Copyright Law: Update on Recent Practical Developments - 2007 31 October, 2008
Posted by cliveelliott in Articles.Tags: Copyright Law, Auckland, Law Society, Copyright mendment Bill, Clive Elliott, Bill of Rights Act
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Paper given to the Auckland District Law Society in August 2007
1.The purpose of this paper is to update practitioners on recent developments in the copyright law area. I approach the task in two parts. Firstly, dealing with the principal legislative developments and secondly looking at a couple of other developments of interest.
Main Legislative Developments
Copyright (New Technologies) Amendment Bill
Background
2.The proposed amendments to the Copyright Act 1994 took another step when the Commerce Select Committee reported back to Parliament on 29 July 2007. A number of provisions in the Bill remain the same. However, others are likely to change. The key changes are discussed below.
3.Firstly, it is proposed that that the title of the legislation be changed to the Copyright (New Technologies) Amendment Act, removing reference to “performance rights”. That is, given the relatively limited treatment they receive in the Bill, the committee has stated that while the Bill does have some sections that refer to performers’ rights their only purpose is to make those sections technologically neutral.
Storing for educational purposes
4.The committee recommends amending the new s 44A(1)(b)(ii) so that the requirement that the author of a copyright work be identified be dependent on the author’s identity being known. This is to take into account the fact that authors on the internet are often not capable of identification.
5.It is recommended that s 44(1)(b)(iv) be removed. The section provides that educational establishments must identify the course of instruction for which material is stored, if it is stored. The committee suggests that this is impractical as the website could be used in many courses and it will also reduce flexibility in internet based teaching.
Copyright for librarians and archivists for replacement
6.The committee posits that the new s 55(4) be inserted into clause 34(2) so that it is consistent with s 55(1)(b) of the Act. This would allow a digital copy to be made to replace an item in a prescribed library or archive but only under certain limited circumstances.
7.In accordance with submissions made by the New Zealand Law Society, the committee has accepted that it impossible to differentiate between on-site and off-site access and as such the conditions in the new s 56A should apply no matter where digital copies are accessed. It has also accepted that the term ‘Authenticated user’ be more restrictively defined in order to properly balance the competing rights of protection and access.
8.It is now proposed that the new ss 56B(a) and 56C(a) be abandoned. These sections require requesters of digital copies to state the purpose for which the material will be used and to put the request in writing. This is seen as unnecessary in light of current practice and existing sections in the Act.
9.The committee recommends that ss 56B(b) and 56C(b) be deleted because of compliance costs for libraries and archives. These two sections require a written declaration that certain provisions of the Copyright Act have been followed.
Observing, studying, or testing of computer program
10.The committee recommends inserting new s 80 BA (clause 43) in order to clarify that a lawful user of a computer program may observe, study, or test the program and how it runs under certain circumstances without infringing copyright. This is recognition of the need, once again, to balance the often competing interests of copyright owners and the wider public, who may need or wish to access a particular copyright work.
Fair Dealing
11.Fair dealing defences, exceptions or savings relating to CDs, DVDs and a range of audiovisual works remain an area of continuing debate and disagreement.
12.In terms of format shifting, the committee received a number of submissions from parties contending that a purchaser of a copyrighted sound recording (for example a CD) should be able to copy it to another format without restrictions. The committee however stressed that such a person does not acquire copyright in the sound recordings and that the copyright owner retains the exclusive right to control copying of the works under s 16 of the Act. On this basis it maintained the status quo to the extent of maintaining the existing form of restrictions.
13.However, it is now proposed that s 81A(1)(e) be amended to clarify that the copy must be solely for the personal use of the person who made it or of a member of the person’s household if the format-shifting exception were to apply.
14.Further, it is now proposed that s 81A(1)(g) be amended so that a person who has purchased a CD must retain possession of both the original copy and any copy subsequently made, meaning that if the original CD is sold, the copy could not be retained.
15.Is also proposed that s 81A(3) be removed on the basis that it would create uncertainty as to whether purchasers of sound recordings recorded on older technology would be allowed to continue format-shifting. The section itself states that new s 81A will expire two years after enactment, unless extended by the Governor-General by Order in Council. The committee rejected submissions that s 81A should be extended beyond sound recordings, on the basis that this would not be in accordance with our obligations under the Berne Convention for the Protection of Literary and Artistic Works.
16. In terms of time shifting, the committee recommends that new s 84(1)(a) be amended so that it is more clear that the recording must be solely for the personal use of the person who made it or of a member of his or her household were the time-shifting exception to apply. Equally, it is envisaged that s 84(1)(c) be reworded in order to clarify that a time-shifted recording must not be made from an on-demand service.
Internet service provider obligations
17.The committee has recommended that the definition of ‘internet service provider’ (‘ISP’) in clause 3(2) be amended so that a person who hosts material on websites or other electronic retrieval systems that can be accessed by a user falls within the definition.
Liability if user infringes copyright
18.The committee is of the view that the wording of new s 92B (clause 53) is not satisfactory because of the risk of it exposing ISPs to liability for copyright infringement – specifically when a person has infringed the copyright concerned before using the services of the ISP. That is, for example in sending or distributing any infringing content. If amended the section will make it clear that it applies only if a person infringed copyright in a work by using internet services of the ISP. Likewise, ‘Internet services’ are defined.
Liability for storing infringing material
19.It is proposed that in clause 53, the new s 92C(2)(a) be amended and that a new s 92C(2)(ba) be inserted so that it is clear when ISPs would be required to take material down, an issue of some concern to ISPs. A new s 92C(2)(b) also provides that an ISP would become liable for copyright infringement by storing infringing material if a user of the service committed an act of copyright infringement on behalf of, or at the direction of, the ISP.
Technological protection measures
20.Technological protection measures (‘TPM’) are devices designed to manage and prevent piracy of digital copyright works. Certain interests argued that the Act should be extended so that the act of circumventing a TPM is prohibited. However, the committee resisted this approach on the basis that there are likely to be situations in which users of copyright works may want to circumvent a TPM for legitimate reasons and purposes, such as fair dealing.
21.Therefore, the existing provisions are largely retained. The definition of TPMs in new s 226 is to be amended to specifically exclude controls on access to a work for non-infringing purposes. It is however now clear that the Copyright Act is not meant to protect access-control technologies that are used for price discrimination or to control the geographical distribution of works. Once again, this will please those who argued that access control is a competition law issue and has little or nothing to do with copyright law and that ultimately many access control measures work to the detriment of users in New Zealand.
22.Again, in accepting another of the Law Society’s submissions, it has been acknowledged that the rather pejorative term ‘TPM spoiler’ should be replaced by the more accurate and neutral term ‘TPM circumvention device’.
23.Finally, in recognition of the need to find the appropriate balance between competing interests, new s 226E (clause 89) is to be changed to allow users to get assistance from a person who is qualified to exercise a permitted act using a TPM circumvention device without applying to the copyright owner, something which many saw as onerous and unnecessary. Further, new s 226E(4) ensures that such persons cannot charged unreasonably high fees for such assistance.
Commissioning of Copyright Works
24.In March 2006, the Ministry of Economic Development released a discussion paper The Commissioning Rule and the Copyright Act 1994. This paper can be found on the MED website at http://www.med.govt.nz/templates/MultipageDocumentTOC____18837.aspx
25.The discussion paper dealt with two issues. The first is the adequacy of s 21(3) of the Copyright Act which provides a regime for dealing with ownership of copyright in commissioned works. The second is the relationship between copyright law and contract law. It is understood that 70 responses were received by the MED. These responses have been considered and a second discussion paper has been released, eliciting further comment from interested stakeholders. This paper focuses in particular on the following areas:
•Whether the underlying rationale for the commissioning rule continues to be relevant;
•The scope of copyright works covered by the rule;
•How privacy interests of those who commission works for private and domestic purposes should be protected; and
•Consistency between the Copyright Act and the Designs Act.
26.Submissions on the discussion paper are due later this month and the New Zealand Law Society is likely to contribute to the debate.
Other Areas under Review
27.A number of other related issues are being considered at present. These include the following.
Off-air recordings of television programmes to educational establishments
28.The MED is in the process of reviewing whether the Copyright Act should apply to off-air recordings of broadcast television programmes provided to an educational establishment by an external grant. A report is expected in September.
Directors’ Rights
29.Film directors have argued that they should be defined as ‘authors’ and thus the first owners of the relevant works under the Copyright Act. The committee has indicated that the issue requires further attention but that it needs to be done as a separate exercise, because other interest groups are likely to want to have their say. It is understood that the MED is likely to look at this in early 2008.
Orphaned works
30.It has been proposed that the Copyright Act needs to be amended to allow the legitimate copying of so called orphaned works. These are works where the owner cannot be identified for some reason. The MED is also to investigate this and report back to the Associate Minister of Commerce.
Access to works for print-disabled persons
31.The issue of whether and under what circumstances entities may make adaptations of works for print-disabled people without infringing copyright is dealt with by s 69 of the Copyright Act. The issue of consultation between the MED and the Royal New Zealand Society for the Blind and other parties is to be considered and once again a report made to the Associate Minister of Commerce.
32.Finally, in terms of the Act as a whole, the MED has indicated that it will be subject to review in five years time to ensure that it maintains its relevance in the face of new technologies. This is welcome but it is not just in the area of new technologies that the Act requires attention. I consider that more fundamental issues such as the whole area of “fair use” needs to be reviewed. Hopefully, this process can be initiated before too long.
Case Law Developments
The Da Vinci Code
33.A case of particular interest relates to the celebrated novel, The Da Vinci Code, written in 2003 by Dan Brown. On 28 March 2007 the Court of Appeal handed down its decision in Baigent and another v Random House Group Ltd [2007] EWCA Civ 247. This was an appeal against a decision of the High Court to dismiss the Claimants’ claim of breach of copyright under s16 of the Copyright, Designs and Patents Act 1988 (UK). At issue was whether the High Court Judge was correct in legal principle, and therefore whether he was entitled to his conclusions.
34.The Claimants are two of the three authors of a book first published in 1982, The Holy Blood and the Holy Grail (‘HBHG’) which is described by them as a work of historical conjecture, and suggests a secret history of the Holy Grail and Christianity. The Defendant is the publisher in the United kingdom of The Da Vinci Code (‘DVC’).
35.It was common ground between the parties that HBHG was essentially historical in nature whereas DVC was a thriller. It was also common ground that the thriller adopted certain themes similar to and overlapping with the content of the historical work. It was not in dispute that HBHG is an original literary work in which copyright subsists, nor that the Claimants are two of the joint holders of the copyright. The Claimants’ case is that Brown derived the majority of six chapters of his work from HBHG, that he copied part of HBHG and that what he copied was a substantial part of the work.
Procedural History
36.The case first went to trial before Mr Justice Peter Smith in the High Court (Chancery Division) in February and March 2006. His Honour’s judgment was delivered on 7 April 2006, dismissing the claim. Lloyd LJ, in the Court of Appeal, describes Peter Smith J’s judgment as “not easy to read or understand”, and suggests he should “have allowed himself more time for the preparation, checking and revision of the judgment”. Smith J appears to have held that while the six chapters of DVC in question were largely derived from HBHG, the claim for breach of copyright did not succeed as the claimants failed to establish that a substantial part of HBHG had been copied. Peter Smith J refused permission to appeal, but the Claimants’ application to the Court of Appeal was accepted by Lloyd LJ, with permission to appeal being granted on 13 June 2006.
Decision of the Court of Appeal
37.All three judges delivered concurring decisions. The first and most detailed judgment was delivered by Lloyd LJ, who noted at para [5] the unusual nature of the claim:
If the copyright work in question is a literary work, the allegation will normally be that part of the text of the earlier work was copied exactly or with some modification, in the creation of the later work. In the present case that is not what is alleged as the basis for the claim in copyright infringement. What is said to have been copied is a theme of the copyright work
38.In setting out the test for breach of copyright, Lloyd LJ stated at para [5]:
Copyright does not subsist in ideas; it protects the expression of ideas, not the ideas themselves. No clear principle is or could be laid down in the cases in order to tell whether what is sought to be protected is on the ideas side of the dividing line, or on the expression side.
39.As legal authority for the lack of a definite rule with regards to delineating ideas and expression, Lloyd LJ cited Lord Hoffmann’s discussion of artistic copyright in the House of Lords in Designers’ Guild Ltd v Russell Williams (Textiles) Ltd [2001] 1 All ER 700, [2000] 1 WLR 2416, at para 24, [2001] FSR 113:
There are numerous authorities which show that the “part” which is regarded as substantial can be a feature or combination of features of the work, abstracted from it rather than forming a discrete part. That is what the judge found to have been copied in this case. Or to take another example, the original elements in the plot of a play or novel may be a substantial part, so that copyright may be infringed by a work which does not reproduce a single sentence of the original. If one asks what is being protected in such a case, it is difficult to give any answer except that it is an idea expressed in the copyright work.
40.Lloyd LJ also cited paras [25] and [26] of Lord Hoffmann’s judgment in Designers’ Guild, which is now authoritative on this point, namely that:
The other proposition is that certain ideas expressed by a copyright work may not be protected because, although they are ideas of a literary, dramatic or artistic nature, they are not original, or so commonplace as not to form a substantial part of the work.
Generally speaking, in cases of artistic copyright, the more abstract and simple the copied idea, the less likely it is to constitute a substantial part. Originality, in the sense of the contribution of the author’s skill and labour, tends to lie in the detail with which the basic idea is presented.
41.Applying this approach His Lordship set out the following test at para [7]:
•what relevant material was to be found in both works;
•how much, if any, of that had been copied from HBHG
•whether what was copied was on the copyright side of the line between ideas and expression; and.
•whether any of the material that was copied and did qualify as expression, rather than as ideas, amounted to a substantial part of HBHG.
The third and fourth of these issues, as often, are interconnected.
42.Lloyd LJ further stated at para [8] that:
If, by applying those tests, the judge found that a substantial part of HBHG had been copied by Mr Brown in writing DVC, it was irrelevant to consider Mr Brown’s intention in doing so. Breach of copyright does not depend on the intention or state of mind of the alleged infringer.
Application:
43.According to Lloyd LJ, Peter Smith J found that even though relevant material in HBHG was also found in DVC, that Dan Brown had access to HBHG while including this common material in DVC (and Brown used HBHG at this stage), and that Brown based relevant parts of DVC on material in HBHG. His Lordship summarises the position thus at para [99]:
what [Brown] took from HBHG amounted to generalised propositions, at too high a level of abstraction to qualify for copyright protection, because it was not the product of the application of skill and labour by the authors of HBHG in the creation of their literary work. It lay on the wrong side of the line between ideas and their expression.
44.As a result, Peter Smith J was correct to conclude that:
whatever elements (if any) were copied from HBHG, they did not amount to a substantial part of it.” Concluding at para [100] that it had not been shown that the judge was wrong in the conclusions to which he came and indeed he was entitled to come to those conclusions. I would therefore dismiss the appeal.
45.One of the real difficulties the Claimants faced in this case was that even though the trial judge had found that Brown had in fact copied some material from HBHG in writing DVC that however viewed this did not amount to a substantial part of HBHG and in effect was on the wrong (ideas) side of the dividing line between ideas and expression. That is, because it was expressed at too high a level of abstraction. More fundamentally however the trial judge concluded that the so-called Central Theme was not in fact a part of HBHG at all.
46.In practical terms, the Claimants position was seriously undermined by two critical factors. The first was that when one of the authors, Mr Baigent gave evidence as to what the Central Theme was and where it could be found in the copyright work as a theme, his evidence was “comprehensively destroyed” in cross-examination (see paragraphs 231 and 233 of the High Court judgment). The second was that the Claimants made repeated changes to the way in which the Central Theme was formulated, the Appeal Court noting with displeasure the number of changes in the particulars provided. Indeed, after observing (at paragraph 231) in a very direct way that this evidence was “lamentably inadequate” the trial judge went on to note at paragraph 240:
“I am entitled to see whether or not the Claimants evidence about their Central Theme is credible. At the end of the day if they are unable to say in a coherent way what their Central Theme is that is strongly supportive of the proposition that there is no such Central Theme as alleged.”
47.That makes it clear that in a literary copyright case that where a party seeks to allege infringement and does not rely on copying of the text, structure or architecture of the work that as a minimum they should at least to have a clear idea as to what part has been copied and try to have a reasonably consistent stance in terms of what comprises the work in issue.
The Brash E Mail Saga
48.The Don Brash e-mail saga was not just the last straw that broke the camel’s back in the case of Dr. Brash’s political aspirations. It also throws up some very interesting legal issues around the question of confidentiality, privacy and copyright. The exact sequence of events is a little unclear. It does however appear that a relatively large number of e-mails to and from the Dr. Brash got into the hands of the author Nicky Hager and formed part of his book “The Hollow Men”. Dr. Brash indicated that while he had nothing to hide over the misappropriated emails he nevertheless obtained an ex parte interim injunction to prevent their publication, on the basis that the threat of publication had become more tangible in the weeks prior to seeking such relief.
49.At the time, Commentators such as Fran O’Sullivan stated that there appeared to have been a serious security breach which should be investigated by Parliament’s Speaker Margaret Wilson and that a full-scale inquiry was necessary. She also expressed the view that the electronic theft of the Opposition Leader’s emails from Parliament’s server was a significant matter and that it was necessary that our politicians could operate, secure in the knowledge that their emails would not find themselves in their opponents’ hands.
50.In Brash v John Doe & Jane Doe (HC, Wellington, CIV-2006-485-2605, 16 November 2006, per Mackenzie J) Dr. Brash sought an order for an ex parte application for an interim injunction alleging that an unknown person or persons had gained unauthorized access to his computer and had taken copies of email messages without authority. He also claimed to have reason to believe that this person or persons had distributed copies of these emails and with the intention of having them published in book form.
51.Mackenzie J granted the order relying on earlier cases where interim injunctions had been granted against unknown persons; in Tony Blain Pty Ltd v Splain [1993] 3 NZLR 185 per Anderson J and Bloomsburny Publishing Group Ltd v News Group Newspapers Ltd [2003] EWHC 1205 (ch). Mackenzie J was satisfied on the basis of these authorities that the necessary jurisdiction to make the order existed. Dr. Brash established a serious question to be tried, in relation to four causes of action: conversion, copyright infringement, breach of confidence and the tort of privacy.
52.On the breach of copyright action in finding that a serious question arose the Judge relied on Ashdown v Telegraph Group Ltd [2001] 4 All ER 666 (CA) where it was held that copyright protection will prevail over freedom of expression. In terms of the balance of convenience His Honour found that it lay with the plaintiff in that he would suffer damage if the emails were published and the orders were made without notice, given the prejudice that would be suffered if this was required.
53.However, the situation was soon to change because on 24 November 2006 Mackenzie J was asked by the plaintiff to discharge the orders and a minute was issued accordingly. By then, the book ‘The Hollow Men’ had been published and at that point the plaintiff stated that he did not wish to have the orders to have continuing application to the book.
54.A question that arises is whether Nicky Hager was entitled to publish the e-mails contained within his book, even if they were ‘stolen’, as alleged. Leading to one side possible ramifications under the Crimes Act the question is whether the Court would have granted or continued an interlocutory injunction once the matter had been fully argued or indeed whether a permanent injunction would have been granted. Obviously, the Court would have had little difficulty in recognizing the need to protect confidences whether of a personal nature (for example a communication between a constituent and a member of Parliament) or a more formal communication (for example, one involving a government official or the Leader of the Opposition, something in the nature of a government secret).
55.However, that is only one side of the coin. Given the nature of certain of the communications, some of which were less than flattering of Dr Brash (and had been leaked from time to time when it suited his political opponents) the question of the public interest arises. Accordingly, the question which would need to be addressed at either the interim or substantive stage of any proceeding was whether the public interest and the need of the public to know what was said, by the road any other interests. Certain commentators have suggested that the public interest arguments should have also prevailed in terms of the copyright argument and that an injunction should not be granted where, as in this case, the public interest is necessarily involved. I am not sure that that is necessarily so if, following full argument, Ashdown is followed in New Zealand. Having said that, the proposition in Ashdown is that copyright should, except in rare cases, prevail over freedom of expression. Where however the issue of freedom of expression is closely connected to broader issues of public interest, for example, involving a prominent politician, the balance may well shift.
56.Coming back as we should to copyright, the difficulty might well be that copyright in the various e-mails would belong to the authors of those e-mails and even though they may have resided for the time being on Dr Brash’s computer (or more correctly the Parliamentary server) he would not actually own the copyright. On the other hand, if he had responded to a particular e-mail he would arguably own the copyright in the response. And then there are the issues of privacy and the Bill of Rights Act. That however will need to be for another day.
IP LAW UPDATE 2005 31 October, 2008
Posted by cliveelliott in Articles.Tags: intellectual property, New Zealand., PATENTS, IPONZ, E Commerce Patents, COPYRIGHT, Trade Marks Act, Law
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RECENT DEVELOPMENTS IN IP LAW
This paper was written for the Auckland District Law Society and presented to its members in October 2005
1.INTRODUCTION
The aim of this paper is to give practitioners an overview of some of the more important recent developments in intellectual property (IP) law in New Zealand. The focus is on IP but with some discussion of related internet and privacy issues. In doing so, I hope to be able to provide a broad review of the past 12-18 months, identifying the main developments and more significant trends.
I have not attempted to deal with all developments. Neither time nor space permits that. However, hopefully I will be able to discuss a few of the more relevant and interesting issues, so as to give participants an overall feel for what is happening in this field.
2.PATENTS
Patents are regarded by many as one of the more esoteric and at times difficult areas of IP law. It represents as good a place as any to start.
Methods of Treatment of Humans
The Court of Appeal has handed down two recent decisions in the patents field. In the first, Pfizer v Commissioner of Patents, [2005] 1 NZLR 362, a full court (Anderson P, Glazebrook J, Hammond J, William Young J, O’Regan J) ruled on the allowability of methods of treatment of humans.
Pfizer had lodged two applications directed to methods of medical treatment of psychotic disorders, using a new compound. The Commissioner rejected the claims on the basis that they related to a method of treating humans and therefore failed to meet the test of a patentable invention as per s 2 of the Patents Act 1953. The hearings officer rejected the claims on the basis that they were not allowable on moral/policy grounds. Pfizer appealed the IPONZ decision to the High Court (judgment of Ellis J in Re Pfizer Inc, High Court - Wellington, AP257/2000, 30 August 2002, unreported). The High Court upheld the decision of the Assistant Commissioner. Pfizer then appealed that decision to the Court of Appeal.
In doing so, Pfizer argued that it was desirable that methods of medical treatment should be patentable and that Wellcome Foundation Ltd v Commissioner of Patents [1983] NZLR 385 (”Wellcome“) should be overruled essentially for policy reasons.
In dismissing the appeal, the Court of Appeal found that its earlier decision in Wellcome was clear and that it prevented patents being granted for methods of treating disease or illness in human beings. Accordingly, it concluded that the issue was properly one for the legislature not the courts. The Court also stated that while conformity between the laws of New Zealand and Australia may be a desirable policy objective, that Australia’s acceptance of patentability of methods of medical treatment was not determinative.
Pfizer’s central argument was that, consistent with the judgment of the Court of Appeal in Pharmac, (Pharmaceutical Management Agency Ltd v Commissioner of Patents [2000] 2 NZLR 529) it was now appropriate for the Court to overrule Wellcome so as to permit the patenting of methods of medical treatment. It argued that such a conclusion would logically follow from the finding in Pharmac that methods of medical treatment are in fact capable of being an invention under the Act.
In delivering the principal judgment, O’Regan J accepted that the course proposed by Pfizer was certainly open to the Court, stating at paragraph 80 that:
“All of these heads of argument must, of course be addressed in the context of Pfizer’s broad contention that that patentability of methods of medical treatment was desirable and that we should overrule Wellcome (and Pharmac to the extent that it did not overrule Wellcome) for policy reasons. We accept that it would be open to us to do so, in the same way this Court accepted the patentability of Swiss claims in Pharmac.” In saying this, to some extent we have consistency between New Zealand and Australia”.
However, the Court was not prepared to go down Pfizer’s path, for reasons explained by O’Regan J. at paragraphs 83 and 84; namely that:
“…our overall view (which is confirmed by the nature of the evidence led) is that reform of this area of the law is better undertaken through the Parliamentary process. This would allow proper consultation with medical professionals and other organisations as well as the commercial interests which favour patentability, and the formulation of considered reform proposals after that consultation process has taken place.”
At the end of the day, the views of the Court are probably well summed up at paragraph 7 of the judgment of Anderson P, where his Honour states:
“…this Court once more unanimously holds that in terms of the present law, methods of medical treatment of humans are not patentable. Such methods may be inventions, but in terms of longstanding authority it is generally inconvenient to protect them with letters patent or grants of privilege.”
This result is an unwelcome one (sorry couldn’t resist) for the pharmaceutical industry. In Pharmac, (admittedly a case relating to Swiss-style claims) Gault J acknowledged that the exclusion from patentability of methods of medical treatment rests on moral, or more properly policy, grounds. Following this expression of opinion, IPONZ altered its practice, by refusing claims to methods of treating humans pursuant to Section 17 of the Patents Act - on the basis that the use of the invention would be contrary to morality.
Something in the order of 600 applications were left in limbo pending the outcome of the Pfizer appeal. Now that the position is clear again, objections are once again being made under section 2 of the Patents Act. Obviously, some claims may be capable of amendment by reformulating them as Swiss-type claims but for the rest, the prognosis is not good.
The net result is that we once again have a divergent position between New Zealand and Australia, even though the definitions of invention in the respective patents acts are materially the same. Further, decisions such as Bristol Myers Squibb Company v FH Faulding & Co Limited (2000) 170 ALR 439, (methods of medical treatment patentable and patents should be granted for such methods) might have formed the basis for some level of harmony. What we do see, on both sides of the Tasman is a delicate dance between our courts and legislatures as they try to demarcate the often fine line between making and interpreting the law.
In New Zealand, the courts having left the decision to Parliament, it seems that the likely result is that the new Patents Act will exclude from patentability inventions concerning diagnostic, therapeutic and surgical methods for the treatment of humans.
Accordingly, Parliament seems set to have the final word on this issue and to close the door on any further debate in New Zealand, at least for the foreseeable future.
Infringement and Validity
In the second decision, in Peterson Portable Sawing Systems Ltd v Lucas (Court of Appeal, CA64/03, 4 March 2005, Anderson P, McGrath J, Glazebrook J, unreported) the Court turned its mind to something completely different, portable sawmills. The appellant, Peterson, appealed against a High Court decision which had found that the patent was valid and infringed. One of the principal arguments put to the Court of Appeal was that the High Court judge had failed to distinguish between novelty and obviousness and in so doing finding that inventiveness is a matter of degree rather than classification. It was also asserted that in the High Court Fisher J had not properly addressed the issue of the common general knowledge.
In dismissing the appeal, the Court, per Anderson P, noted at paragraphs 79-83:
“The inventive concept was the addition to the Peterson Standard mill, with its advantages of open end framing, lightness and stability, of a quick and efficient method of, simultaneously, raising and lowering the separate rails…
That combination was fairly readily achievable, obvious in hindsight, and as the commercial success showed, very desirable to millers. But designers were designing away from such integration, not towards it. This would seem to be a classic case of a simple but not obvious solution, like the wheel.
Such observations are, however, less pertinent than the essentially factual enquiry which had to be undertaken by the trial Judge. It was for him to determine whether the Lucas mill was anticipated or obvious to the skilled addressee.
There will be cases where the subject art is complex and diverse, with the skilled addressee possessing extensive arcane knowledge which must be evaluated by a trial judge. Yet other cases will concern an art less specialised and complex. In those cases the scope for novelty and inventiveness may be relatively compressed and the notional skilled but unimaginative addressee may be more readily identifiable.
The present case seems one of the latter type. Indicative of the notional addressee are Mr Lucas, Mr Peterson, Mr Hutchinson and such designers as those of the Lewis mill. Fisher J was plainly entitled to have regard to reality in seeking to identify the notional. The appellants’ approach has been to invest a relatively straight forward, albeit subtle, question with an unwarranted complexity”.
As the person responsible for such complexity I should probably not comment at this point. In July leave was given by the Supreme Court, in what I think is the first IP case to be heard, to appeal parts of the decision (relating to the grounds of anticipation and obviousness). The appeal will be heard in November this year.
E Commerce Patents
Following the Federal Circuit’s decision in State Street Bank & Trust Co v Signature Financial Group Inc (method of doing business, producing a “useful, concrete and tangible result” and practical utility and therefore patentable) the general approach in New Zealand has been that methods of doing business are regarded in the same light as other methods and subjected to the same rules.
As a result, IPONZ has been inundated with new business method patent applications. While the New Zealand courts have yet to decide whether software or business methods are patentable it is likely that they will follow the international approach.
Law Reform
The patent area has been under the law reform microscope for some time now. A discussion document, Boundaries to Patentability was released by the Ministry of Economic Development (MED) in March 2002. Cabinet agreed to the policy proposals arising from the third stage of the review process and on 20 December 2004 a Draft (exposure draft) Patents Bill was released for public consultation. Submissions closed on 11 March 2005. The draft Bill is currently being reviewed. It is unclear when it will be introduced to the House, but with elections this year it is now likely to be in 2006.
The draft Patents Bill is a substantial document that will entirely replace the existing Act. Very briefly, the major proposed changes include:
a.A strengthening of the criteria for granting a patent;
b.Certain of the threshold tests, including that of utility, will be amplified and brought up-to-date with modern technological developments;
c.Novelty and obviousness will be measured against all matter made available to the public anywhere in the world, by any means, as opposed to just in New Zealand as at present; and
d.A Maori Consultative Committee will be set up to advise the Commissioner on matters relevant to Maori.
3.COPYRIGHT
Ownership/Enforcement re Software
The courts are often called in to determine the ownership or vesting of rights in software. It is often a complex task.
In Pacific Software Technology Ltd & Anor v Perry Group Ltd & Anor [2004] 1 NZLR 164, (2003) 57 IPR 145, the Court of Appeal dismissed an appeal against a High Court decision which dealt with the ownership of computer software. The High Court ordered that the appellant deliver up the source code to the respondents. One issue which arose was as to the ownership of pre-existing libraries in which separate copyright vested. The Court found that it was necessary to imply licences vis-à-vis the source code and object code.
In New Zealand Payroll Software Systems Ltd v Advanced Management Systems Ltd & Anor [2003] 3 NZLR 1, the Court of Appeal considered s113, and s113 (1)(a) of the Copyright Act. The case related to the purported transfer of copyright in computer programs known as “LEADER”. In dismissing the appeal, the Court endorsed the High Court’s findings that, after the ongoing enhancement and modification of the software, the Crown, while once owning 100% of the software, at the time of the judgment owned 25%. The Court also found that the program had to be seen as a composite whole and not as separate units representing each different step in the process. As a result, it held that copyright was held in trust in appropriate proportions.
This case illustrates that the courts will intervene to determine the proportions of ownership or the vesting of other rights when software is developed and to import notions of the law of trusts, to balance the competing interests of parties who have worked together in a joint development programme.
In The Callista Group Ltd v Zhang, High Court – Auckland, CIV-2003-404-5127, 11 July 2005, Laurenson J considered a claim for breach of copyright. Callista sued Zhang (a computer programmer and dismissed former employee) alleging he had infringed its copyright. Callista asserted that Zhang had unlawfully written computer programmes for the second and third defendants. Zhang accepted that Callista owned the relevant copyright for its programmes but claimed parts of the source codes had been obtained from other sources and that the security keycode programmes were simply generic tools He also said that the programmes were not copied and lacked the necessary similarity to amount to an infringement.
The Court was firm in finding that copyright subsists in the programmes, in that they had been created over a significant period of time using skill, labour, and judgement. In terms of causal link, the Court concluded that the security programmes had been entirely incorporated in to the works created by Zhang. An injunction and damages of $150,000 were awarded.
On the issues of damages, Laurenson J expressed concern about the state of the evidence. His Honour considered the traditional approach as adopted in Feltex Furnishings of New Zealand Ltd v Brintons Ltd (1992) 4 NZBLC 102,913 but at the end of the day followed a broad “equitable/global” approach. In doing so, the Court lumped together the questions of compensation, flagrancy and ability to pay and ordered a single amount to be paid by way of damages. It is unclear as to whether this approach is correct in principle but in practical terms it might be seen as a solution to something of a dilemma.
In a case in which the trial judge expressed difficulty with both the facts and the law, this is a timely reminder that parties who represent themselves often do themselves a disservice, as Mr Zhang unfortunately discovered.
Copyright/Fair Trading Act
The interface between copyright and fair trading principles was recently canvassed in World TV Ltd v Best TV Ltd (2005) 11 TCLR 240 and 247.
WTVL (World) claimed that BTVL (Best) had infringed its copyright, or copyright that it had an interest in, by broadcasting Mandarin and Cantonese language programmes on a subscription basis. Baragwanath J dealt with the matter in two separate judgments. In the first, World obtained an interim injunction against Best. It alleged that Best was downloading by satellite programmes for which World had an exclusive New Zealand licence. It asserted that it was authorised to bring legal proceedings in New Zealand against other parties who, without authority, broadcast programmes produced by the Chinese state broadcaster CCTV.
In terms of the claim for interim relief, Baragwanath J stated that the Court’s responsibility in relation to intellectual property was to deal promptly and effectively with breaches. The Court was of the view that to not grant relief would be likely to cause damage to further subscribers. His Honour was uncertain as to whether he should grant relief in relation to various CCTV programmes, as pursuant to s 124 of the Copyright Act, Best was not the copyright owner or exclusive licensee. The Judge asked for further submissions on the latter point.
In its second judgment, the Court found that there was no evidence to support Best’s claim in copyright and that in the result it was not an infringement to simply rebroadcast material. Given that the copyright owner had elected not to sue the question was whether Best could itself bring a claim under the Fair Trading Act. On this point, the Court found that the scheme of the Copyright Act includes freedom to publish copyright material, subject of course to the right of the copyright owner to sue for breach of copyright. However, given that the copyright owner had elected not to do so his Honour concluded that it would be wrong to treat conduct that goes no further than mere copyright infringement as being actionable under the Fair Trading Act by a third party who was not the owner or an exclusive licensee.
This conclusion was dependant on the view that the mere broadcast of the particular programme was not misleading or deceptive. In doing so, the Court made interesting observations about the way to balance competing rights/interests provided by general and specific legislation and cited passages from Burrows, “Statute Law in New Zealand”, 3rd ed, LexisNexis, Wellington, 2003, pg 308, pg 314, pgs 368-383, and Ricketson, “The Law of Intellectual Property: Copyright, Designs and Confidential Information”, 2nd ed, Law Book Company, Sydney, 2002, para 1.125
Copyright in House Plans
In Golden Homes (1998) Ltd v Blue Chip Construction Ltd, High Court – Auckland, CIV-2003-404-7090, 21 June 2005, Allan J considered the question of copyright in building plans. The second plaintiff, Golden Homes Holdings Ltd (Golden) sought an extension of an earlier granted interim injunction against the defendants. The Court also considered an application for further and better discovery and for an order joining a new party. However, the judgment is more noteworthy in so far as it deals with the question of whether the interim injunction should be extended.
In declining an extension, his Honour considered the well established approach adopted in Ancher, Mortlock, Murray & Woolley Pty Ltd v Hooker Homes Pty Ltd [1971] 2 NSWLR 278 and Beazley Homes Ltd v Arrowsmith [1978] 1 NZLR 394. He found that there was a sufficient degree of objective similarity between Golden’s plans and those of certain of the defendants so as to raise a serious question for trial. However, he found that the balance of convenience favoured the defendants because, in part, the claim was not strong. Obviously, while only an interlocutory decision, it is a further reminder that in relation to building plans the courts tend to interpret copyright restrictively. As to whether infringement is ultimately made out, this will require determination at a substantive trial.
Dealing in Infringing DVD’s
On 15 November 2004 Zheng Wang was convicted in the Manukau District Court, Auckland under the Crimes Act 1961, for using a document known to be forged, to obtain a pecuniary advantage, and then escaping from custody. Wang was arrested by the police for selling pirated DVDs – being caught with a large number of DVDs and a sum of money in his possession. At the time of his arrest he tried to escape from custody.
The police charged Wang under the Crimes Act (S 257 making or using a forged document) rather than under the Copyright Act (S 131 criminal offence of dealing in objects that are infringing copies of copyright works). In his sentencing, Judge Harvey took into account the need to deter other potential pirates and to protect the community from the impact that pirating can have in terms of reduced creativity and the increased prices of accessing copyright materials.
Judge Harvey sentenced him to 15 months in prison on each charge, with the terms to run concurrently. It is understood that this was the first time in New Zealand’s that someone had been given a prison sentence in relation to pirated DVDs. Wang then appealed against both his conviction and sentence. See Wang v Police (High Court, Auckland, CRI-2004-404-000476, 12 May 2005 and 23 March 2005, Baragwanath J unreported).
While endorsing Judge Harvey’s concerns, Baragwanath J rejected the Crown’s argument that s 257(a) of the Crimes Act does not require proof of an attempt to deceive. His Honour noted that the requirement in sub clause (e) that the document be made “with the intention that it should pass as being made by some other person who did not make it…” point to Parliament’s purpose. They require the Crown to prove intent to deceive.
Accordingly, he found that because the DVDs were obvious forgeries and bore no resemblance to genuine licensed products that would be bought and sold legitimately that the necessary element could not be established. As a result his Honour found that the forgery conviction could not stand. The appeal against conviction was thus allowed and a sentence of 15 months for escaping from custody was set aside. A 26 day prison term was substituted.
With respect, it seems most unfortunate that someone found with 56 pirated DVD’s and a sum of money from the sale of others pirated DVD’s and who then attempts to escape from custody, ends up with a sentence of just 26 days. Music and movie piracy is a major problem and one would have thought that the police would have done a better job in getting a conviction that would stick and would have a bit more deterrence value.
To compound the problem, Mr Wang has since been charged with further offences – see article on DVD pirating in the 17 October 2005 issue of LawTalk.
Law Reform
In the digital copyright area, the main law reform proposals are contained in the position paper - “Digital Technology and the Copyright Act 1994 – Position Paper” Ministry Of Economic Development (December 2002). Issues discussed include:
a.Whether a broad distribution/communication right should be introduced;
b.Whether the existing definition of copying is broad enough to allow copyright owners to prohibit unauthorised copying of material in digital form and the conversion of print or analogue works to digital form;
c.Whether the definition of copying should be amended to address explicitly incidental and temporary copies;
d.Whether the fair dealing exceptions are adequate for digital technology and whether further exceptions are necessary; and
e.Whether time and format shifting should be allowed.
As at October, the Bill is still awaited. However, the timing of its introduction remains uncertain, given the election.
4.TRADE MARKS
New Act
The Trade Marks Act 2002 came into force on 20 August 2003. This represents the first major overhaul of trade mark law for some 50 years. However, the new Act retains a number of existing features.
A trade mark is defined as any sign capable of being represented graphically and distinguishing the goods or services of one from another. A sign includes a brand, colour, device, heading, label, letter, name, numeral, shape, signature, smell, sound, taste, ticket, or word; many of these falling into the category of “non-traditional” marks, something I touch on below.
A series of new “absolute” and “relative” grounds for objection to registrability now exist. Certain marks cannot be registered:
a.a sign that is not a trade mark;
b.a trade mark that has no distinctive character;
c.a trade mark that consists only of signs or indications that may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin, time of production of goods or of rendering of services, or other characteristics of goods or services; and
d.a trade mark that consists only of signs or indications that have become customary in the current language or in the bona fide and established practices of trade.
A number of other significant changes have been made. The first is that the distinction between Parts A and B of the register has been abolished. Multi-class applications can now be lodged. Well-known marks receive greater protection and dilution of such marks may now be prevented where the use takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the mark. The use of trade marks in comparative advertising is now expressly permitted, as long as it is in accordance with so called “honest practices”.
Indigenous rights are expressly catered for. A Maori advisory committee advises the Commissioner of Trade Marks on whether a trade mark is considered to be offensive. Other marks, that are likely to offend “significant sections” of the community, may now also be rejected (see further comment below).
By all accounts, the new regime is working well, which in part is a reflection of the quality of people involved. This is encouraging, because similar advisory committees are proposed in the patents and plant varieties (PVR) areas, on the latter see comments below.
Case Law
A number of trade mark cases are worthy of mention. The Court of Appeal dealt with the difficult issue of whether and if so to what extent a company can use a competitor’s marks in Benchmark Building Supplies Ltd v Mitre 10 (New Zealand) Ltd [2004] 1 NZLR 26. Benchmark appealed successfully from a High Court judgment granting an interlocutory injunction restraining an unusual form of comparative advertising. Mitre10 produced promotional brochures advertising their products and prices. Benchmark used these brochures, after putting their own stickers on them, setting out prices of equivalent products in its own Benchmarks stores. The High Court considered that this amounted to both copyright and trade mark infringement. The Court of Appeal differed, finding that Benchmark had not reproduced any copyright works as such; pointing out that nothing had actually been copied. Accordingly, it found that even though Benchmark had taken advantage of the brochures, economic benefit is not a relevant consideration in deciding copyright infringement and absent reproduction there was no infringement.
The Court then considered the question of moral rights. It confirmed that a breach of an author’s moral rights is a wrong actionable only by the author, not the copyright owner and as Mitre 10 was not the author of the brochures, that it could not do so. Finally, in terms of trade mark infringement, it found that Benchmark’s use of Mitre10’s trade marks constituted comparative advertising within s 94 of the Trade Marks Act 2002 and was therefore permissible.
Spill over Reputation
The conflict between local and overseas rights and interests continues to exercise the IP community’s mind. The need to recognise local proprietors’ interests, while at the same time acknowledging the internationalisation of IP, is likely to continue to create tensions. This it has, as illustrated by the recent Le Mans decision.
The Automobile Club de l’Ouest (ACO) is the organisation behind the famous Le Mans car races. It sought to register Le Mans in New Zealand for, inter alia, vehicles, engines and car tyres and parts, fittings and accessories therefore. However, the local Dunlop company, South Pacific Tyres New Zealand Ltd, opposed registration on the basis that it had been using the trade mark on tyres in New Zealand since the 1980s. It argued that ACO had not used the mark for the relevant goods set out in its specification and further that the trade mark was not distinctive, given the geographical significance of the French town Le Mans.
ACO responded by saying that the town of Le Mans was only well-known and indeed world-famous because of its efforts to hold and promote the race and without these efforts few people would have heard of the town at all. The applicant provided survey evidence which showed (not unsurprisingly) that the public at large associated Le Mans with the car race rather than the particular geographical location of the town (no doubt true!) Thus, the applicant argued that the primary significance was the race rather than the place
The hearings officer was clearly faced with a difficult call. The survey evidence was highly probative and one could understand ACO’s view that it was the true and rightful owner of the trade mark not just in France, but internationally. This viewpoint was supported by the results of the market survey which showed that the majority of the public thought of a car race when shown the words LE MANS in relation to tyres and the fact that only a small percentage of respondents made a connection with South Pacific/Dunlop.
The hearings officer concluded that the name Le Mans has more than one signification and that notwithstanding the evidence that the Le Mans trade mark was distinctive, that one of its meanings was geographical. Significantly, it was found that South Pacific had proved that it in turn had a reputation in the mark for tyres in New Zealand, it being able to show this notwithstanding the survey evidence which might suggest otherwise. The hearings officer also placed emphasis on the fact that South Pacific was the first party to use the trade mark in New Zealand for tyres. Accordingly it was found that South Pacific had sufficient reputation in the trade mark in relation to tyres, notwithstanding the contrary evidence.
Finally, ACO’s argument that South Pacific’s use of the mark Le Mans for tyres was a misappropriation was rejected on the basis that there was no evidence of fraudulent use.
In the result, while both parties had argued that the goods were too similar, the hearings officer came to a conclusion that the merits were sufficiently evenly balanced and that neither party should succeed entirely at the expense of the other. Even if this is not what the parties wanted, it is suggested, with respect, that the decision is practical and logically sound. This however will not necessarily be the final word on the issue. The parties have appealed/cross appealed. Accordingly, the outcome may only be known once the High Court has heard the appeal.
In Valley Girl Co Ltd v Hanama Collection PTY Ltd, (High Court – Wellington, CIV2004-485-2005, 6 April 2005, Miller J, unreported) the issue of spill-over arose again.
The appellant, (the New Zealand company, Valley Girl), failed in its appeal against an IPONZ decision that the use of the trade mark VALLEYGIRL was likely to mislead or deceive. The respondent, Hanama, had used the same mark throughout Australia since 1996. The sole director of Valley Girl had supplied garments and materials to Hanama in the past. The applicant indicated that the VALLEY GIRL name was intended to evoke fresh, youthful, and feminine qualities. Unfortunately, that connotation escapes me. The Office refused the trade mark application on grounds that Hanama had established a reputation in the mark in New Zealand before the relevant (application) date and was therefore the true proprietor of the mark in New Zealand.
Of possible relevance to those preparing evidence in these types of situations, I think it can be said that our tribunals and courts are reasonably well inclined to rely on Australian spill-over. Miller J put it this way, at paragraph 27:
“The number of travellers between New Zealand and Australia is also very substantial. It is true that the evidence does not establish what proportion of them would be aware of the respondents’ goods in Australia, but it is a reasonable inference that the proportion of travellers who fall into the target market corresponds to the proportion of that group in the population as a whole.”
The Court had to assess the situation under the Trade Marks Act 1953. It held that while the opponent/respondent had to point to knowledge of the mark in New Zealand, actual trade or dealing in the goods bearing the mark in New Zealand was not required. Both the Assistant Commissioner and the High Court Judge were influenced by the fact that the marks were identical.
The Court also looked at the issue of bad faith, an issue which had awaited detailed judicial comment and found that there was no evidence of fraud and that something more than the mere appropriation of a foreign mark must be shown in order to establish bad faith.
As to good/bad faith, his Honour stated, at paragraphs 52 and 53:
“As was held in Malibu Boats West Inc v Catanese (1999) 51 IPR 134 at [28], the Courts view borrowings from abroad with suspicion, and in circumstances where the appellant appropriated the same mark for goods in the same class, it is perhaps easier to draw the inference that the mark is valuable to the appellant precisely because it has some measure of recognition in this country.
I will approach the matter on the basis that the appellant was not entitled to claim proprietorship of the mark in New Zealand if its claim is affected by fraud or breach of duty, or the application was made in bad faith. The New Zealand Act does not refer to bad faith, but I accept that bad faith is not confined to dishonesty. It may be demonstrated by evidence of conduct falling short of reasonable standards of commercial behaviour”.
His Honour then concluded at paragraphs 56 and 57:
“I accept that the appellant has chosen to appropriate the respondents’ mark. In so doing the appellant took an opportunity that arose out of Mr Cho’s business dealings with the respondents in Australia. It is a reasonable inference that the appellant hopes to exploit such recognition as the mark has in New Zealand arising out of its use in Australia. The question is whether that amounts to bad faith.
I am not satisfied that it does. Accordingly, something more than appropriation of a foreign mark must be shown in order to establish bad faith. Since that is all the respondents can point to, their objection to the appellants’ claim to proprietorship fails so far as it is based on bad faith, fraud, or breach of duty”.
Rules of Comparison
In Austin, Nichols & Co Inc v Stichting Lodestar, (High Court – Wellington, CIV-2004-485-1281, 5 May 2005, Gendall J, unreported) the Court considered an appeal from ANCI, the proprietor of the well known trade mark “WILD TURKEY” for alcoholic beverages. It opposed registration of the trade mark “WILD GEESE” also for alcoholic beverages, on the basis that it was likely to deceive or cause confusion.
His Honour Justice Gendall agreed with the appellant. He held that the relevant consideration was of notional not actual use; and that the test is whether, as part of the overall assessment, this being the key consideration, the marks convey the same “idea”. The Judge found that confusing similarity may exist (in this case because of the “wild game bird” connection) despite differences and ultimately concluded that the overlap or similarity between the proposed goods to which marks would be used was likely to confuse or deceive the public. Accordingly, the appeal was allowed.
In Tammy v Tommy Hilfiger Licensing, Inc., (IPONZ, T4/2005, 14 December 2004) the same comparative exercise was undertaken in relation to marks used in the clothing industry. This time the Assistant Commissioner compared TOMMY with TAMMY. She did so because she considered that TOMMY is the essential feature of the Tommy Hilfiger marks and the Tommy Hilfiger marks are apparently commonly referred to by persons in the trade and by customers as “Tommy”.
Having done so, she concluded that:
“In comparing the TOMMY and TAMMY marks, I must ultimately focus on the whole of each word, not do a side by side comparison, and I must allow for imperfect recollection….
Having considered the parties’ submissions and evidence, my overall impression of TOMMY and TAMMY is that the marks look similar, but they sound different. In my view, the most important difference between the marks is the conceptual difference – that TOMMY is the name of a male and TAMMY is the name of a female. It is difficult to envisage how a substantial number of persons in the relevant market are likely to be deceived or confused by these two marks, which have such a significant difference as this.”
Non-Traditional Marks
Non traditional marks i.e. colour, shapes, smells and the like, have proved to be a fertile area for disagreement. This is perhaps not surprising, given that they tend to occupy ground outside the traditional sphere of trade mark rights.
In terms of one category of “non-traditional” marks, namely shape marks, the decision in Fredco Trading Ltd v Miller, (High Court – Auckland, CIV2004-404-000895, 16 December 2004, Venning J, unreported) is likely to be important going forward.
Fredco applied for a declaration of invalidity in relation to a trade mark registration for plastic vine ties - known commercially as the Klipon. Trade Mark registration number 661428, is represented as follows:
and covers “plastic vine ties” in class 22. By way of explanation, the registration states that: “The mark consists of the three dimensional shape of a vine tie, as shown in the representation attached to the application”. The registration thus relates to a relatively simple and in part functional shape, making the decision an important one in this relatively new and largely uncharted area.
Miller, the proprietor of the trade mark, established that it had designed and sold the vine tie for over 20 years for use in the kiwifruit industry and had amassed very substantial sales. The parties were commercial competitors selling functionally similar vine ties. When Fredco launched a competitive product Miller sued for passing off, breach of the Fair Trading Act 1986 and infringement of its shape trade mark. The infringement proceedings were stayed pending resolution of the attack against the validity of the trade mark registration.
It is clear that his Honour Justice Venning was influenced by the evidence. He stated:
“The Klipon vine tie and the ITW vine tie carry out the same task. They satisfy the same basic requirements. However, aspects of the shape of the Klipon vine tie are different to that of the ITW vine tie. The swan-neck hook in particular and to a lesser degree the rectangular shape of the head are features that distinguish the Klipon vine tie from the ITW vine tie. More significantly, there is evidence that consumers can and do distinguish between a Klipon vine tie and its competitor based on shape”.
He went on to say that:
“While the shape of the Klipon vine tie is influenced by functional considerations because a vine tie must have certain features, the shape of the Klipon vine tie is not wholly determined by these considerations. There is a combination of aesthetic with functional by the use of, for example, the swan-neck.”
Accordingly, the Judge found that the shape mark was valid, relying on the important factual findings that:
a.“The ITW vine tie is distinguished by consumers as different to the Klipon vine tie.
b.The shape of the respondent’s vine tie is promoted along with the brand name Klipon.
c.There is evidence before the Court that customers use the shape to identify the product and its source as a Klipon vine tie both before and after sale.
d.It is possible to use alternative shapes to achieve the same purpose without copying identically the Klipon shape.
e.There is an aesthetic component to the shape of the Klipon vine tie, the swan-neck”.
In holding that the trade mark registration was valid the Court found that the “swan neck” shape of the Klipon vine tie made it “capable of distinguishing” from other vine ties. In doing so the his Honour noted that the terms “capable of distinguishing” and “distinctive character” have different meanings and that the swan-neck rectangular end and other variations of the Klipon vine tie were merely examples of how the same technical result could be achieved. Accordingly, the Court concluded that the evidence was sufficient to establish the necessary distinctive character and sustain the registration.
The decision has been appealed. The Court of Appeal will no doubt add to the debate over where the proper line of demarcation ought to lie in relation to “distinctive character”
In Société des Produits Nestlé SA v Cadbury Limited and Effem Foods Limited (IPONZ, T14/2005, 22 March 2005) Nestle sought to register their LIFE SAVER sweet as a shape mark. The grounds of opposition were that the shape mark was not registrable –