What's happening in intellectual property - April 2024

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

Turtle wash out: criticism not an infringement of moral rights

By Veronica Sebesfi

In Hoser v Georges (No 2) [2024] FedCFamC2G 243, Judge Mansouriadis in the Federal Circuit and Family Court of Australia (Division 2) clarified the scope of the moral right of integrity of authorship, which is the right 'not to have the work subjected to derogatory treatment' per s195AI(2) of the Copyright Act 1968 (Cth). Derogatory treatment is defined in s195AJ as:

(a) the doing, in relation to the work, of anything that results in a material distortion of, the mutilation of, or a material alteration to, the work that is prejudicial to the author’s honour or reputation; or

(b) the doing of anything else in relation to the work that is prejudicial to the author’s honour or reputation.

The applicant self-publishes papers on the taxonomy of reptiles in his own 'Australasian Journal of Herpetology'. The respondents included members of the 'Turtle Taxonomy Working Group'. The respondents published academic books and papers in which they referred to several of the applicant's self-publications and criticised his approach to taxonomy and nomenclature. The applicant alleged in an amended statement of claim that the respondents had made statements that conveyed imputations that were prejudicial to the applicant's honour and reputation as the author of the works, and therefore his works had been subjected to derogatory treatment.

Judge Mansouriadis was required to consider whether the amended statement of claim disclosed a reasonable cause of action for infringement of the applicant's moral rights.

Judge Mansouriadis considered whether 'the doing of anything else in relation to the work' in s195AJ(b) includes making statements about the information or ideas conveyed by the work or the author of the work. Relying on other sections of the Copyright Act, his Honour concluded that s195AJ(b) refers to doing anything to the 'particular form of expression in which an author convey[s] ideas or information to the world'. Like the rest of the Copyright Act, the moral right of integrity of authorship is a right concerning the material form in which the author expresses their ideas, rather than the ideas or information conveyed.

Judge Mansouriadis concluded that the amended statement of claim did not allege that the respondents did anything to the writing or any medium recording the writing in the works that they referenced, and therefore there was no reasonable cause of action for infringement disclosed in the statement of claim.

This case is a reminder that the scope of moral rights protection does not extend to critical remarks about the author themselves or the ideas contained in their works.

Foreign words as trade marks? The latest word from the Federal Court

By Rob Vienet and Stefan Ladd

The Federal Court has delivered its judgment in Caporaso v Mercato Centrale Australia (MCA), a case concerning the use of foreign words as trade marks.

By way of background, Caporaso Pty Ltd is the registered owner of various trade marks incorporating 'MERCATO' (the Italian word for 'market'). Those trade marks are registered in respect of various goods (including meat, fish, poultry and coffee), and services (including retail services, and services for providing food and drink). In 2023, Caporaso brought proceedings against MCA, alleging that the latter's use of various trade marks incorporating 'MERCATO CENTRALE' in respect of an online food and beverage delivery service amounted to trade mark infringement.

The Federal Court found that 'MERCATO CENTRALE' was not deceptively similar to Caporaso's marks for 'MERCATO' and, as such, MCA's conduct did not amount to trade mark infringement. Key to this was the finding that the word 'CENTRALE' was distinctive (as opposed to merely descriptive), and was of equal significance and impact, both visually and aurally, to 'MERCATO', such that members of the target audience would not consider 'MERCATO CENTRALE' to be a sub-brand of 'MERCATO'.

However, although MCA was successful in defending the infringement aspect of the case, its cross-claim seeking the cancellation of Caporaso's registrations was largely unsuccessful. An interesting part of the judgment was the finding that 'MERCATO' had distinctiveness in relation to certain goods and services, which was heavily influenced by the statement that the absence of that word from the Macquarie Dictionary made it 'considerably more difficult for a party in [MCA's] position to establish that the word in its ordinary signification is directly descriptive of the relevant [goods and services]'.  

The case demonstrates how Australian courts are approaching the issue of foreign language words in the context of trade mark infringement and revocation claims, and follows a line of cases that considered similar issues (see Cantarella v Modena in relation to oro and cinque, Goodman Fielder in relation to LA FAMIGLIA, and Cantarella v Lavazza in relation to oro). In particular, it is a reminder that the court will not assume that the meaning of a foreign word will be understood by ordinary Australian consumers in a trade mark context.

The judgment is subject to an appeal, so stay tuned for further updates.

New Zealand expands protection for geographical indications

By Tommy Chen and Bryanna Workman

The New Zealand Parliament has recently passed legislation that implements the European Union-New Zealand Free Trade Agreement (the EU-NZ FTA) and expands protection for geographical indications. New Zealand producers and businesses that import food and beverage products into New Zealand will need to comply with the expanded regime from 1 May 2024.

The EU-NZ FTA was signed in July 2023. New Zealand already had a standalone geographical indications registration scheme for wines and spirits, and the new legislation expands the scheme to cover all other goods. As required by the EU-NZ FTA, it recognises 1975 geographical indications from the EU as registered geographical indications in New Zealand, without going through an application and opposition process. The full list of new geographical indications can be found here. 

From 1 May 2024, no person or business can use any of these terms in New Zealand in respect of the 'product class' for which the geographical indication is registered, unless the product meets the requirements for use of the geographical indication under EU law. There are some limited exceptions to this prohibition, including to enable use of a person's own name or the name of their predecessor in business, or the customary names of plant varieties and animal breeds.

A small number of geographical indications are subject to a phase-out period. For example, the term 'Feta' for cheeses is subject to a nine-year transition period, and the terms 'Sherry' and 'Prosecco' for wines are subject to a five-year transition period. Additionally, businesses that have used the term 'Gruyère' or 'Parmesan' continuously for at least five years before 1 May 2024 may continue to use it. However, any businesses seeking to rely on the phase-out period or prior use exception must ensure that the country of origin of the goods is legibly and visibly indicated on the product.

Compared with the existing regime, the new legislation also introduces the following new civil and administrative enforcement measures.

• Expanded standing to commence civil proceedings: Any person 'with an interest in upholding the restrictions on use of the registered geographical indication' may commence proceedings to seek relief for a breach of a restriction on use of a registered geographical indication.
• Introduction of GI officers: The Government may appoint 'GI officers', who can investigate the origin of goods and issue notices of direction to persons who have breached a restriction on use of a geographical indication. Failure to comply with a notice of direction may result in the imposition of infringement fees or court fines.
• Implementation of border protection measures: New Zealand customs may investigate, inspect, intercept and detain products suspected to breach the restrictions on use of geographical indications.

Further information about the expanded regime can be found on the website of the Intellectual Property Office of New Zealand. 

It remains to be seen whether Australia will accept similar demands in relation to geographical indications if and when the FTA is agreed, as negotiations with the EU are still stalled.

UK zeroes in on US patent misuse doctrine 

By Matthew Wang

The Court of Appeal of England and Wales recently handed down its decision in AstraZeneca UK Ltd v Tesaro Inc [2024] EWCA Civ 78, concerning the royalty provisions in patent licences for the cancer treatment drug Zejula. In doing so, the court placed considerable emphasis on the US doctrine of 'patent misuse'.

In 2012, AstraZeneca granted two patent sub-licences to Tesaro, for patents containing second medical use claims of, or methods of treatment using, existing compounds within the class of drugs known as PARP inhibitors, one such drug being niraparib (marketed by Tesaro as Zejula). Although all sales of Zejula were for the treatment of cancer, not all were for uses or treatments falling within the claims of the patents. The issue before the court was whether the royalties under the sub-licences were calculated by reference to all sales of Zejula or only sales that fell within the scope of the claims of the licensed patents.

In the first instance, before the High Court of England and Wales, Mr Justice Richards held that the royalty was to be calculated using total sales of niraparib for use as cancer treatments – effectively, all net sales of Zejula.

In February 2024 the Court of Appeal unanimously reversed this position, holding that the royalty was limited to sales for uses or treatments that fall within the scope of the claim of the licensed patents only. A principal reason for this involved interpreting the contract to give effect to a lawful meaning, rather than an unlawful meaning. The court favoured the narrower interpretation, which would avoid contravening the US law doctrine of patent misuse. This doctrine holds that a royalty in a patent licence based on total sales (not just sales of the patented product or process) may be 'patent misuse'. Therefore, there is a defence under US law to a contractual claim for such a royalty in its entirety, particularly where the patent holder 'conditions' the licence grant on payment of royalties over products that do not use the teaching of the patent.

Further, the court found that the following factors supported this interpretation:

• The licence grant and the royalty provision in the sub-licences used the same definition of Licensed Product, which incorporated the critical definition of Compound: '….niraparib and Mk-2512 the use of which may be claimed or covered by, or the Exploitation of which may be claimed or covered by, one or more of the Licensed Patents'. Construed in the context of the grant of the licence, the effect of the italicised words is to align the licence's scope with the claims of the licensed patents. Accordingly, the same limitation applied to the royalty provision.
• The temporal scope of the royalty provision was dictated expressly by whether a granted patent in a given country 'covers or claims' the exploitation of the licensed product. Similar limitations were thought to apply to the subject matter of the royalty.
• The royalty provisions in the head licences granted to AstraZeneca were limited to use of the product that would infringe the claim of the patent in the absence of the licences. The head licences were cross-referenced in the sub-licences, and so could be examined to resolve any ambiguity in the sub-licences. Further, the court took into account evidence that, during negotiation of the patent sub-licences, AstraZeneca communicated to Tesaro that the downstream royalties under the sub-licences matched the upstream royalties under the head licences. That would only be the case if the two sets of agreements had royalty obligations of the same scope.

IP Australia adopts Madrid Goods and Services list

By Tim Golder and Ye Rin Yoo

On 26 March 2024, IP Australia adopted the Madrid Goods and Services (the MGS) list for the classification of goods and services in the registration of trade marks. Previously, it adopted a combination of the Nice Classification and IP Australia's own national classification. The change seeks to align IP Australia's classification with the World Intellectual Property Organization and other international trade marks offices that use the MGS list.

In Australia, an application to register a trade mark can be filed based on:

• a 'picklist' of goods and services; or
• without a 'picklist', by drafting the goods and services in free text.

The adoption of the MGS list particularly affects applications filed based on a 'picklist' because the goods and services can only be selected from that list.

The MGS list's benefits include:

• a more extensive list of goods and services from which a selection can be made; and
• a potentially lower chance of an objection to the classification of the goods and services overseas, if a Madrid application is filed based on the Australian application that designates various overseas jurisdictions.

However, that more extensive list does not necessarily mean broader claims in each class. For example, in Class 35, the MGS list has removed broad claims for 'retail services' and 'wholesale services', and replaced them with more specific ones (eg 'retail services relating to clothing'). The MGS list has kept the broad claims for 'software' in Class 9 and 'software as a service' in Class 42. This remains inconsistent with other jurisdictions, such as New Zealand and the United States, where those claims would be objected to and further specifications required.

Further, the MGS list does not address other classification issues, including the following (also discussed in our Insight IP Australia releases new guidance on classifying emerging technology trade marks).

• the overcrowding of trade marks classified in Class 9 and Class 42, which may lead to increasing difficulty in obtaining registration for them; and
• the uncertainty surrounding the scope of trade marks for virtual and real world goods and services. Certain virtual goods and services may not be cross-searched against, or considered similar to, their counterpart real world goods and services. Eg under IP Australia's current cross-searching practice, Class 9 is not cross-searched against Class 25, so an earlier trade mark for Class 25 'clothing' may not be cited against an application to register a trade mark for Class 9 'virtual clothing'. Even if cited, IP Australia's current position is that virtual goods (eg Class 9 'virtual clothing') are not similar to their counterpart real world goods (eg Class 25 'clothing').

Therefore, while adoption of the MGS list will have practical benefits, businesses may want to consider filing an application:

• without the picklist, so as to draft goods and services that may potentially be broader or more accurately describe the goods and services; and
• specifically claiming virtual goods and services, if there is a genuine intention to use the trade mark for them.

Letter of consent system now in effect in Japan

By Tim Golder and Ye Rin Yoo

The letter of consent system in the registration of trade marks (discussed in our previous article) is now effective in Japan.

To recap our earlier article, the Japan Patent Office (the JPO) objects to an application for the registration of a trade mark if it is identical or similar to an earlier trade mark for identical or similar goods or services. Until recently, the applicant had to submit arguments or adopt an 'assign back strategy' (assign its trade mark to the earlier trade mark owner, then have it assigned back) to overcome this.

From 1 April 2024, the JPO will accept a letter of consent from the earlier prior trade mark owner as part of its consideration whether to withdraw the objection. It will only accept a letter of consent for an application filed after 1 April 2024. An application filed before 1 April 2024 would need to be re-filed or re-designated in Japan for the JPO to accept a letter of consent.

However (and unlike in Australia and New Zealand), the JPO will not simply withdraw an objection based on the existence of a letter of consent. It will need to be satisfied by:

• the copy of the letter of consent – the appropriate form of which is still yet to be confirmed; and
• the proof of no likelihood of confusion – we await further guidance on this. It is possible that the JPO will consider a coexistence agreement between the parties, depending on the terms. However, the existence of an agreement is unlikely to be sufficient proof on its own.

If the JPO is satisfied regarding both of the above, it will withdraw the objection. If not, it will maintain the objection, and the applicant may ultimately need to revert to the 'assign back strategy' to overcome it.

A trade mark registered on the basis of a letter of consent and its use can be challenged by any party if there is unfair competition or actual consumer confusion.

Overall, though, we await further guidelines on the new letter of consent system in Japan.