which was not on its own distinctive of Apple's services.

The Delegate concluded that APP STORE was descriptive, and that Apple had not demonstrated through evidence that the mark had acquired a meaning related to Apple which overshadowed its descriptive meaning. The application was therefore rejected in relation to all three applied-for classes under sub-section 41(6).

Comment

Apple will have an opportunity to put on new evidence for the Federal Court appeal, which will be a hearing de novo of this application. Overcoming a section 41(6) objection tends to require very substantial evidence of the acquired meaning of a mark, which Apple may not be able to provide in light of the fact that there were only seven days of use between the launch of the App Store in Australia and the date of the application.

Apple is likely to focus instead on demonstrating that APP STORE is at least to some extent capable of distinguishing its retail, telecommunications and web-based services. To do so, it will emphasise the novelty of the APP STORE mark and concept as at the priority date, and may also put on evidence from third parties attesting to recognition of the trade mark meaning of APP STORE in the market at that time. This would complement the evidence it put before the Office from a linguistics professor, that APP STORE did not have a commonly understood or used meaning in 2008.

Some commentators have suggested that the decision may be moot, as Apple could rely on existing registration number 1156967 for APPSTORE to protect its mark. However, as noted above, the Delegate's reasons insinuate that the prior mark may have been registered in error. Apple faces some risk that a competitor will use this opportunity to apply for cancellation of the APPSTORE mark on the basis that it was wrongly registered. The mark could also be challenged on the basis of non-use, if the space between the words APP and STORE which appears in Apple's uses of the mark is regarded as a key feature.

The Federal Court appeal may also shed light on Apple's strategy in approaching this application. The Examiner's original objection applied only to class 35 goods, and it would have been open to Apple to pursue a divisional application to register APP STORE in classes 38 and 42, which would have proceeded to registration. Apple may have chosen not to avail itself of this opportunity on the basis that having all three classes considered together by the Office, and ultimately by the court, might increase the likelihood that the most descriptive component of the application (in relation to class 35) might be accepted together with the more distinctive component (in relation to classes 38 and 42). 

The Australian decision and appeal occur within an international context of legal battles in relation to use of the APP STORE mark. Apple and Amazon are embroiled in litigation in the US over the 'Amazon Appstore', with a trial scheduled for August. Apple's US application to register APP STORE, which has been opposed by Microsoft, will remain in limbo by agreement between the parties until the dispute between Apple and Amazon is resolved.

A version of this article first appeared in the World Trademark Review Daily on 8 April 2013

The clock is ticking - time for trade mark owners to keep watch

By Senior Associate Mark Williams

A recent decision of the Australian Trade Marks Office, along with the Raising the Bar legislative changes, has placed greater pressure on trade mark owners to keep a watch on the trade mark activities of their competitors.

In Bridgestone Corporation v Zylux Distribution Pty Ltd 2013 ATMO 19, a Trade Marks Hearing Officer considered Bridgestone's application for a late extension of time in which to oppose a trade mark application based on 'an error or omission by the person applying for an extension of time, or by that person's agent'. In denying the application, the Hearing Officer confirmed that case law which states that there must be a causal connection between the error by the agent, and the opponent's failure to file the notice of opposition.

Bridgestone was not aware of the existence of the Zylux application due to an error by its agent in referring an examination report. Despite submissions from its representative that, if it had been aware of the Zylux application before the opposition deadline, Bridgestone would have opposed, the Hearing Officer noted the absence of any evidence demonstrating that:

• Bridgestone had undertaken any search of the Register prior to filing; or
• Bridgestone or its representative considered it appropriate to keep a watch for similar marks on the Australian Register.

In light of the Raising the Bar legislative amendments which came into effect on 15 April 2013, which shortened the opposition deadline to two months from the date of advertisement of acceptance, it is now even more important for trade mark owners to keep a watch out for applications for similar trade marks. To this end, it would be prudent for trade mark owners to consider implementing monthly trade mark watches which can be conducted by reference to mark, class(es) or party name.