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

Your regular wrap-up of some of the world's leading and intriguing IP stories 10 min read

Bubble Bath bust-up: Federal Circuit and Family Court holds ABC children's show did not infringe copyright

By Veronica Sebesfi

Judge Baird's recent decision in the Federal Circuit and Family Court (Division 2) in Duncan v Australian Broadcasting Corporation [2023] FedCFamC2G 993 demonstrates that copyright is found not in an idea but in the form of expression. It also illustrates the correct approach to alleging objective similarity between works when bringing a case of copyright infringement.

The applicant, Ms Duncan, had created three works over a period of about five years for a children's animated television show called Buster the Brave Little Wooden Boat and, later, Buster and Jack Series. The show was a 2D animation set in an open harbour, and starring Buster – a young wooden boat with an engine, who ferries people between the island and mainland – and his best friend Jack, a seagull, who is a retired engineer.

Ms Duncan alleged that the ABC had infringed copyright of one or more of the three works or the works' subject matter, by broadcasting the ABC-developed children's animated television show Bubble Bath Bay, episodes of which were subsequently broadcast under the name Sydney Sailboat. Bubble Bath Bay was a 3D animation about an anthropomorphic young sailboat named Sydney, and a number of his friends, who are also anthropomorphised boats and other harbour creatures.

While considering whether copyright in Ms Duncan's works had been infringed, Judge Baird criticised the approach that she had taken to the element of objective similarity. Her Honour stated that it was 'impermissible' for Ms Duncan to argue that works were objectively similar by 'searching for and picking out discrete elements, concepts, themes or ideas she considers present in one or other of the Works … and seeking correspondences in one or other discrete elements, concepts, themes and ideas she discerns in one or more frame(s), scene(s), episode(s), or part(s) of Bubble Bath Bay … [and] combining diverse instances from one or other or more of the Works'.

Instead, the appropriate comparative exercise yielded the conclusion that the works and Bubble Bath Bay were not objectively similar, because the commonalities between them were nothing more than generic, high-level ideas and concepts: eg, the feature of a seabird character or a character's reaction to fog on the water. The protagonists and characters differed, there were different arrangements of characters and events, and the essential features and substance of the plots were not the same. Judge Baird stated that copyright in the works was 'not a monopoly in the concept of a children’s television series set on the water in a harbour setting, with anthropomorphic boats and other creatures having little adventures'.

In any event, Judge Baird was also satisfied that there was no causal connection between the shows and that there was evidence for the ABC independently creating Bubble Bath Bay.

The dual role of trade marks – the Full Court has its say in Halal Certification Authority v Flujo Sanguineo Holdings

By Stefan Ladd and Ryan Balkin

In case you missed it, the Full Federal Court has delivered judgment in Halal Certification Authority Pty Limited v Flujo Sanguineo Holdings Pty Limited [2023] FCAFC 175. The decision provides further clarity on what qualifies as trade mark use under Australian law, and is particularly significant for the food and beverage industry where products often display multiple brands or trade marks.

The Halal Certification Authority case concerned the use by the Flujo group of companies of a halal certification logo on its food products (examples of which are shown below). Halal Certification Authority, which held a trade mark registration for a substantially identical logo, argued that such use infringed its rights.

A key issue in the case was whether the halal logo had been used as a trade mark – an important prerequisite to establishing trade mark infringement. At first instance, the court held that it had not.

While the appeal was ultimately dismissed, interestingly the Full Court has taken a different view on the issue of use as a trade mark. It confirmed that use of a trade mark is to be determined objectively from a consumer's viewpoint. The Full Court also emphasised that the fact that a sign has been used descriptively does not mean that it has not also been used as a trade mark. In this case, the halal logo in question performed both a descriptive function (ie it described the goods as halal) and a branding function (ie it conveyed that the goods had been certified as halal by the Halal Certification Authority). This meant that the logo had indeed been used as a trade mark.

The case is an important reminder that when assessing the potential impact of a sign's usage on consumer perception and whether it functions as a trade mark or badge of origin, you must consider the sign in its entirety and in its applied context. Businesses should ensure that they always get the necessary permissions from trade mark owners before adopting third party signs or branding.

One inventive step for AI, one giant leap for the UK High Court?

Paul Mersiades

The High Court of Justice of England and Wales has, in the first instance decision in Emotional Perception AI Ltd v Comptroller-General of Patents, Designs and Trade Marks [2023] EWHC 2948 (Ch), determined that an artificial neural network (ANN), which recommends songs to its users, is not excluded from patentability under the computer program exclusion in the Patents Act 1977 (UK). This is the first time that a UK court has considered patent protection for ANNs, and while the court did not consider other validity aspects of the invention, it has upended long-standing UK Intellectual Property Office (UKIPO) guidance on patentability for AI models.

ANNs are computational models inspired by the way biological neural networks in the human brain function, and are a key component of machine learning and artificial intelligence. The patent applicant, Emotional Perception AI (EPAI), sought a UK patent for an ANN system that was trained to perceive similarity between media files and recommend a file that is semantically similar (ie evokes a similar emotional response) to a given input. In June 2022, the UKIPO held that EPAI’s invention was excluded from patentability under section 1(2)(c) of the Patents Act, which excludes 'a program for a computer … as such' from patentability. EPAI appealed this decision.

The UK High Court allowed the appeal, agreeing with EPAI that while there is a computer program involved in training the ANN, the fully trained ANN does not implement a series of instructions but operates according to something that it has learned itself. In the alternative, the court determined that because the end result of EPAI’s system (the sending of a file recommendation to an end user) was an 'external technical effect', the ANN fell outside the exclusion of a computer program 'as such'.

The decision is contrary to the UKIPO's patent examination guidance, which treated the training and implementation of AI models as mathematical methods implemented by computer programs – this guidance has been suspended following the judgment. It remains to be seen whether the UKIPO will appeal the decision to the Court of Appeal. If not, this would likely open up patentability in the UK for a large range of AI models trained through machine learning that were previously considered unpatentable.

EPAI's patent application has also been filed in other jurisdictions – including in Australia, where it has been filed but not yet examined by the Patents Office. Australian patent law does not have the same exclusion for computer programs 'as such', but instead a computer-implemented invention is only patentable if it is a 'manner of manufacture' – the precise meaning of which remains unclear [following the Australian High Court's split decision in Aristocrat in 2022.]  It therefore remains to be seen whether the Australian Patents Office will follow the lead of the UK High Court and jump to an equivalent conclusion.

Gold rush: dispute brews over the 'ORO' marks

By Ioana Sabau

In Cantarella Bros Pty Ltd v Lavazza Australia Pty Ltd (No 3) [2023] FCA 1258, Justice Yates held that Lavazza Australia Pty Ltd and Lavazza Australia OCS Pty Ltd (together, Lavazza) would have infringed Cantarella Bros Pty Ltd's (Cantarella) rights by using its registered 'ORO' trade marks. However, His Honour found that Cantarella's claim could not succeed, as it was not the first user of the 'ORO' marks for coffee products and, hence, was not the true owner of the trade marks.

In 2000 and 2013, Cantarella registered two ‘ORO’ trade marks in Australia for coffee products. The validity of its first registered 'ORO' trade mark was challenged in the High Court by Modena Trading Pty Ltd (Modena), with the High Court eventually finding that the mark was inherently adapted to distinguish. (You can read about the High Court's judgment in our Insight.)

Certain Lavazza coffee products prominently displayed the word 'ORO' on their packaging, and Cantarella claimed that this infringed its rights in the 'ORO' marks. A key preliminary issue in the case was whether this use of the word was use as a trade mark. Cantarella argued that the word 'ORO' was displayed distinctly from other words on the packaging. Conversely, Lavazza stated that the use of the word 'ORO' was always compounded into the phrase 'qualità oro' — meaning 'gold quality' product. Justice Yates held that the use of the 'ORO' mark was as a trade mark because the different size and stylistic depictions of the word 'ORO' distinguished the uses of the word so that it functioned as a trade mark.

Lavazza brought a cross-claim against Cantarella, seeking to invalidate and cancel the 'ORO' marks. It argued two separate grounds: first, that the 'ORO' marks were not capable of distinguishing Cantarella's products; and, second, that Cantarella was not the true owner of the 'ORO' marks.

Justice Yates found that the 'ORO' marks were capable of distinguishing goods as a trade mark, finding that the Italian word 'oro' has not been incorporated into Australian English such that ordinary members of the Australian community would understand its meaning. In looking at whether the word 'oro' was incorporated into Australian English, His Honour appeared to articulate a stricter test than the High Court's in the Modena proceeding. A majority of the High Court previously articulated that the relevant test was whether persons in Australia understood that the word 'oro' was descriptive of the character or quality of the goods, which does not require the word to be incorporated into Australian English. 

Regarding Cantarella's ownership of the 'ORO' marks, Justice Yates found that a third party, unrelated entity Caffè Molinari SpA (Molinari), used 'ORO' as a trade mark in relation to coffee products before Cantarella's first use of the mark, in August 1996. Evidence before the Court indicated that Molinari first supplied the coffee products bearing the mark in September 1995. This evidence was not raised in Modena's High Court proceeding to invalidate Cantarella's trade mark, with the High Court ruling that there was no evidence of prior use of the 'ORO' mark. This surprising twist ultimately led Justice Yates to hold that the registrations of the 'ORO' marks were invalid and should be therefore cancelled.

This case demonstrates the need for trade mark owners to be diligent before embarking on an infringement action, and to make sure there is no third party use of the mark that may invalidate the trade mark registration.

However, as at the date of publication, this decision could be appealed.

AI goes off script: Hollywood actors' and writers' strikes end

By Paul Mersiades

They say that art imitates life, with film and television creators long using their medium as a mirror to reflect society's deepest anxieties and concerns. This year, Hollywood writers and actors have used another outlet – labour contract disputes – to express their fears about artificial intelligence.

The Writers Guild of America (or WGA), which is the labour union that represents over 11,500 writers in film, television, radio, and online media, went on strike from 2 May to 27 September 2023. From 14 July to 9 November 2023, they were joined on the picket line by 160,000 media professionals and entertainers represented by the Screen Actors Guild – American Federation of Television and Radio Artists (or SAG-AFTRA). In each case, the unions were unable to agree with the Alliance of Motion Picture and Television Producers (or AMPTP) on the terms of new three-year contracts. A key point of contention for the warring parties had been the film and television studio's use of AI and the potential impact of this ever-emerging technology on craft and job security of writers and actors.

In late 2023, generative AI tools that can generate human-like text, images and music catapulted into the public consciousness. One of the WGA's key concerns in the negotiations was to prevent studios from being able to use AI to generate scripts and then hire writers to edit the AI output, thereby paying fewer writers and at a lower rate. Similarly, SAG-AFTRA was protesting over the AMPTP's proposal for actors' voices and likenesses to be scanned by AI systems and then used by the studios in perpetuity in return for a single day-rate payment. Unlike in Australia, the United States recognises the right of publicity, which entitles all individuals to restrict the commercialisation of their names, images, likeness and similar identifying features, and so the Hollywood actors were resistant to such broad waivers of their rights of publicity without fair compensation or recognition.

On 27 September 2023, the writers' strike ended when they were able to reach agreement with the AMPTP on contractual terms, including in relation to the use of AI. The agreed terms include that the studios cannot use AI to write or rewrite literary materials, cannot require writers to use AI software when performing writing services, and must disclose to writers if any materials given to them have been generated by AI. SAG-AFTRA followed suit on 10 November 2023, negotiating terms requiring producers to obtain consent from actors to create and use their digital replicas, and also specify how they intend to use such digital likeness, with actors then being entitled to compensation at their usual rate for the number of days they would otherwise have been paid for the work being performed by the digital replica.

Strikingly, the WGA deal acknowledges that the WGA reserves the right to assert that the exploitation of writers’ material to train AI is prohibited by law. This ominously sets the stage for what could be the next big budget, star-powered showdown in the series of AI-related disputes that are currently playing out in US courts. As two US academics have put it, these disputes are asking the question: 'Will copyright law allow robots to learn?'

Big Mac vs Big Jack: when reputation doesn't count

By Nick Li, Zakhi Mehta and Teresa Matina

The Federal Court's recent decision in McD Asia Pacific LLC v Hungry Jack’s Pty Ltd [2023] FCA 1412, confirms that reputation in a trade mark is not a relevant consideration in assessing deceptive similarity in the context of trade mark registrability and infringement.

McDonald's alleged that its BIG MAC and MEGA MAC trade marks had been infringed by Hungry Jack's' BIG JACK and MEGA JACK trade marks which it contended were 'deceptively similar', and so contrary to section 120 of the Trade Marks Act 1995 (Cth) (TMA). The court ultimately held that the trade marks were not deceptively similar, despite some similarities.

The court held that, in assessing the similarity between the marks, one took no account of any familiarity a notional consumer may have with the marks. Notably, the court also rejected Hungry Jack's' submission that the High Court's decision in Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd (2023) 408 ALR 195 had expanded the inquiry for deceptive similarity to include consideration of idiosyncratic circumstances around the use of the trade mark under section 120 (and also section 44 in relation to registrability).

This decision reconciles the High Court's decision in Self Care with the well accepted prior convention, confirming that one focuses solely on comparison between the two marks without reference either to any reputation which either mark may possess or any circumstances surrounding the actual use of the marks. Reputation and surrounding circumstances are relevant for other causes of action such as passing off, but not for the question of 'deceptive similarity for sections 44 and 120 of the TMA.