intellectual property bulletin · patent ofﬁ ce also held that mr collins did not agree to the...

Intellectual Property BulletinDECEMBER 2002

CONTENTS

PATENTS 2, 4, 7

TRADE MARKS 9

DESIGNS 13

COPYRIGHT 14

NZ UPDATE 21, 23

PATENTS

Is it time to retread your thinking on employee inventions?The Patent Offi ce holds that an employer will not in every situation have rights of assignment to an invention of an employee.Page 2

Patents and designs – Papua New Guinea styleThe PNG Patents and Industrial Designs Act 2002 came into force on 1 July 2002.Page 4

Patent revocation proceedingsA recent Federal Court decision warns parties seeking to revoke patents to bring their whole revocation case before the court in the one action.Page 7

TRADE MARKS

Registering shape trade marksA recent decision by the Full Federal Court should result in the Trade Marks Offi ce more readily accepting shape trade mark applications for registration.Page 9

DESIGNS

Massaging Australia’s design infringement lawsThe Federal Court recently handed down a decision that is relatively uncommon in Australian design law.3

COPYRIGHT

Clicking through copyright exceptionsExamining the Copyright and Law Review Committee’s report Copyright and Contracts.Page 14

FOOD LABELLING

New food standards are almost herePage 15

PlayStation® national anti-piracy campaignPage 16

INTERNET

The new auDA Dispute Resolution PolicyThe Australian domain name administrator, auDA, has recently introduced a new dispute resolution policy.Page 18

LEGAL PROFESSIONAL PRIVILEGE

Daniels v ACCCThe High Court has now confi rmed that the ACCC cannot require clients to hand over their confi dential legal advices that are the subject of legal professional privilege.Page 19

NEW ZEALAND UPDATE

Inconsistent IPONZ shape trade mark decisionsPage 21

Are methods of medical treatment patentable?Page 23

ANTI-PIRACY

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ALLENS ARTHUR ROBINSON INTELLECTUAL PROPERTY BULLETIN DECEMBER 2002

PATENTS

Is it time to retread your thinking on employee inventions?Spencer Industries Pty Ltd v Anthony Collins & Anor [2002] APO 4

The Patent Offi ce holds that an employer will not in every situation have rights of assignment to an invention of an employee.

By Robert Cooper, Partner, and Clare Cunliffe, Lawyer

OverviewThis case involved an application by an inventor, Mr Collins, for a declaration that his previous employer, Spencer Industries Pty Ltd (Spencer), was not entitled to be granted a petty patent for his invention. The petty patent related to an assembly for removing the tread from worn tyres (the invention). The decision confi rms that employers will not necessarily have an automatic right over employee inventions.

The story so far – how standard procedures failedMr Collins was employed by Spencer as a sales manager and his previous technical experience formed part of his qualifi cation for that position. Mr Collins often suggested modifi cations to Spencer products to overcome customers’ technical problems. His ideas were good and a number of them were adopted by Spencer and developed into inventions covered by patents held by Spencer.

Mr Collins fi rst raised the idea for the invention with Spencer in 1996, but the idea was not pursued. It was not until Mr Collins raised the idea again in early 1998 that Spencer developed prototypes to test. With testing successfully completed, Spencer representatives and Mr Collins contacted Spencer’s patent attorney.

The patent attorney drafted a petty patent application that named Mr Collins as the inventor. It appears that Spencer expected that Mr Collins would assign the invention to Spencer for a nominal amount. However, it appears that Mr Collins assumed that he would be properly compensated for the assignment.

As a result of this difference of opinion, the assignment was never signed. Mr Collins eventually resigned from Spencer and agreed to assign the invention to Spencer’s major competitor, B & J Manufacturing Company (B & J).

Spencer slides off the roadMr Collins claimed that Spencer was not entitled to be granted the petty patent because the assignment had never been signed.

Spencer claimed it was entitled to the petty patent because it employed Mr Collins. Alternatively, it claimed that, because the invention should be assigned to it, Mr Collins owed it a duty to further its business interests.

The Patent Offi ce agreed with Mr Collins’ argument that Spencer had no entitlement to the petty patent by reason of his employment or his duties.

The Patent Offi ce decided that in the absence of express contractual obligations, there is no rule that an employee’s invention is automatically the property of the employer. Where there is no express contractual provision establishing ownership of the invention, an employer will need to demonstrate that the employment relationship suggests that the invention was made in the course of employment. That is, employers need to demonstrate that ‘inventing’ was part of the employee’s job description.

In the present case, despite the facts that:

• the invention related to Spencer’s fi eld of business;

• Mr Collins developed the invention after discussions with Spencer;

• other inventions made by Mr Collins had been patented by Spencer in its name; and

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• Mr Collins did not object to Spencer making an application for a petty patent for the invention,

the Patent Offi ce held that designing or inventing was not part of Mr Collins’ role, and thus that Spencer had no automatic right over the invention. The Patent Offi ce also held that Mr Collins did not agree to the assignment of the invention by his conduct relating to the grant of the petty patent.

In coming to this conclusion, the Patent Offi ce was infl uenced by the considerations that:

• Mr Collins’ technical experience was in a different fi eld to his employment;

• Mr Collins’ job description did not involve inventing;

• Mr Collins provided most suggestions to Spencer engineers for development and implementation;

• Mr Collins’ innovations were spurred by his desire to match competitors (and thus related to his sales role) and not by an obligation to invent;

• Most of Mr Collins’ previous suggestions were in the nature of modifi cations rather than a redesign or invention;

• Mr Collins came up with the idea on vacation and, after Spencer’s initial lack of interest, developed the invention himself; and

• Mr Collins did not understand patent law.

The Patent Offi ce held that while Mr Collins may have alerted Spencer to problems with its products as part of his role of sales and after-sales service,

he was neither required nor instructed to fi nd solutions to these problems as part of his employment.

The Patent Offi ce also held that Mr Collins’ only duty to further Spencer’s business interests related to the area of product sales in which he was employed.

What can you do?This decision suggests that employers will not always be entitled to the inventions of their employees, even those that are made in the fi eld of the employer’s business and developed in consultation with the employer. The question therefore arises: how can employers best safeguard their business interests in relation to employees’ contributions?

There are certain steps that employers can take:

• Always include appropriate clauses in employment contracts so that the employee assigns all intellectual property developed during his or her employment to the employer, and that the employee agrees to do all things necessary to assist the employer to protect and defend such intellectual property.

• Review all current employee contracts for appropriate intellectual property assignment clauses.

• Ensure that all assignments are signed by each inventor.

• Review your Intellectual Property Management Policy to ensure ownership of all intellectual property is vested in the company.

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Patents and designs - Papua New Guinea style Patents and Industrial Designs Act 2002

The Papua New Guinea Patents and Industrial Designs Act 2002 came into force on 1 July 2002, introducing legislation for the protection of patents and industrial designs to Papua New Guinea for the fi rst time.

By Trevor Davies, Partner, and Lorien Beazley, Senior Associate

PatentsA patent granted for an invention under the Patents and Industrial Designs Act1 (the PNG Act)

expires 20 years after the fi ling date of the application. Annual renewal fees are payable, commencing one year after the fi ling of the application.

The PNG Act recognises the rights of priority under the Paris Convention.

InventionAn invention is defi ned as an idea of an inventor that permits, in practice, the solution of a specifi c problem in the fi eld of technology and may be, or may relate to, a product or a process, but does not include:

1. a discovery, scientifi c theory or mathematical method; or

2. a scheme, rule or method for

(a) doing business; or

(b) performing purely mental acts; or

(c) playing games; or

3. diagnostic, therapeutic and surgical methods, but not including any products for use in any such methods, for the treatment of humans or animals; or

4. an invention, the commercial exploitation of which would

(a) be contrary to public order or morality; or

(b) seriously prejudice the environment.

Patentable inventionsAn invention is patentable if it is new, involves an inventive step and is industrially applicable.

• New – an invention is new if it is ‘not anticipated by prior art’. Prior art is widely defi ned as consisting of everything disclosed to the public, anywhere in the world, by tangible form, oral disclosure, use or any other way, prior to the fi ling or, where appropriate, the priority date of the application claiming the invention.

There is a 12-month grace period in relation to disclosure to the public of the invention by the applicant (or his or her predecessor in title) or from an abuse committed by a third party without regard to the applicant. If such a disclosure has been made, the disclosure does not form part of the prior art if it occurred within 12 months before the fi ling or priority date of the application.

• Inventive step – an invention involves an inventive step if, having regard to the relevant prior art, it would not have been obvious to a person skilled in the relevant art in the light of the common general knowledge as it existed prior to the fi ling or priority date of the application.

• Industrially applicable – an invention is industrially applicable where it can be made or used in any kind of industry (where ‘industry’ is construed in its broadest sense to include handicrafts, agriculture, fi shery and services).

Right to patentThe PNG Act specifi cally states that the right to a patent belongs to the inventor, unless an invention was made in the course of employment. In this case, in the absence of contractual provisions to the contrary, the right to the patent belongs to the employer.

Rights conferred by a patent The owner of a patent has the right to control exploitation of the invention (make, use, offer for hire, sell, import and stock the product for purpose of offering for sale, sale or use) in PNG. However, the rights of an owner of a patent shall not extend to:

• acts in respect of articles put on the market by the patentee or with his or her consent;

• acts done only for experimental purposes relating to a patented invention;

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• exploitation of the invention or making effective or serious preparations to exploit the invention in PNG by any person in good faith before the fi ling/priority of the application; and

• acts performed by any person who proves that, at the date of any infringement of a patent, he or she was not aware, and had no reasonable grounds to believe, that a patent for the invention existed.

The Government may authorise (even without the agreement of the owner of the patent) use of the invention for the public interest, particularly national security, nutrition, health or the development of other sectors of the national economy, or where the manner of exploitation of a patented invention by the owner (or his or her licensee) is determined as anti-competitive.

Invalidation of a patentAn interested party may request the National Court to invalidate a patent on the grounds that:

• the purported invention does not conform to the defi nition of ‘invention’; or

• the purported invention is not a patentable invention, it is not new, it does not involve an inventive step or it is not industrially applicable; or

• the owner of the patent is not the inventor or his or her successor in title.

Industrial designsThe duration of protection for an industrial design is initially fi ve years after the date of fi ling for registration. This can be renewed for two further

consecutive periods of fi ve years on application and payment of the prescribed fee.

An ‘industrial design’ is broadly defi ned and means any composition of lines or colours or any three-dimensional form, or any material, whether or not associated with lines or colours, provided that such composition, form or material gives a special appearance to a product of industry or handicraft and can serve as a pattern for a product of industry or handicraft and appeals to and is judged by the eye.

The phrase ‘any composition of lines or colours’ suggests that an artistic work could be an industrial design provided that it satisfi es all of the defi nition. Also, by referring to ‘handicraft’, the defi nition suggests the application may be broader than only ‘industrial rights’.

Registrable industrial designsAn industrial design is registrable if it is ‘new or original’. An industrial design is ‘new or original’ if it has not been used or disclosed to the public, anywhere in the world, or in any way used

prior to the fi ling or priority date of the application.

An industrial design is not registrable if it:

• is contrary to public order or morality; or

• serves solely to obtain a technical result and leaves no freedom as regards arbitrary features of appearance.

There is a 12-month grace period for disclosure to the public made within 12 months preceding the fi ling or priority date of the application by the applicant or through a ‘third party abuse’.

Rights to registration of an industrial designThe right to the registration of an industrial design belongs to the creator, unless the industrial design is created in the course of employment. In this case, in the absence of contractual provisions to the contrary, the industrial design belongs to the employer.

Copyright and Neighbouring Rights Act 2000, Papua New Guinea

• civil rights of action;

• criminal sanctions;

• customs seizures; and

• special provisions for the protection of various expressions of ‘folklore’.

A detailed summary of the legislation will appear in our next edition of the Intellectual Property Bulletin.

PNG’s fi rst copyright regime came into effect from 1 July 2002. The Act provides for:

• protection of literary and artistic works for the life of the author plus 50 years;

• protection of sound recordings and broadcasts for 50 years;

• moral rights;

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Rights conferred by a registered industrial designThe owner of a registered industrial design has the right of exploitation in PNG by making, offering for hire, selling or importing articles incorporating a design that is a copy, or a substantial copy, of the registered design. There is an exemption from infringement for innocent infringers (acts performed by any person who proves that, at the date of any infringement of a registered industrial design, he or she was not aware, and had no reasonable grounds to believe, that the industrial design was registered). However, the right of the Government to grant exploitation rights to third parties does not exist with respect to industrial designs.

Invalidation of industrial designsAn interested party may request the National Court to invalidate the registration of an industrial design on the grounds that:

• the purported industrial design does not conform to the defi nition of ‘industrial design’; or

• the purported industrial design is not a registerable industrial design, it is not new or original; or

• the registered owner of the industrial design is not the creator or his or her successor in title.

RegulationsPatent and Industrial Designs Regulations 2002 provide for:

• fees, forms and language;

• patents applications and procedure for grant of patents;

• application and procedures for industrial designs; and

• corrections, assignments, hearings and evidence.

Australian connectionIP Australia administers or examines patent applications of a number of countries in the region such as Tonga and Singapore. In March 2002, IP Australia signed an agreement with the Intellectual Property Offi ce of PNG under which the Patent Offi ce has agreed to examine patents in accordance with the PNG Act and any international treaties to which PNG is a party. IP Australia has yet to examine an application made under the PNG Act.

Other forms of IP protection in PNG• Treaties: In addition to being

a member of the WIPO Convention and WTO (TRIPS), on 15 June 1999, PNG became bound by the Paris Convention for the Protection of Industrial Property.

• Trade marks: There is a system of trade mark registration administered by the Intellectual Property Offi ce of PNG. The initial term of protection is 10 years, which can be renewed on submission and payment of appropriate fee.

• Copyright and Neighbouring Rights Act: This Act came into operation on 1 July 2002 and is summarised elsewhere in this edition (see box on page 5).

• Other rights: There is no legislation for the administration and protection of traditional knowledge and the present IP regime makes no express provision to protect traditional knowledge.

Filing applicationsAlthough searching and examination of the patent applications will be carried out by IP Australia, applicants must fi le applications with the Intellectual Property Offi ce of PNG. Applicants who reside outside PNG must be represented by a person (agent) having an address for service in PNG.

We are watching the introduction of this new law with interest. 1 Independent State of Papua New Guinea No 30

of 2002 - Patent and Industrial Designs Act 2000

- Gazette Notice G108 of 4 July 2002

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Patent revocation proceedings – what may go wrong if you limit your attack?Old Digger Pty Ltd (formerly called SDS Digger Tools Pty Ltd) v Azuko Pty Ltd [2002] FCA 1158

A recent Federal Court decision warns parties seeking to revoke patents to bring their whole revocation case before the court in the one action.

By Wayne McMaster, Partner, Kate Beattie, Lawyer, and Johanna Gibson, Articled Clerk

The lawA person may apply to revoke a patent on a number of grounds under the Patents Act 1990 (the Patents Act), including that the invention is (i) not a patentable invention (ie the invention is not the proper subject matter of a patent; not novel; or is obvious); and that (ii) the patent specifi cation does not comply with subsection 40(2) or (3) of the Patents Act (ie does not describe the invention fully; or is not clear and succinct or fairly based on the matter described in the specifi cation).

Generally, a patentee would prefer to have all issues with respect to the validity of its patent dealt with in one revocation action. This avoids the time and expense of having to go to court twice. However, a party seeking to revoke a patent may, for example, wish to avoid the expense associated with raising all the grounds of revocation that exist under the Patents Act. The costs associated with a section

two of its patents. Azuko cross claimed for the revocation of both patents under the s40 grounds discussed above.

On 8 August 2001, the Full Bench of the Federal Court dismissed an appeal (in part) and upheld the decision of the Federal Court that a number of claims of the Old Digger patents were infringed and were not subject to revocation. An application for special leave to appeal to the High Court was dismissed.

Azuko then sought to fi le a second cross claim in fresh proceedings or, alternatively, re-open its earlier cross claim in the initial proceedings, again seeking to revoke the Old Digger patents. Azuko intended to raise different examples from the complete specifi cation to establish the same s40 grounds of revocation raised in the initial proceedings.

A second bite at the cherry?Courts are generally reluctant to allow parties to re-litigate old issues in subsequent proceedings between the parties. Where one party has brought an action against another party and judgment is entered, no subsequent proceedings can be brought with respect to that same cause of action (the ‘res judicata’ principle). This principle has been extended to prevent parties subsequently litigating new matters, where those new matters are so relevant to the subject matter of earlier proceedings that it was unreasonable for the relevant party not to have raised them in the earlier proceedings (the ‘Anshun’ principle)1.

40 attack are far less than those associated with attacking the patentability of the invention. Therefore, that party may choose to raise only some grounds of revocation in initial proceedings. If the initial revocation action is unsuccessful, that same party may wish to raise further grounds of revocation in subsequent proceedings.

A recent decision of the Federal Court, Old Digger Pty Ltd (formerly called SDS Digger Tools Pty Ltd) v Azuko Pty Ltd [2002] FCA 1158 (September 2002), cautions parties seeking to revoke a patent against this piecemeal approach.

The facts in briefAzuko manufactured and distributed drilling equipment used in the mining and exploration industry. Old Digger held two patents for inventions relating to the features of drilling equipment used in that industry.

In the initial proceedings, Old Digger alleged infringement of

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Can fresh proceedings be brought?Azuko argued that each sub ground of revocation of a patent under the Patents Act is a separate ‘cause of action’. Therefore, each sub ground of revocation can be pursued as a separate action in subsequent, fresh proceedings between the parties.

The court disagreed. Justice von Doussa concluded that, despite there being a number of potential sub grounds of revocation under the Patents Act, the relevant cause of action is the right to have a patent revoked on the basis that it is invalid. If so characterised, that cause of action can only be tried once between the same parties, irrespective of the exact sub grounds of revocation raised in the course of those proceedings.

However, in any case, Azuko was seeking to re-litigate the same sub grounds of revocation in the fresh proceedings, namely the s40 grounds that Azuko had raised in the initial proceedings between the parties (albeit supported by different examples from the complete specifi cation). Justice von Doussa observed that, even if the term ‘cause of action’ refers to each separate sub ground of revocation under the Patents Act, Azuko could not bring fresh proceedings in relation to those same sub grounds of revocation.

The court was not required to decide upon this potential distinction as to the meaning of ‘cause of action’. Whether the relevant ‘cause of action’ was the right to have the patent revoked generally or the right to have the

patent revoked on a specifi c sub ground of revocation, Azuko was seeking to bring fresh proceedings on the same ‘cause of action’. Therefore, Azuko was barred from bringing such proceedings under the res judicata principle.

The court also relied on the extended Anshun principle discussed above, namely that as the issues raised by Azuko in the subsequent proceedings were so relevant to the subject matter of the initial proceedings, it was unreasonable for Azuko not to have raised the ‘new’ s40 grounds in the initial proceeding and have the issues determined together. The court held that there were no special circumstances to justify Azuko’s conduct. In particular, the special nature of patent rights did not provide a basis for allowing Azuko to bring fresh proceedings in these circumstances.

Can the initial proceedings be re-opened?Azuko also sought to re-open its earlier revocation claim in the initial proceedings. Azuko argued that, as there were some outstanding issues in the initial proceedings, Azuko was entitled to re-open the revocation claim and raise the further s40 grounds of invalidity

The court held that when judgment was entered in respect to the revocation claim in the initial proceedings, it was a fi nal judgment and had dismissed the entire proceedings in that respect. The court did not have power to set aside this judgment and re-open this issue.

Consequences for partiesGenerally, a party will not be permitted to bring a revocation case with respect to a patent in a piecemeal fashion. If a question regarding the validity of a patent is raised, the party raising that question is obliged to put its whole case before the court at that time.

This has important ramifi cations for parties seeking to revoke patents and patentees seeking to defend revocation actions.

On the broadest reading, a party seeking to revoke a patent is obliged to raise all relevant grounds of revocation under the Patents Act in the course of initial proceedings. For example, where a party seeks to apply to a court to revoke a patent on the ground that the specifi cation does not comply with s40 of the Patents Act, that party should also raise all further relevant grounds of invalidity, such as lack of novelty. If that party fails to do so, the patentee may successfully oppose any subsequent application to bring fresh proceedings on new grounds of revocation or to re-open the court decision on the revocation claim.

Of course these principles do not preclude the addition of grounds of invalidity during the course of the initial proceedings between the parties. Nor do they preclude the possibility of a third unrelated party subsequently challenging the validity of a patent on the same grounds of revocation raised in earlier proceedings between different parties.

In summary, if you are seeking to revoke a patent, you should investigate all possible grounds

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of revocation in relation to the patent and ensure that all relevant grounds are raised during initial proceedings. If you fail to do so, there is a risk that a court may apply the res judicata or Anshun principles to prevent you raising any further grounds of revocation in a subsequent proceeding.1 Port of Melbourne Authority v Anshun Pty Limited

(1981) 147 CLR 589

TRADE MARKS

Registering shape trade marksKenman Kandy Australia Pty Ltd v Registrar of Trade Marks [2002] FCAFC 273

A recent decision by the Full Federal Court should result in the Trade Marks Offi ce more readily accepting shape trade mark applications for registration.

By Colin Oberin, Partner, and Ben Arnall, Lawyer

Shapes as trade marksIn recognition of changing practices in the marketing and promotion of goods and services, and to bring Australia’s trade mark laws into line with international conventions, new legislation came into effect in 1996 allowing a greater range of trade marks to be registered. The Trade Marks Act 1995 (the Act) specifi cally lists shapes, aspects of packaging, colours, sounds and scents as ‘signs’ that may now be registered, in addition to traditional signs such as names, words, headings, labels, devices, tickets and numerals (and combinations of these).

Following this expanded defi nition of registrable signs, it was expected that shape trade marks would become signifi cantly easier to register. However, the Trade Marks Offi ce (TMO) and the courts have taken a very stringent view as to when a product shape is registrable as a trade mark. A recent survey conducted by the Advisory Council of Intellectual Property has confi rmed that applications for shape, sound, scent and colour trade marks are signifi cantly more diffi cult to register than applications for traditional signs such as words,

devices and labels. While 62% of all trade mark applications (where a fi rst report was issued between January 1999 and June 2000) were accepted for registration, only 10% of shape, sound, scent and colour applications were successful for the same period.

Shape trade marks are still unregistrable, or of doubtful validity, in many countries. For example, although shape trade marks have been registered in New Zealand for some time, a recent decision held that such marks should not be registered (see our New Zealand Update section on page 21 for further details).

Capable of distinguishing In order to be accepted for registration, a three-dimensional shape mark must pass the same test as any other trade mark proposed to be registered. It must be capable of distinguishing the applicant’s goods or services from those dealt with or provided by other persons. Subsections 41(3) to (6) of the Act set out various tests for determining whether a trade mark is capable of distinguishing an applicant’s goods or services. In short, the

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Act states that the requirement may be satisfi ed by either showing that the mark is inherently (that is, by its very nature) capable of distinguishing an applicant’s goods or services, or alternatively, by demonstrating that the mark does or will distinguish the relevant products or services because of the extent of its use.

So far, the TMO has adopted a fairly cautious approach to the registration of shape trade marks. It has generally insisted on evidence of factual distinctiveness under ss41(5) or (6). Examples of product shapes accepted for registration on this basis include the Weber Barbecue Kettle, Toblerone chocolate, Bic ball point pens and the shape of Gibson guitars. Up until the Kenman Kandy decision, shape trade marks were very diffi cult to register based only on inherent capacity to distinguish. For example, in Re Chocolaterie Guylian NV (1999) 46 IPR 201, the TMO rejected an application to register a shape mark consisting of a three-dimensional seashell-shaped piece of chocolate without evidence that the shape had acquired factual distinctiveness.

Kenman Kandy’s millennium bug confectionery Kenman Kandy Australia Pty Ltd (Kenman) applied to obtain trade mark registration for the three-dimensional shape of its fruit-fl avoured ‘millennium bug’ confectionery (the bug shape). In support of its application, Kenman relied solely on the contention that the concocted form of the bug shape was inherently adapted to distinguish its confectionery from those of

other manufacturers. Kenman fi led no evidence of the extent to which the bug shape had already been used in Australia.

A delegate of the Registrar of Trade Marks made a number of fi ndings in relation to the bug shape, including that it was an ‘invented’ and ‘stylised six-legged creature’ that ‘strikes the eye as distinguishable from other shapes’. Despite making such fi ndings, the delegate ultimately rejected the registrability of Kenman’s bug shape trade mark. On appeal to the Federal Court, Justice Wilcox upheld the delegate’s decision, reasoning that:

To allow registration, for confectionery, of the shape of a real or readily-imagined animal would be to commence a process of ‘fencing in the common’ which would speedily impose serious restrictions upon other traders.

The decision on appealBy a majority of 2 to 1, the Full Federal Court upheld Kenman’s appeal and ordered that the bug shape trade mark be registered. Justices French and Stone

formed the majority, while Justice Lindgren dissented.

Although the three judges were not unanimous, they agreed that the introduction of new trade mark legislation in 1996 was not accompanied by an intention to make a radical change in trade mark law. Following the court’s earlier decision in Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd (2000) 48 IPR 257, the court agreed that shape trade marks could be the confi guration of part or the whole of the goods themselves, but that a shape dictated by the nature of the goods or by a particular technical result to be obtained, could not function as a trade mark. This last consideration was emphasised by the court, even though it was not directly applicable to Kenman’s confectionery, because the bug shape had no functional signifi cance other than aesthetic. In doing so, the court reaffi rmed the long-standing principle that trade marks should not be used to create perpetual monopolies in respect of functional features or innovations.

WHAT IS THE POSITION ELSEWHERE?

Lyndon Coppin, a senior associate in our Hong Kong IP practice, reports that shape marks are registrable in Hong Kong, subject to the usual tests we have in Australia being met, unless one of the grounds of refusal apply. In addition to the absolute grounds of refusal, there are grounds contained in the Hong Kong Trademarks Ordinance that apply specifi cally to shapes. A shape will not be registered as a trademark if it consists exclusively of the shape that results from the nature of the good themselves, the shape of the goods that is necessary to obtain a technical result or the shape that gives substantial value to the goods.

Andrew Christie and Ben Arnall also write on a recent New Zealand case on shape trade marks, in an article in our New Zealand Update section (see page 21).

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However, on the central issue – whether the bug shape was inherently capable of distinguishing the applicant’s confectionery – there was a clear divergence between the majority and Justice Lindgren.

The majorityJustices French and Stone decided that, in assessing whether a shape mark had inherent capacity to distinguish, the same criteria used to determine the registrability of other types of registrable signs should be applied. Adopting the test formulated by Justice Kitto in Clark Equipment Co v Registrar of Trade Marks (1964) 111 CLR 511 to Kenman’s bug shape, they considered the issue in the following terms: were other confectionery manufacturers likely, in the ordinary course of their businesses and without any improper motive, to desire to use the bug shape or some mark nearly resembling it, upon or in connection with their own goods?

Justice Stone took the view that, although the bug shape was suggestive of insect life, it was not the shape of any specifi c insect or bug. Upholding Kenman’s appeal, Her Honour concluded:

Registration of the bug shape as a trade mark would not give the appellant a monopoly over all bug or insect shapes – only this particular shape and any substantially identical or deceptively similar shape.

Justice French took a similar approach, fi nding that:

The shape of the millennium bug involves a symmetrical disposition of projections (‘legs’) and recesses (‘eyes’). Theoretically

it may be the case that the number of possible symmetrical arrangements of projections and recesses is not infi nite. Assuming that to be so, it is speculative, absent evidence, to draw conclusions about that number and whether the particular arrangement has any signifi cant impact upon the access of other traders to the use of insect like shapes as trade marks.

A further signifi cant aspect of Justice French’s judgment was his emphasis of the point (which he had made earlier in Registrar of Trade Marks v Woolworths Ltd (1994) 45 IPR 411) that trade marks, such as the bug shape, enjoyed the benefi t of the presumption of registrability mandated by section 33 of the Act, as well as the observation that closer adversarial scrutiny of the trade mark may occur later at the opposition stage.

Dissenting judgment

Justice Lindgren partially agreed with some of the views of the majority judges, but ultimately reached a different conclusion. Justice Lindgren agreed that the Clark Equipment case established the appropriate principle to apply when determining whether a shape trade mark is inherently adapted to distinguish an applicant’s goods or services. His Honour also concurred with the majority that it was relevant to ask whether other manufacturers were likely to want to use the bug shape on their own items of confectionery. However, His Honour said the Clark Equipment case imposed an additional test for registrability: whether the sign sought to be registered operated as a badge of origin indicating product source.

Applying this test, Justice Lindgren concluded that:

The Bug shape that Kenman seeks to have registered in respect of confectionery is … ill-suited to designating the trade source of confectionery. Its function is understood by the public to be no more than to provide an aesthetically pleasing shape that will attract buyers, many of whom are likely to be children. Its attractive nature is perceived to be intended to operate as an inducement to buy for a reason other than that the confectionery comes from one trade source as distinct from others.

Signifi cantly, Justice Lindgren also commented that he could not conceive of circumstances in which the shape or colour of any goods would be inherently adapted to distinguish them.

Infringement of shape trade marks Kenman Kandy concerned the registrability of shape trade marks, rather than their infringement. Trade mark infringement occurs when a person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, a registered trade mark in relation to goods or services for which the trade mark is registered.

A number of recent Full Federal Court cases have provided guidance as to when a shape trade mark registration will be infringed by a competitor producing a similarly shaped article. In Coca-Cola Company v All-Fect Distributors Ltd (1999) 47 IPR 481, the respondent’s confectionery, in the slightly distorted shape of a Coca-Cola bottle, was found to infringe Coca-Cola’s trade mark

12


comprising a drawing of its glass contour bottle. The court held that the striking shape of the respondent’s confectionery was apt to distinguish it from the goods of other traders and thus was used as a trade mark.

However, the opposite conclusion was reached in Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd, where it was decided that Remington, by producing an electric shaver with a triple head confi guration, had not infringed Philips’ registered trade marks for the two-dimensional representation of its shaver. The court said that Remington’s emphasis of the head of its shaver in its advertising and packaging sent a message as to the product’s quality, rather than its trade origin. Therefore, since Remington had not used the head of its shaver as a trade mark, it had not infringed Philips’ registration.

These decisions indicate that to produce or deal in goods having a confi guration closely similar to a registered shape trade mark will not always amount to trade mark infringement.

Implications of Kenman KandyPreviously, there has been a strong perception that the TMO has subjected the new types of registrable signs to a preliminary assessment as to whether they are trade marks per se, before the question of whether they are ‘capable of distinguishing’ is determined. This has meant that the TMO has placed a higher barrier in the face of applications for shape trade marks (and other new types of signs) when compared with words, devices

and other traditional signs. This position should change in light of the Full Federal Court’s decision.

Although each shape mark will still need to be considered on its merits – and, quite clearly, shapes that are dictated by function will not be regarded as inherently adapted to distinguish – the majority judgment in Kenman Kandy should signal an increase in the number of successful applications for three-dimensional shape trade marks in Australia.

13


DESIGNS

Massaging Australia’s design infringement lawsLacey v Foggin [2002] FCA 1282

The Federal Court recently handed down a decision that is relatively uncommon in Australian design law by fi nding that a registered design had been infringed.

By Tim Golder, Partner, and Ben Arnall, Lawyer

On 17 October 2002, the Federal Court of Australia handed down its decision that a registered design – in this case, for a head massage device – had been infringed.1 The decision is likely to be welcomed by creators and designers of commercial and industrial products who have found that, while securing Australian design registrations is relatively easy, they are signifi cantly more diffi cult to enforce against alleged infringers. According to one recent survey, only 36% of infringement proceedings decided between 1993 and 2000 were successful at trial.2

The facts, briefl yIn August 1998, the applicant, Mr Lacey, obtained registration for the design of a non-electric head massager called the ‘Orgasmatron’, described on its packaging as ‘the Ultimate Head Massager’. The device, made in accordance with the design, is intended to ‘gently massage the pressure points located around the head and back of the neck’. The design’s signifi cant visual features include an upright cylindrical handle shape surmounting a set of prongs in an inverted wine glass (or cage-like)

The Designs Act 1906 states that infringement occurs where a person ‘applies the design or any fraudulent or obvious imitation of it to any article in respect of which the design is registered’. It is also a breach of a design holder’s rights to import, sell, hire or offer for sale or hire such an infringing article. Australian courts have tended to require extremely close similarity between a registered design and a respondent’s product before concluding that it is an ‘imitation’.

In this case, the respondent advanced two separate arguments in defence of the applicant’s claims of design infringement. First, it argued that the question of infringement should be assessed by making a comparison between the applicant’s design and the respondent’s article at the point of sale. In other words, since the wires of the Shiver Me Timbers! device were in a straightened state at the time of sale, there was no resemblance to the particular shape and appearance of the applicant’s design to justify a fi nding of infringement. However, Justice Madgwick rejected this argument, deciding that the appropriate point at which to consider design infringement was when an impugned article was in use. His Honour stated:

Where the article is sold on the basis of a common understanding between vendor and purchaser that the purchaser will continue a process of assembly to completion, the protection granted to the registered design extends to the features of the completed or fi nished article.

As a second defence, the respondent argued that, even if

shape, as well as the centripetal tendency of the feet of the prongs.

The respondent, Mr Foggin, manufactured and sold a head massager known as the ‘Shiver Me Timbers!’, which bore all of the visual elements of the applicant’s design when assembled according to the accompanying instructions. However, the respondent’s product was sold with its constituent wires extending from the handle in a straightened state, a point emphasised by the respondent.

The applicant commenced proceedings against the respondent, alleging that the device infringed the registered design for the Orgasmatron.

Did ‘Shiver Me Timbers!’ infringe the applicant’s design?The respondent raised an argument that the applicant’s design was invalid on the ground that it was a ‘method or principle of construction’. This argument was dismissed by the judge. The most signifi cant issue of the case was whether the respondent’s product infringed the applicant’s registered design.

14


the directions supplied with its head massager were followed, the end product did not infringe the applicant’s design since its own product had sharply angulated bends, quite dissimilar to the curved prongs for the design of the Orgasmatron. However, Justice Madgwick was not persuaded by this argument either. His Honour said that the respondent’s product could be seen as embodying all the signifi cant visual features of the applicant’s design, on the basis that the curved prongs in the applicant’s design were an ‘irrelevancy or, at least, a minor detail’. Alternatively, Justice Madgwick said that, even if the curved shape of the prongs were viewed as an essential element of the applicant’s design, purchasers of the respondent’s product would most likely interpret the accompanying instructions as meaning that the massager should be curved to fi t comfortably over the user’s head, rather than being left in a ‘stiffl y angular format’. On that basis, the Shiver Me Timbers! product would also infringe the applicant’s design, said Justice Madgwick, since the ‘usual method of following instructions would result in something that would only be trivially different from the registered design’.

The court concluded that the respondent’s product was an application of the registered design for the Orgasmatron and therefore an infringement.

Following the fi nding of infringement, the court ordered an injunction permanently restraining the respondent from manufacturing, selling or hiring the Shiver Me Timbers! head massager and the respondent was

ordered to account for the profi ts made by the infringing conduct.

Implications of the decisionThe signifi cant aspect of the decision in Lacey v Foggin is the court’s approach that the test for design infringement is assessed by reference to how an impugned article is actually used, rather than its appearance at the time of sale. Therefore, if an article requires some assembling (with, or perhaps even without, instructions) before it can be used, then that is the point at which appropriate comparisons will be made against the registered design to determine whether there has been an infringement. This places design owners in a stronger position to succeed in an infringement action.1 Lacey v Foggin [2002] FCA 1282

2 Naomi Pearce, 'Toward a better test for infringement

of a registered design - the Designs (Exposure Draft)

Bill', (2002) 15 Australian Intellectual Property Law

Bulletin 29, at page 30

COPYRIGHT

Clicking through copyright exceptionsThe Copyright and Law Review Committee’s report Copyright and Contracts

By Hugh FitzSimons, Lawyer

The enforceability of agreements that purport to exclude or modify copyright exceptions is unsettled as a matter of domestic law. That is the most signifi cant fi nding of the Copyright and Law Review Committee’s report, Copyright and Contracts, released on 1 October 2002 (the Report).

The Report found that such agreements are widely used online. An example of a type of agreement that may purport to exclude or modify copyright exemptions is a ‘clickwrap’ agreement, where end-users must agree to certain terms and conditions before being allowed

15


access to a site, document or program. Another example is a ‘shrinkwrap’ agreement, often used in the sale of software, in which the terms are sealed inside shrinkwrapping and cannot be accessed until after the product has been purchased.

A ‘copyright exception’ is an exception to the exclusive rights of copyright owners granted by the Copyright Act 1968 (Cth). Examples are the right to use materials for research or study, criticism or review, reporting news (the ‘fair dealing’ exceptions), as well as library and archive exceptions, technology-based exceptions, statutory licences and miscellaneous exceptions.

The Report concludes that contracts are frequently being used by copyright owners to shift the copyright balance. End users are being asked to sign away their statutory rights (ie the copyright exceptions) in order to access materials online.

The main recommendation of the Report is that the Copyright Act be amended to provide that provisions of agreements that purport to exclude or modify copyright exceptions have no effect.

The Report also recommends that Australia encourage other nations to adopt similar provisions, in recognition of the cross-jurisdictional nature of many online agreements.

The Report briefl y considers whether clickwrap and shrinkwrap agreements are enforceable, regardless of their content – that is, whether they are a valid means of forming a contract. The Report fi nds that clickwrap agreements are likely to be enforceable, but that the enforceability of

shrinkwrap agreements is open to much greater debate.

The Government’s recent track record in acting on the recommendations of intellectual property committees is not strong. In November 2000, the House of Representatives Standing Committee on Legal and Constitutional Affairs handed down a report entitled Cracking down on copycats: enforcement of copyright in Australia. At the time of writing, some 24 months later, the Government has not even responded to that Report (let alone implemented the recommendations of the Committee) and has made no public steps to do so.

A full copy of the Copyright and Contracts report may be found at www.clrc.gov.au.

FOOD LABELLING

Food for thought: new Standards almost hereAustralian and New Zealand food manufacturers and importers of food now have less than two months to comply with the new Australian New Zealand Food Standards Code.

By Karin Clark, Special Counsel, and Fiona Miles, Lawyer

The Managing Director of Food Standards Australia New Zealand, Mr Ian Lindenmayer, said in a recent speech to environmental health offi cers (who are largely charged with the enforcement of the new standards) that some companies will clearly fail to be fully compliant with this new Code unless they give it an immediate high priority. Mr Lindenmayer also said:

It is probably not an overstatement to say that

enforcement of food regulations will be in the spotlight as never before from early next year … consumers will want to know if manufacturers are breaking the law.1

The Code has in fact been in force for almost two years, but manufacturers and importers of most foods have had the choice of complying with the new Code or the older (1987) Food Standards Code. However, after 20 December 2002, the

Copyright Amendment (Parallel Importation) Bill 2002

The Copyright Amendment (Parallel Importation) Bill 2002 has been on the House of Representative’s Expected Business List at several points over the past few months, but, as of 4 December, debate on this Bill had not resumed.

16


new Code becomes mandatory, although food manufactured or labelled before 20 December under the previous Code can stay on the shelves lawfully for another 12 months (or 24 months for long-life products).

New labelling provisionsThe new Code requires more comprehensive labelling requirements. These include:

• the presence of certain allergens in food, such as egg, fi sh, milk, nuts and peanuts, must be declared;

• certain other advisory statements and declarations (for example, about the presence of added caffeine in certain drinks) are mandatory;

• new nutrition information labelling will be required. These need to be in prescribed formats, setting out information such as the energy, protein, saturated fat and the sodium content of the food;

• foods that have ‘characterising’ ingredients (such as cocoa in chocolate or milkfats in ice cream) are required to be labelled with a declaration of the percentage of the characterising ingredients; and

• date marking requirements have been extended.

At the same time, the new Code is more fl exible than the previous Code in some areas, with the removal of many prescriptive standards. However, food manufacturers and importers need to keep in mind that, even in areas where the new Code provides more fl exibility, there

may be no guarantee that they will be able to benefi t from the Code’s liberalisation. For example, the ACCC has alleged that labels that take advantage of the less prescriptive standards in the new Code are misleading or deceptive and therefore breach the Trade Practices Act 1974.

Manufacturers and importers also need to keep in mind that advertisements for a food must not contain any statements that are prohibited by the new Code.

For food manufacturers and importers, the new Code is clearly important, not just because its provisions are mandatory, but also because non-compliance can put at risk valuable trade marks and the goodwill attached to the products and the companies that market them.1 See http://www.foodstandards.gov.au/mediarerelease

spublications/speeches/speeches2002/speechianlind

enmayer1757.cfm

ANTI-PIRACY

PlayStation® national anti-piracy campaignA brief glimpse at what is believed to be the largest anti-piracy campaign undertaken by a single company in Australia, and which has attracted signifi cant media attention over the past three years.

By Miriam Stiel, Senior Associate

Since 1999, AAR has coordinated a national anti-piracy campaign on behalf of Sony Computer Entertainment Australia Pty Ltd (SCE Australia), the company which distributes and markets the popular PlayStation® and PlayStation®2 range of computer hardware and software.

Legal measures taken throughout the campaign on behalf of SCE Australia have included:

Border protection – AAR has lodged ‘Notices Of Objections’ under the Trade Marks Act and have worked closely with the Australian Customs Service in the administration of the

17


Notices, which have resulted in the seizure of tens of thousands of counterfeit games at various points of entry into Australia.

Criminal action – AAR has also worked closely with federal and state police and prosecuting authorities in relation to a number of prosecutions brought under the criminal offence provisions in the Copyright Act and Trade Marks Act.

Civil proceedings – more than 110 separate Federal Court proceedings have been commenced against individuals and companies involved in the unauthorised sale, manufacture and importation of counterfeit copies of PlayStation® games. The cases have often involved novel issues of fact, law and procedure and a signifi cant body of case law is emerging from the decisions that have been handed down by judges of the Federal Court. These include:

• A judgment of A$208,979.73, including A$156,000.00 by way of account of profi ts and interest of A$52,979.73, was awarded to SCE in a trade mark infringement case. Although the general principles governing the process of accounting for profi ts based on infringement of a trade mark are well established, the task of calculating the profi ts to which the applicants were entitled was diffi cult in this case because the respondents, who, as the judge pointed out, ‘know best what profi ts they in fact made’, and who bear the onus of establishing what deductions from gross profi t should be allowed, chose not to appear in the proceeding. In determining the net and

then the gross profi ts, the judge relied on business records obtained through the execution of ‘Anton Piller’ orders; admissions made by the respondents to the investigators conducting the trap purchases and evidence of the prices at which blank recordable CDs in plastic cases could be purchased. [Sony Computer Entertainment Aust Pty Ltd v Jakopcevic [2002] FCA 777 (14 June 2002).]

• In a number of cases, the court has accepted that the sale of PlayStation® computer game CD-ROMs, which, although they did not display any registered trade marks externally (on packaging or on the slick on the CD ROM), when inserted into a PlayStation® console caused the marks to be displayed on a television monitor and which involved aural uses of the marks at the time of sale, constitutes use as a trade mark for the purpose of the infringement provisions of the Trade Marks Act. [See, for example, Sony Computer Entertainment Australia Pty Ltd v Dannoun [2002] FCA 1634 (16 November 2000), or Sony Computer Entertainment Aust Pty Ltd v Jakopcevic [2001] FCA 1520 (24 October 2001).]

• Fines of $3,500 and $5,000 and indemnity costs orders have been imposed in contempt of court proceedings where respondents have breached injunctions previously granted by the court. [Sony Computer Entertainment Australia Pty Ltd v Dannoun [2000] FCA

1634 (16 November 2000); Sony Computer Entertainment Australia Pty Ltd v Johnston [2001] FCA 912 (19 June 2001).]

• Indemnity costs were also awarded to SCE Australia in a case where it was held that the respondents had defended the proceedings in wilful disregard of facts known to them and found to have been without foundation; denied allegations that should never have been denied; and showed a disregard for the rights of the applicants and the position of the court in seeking to ascertain the truth. [Sony Computer Entertainment Australia Pty Ltd v Dannoun (No. 2) [2001] FCA 1530 (29 October 2001).]

18


INTERNET

The new auDA Dispute Resolution PolicyThe Australian domain name administrator, auDA, has recently introduced a new Dispute Resolution Policy to apply to .au domain names registered under and governed by its domain name regime, which will have signifi cant implications for Australian businesses with an Internet presence.

By Andrew Wiseman, Partner, and Andrew Byrne, Law Graduate

On 1 August 2002, the Australian domain name administrator, auDA, introduced a new Dispute Resolution Policy (the auDRP) to apply to .au domain names registered under and governed by its domain name regime. The auDRP is modelled on the Uniform Dispute Resolution Policy (UDRP) that applies to generic top level domains (.com, .net, .org) and will have signifi cant implications for Australian businesses with an Internet presence.

The purpose of the auDRP is to provide a cheaper and more expedient alternative to litigation for the resolution of disputes between the registrant of an .au domain name and a party with competing rights in that name.

Under the new policy rules for the registration of .au domain names, introduced by auDA on 1 July 2002, there is a signifi cant window for parties to abuse the registration process and register a domain name in bad faith. An applicant can now register a domain name that is based on their Australian registered trade mark (or trade mark application) or which is ‘closely and substantially connected’ to the applicant. Furthermore, there is no longer a limit on the number

of domain names that can be held by an entity.

Complaints about domain names under the auDRP must be submitted to an auDA-approved dispute resolution service provider, which then appoints a panel to determine the dispute. Each of these providers must follow the auDRP Rules set out in Schedule B of the auDRP.

Disputes covered by the auDRP, outlined in Schedule A clause 4(a), include situations where a complainant (who bears the onus of proof) asserts that:

• a domain name is identical or confusingly similar to a name, trade mark or service mark in which they have rights;

• the holder of the domain name has no rights or legitimate interests in respect of the domain name; and

• the domain name has been registered or subsequently used in bad faith.

Schedule A clause 4(b) then provides that the following circumstances (in particular, but without limitation) will be evidence of registration or use of a domain name in bad faith:

• circumstances indicating that you have registered or

acquired the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to another person for valuable consideration in excess of your documented out-of-pocket costs directly related to the domain name; or

• you have registered the domain name in order to prevent the owner of a name, trade mark or service mark from refl ecting that name or mark in a corresponding domain name; or

• you have registered the domain name primarily for the purpose of disrupting the business or activities of another person; or

• by using the domain name, you have intentionally attempted to attract, for commercial gain, Internet users to a website or other online location by creating a likelihood of confusion with the complainant’s name or mark as to the source, sponsorship, affi liation, or endorsement of that website or location or of a product or service on that website or location.

Finally, schedule A clause 4(c) of the policy outlines the following indicators that a person holds a legitimate interest in a domain name:

• before any notice to you of the subject matter of the dispute, your bona fi de use of, or demonstrable preparations to use, the domain name or a name corresponding to the domain name in connection with an offering of goods or services (not being the

19


offering of domain names that you have acquired for the purpose of selling, renting or otherwise transferring); or

• you (as an individual, business, or other organisation) have been commonly known by the domain name, even if you have acquired no trade mark or service mark rights; or

• you are making a legitimate non-commercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the name, trade mark or service mark at issue.

Despite these comprehensive criteria, panels will inevitably face problems when they come to interpret the particular terms outlined above. The UDRP has faced such problems and UDRP decisions, which are formally disclosed, have come to develop an informal system of precedent for reference by UDRP decision-making panels. It remains to be seen whether a similar system of precedent will develop for auDRP decisions.

As a fi nal note, the auDRP is implemented by incorporation in registration contracts and will therefore only apply to domain names registered on or after 1 July 2002. Nevertheless, registration of domain names under the auDA policy must be renewed every two years and so all domain names will automatically become subject to the new Dispute Resolution Policy within that timeframe.

LEGAL PROFESSIONAL PRIVILEGE

Daniels v ACCC: High Court confi rms clients’ right to legal professional privilegeThe Daniels Corporation International Pty Limited v ACCC [2002] HCA 49

The High Court has now confi rmed that the ACCC cannot require clients to hand over their confi dential legal advices that are the subject of legal professional privilege.

By Fiona Crosbie, Partner, and Bashi Kumar, Lawyer

On 7 November 2002, the High Court confi rmed the rights of clients to refuse to hand over to the Australian Competition and Consumer Commission (ACCC) confi dential communications with their lawyers. Such confi dential communications are commonly referred to as privileged communications, to connote the protection accorded to them by a longstanding legal doctrine known as legal professional privilege. The High Court’s decision in Daniels may well have broader regulatory implications beyond the trade practices context.

The ACCC’s powersThe ACCC has wide investigative and information-gathering powers under section 155 of the Trade Practices Act (TPA) to:

• enter premises to inspect and copy material; or

• issue notices requesting materials.

The TPA, particularly s155, is silent as to whether legal professional privilege is a valid ground for refusing to produce materials to the ACCC.

The backgroundThe High Court case concerned Daniels Corporation, which was the subject of ACCC investigations for alleged contraventions of the TPA.

The ACCC issued s155 notices to Daniels Corporation and its legal advisers requiring the production of privileged communications. Daniels Corporation resisted, and the ACCC commenced proceedings seeking production of the privileged material.

The Full Federal Court unanimously held that the ACCC had the power, under s155, to obtain privileged communications. Daniels Corporation obtained special leave to appeal to the High Court in February 2002. About this time, Coles Myer and Woolworths commenced proceedings in the High Court, also seeking judicial clarifi cation on the extent of the ACCC’s investigative power to compel the production of privileged communications. All three proceedings were heard on 18 June 2002.

20


The issuesIn considering the appeal, the High Court addressed the following questions:

• Is legal professional privilege merely a rule of substantive law, or a fundamental common law right or immunity?

• How should the court interpret the words of s155, which concern the ACCC’s investigative powers, having regard to the status of legal professional privilege?

• Do the ACCC’s investigative powers override claims of legal professional privilege?

The decisionAll seven members of the High Court confi rmed that the ACCC could not use its information-gathering powers to compel the production of privileged communications. The unanimous decision of the Full Federal Court was overturned.

The status of client legal privilegeIn the leading judgment, Chief Justice Gleeson, and Justices Gaudron, Gummow and Hayne described legal professional privilege as a ‘common law right’ or, more appropriately, a ‘common law immunity’. In separate judgments, Justice McHugh characterised the privilege as an important immunity; Justice Callinan characterised the privilege as an important common law right; and Justice Kirby characterised the privilege as a fundamental human right, although acknowledging the diffi culty in according such a right to a corporation.

Principles of legal interpretationThe High Court emphasised the well-settled legal rule that statutory provisions should not be construed as overriding common law rights, privileges or immunities in the absence of clear words or a necessary implication to that effect.

The High Court has expressed this rule since 19081 and has strictly applied it since 19872.

Does the TPA override client legal privilege?The court held that the ACCC’s investigative powers under s155 of the TPA provide no basis for an implication, much less any necessary implication, that they override legal professional privilege. Indeed, the court found that section 155 pointed to an intention to preserve the privilege, when regard is had to:

• the very general terms of the ACCC’s statutory powers to investigate;

• the fact that privilege can be validly claimed in answer to search warrants, which is similar to the ACCC’s powers to enter premises; and

• the express restrictions on the right to claim privilege against self-incrimination in the TPA, with no corresponding restriction on, or even mention of, legal professional privilege.

Privilege and the public interestThe ACCC argued that its investigatory powers would be impaired or frustrated if privilege could be used to resist the production of documents. The High Court did not agree.

Each member of the court pointed to different reasons why this was not the case:

• Communications that ‘seek help to evade the law by illegal conduct’ have never been privileged.

• Privileged documents would constitute only a small percentage of the overall documents produced to the ACCC.

• The ACCC’s longstanding practice and policy of not requesting privileged communications and of stating that privilege was a valid answer to a request for documents or information.

• If investigations become unduly hampered, the inconvenience would be short-lived since Parliament would intervene to amend the legislation.

Two members of the court noted that the matter of fi nding the appropriate balance between the competing public interests of preserving the privilege on the one hand, and facilitating regulatory investigations on the other, is best left to the Parliament.

The ACCC also argued that there was a public interest in overriding the privilege, as evidenced by the High Court’s approach in Corporate Affairs Commission v Yuill 3 (Yuill). There, the High Court held that special investigative powers under the companies legislation overrode client legal privilege and the corporate affairs regulator could compel the production of privileged communications.

Every member of the High Court found that Yuill was not

21


applicable to the facts in Daniels because Yuill considered different legislation, and was decided before legal professional privilege was elevated by the High Court to the status of a common law right or immunity. A majority of the High Court went so far as to say that it may be that Yuill would be decided differently today.

Implications for other regulatorsMany Federal regulators have similar investigatory powers to those of the ACCC.

Since 1991, when Yuill was decided, the Australian Securities and Investments Commission (ASIC) has commonly used its information-gathering powers to request privileged communications.

The Australian Taxation Offi ce (ATO) also has wide investigatory powers to request information relating to a person’s income or assessment. The legislative provision conferring such power is expressed in substantially similar terms to section 155 of the TPA, and is similarly silent on the issue of privilege. The Federal Court has noted the similarity of the provisions and therefore the relevance of a decision in Daniels to the ATO.4

A win for clientsLegal professional privilege exists to protect a client’s right to full and frank legal advice. The High Court decision represents a win for all who obtain legal advice. The decision means that a regulator cannot examine a person’s thinking on a legal issue, before that person makes a decision to act. This is particularly important in today’s increasingly complex regulatory

environment where decisions involving an assumption of legal risk often arise. 1 Potter v Minahan (1908) 7 CLR 277

2 In Re Bolton (1987) 162 CLR 514

3 (1991) 172 CLR 319

4 ANZ Banking v DC of T [2001] FCA 314 at para

14-15 Sundberg J

NEW ZEALAND UPDATE

Inconsistent IPONZ shape trade mark decisionsTwo recent decisions of the Intellectual Property Offi ce of New Zealand have created some uncertainty as to whether shape trade marks are registrable and whether existing shape registrations are valid. However, this uncertainty is likely to be short-lived in light of proposed legislative changes.

By Andrew Christie, Partner, and Ben Arnall, Lawyer

Unlike the Australian and UK legislation, the New Zealand Trade Marks Act 1953 does not expressly refer to shapes in the defi nition of registrable signs. The Act says ‘sign includes a device, brand, heading, label, ticket, name, signature, word, letter, numeral, colour or any combination thereof’. IPONZ has, nevertheless, already accepted for registration a number of trade mark applications for the shape of goods.

IPONZ’s decision in Horizon Biscuit Company Limited & Anor v Société Des Produits Nestlé S.A. (T45/2002 – 30 August 2002) has now cast doubt on the validity of such registrations. In that case, Nestlé sought to register the three-dimensional shape of its well-known KIT KAT chocolate bar as a trade mark. Although the application was initially accepted for registration, it was successfully opposed by Horizon.

In reaching his decision, the Assistant Commissioner of Trade Marks noted the existence of three-dimensional shape marks already on the register, but commented that the issue raised in the case had not ‘been the subject of real contest previously’. The Assistant Commissioner placed much emphasis on the fact that the NZ legislation was amended in 1994 to include colour, but not shape, as a registrable sign. He thought this indicated that Parliament had directed its attention to the scope of the defi nition of sign, and since it had not included three-dimensional product shapes, this meant Nestlé’s KIT KAT chocolate bar was not registrable as a shape trade mark.

A further signifi cant aspect of the decision was the Assistant Commissioner’s fi nding that, even if shape marks were registrable signs, Nestlé’s KIT KAT bar would

22


not qualify for registration. This was because the shape of the KIT KAT product, comprising a block of confectionery in the form of separate ‘fi ngers’, was found not to be inherently capable of distinguishing Nestlé’s goods. The Assistant Commissioner was also not satisfi ed that the shape had acquired distinctiveness through use.

However, a more recent decision of IPONZ has raised a question as to whether the Nestlé opposition was decided correctly. In Re Mag Instrument Inc (T55/2002 – 4 November 2002) a different Assistant Commissioner declined to follow it, preferring IPONZ’s established practice that shapes of goods are signs and thus potentially registrable trade marks. But in that case, IPONZ ultimately rejected the application to register, as a trade mark, the shape of a fl ashlight known as a ‘MAG-LITE’. The Assistant Commissioner found that the shape was not inherently distinctive (partly because its shape was dictated by function) and insuffi cient evidence had been fi led to establish distinctiveness in fact. Importantly, the Assistant Commissioner also set out some useful guidelines, derived from a number of UK decisions, as to when the shape of goods will be inherently distinctive.

Applications to register the three-dimensional shape of Nestlé’s KIT KAT and Mag’s MAG-LITE are currently under examination by the Trade Marks Offi ce in Australia.

As noted in previous editions of our Intellectual Property Bulletin, a new Trade Marks Bill has been introduced into the NZ Parliament. If passed, the

bill will amend the defi nition of registrable ‘sign’ to expressly include shape trade marks. However, the recent decisions of IPONZ discussed above indicate that, even if this amendment is made, trade marks for three-dimensional goods are still likely to remain diffi cult to register in NZ. It remains to be seen whether the approach taken to the registrability of shape trade marks in Australia, following the Kenman Kandy decision, will be replicated in NZ.

STOP PRESS IPONZ registering shape marks

In a practice note issued on 29 November 2002, IPONZ has confi rmed that shape marks are considered signs under the Trade Marks Act 1953. Shape marks will be examined under the same requirements for registrability as other marks.

We will report further on this in our next edition of the Intellectual Property Bulletin.

23


Are methods of medical treatment patentable? NZ and Australia remain dividedIn the matter of an appeal from the decision of the Assistant Commissioner of Patents dated 27 October 2000 in relation to applications for Letters Patent Nos 332218 and 332219 in the name of Pfi zer Inc [High Court of New Zealand – Ellis J, 30 August 2002]

A recent decision has confi rmed that methods of medical treatment of human beings are not patentable in New Zealand.

By Andrew Christie, Partner, and Kate Beattie, Lawyer

The position in NZThe High Court of NZ has recently confi rmed a decision by the NZ Assistant Commissioner of Patents, who refused to accept patent claims to a method of medical treatment of a human being.

In 1983, the NZ Court of Appeal held that patents may not be granted for a method of treating disease or illness in human beings: Wellcome Foundation Ltd v Commissioner of Patents [1983] NZLR 385 (the Wellcome decision). However, in a subsequent decision, the Court of Appeal held that so-called Swiss claims used in Europe to claim methods of treatment are patentable under NZ law. Swiss claims are directed to the use of a compound in the manufacture of a medicine for the treatment of a human being.

The High Court reconciled these decisions by drawing a distinction between prohibited

method claims and Swiss claims. The court concluded that, in accordance with the Wellcome decision, methods of medical treatment of a human being are not patentable even though Swiss claims in relation to such a treatment may be valid (the court was not required to decide this issue).

In reaching this decision, Justice Ellis relied on a number of exceptions and restrictions to patentability under NZ law, including those where the invention is generally inconvenient or contrary to law or morality.

Although methods of medical treatment are not patentable in NZ, the Intellectual Property Offi ce of NZ continues to allow patents for methods of treatment of human beings that do not relate to treating disease or illness, such as cosmetic and contraceptive methods of treatment.

The position in AustraliaIn contrast to NZ, the Australian Patent offi ce has been accepting claims to methods of medical treatment since 1972. Recently, the Full Bench of the Federal Court of Australia has confi rmed that methods of medical treatment of a human being are patentable under Australian law (see Bristol-Myers Squibb Co v FH Faulding & Co Ltd 46 IPR 553). In particular, the court decided that such patents were not invalid on the ground of general inconvenience.

ImplicationsThese decisions have confi rmed the divide between NZ and Australia on the grant of claims to methods of medical treatment of human beings.

The NZ Government is currently reviewing a number of issues in relation to boundaries to patentability in NZ, including the patentability of methods of medical treatment of human beings. A discussion paper on this topic, issued in March, can be found at http://www.med.govt.nz/buslt/int_prop/patentsreview/index.html

In summary, if you are seeking to protect a method of medical treatment of a human being in NZ, this can be achieved by defi ning your invention with Swiss claims. In contrast, the Australian Patent Offi ce will accept both Swiss claims and claims per se to methods of medical treatments of a human being.

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For further information, please contact:

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The Intellectual Property Bulletin is published by Allens Arthur Robinson and Allens Arthur Robinson Patent and Trade Marks Attorneys as a news reporting service to clients and associates. It is not purporting to be legal advice. Should you require advice, please contact one of the persons listed above.

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