InIP: What's happening in intellectual property - July 2024

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

Return of the Battle of the Sevens

By Rob Vienet and Ellie Nigro

The Full Court of the Federal Court of Australia has delivered its judgment in Seven Network (Operations) Limited v 7–Eleven Inc [2024] FCAFC 65, an appellate decision concerning trade mark non-use.

By way of background, 7-Eleven alleged that Seven Network was not using its '7NOW' trade mark in relation to certain categories of registered goods and services, including computer software (class 9) and certain advertising services, including 'the promotion and sale of goods and services for others…' (class 35). At first instance, the Federal Court of Australia held that '7NOW' should be removed from the Register for non-use. You can find our Insight about this decision here.

Seven Network appealed the decision, arguing the '7NOW' trade mark should remain on the Register because Seven Network had in fact used it in relation to the class 9 goods and class 35 services or, alternatively, pursuant to the Full Court's discretion under section 101(3) of the Trade Marks Act 1995 (Cth):

If satisfied that it is reasonable to do so, the Registrar or the court may decide that the trade mark should not be removed from the Register even if the grounds on which the application was made have been established.

The Full Court allowed the appeal in part, finding that the primary judge had erred in construing the class 35 services as the promotion and sale of goods and services of others, rather than for others. However, this was a small victory and Seven Network has lost registered trade mark protection over '7NOW' in relation to a number of other goods and services. And so, 7-Eleven is another step closer to rolling out a delivery app in Australia bearing the name '7NOW'.

This case highlights that context is king when it comes to determining whether a trade mark has been used in relation to particular goods or services. For example, the Full Court did not consider that use of '7NOW' on a website was use in relation to computer software (ie class 9) just because computer software was accessible from the website if users clicked on certain hyperlinks, but held that such use demonstrated a sufficient connection with promoting goods and services for others that were advertised on the website (ie class 35).

Honda free to go in a different direction—up to a point

By Tommy Chen

The Victorian Supreme Court's ruling on Honda Australia's deliberate early termination of a dealer, as part of the restructuring of its dealership agreement, confirms that franchisors have wide latitude to restructure their business model. However, they must compensate affected franchisees for the remaining term of their franchise agreements and otherwise act within the law.

As the Allens Competition team previously reported, in December 2023 the Federal Court imposed an $A6 million fine on Honda Australia. Its restructuring involved terminating all its dealers with effect from 1 July 2020 (including dealership agreements which still had several years to run), with some of those dealers being appointed agents under a new 'agency model'.

The Australian Competition and Consumer Commission brought the Federal Court case, which centred on Honda Australia's misrepresentation to customers that some dealerships that were not being appointed as agents would close or had closed, and would no longer service Honda vehicles.

One of the affected dealers, Brighton Automotive, brought parallel proceedings before the Supreme Court of Victoria. In May 2024, the court handed down its decision (Brighton Automotive Holdings Pty Ltd as trustee for the Brighton Honda Unit Trust v Honda Australia Pty Ltd [2024] VSC 262).

• Compensation for remaining term: The court accepted that Honda Australia was in breach of the dealership agreement by terminating the contract early in 2021, when the agreed contract term lasted until 30 June 2023. Honda Australia had accepted that it was in breach. The court held that damages would be calculated by reference to lost sales, servicing and parts profits, compared to the scenario that the agreement had run to its term. However, Brighton Automotive was not entitled to compensation for the hypothetical value of a renewal after the ordinary expiry of its dealership agreement on 30 June 2023. The court found that, had Honda Australia not terminated early, it would have simply implemented its business plan the same way, but on 30 June 2023.
• Misleading or deceptive conduct: The court also did not find Honda Australia's conduct when it did not disclose its future plans at the time Brighton Automotive last renewed its dealership agreement in 2018 to be misleading and deceptive. Although Honda Australia was already contemplating changing to the agency model, the court found on the evidence that its business plan had not been finalised, and the decision to terminate dealership agreements early was made later, after the dealership agreement was renewed.
• Unconscionable conduct and good faith: The court also did not accept that Honda Australia's deliberate breach was unconscionable conduct. It considered favourably the relatively long period of notice Honda Australia gave and that it immediately acknowledged it would be liable to compensate Brighton Automotive for its losses. As one factor in the unconscionable conduct claim, the court held that Honda Australia did not breach its obligation under the Franchising Code to act in good faith in all its dealings with Brighton Automotive. Honda Australia was entitled to change its business model to address its declining profitability. The fact that it did not contact Brighton Automotive to ask whether it would agree to an early termination did not mean it was in breach. It was sufficient that Honda Australia gave dealers early notice of its intention to terminate, once the decision was made.

The Honda Australia cases are a useful reminder that franchisors (including automotive companies that distribute through dealers or agents) are subject to various duties under the Franchising Code of Conduct and other laws, but still have latitude to change their business models.

The APVMA obtains its first civil penalty order

By Lauren John and Jacob Flynn

The Australian Pesticides and Veterinary Medicines Authority (APVMA) has secured its first civil penalty order in the Federal Court of Australia.

Bonnie & I Pty Ltd (B&I) operates an online store selling various veterinary products, including flea sprays, anti-nausea medication and supplement powders. In September 2023, the APVMA commenced proceedings against B&I and its sole director, alleging they had contravened the Agricultural and Veterinary Chemicals Code (AgVet Code) by:

• supplying unregistered chemical products;
• offering unregistered chemical products for sale on their website; and
• failing to comply with recall notices issued by the APVMA.

Last month, in APVMA v Bonnie and I Pty Ltd [2024] FCA 642, Justice Button found that the APVMA had established each of the allegations, and her Honour imposed civil penalties totalling nearly $1 million, plus legal costs.

The court's decision follows an independent review undertaken into the independent statutory authority last year which noted that the APVMA adopted a 'low-risk profile approach' in respect of compliance and enforcement activities. Further, there were instances where the low-risk profile approach arguably did not align with the severity of the non-compliance being addressed.

It remains to be seen whether the B&I decision signals the beginning of a more active enforcement approach from the APVMA.

Australia adopts IP treaty on genetic resources and Indigenous knowledge

By Tommy Chen, Olivia Henderson and Bec Muller

Following more than 20 years of negotiations, Australia was among the World Intellectual Property Organization member states to adopt a new Treaty on Genetic Resources, Traditional Knowledge and Traditional Cultural Expressions on 24 May 2024. It requires patent applications to disclose, where the claimed invention is based on genetic resources and associated traditional knowledge:

• the country of origin or source of genetic resources upon which their claimed invention is based; and
• the Indigenous peoples or local community (as applicable) who provided, or otherwise the source of, any traditional knowledge associated with the genetic resources upon which their claimed invention is based.

These obligations will not apply retroactively, and disclosures are not required to be assessed for authenticity. Non-compliance with the disclosure requirements does not provide grounds to interfere with conferred patent rights. However, parties to the Treaty are obliged to implement measures (and sanctions or remedies in cases of fraud) dealing with non-compliance, which are to be enforced after the applicant is given an opportunity for rectification (except in the case of fraud).

Parties to the Treaty may establish information systems, including databases, of genetic resources and traditional knowledge associated with genetic resources. Where appropriate, they must consult with Indigenous peoples, local communities and other stakeholders regarding, among other things, how to appropriately safeguard these information systems.

While a Bill to bring the international Treaty into Australian domestic law is yet to be presented to Parliament, IP Australia welcomed the adoption, as its implementation will 'help support the cultural integrity and economic potential of Indigenous Knowledge in the IP system'.

IP Australia is establishing a three-year Indigenous Knowledge Panel pilot, which was announced shortly after Australia adopted the Treaty. It will be consulted on policy and legislative matters relating to Indigenous knowledge in intellectual property. Applications to join the panel are currently open and close on 7 August 2024.

Significant changes to trade mark regulation include broadening of extension of time provisions

By Tim Golder and Ye Rin Yoo

The Intellectual Property Laws Amendment (Regulator Performance) Regulations 2024 commenced on 17 May 2024, amending primarily the Trade Marks Regulations 1995.

Among other amendments, the Regulations:

• align the renewal grace period (the period during which a trade mark can still be renewed after the renewal deadline) for all trade marks to six months;
• allow for trade marks removed for non-use to be restored in additional circumstances where an extension of time is granted and evidence in support is filed or a hearing is requested within the extended period; and
• allow for extensions of time of the five-working-day period to respond to Headstart Reports, but in limited circumstances: ie an error or omission, circumstances beyond control or other special circumstances.

The broadening of extension of time provisions follows the broadening of the 'prompt and diligent' ground for obtaining an extension of time for filing evidence in trade mark oppositions and non-use actions in July 2023 – see our August 2023 InIP.

Another significant amendment is the removal of all references to the 'Official Journal'. As in many other jurisdictions, the Official Journal is where different stages of a trade mark application are published (eg publication of the acceptance of a trade mark application for a two-month opposition period). This reflects IP Australia's move away from the Official Journal, and towards relying upon IP Australia's website and Australian Trade Mark Search database only as the public's source of information for IP rights.