InIP: What's happening in intellectual property - June 2023

Your regular wrap-up of some of the world's leading and intriguing IP stories 6 min read

The battle of the brands — a tale of two agencies

By Ioana Sabau

A recent decision by Justice Jackman of the Federal Court may clarify how courts will assess deceptive similarity under section 120(1) of the Trade Marks Act 1995 (Cth).

In Self Care IP Holdings v Allergan Australia Pty Ltd [2023] HCA 8 (Self Care), the High Court was asked to consider whether the use of the mark 'PROTOX' infringed the 'BOTOX' trade mark registration owned by Allergan. In outlining the test for deceptive similarity, the High Court endorsed the position that the actual use of an allegedly infringing mark is not examined. Instead, the registered trade mark and the mark being used by the alleged infringer are to be directly compared without regard to the totality of the infringer's conduct, such as the presence of other trade marks or disclaimers.

In its application of the test for deceptive similarity of the 'PROTOX' and 'BOTOX' marks, the High Court in Self Care appeared to consider the actual use of the allegedly infringing mark, by contemplating (at paragraphs [70] and [71]):

• the impact of a disclaimer on the packaging stating 'BOTOX' was a registered trade mark of Allergan; and
• the proximity on the packaging of a FREEZEFRAME mark.

The High Court's assessment of deceptive similarity at paragraphs [70] and [71] is difficult to reconcile with its acceptance of previous authorities, which stated that the actual use of the mark cannot be considered in assessing deceptive similarity.

Justice Jackman's decision in The Agency Group Australia Limited v H.A.S. Real Estate Pty Ltd [2023] FCA 482 (The Agency Group) assesses the High Court's reasoning in paragraphs [70] and [71] of Self Care. His Honour's judgment provides a useful application and commentary on this tension to give practical guidance for practitioners.

The Agency Group case principally related to whether the use of a mark, 'THE NORTH AGENCY', infringed 'THE AGENCY' marks registered for real estate services. Regarding paragraphs [70] and [71] of Self Care, Justice Jackman noted the inconsistency with the High Court's earlier statements at [28] of Self Care that a mark's actual use is not relevant for deceptive similarity. In describing the High Court's 'mode of analysis' at [70] and [71], Justice Jackman remarked that their Honours' consideration of the actual use of the marks was a 'fundamental error', which he proposed to 'simply disregard'. On this basis, His Honour proceeded to reject the notion that the actual use of an allegedly infringing mark can be taken into account in assessing deceptive similarity.

Practitioners should note Justice Jackman's application of the test of deceptive similarity and await the Full Federal Court's reasoning on appeal.

You can read Justice Jackman's decision, The Agency Group Australia Limited v H.A.S. Real Estate Pty Ltd [2023] FCA 482, here. An appeal to this decision was filed on 14 June 2013.

Katie Perry vs Katy Perry

By Edward Thien and Jess McKenna

In a case dubbed by the Federal Court's Justice Markovic 'a tale of two women, two teenage dreams and one name', a small business owner from Australia, Katie Taylor (née Perry) (the designer), has successfully won a trade mark infringement case against internationally known singer Katy Perry (the singer) that has attracted international headlines.

The designer has sold clothes under the brand name 'KATIE PERRY' since about 2007 and filed a trade mark in September 2008. The singer adopted the stage name 'Katy Perry' in about 2002, and gained popularity in Australia around late 2007 and early 2008. The singer initially contacted the designer in May 2009, seeking that she withdraw her trade mark application, which led to the parties' attempts to negotiate a coexistence agreement. Those negotiations ultimately failed, but the singer, through various corporate entities, began selling 'KATY PERRY' branded merchandise during her Australian tour, despite her knowledge of the designer's trade mark. The singer's branded clothing was again sold during her 2014 and 2018 tours, and also through a line of clothes sold at major retail stores.

While seemingly an obvious case of trade mark infringement, the judgment considered many creative and interesting arguments, including issues of joint tortfeasorship, due to the singer's operations occurring through a web of corporate entities; whether the own name defence applies to a stage name (the singer's real name is Katheryn Hudson); and whether a shoe is 'clothing' for the purpose of trade mark classes (here, it was held not to be). The singer also brought a cross-claim against the designer, claiming she already had a reputation in the name before the designer's trade mark registration.

Ultimately, it was found that use of the KATY PERRY brand had infringed the KATIE PERRY trade mark registration. It was also held that the own name defence applied to the singer herself but not third-party joint tortfeasors (as they are not themselves directly using the mark).The singer's cross-claim was also dismissed. A final award of damages was pending further inquiries. However, the singer has appealed the decision, so this decade-long legal saga appears to have yet another chapter coming. (Katy Perry is not the only well-known singer to face a court battle recently, with Ed Sheeran recently successfully defending a copyright infringement claim in the UK.) 

Franchisor ordered to pay out almost $5 million to three franchisees it misled

By Sophie Clapin

In a recent case, the Federal Court voided three franchise agreements with franchisor, Ultimate Fighting Championship (UFG), on the basis of misleading or deceptive conduct by UFG. All the guarantees provided by directors to secure the franchise agreements have also been declared void, and UFG has been ordered to pay out around $1.5 million per franchisee.

The Australian Consumer Law states that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Also, representations about future matters are deemed to be misleading or deceptive unless the respondent had reasonable grounds to make the representation.

Justice Thawley found that UFG (via its directors) had made numerous representations about future matters, for instance, representations about future cashflow (eg gross income and gross profit models), representations about the establishment costs (eg lease, equipment and fit-out), and representations that 'preferential agreements' with suppliers would be available. These representations were misleading and the respondents could not adduce any evidence of reasonable grounds for making them.

The franchisees argued that, absent the misleading representations, they would not have entered the agreements. Thawley J found that, in entering the agreements, the franchisees had relied on almost all of the misleading representations and that, although some of the representations were relied on more heavily than others, the 'cumulative effect was such that the applicants entered the agreements because of each of the representations, assessed in the context of the whole course of conduct'.

Interestingly, the fact that a number of cashflow models had a disclaimer stating that the model 'is a forecast only and not a representation capable of reliance or guarantee of outcomes…' did not prevent his Honour from finding that the models were relied on in entering the franchise agreements. This was because other representations had made the models seem reliable and realistic (for instance, representations that they were based on real figures from an existing gym and that UFG had a 'proven business model which worked in Australia').

Prospective franchisees can take some comfort from this decision so that, if they are induced to enter franchise agreements by misleading misrepresentations, the ACL may provide compensation for loss or damage suffered as a result. Prospective franchisors may wish to seek legal advice to ensure they avoid making any misleading representations in the lead up to signing a franchise agreement. If a franchisor makes a representation about a future matter, it should ensure it has reasonable grounds for doing so.

Calling all trade mark enthusiasts: smart numbers can infringe trade marks

By Rob Vienet

Have you ever wondered whether use of a telephone number can amount to use as a trade mark? According to the Full Court of the Federal Court of Australia, the answer is yes.

In its recent judgment Henley Constructions Pty Ltd v Henley Arch Pty Ltd [2023] FCAFC 62, the Full Federal Court determined that use of the telephone number '1300HENLEY' infringed various 'HENLEY' trade mark registrations, and also amounted to misleading or deceptive conduct. In doing so, it overturned the primary judge's decision.

According to the primary judge, 1300HENLEY was just a telephone number, which simply provided a method by which persons could contact the owner of the number.

According to the Full Court, 1300HENLEY was a telephone number that was used for promotional purposes – namely, to promote the name HENLEY as the source of the services to which the telephone number was connected. Accordingly, consumers would still perceive the telephone number as a badge of origin.

In our view, the Full Court's judgment was correct in the circumstances. You can find it here.

Trade mark tussle: Tasmania gears up to enter the AFL

By Sophie Clapin and Stefan Ladd

With AFL CEO Gillon McLachlan formally announcing earlier this year that Tasmania will enter the league in 2028, the debate about the new team's name has intensified and raised some interesting IP issues.

As you may have heard, many AFL supporters are calling for the team to be named the 'Tassie Devils' after the famous marsupial native to Tasmania. However, since at least the mid-1980s, US film studio Warner Bros has held registered trade mark rights in Australia in respect of 'Tasmanian Devil' – the name of one of its iconic characters.

It is worth noting, however, that the mere fact that a person holds a trade mark registration for a particular name will not automatically prevent a third party from being able to use and/or register that name. Importantly, a trade mark registration confers rights on its owner in relation to the use of the relevant mark in respect of specified goods and services. Therefore, a trade mark registration may not prevent a third party from using and/or registering a similar, or indeed the same, trade mark in respect of different goods and services.

Where parties are seeking to use the same mark (or a similar mark) albeit in respect of different goods and services, they will often enter into what is called a 'coexistence agreement'. The purpose of this type of agreement is to delineate how each may use the relevant mark, thereby allowing each party to secure its own registration which can therefore 'co-exist' on the register. Of course, before entering into any such agreement, the parties should obtain competition law advice to ensure that the agreement does not fall foul of competition legislation.

Warner Bros and the AFL have publicly indicated that they are negotiating a 'happy solution' to this issue, so trade mark enthusiasts (and footy fans) should watch this space!

US Supreme Court denies broad antibody patent claims

By Tony Shaw PhD, Tommy Chen, Candace Wu PhD and Jacob Flynn

The US Supreme Court recently delivered a highly anticipated decision on the enablement of patent claims to antibodies defined by reference to their function.

The Sanofi and Amgen litigation, which is playing out globally, concerns Amgen's patents for anti-PCSK9 antibodies that reduce low-density lipoprotein (LDL), also known as the 'bad cholesterol'. LDL normally binds a receptor (LDL-R) and is removed from circulation; however, PCSK9 also binds the receptor and prevents LDL removal.

Amgen developed an antibody drug (Repatha®) that prevents PCSK9 from binding LDL-R and reduces the amount of LDL (bad cholesterol) in the body. Amgen's patents covering Repatha claimed antibodies by reference to their function – both binding to PCSK9 and preventing it from binding the LDL-R. The patent claims therefore cover all antibodies with these functions, and potentially millions of different antibodies are therefore claimed.

The Supreme Court unanimously agreed with Sanofi and the lower courts that Amgen's patents were invalid for lack of enablement because Amgen failed to enable all that it has claimed, even allowing for a reasonable degree of experimentation. The court found that Amgen's patents did not satisfy the enablement requirement because they only provide 26 antibodies, which was not enough to fully enable the claims covering millions of variants. It rejected Amgen's argument that following its 'roadmap' or proposal for 'conservative substitution' set out in the patent would sufficiently enable scientists to make and use every undisclosed but functional antibody. In the court's opinion, such an approach would force scientists to engage in 'painstaking experimentation' to see what works, and leave them to 'random trial-and-error discovery'. That is not enablement.

How has this played out in Australia? We have previously reported on issues and strategies for patenting antibodies in Australia. For patents governed by the Patents Act 1990 (Cth) before the 2012 'Raising the Bar' amendments (Pre-RTB), its specification will satisfy the sufficiency (enablement) requirement if it enables the skilled addressee to produce something falling within the scope of the claims. Accordingly, the Australian Patent Office has found that Amgen's corresponding Australian patents, which are governed by the pre-RTB law, satisfy the sufficiency requirement. Sanofi has filed an appeal to the Federal Court, which will be heard late this year.

Post-Raising the Bar (Post-RTB), sufficiency under Australian law is intended to be aligned with UK/European Patent Office (the EPO) jurisprudence. The position affirmed by the US Supreme Court appears to represent a higher bar to achieve enablement, compared with the position in Europe (and Australia) for functional claiming. The EPO's starting position is that generating antibodies against a known target (eg PCSK9) is a matter of routine, and there is a greater tolerance of the burden placed on the skilled person to carry out trial-and-error work in order to practise the claimed invention. Attacks against these types of claims in Europe therefore generally focus on obviousness, with sufficiency pleaded as part of a squeeze argument. Antibody claims that are defined by reference to epitopes and/or function are sometimes upheld in Europe. However, in this specific case, the equivalent European counterparts of the patents in issue were amended during the EPO opposition process, to add structural elements. The theoretical outcome of the same case applying post-RTB Australian law therefore remains unclear.

We will report on any further developments following the appeal later this year.

Show me the honey! Manuka honey certification mark is not distinctive

By Ryan Balkin

On 22 May 2023, the Intellectual Property Office of New Zealand (IPONZ) delivered a sting to Manuka Honey Appellation Society Incorporated's (NZ Manuka) attempts to secure certification trade mark protection for 'Manuka Honey' in respect of honey. The application was successfully opposed on the grounds of distinctiveness (among others) by the Australian Manuka Honey Association.

As reported in our previous updates on this 'trans-Tasman tussle of extraordinary proportions', on 9 December 2019 and 26 February 2023, registration would have essentially granted NZ Manuka monopoly in New Zealand over honey from the nectar of Leptospermum scoparium, despite it also being native to Australia.

IPONZ expressed 'considerable sympathy' towards NZ Manuka, as mānuka is intrinsically linked to the Māori creation story, but reasoned those considerations do not outweigh trade mark principles. Primarily, certification was sought on 18 August 2015 and, by that time, among average New Zealand consumers 'manuka honey' did not signify 'more than a generic term for a type of honey.'

It may have been a different story if certification was sought before use in Australia or if the certification solely focused on 'mānuka' with the macron. IPONZ stated 'savvy marketing by Australian honey producers', after the discovery of the antibacterial properties outside of Māori culture, 'does not equate to dishonest trading on their part'. At the relevant time, manuka was a 'functioning way to describe a type of honey' within Australia.

This decision is consistent with the opinion that we expressed in 2019: ie trade marks that are inherently descriptive are unlikely to be registered, on the basis that an unfair monopoly may be created. The decision also shows that, in the case of inherently descriptive marks that have attached significance, such as culture, registering marks early, before they have reached descriptive status in other regions, may increase the chance of registration. NZ Manuka still has the opportunity to appeal the decision, so more buzz may be generated.

Litigation funders – do third party cost orders mean they're paying twice over?

By Tahlia Rodrigues and Tommy Chen

In February 2023, we reported on a ruling by the High Court on the extent to which the scope of an informal licence can be implied. In May 2023, Justice Thawley handed down a judgment in these proceedings, in relation to costs. Pending any appeal by the litigation funder, this judgment could mark the end of proceedings that were commenced in July 2018.  

Hardingham v RP Data Pty Limited (Third Party Costs) [2023] FCA 480 concerned an application by the respondent, RP Data Pty Limited (RP Data), for costs against a third party litigation funder, Court House Capital Pty Ltd (CHC). RP Data made this application because it was successful in the underlying proceedings and the applicants (who entered into a funding agreement with CHC in June 2018) have not satisfied a previously made costs order.

Justice Thawley ultimately ordered that CHC pay RP Data's costs of the proceeding (excluding the cross-claim) and interlocutory application, by way of a lump sum. His Honour considered that while orders for costs against a non-party are deemed 'rare and exceptional', such descriptions are 'not intended as more than an observation that the costs consequences usually fall on the parties to the litigation…'. 

His Honour provided the following reasons for making the order against CHC.

• CHC is a commercial litigation funder that sought to profit from the principal proceedings, deciding to offer funding in return for 15% of any damages obtained, plus repayment of the funding it provided.
• CHC has sufficient connection with the proceedings, and provided a substantial level of funding.
• Litigation funding is a legitimate and commonplace commercial activity. It is done for the commercial gain of the litigation funder.
• Litigation funders knowingly take on the risk that, if the funded litigation is unsuccessful, they may face an application ordering payment of the successful parties’ costs. It is 'unrealistic' to think that CHC did not appreciate and consider this risk.
• RP Data's decision not to seek security for costs in the primary proceeding does not deny it the relief it later claimed.

CHC made submissions that a costs order would punish it for assisting impecunious applicants to bring meritorious claims. Justice Thawley remarked that while CHC 'rather grandly submitted that its activities promoted access to justice, this is but a consequence of its commercial activities.'

GIs PROSECCO, PARMESAN and now…BASMATI

By Ye Rin Yoo and Tommy Chen

The Indian Government has appealed IP Australia's decision rejecting its application for registration of the word BASMATI as a certification trade mark for Class 30 'Rice' (application number 1991950). The appeal was filed with the Federal Court on 1 February 2023.

India has a system of registration for geographical indications (GIs), separate from the trade mark system, for agricultural products and foodstuffs, as well as handicraft, manufactured goods and textiles. BASMATI is a registered GI in India, for rice grown in the Himalayan foothills of the Indian subcontinent. As a party to the TRIPS Agreement, Australia has an obligation to provide legal mechanisms for protecting such GIs. As in many common law countries, GIs are protected in Australia as certification trade marks (for any goods) under the Trade Marks Act 1995 (Cth) (the TMA). There is an additional system of GI registration for wine or grape products under the Wine Australia Act 2013 (Cth).

Unlike Australian certification trade marks, Indian GIs are not 'owned' by private consortia of producers. Instead, GIs are administered by the registrar of GIs, and producers apply to the registrar for authorisation to use a GI. The Indian Government sought to protect the GI for BASMATI for its specific variety of rice in Australia by applying (in the Government's name as owner) to register it as a certification trade mark.

A certification trade mark is subject to the same examination requirements as a standard trade mark – eg it must be sufficiently distinctive under section 177 of the TMA (equivalent to s41, which requires a standard trade mark to be sufficiently distinctive) – but it must also be accompanied by the rules governing its use and those rules must also be approved by the ACCC. The owner (and any users approved by the owner) must use that trade mark only for the goods or services that meet a particular standard as set out by the accompanying rules.

In the Indian Government's case, IP Australia maintained the Examiner's decision to reject its application to register the word BASMATI as a certification trade mark on the basis that it was not sufficiently distinctive for Class 33 'Rice' under s177 of the TMA. It accepted that a significant amount of BASMATI rice had been exported to Australia since 1987. However, it was not satisfied that the evidence showed clearly what proportion of that amount had been certified by the Indian Government or originated from the particular region.

This decision follows a string of recent Trade Marks Office decisions that have not been so favourable for GI owners in Australia. They include the following:

• the Consorzio del Formaggio Parmigiano Reggiano's unsuccessful opposition to Kraft's application to register KRAFT PARMESAN CHEESE (application number 1999987) – you can find the decision here. It appealed that decision to the Federal Court on 14 October 2022; and
• the Consorzio del Formaggio Parmigiano Reggiano's further unsuccessful opposition to an application to register a logo mark containing the words PARMESAN CCFN (application number 2160333). It has also appealed that decision to the Federal Court, on 24 April 2023.

Including the BASMATI case, there are now three cases before the Federal Court concerning GIs sought to be protected as trade marks in Australia.

Other recent actions involving GI consortia include:

• the Consorzio del Prosciutto di Parma's opposition to an application to register PARMIZZA (application number 2259203), which was withdrawn after amendments were made to that application; and
• the Consorzio per la Tutela del Formaggio Asiago's successful removal of the Sartori Company's registration for SARTORI ASIAGO (registration number 1680928) for non-use – you can find the decision here.

In parallel, as we have reported, the Australian wine industry recently successfully thwarted the Prosecco Consortium's attempt to register PROSECCO (seen in Australia as a grape variety) as a wine GI in Singapore.

We also await further news on GIs from Australia's free trade agreement negotiations with the EU. In the meantime, the recent IP Australia decisions highlight the difficulties with protecting GIs through the trade mark system; and the activities of the various consortia highlight the challenges faced by both GI owners, and the owners, applicants and users of trade marks that may be seen as containing or referencing GIs.