IP @ Ashust · 2015. 6. 24. · IP @ Ashurst • June 2015 Page 3 Background Nextra Australia Pty Ltd (Nextra) is the franchisor of a national newsagency franchise system known, as

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IP @ Ashust

June 2015

From the EditorsWelcome to the June 2015 edition of IP @ Ashurst.

In this edition, we report on two recent decisions by the Full Court of the Federal Court of Australia. Firstly, the decision in Fletcher v Nextra concerning misleading claims made by a blogger on a newsagency franchise blog. The blogger’s comments were found to be “in trade and commerce” due to his business interests and were accordingly in breach of the Australian Consumer Law. We also report on the Full Court’s decision in Damorgold, which concerned the validity of Damorgold’s patent claiming a spring assisted blind mechanism for facilitating the use of roller blinds.

We also report on two patent cases concerning remedies. Firstly, Streetworx, in which the Federal Court declined to award a “springboard injunction” to restrain otherwise lawful conduct in order to deprive a respondent of unwarranted advantages resulting from past conduct which infringed a patent. We also cover the decision in Pacific Enterprises concerning lost profits, mitigation losses and additional damages for patent infringement.

In trade marks, we report on the Jonglea decision in which the opponent successfully opposed an application on the basis of earlier use of a similar trade mark and the Henkel case in which the Registrar of Trade Marks revoked acceptance of four shape trade mark applications.

In copyright, we report on the decision concerning liability for costs in the Frances v Allen & Unwin case in circumstances where the applicant discontinued the proceedings.

In marketing and advertising, we cover the ACCC v Safety Compliance decision concerning misleading and deceptive conduct by telemarketers and the ACCC’s action against online retailer Spreets. We also report on the Verrocchi case, in which the applicant made claims of misleading and deceptive conduct and trade mark infringement in relation to a competitor’s use of similar get-up and trade indicia. Not only were the claims unsuccessful, but the case also resulted in the cancellation of the applicant’s trade mark registration.

We hope you enjoy this edition!

Elizabeth Ireland Senior Associate, Sydney [email protected]

Lisa Ritson Partner, Sydney [email protected]

IP @ Ashurst • June 2015Page 2

ContentsFrom the Editors 1

Nextra! Nextra! Read all about it! Newsagency franchise blogger found liable for misleading and deceptive conduct 3

Damorgold’s patent held novel due to “unusual” circumstances in which prior use occurred 6

Copyright infringement proceedings discontinued but applicant not liable for all of respondents’ costs 8

A tough pill to swallow: Federal Court dismisses claims of trade mark infringement and misleading and deceptive conduct made by discount chemist 10

First in, best dressed: Prior and continuous use trumps trade mark application 12

Shining a light on remedies for patent infringement 14

Liar, Liar: Telemarketing practices of Safety Compliance Pty Ltd found to have misled small business owners 16

Flushing out poor trade mark examination practices: revocation of acceptance by the Registrar 18

IP Bite: Lesson of the Day: Misleading consumers can result in a $600,000 penalty 21

It all adds up: Lost profits, convoyed goods, mitigation losses and now additional damages for patent infringement 22

Page 3IP @ Ashurst • June 2015

BackgroundNextra Australia Pty Ltd (Nextra) is the franchisor of a national newsagency franchise system known, as the Nextra Group. The Nextra Group has 295 franchised newsagency outlets throughout Australia. One of Nextra’s competitors in the national newsagency franchise market is newsXpress Pty Ltd (newsXpress).

In early 2011, Nextra conducted a marketing campaign in which it circulated a flyer to newsagents in order to encourage those newsagents to leave their existing franchisor and join the Nextra Group (Flyer). The Flyer included a number of testimonials from newsagents who had done just that. The Flyer was circulated to both members of the newsXpress franchise as well as various other non-Nextra Group franchisees.

On 27 April 2011, Mr Mark Fletcher, who is a director and 50% shareholder of newsXpress, published an article on his online blog in response to the Flyer entitled: Nasty campaign from nextra misleads newsagents (Article). In the Article, Mr Fletcher, who is a known commentator on issues concerning the newsagency franchise market, was critical of Nextra and the content of the Flyer. The blog on which the Article was published, known as “The Australian Newsagency Blog”, was solely operated by Mr Fletcher and was used by him to opine on issues of interest to those in the newsagency franchise industry, including issues that were central to his own business interests.

In response to the criticisms contained in the Article, Nextra asserted that Mr Fletcher had, in writing and publishing the Article on his blog, engaged in misleading and deceptive conduct in trade and commerce in contravention of section 18 of the ACL. On 23 June 2011, Nextra commenced a proceeding in the Federal Court of Australia seeking an order that the Article be removed from the blog. Nextra asserted that an injunction should be granted in respect of the Article given that it contained a number of representations, including representations of fact, that were incorrect.

Mr Fletcher stood by his Article and defended the representations alleged by Nextra. Mr Fletcher submitted that even if Nextra was successful in establishing that the representations alleged were misleading and deceptive, the representations were not made in trade and commerce such that Mr Fletcher would be liable under the ACL. In particular, Mr Fletcher argued that his authorship of the blog was for the purpose of stimulating discussion amongst members of the industry and the public and was, therefore, not conduct to which the ACL applied.

Nextra! Nextra! Read all about it!

Newsagency franchise blogger found liable for misleading and deceptive conductFletcher v Nextra Australia Pty Ltd [2015] FCAFC 52

What you need to know• On 10 April 2015, the Full Federal Court (comprising Justices Middleton, McKerracher and Davies) dismissed an appeal

brought by Mr Mark Fletcher, a newsagency franchise blogger, in respect of an online article that Mr Fletcher had posted on his blog about the newsagency franchise services offered by Nextra Australia Pty Ltd.

• The Court held that Mr Fletcher, who is a director and shareholder of a rival newsagency franchise company, published the article for the purpose of defending his own business interests. The Court held that by publishing certain representations in the article that were incorrect, Mr Fletcher had engaged in misleading and deceptive conduct in trade and commerce in contravention of section 18 of the Australian Consumer Law (ACL).

• This case affirms that engaging in conduct on online blogs and social media can be caught by the misleading and deceptive conduct provisions of the ACL.

What you need to do• Businesses should be vigilant to ensure that their social media and online content does not contain misleading and

deceptive representations and that they have effective measures in place to review and moderate this content.



First Instance HearingOn 24 April 2014, Justice Collier of the Federal Court of Australia held that the representations contained in the Article were misleading and deceptive and found that Mr Fletcher had, in making those representations, engaged in misleading and deceptive conduct in trade and commerce in contravention of the ACL.

Her Honour noted that the question of whether Mr Fletcher’s conduct in respect of the Article was “in trade and commerce” was complicated by the fact that Mr Fletcher had multiple business interests. At the time of publication of the Article, Mr Fletcher was a shareholder and director of newsXpress, an owner of a business which sold point of sale software for newsagents, and the owner and operator of his own newsagency. Her Honour evaluated a number of posts on Mr Fletcher’s blog (posted between 2006 and 2010) and noted that his motives in posting the articles were mixed. Although Mr Fletcher “had a genuine interest in promoting discussion in the newsagency industry” on topics of interest, he also regularly posted on his blog in order to promote and protect his business interests. The Court held that the Article was an example of Mr Fletcher using his blog to promote newsXpress and “defend” newsXpress from the potential poaching of franchisees by Nextra. As such, Mr Fletcher’s publication of the Article was held to be conduct “in trade and commerce” within the meaning of section 18 of the ACL.

On 16 May 2014, Justice Collier ordered that Mr Fletcher permanently remove the Article (and any responses to it) from his blog. The Court further ordered that Mr Fletcher be restrained from otherwise republishing the Article on any other blog or in any other medium. In a separate judgment on 26 June 2014, Mr Fletcher was also ordered to pay Nextra’s costs on a party-party basis.

Mr Fletcher appealed the decision to the Full Federal Court.

On AppealOn 10 April 2015, the Full Federal Court (comprising Justices Middleton, McKerracher and Davies), dismissed Mr Fletcher’s appeal and upheld the injunctive orders made by Justice Collier. Although Mr Fletcher pleaded several grounds of appeal, the principal issue for consideration was whether her Honour had erred in finding that the Article was published “in trade and commerce” in contravention of the ACL.

Mr Fletcher argued that Justice Collier had erred in finding that the various representations were made in “trade and commerce” on the basis that he had a legitimate interest, as an authoritative industry commentator, in challenging the content of the Flyer, which was entirely separate from his various business interests. Mr Fletcher submitted that the purpose of the blog was to promote discussion and debate and to disseminate information on topical newsagency issues. He also argued that there was no evidence to support her Honour’s finding that the purpose of the publication of the Article was to prevent Nextra poaching newsXpress franchisees.

The Court held that Justice Collier did not err in finding that the Article was published “in trade and commerce” and was correct in characterising the Article as being one written for the purpose of defending Mr Fletcher’s business interests in newsXpress. The Court held that the purpose of the publication of the Article was readily capable of inference from the surrounding facts, including the particular content of the Article (not the least of which was a disclosure in the footer of the Article that Mr Fletcher was a director of news Xpress). The Court held that this disclosure made clear that the commentary in the Article was not from an independent person, but rather from a competitor who was concerned about his own and other potential franchisees being misled by Nextra. The content of the Article was not too far removed from that of conventional comparative advertising such that it could be construed to fall within the scope of section 18 of the ACL.

The Full Court held that Justice Collier was also correct in rejecting Mr Fletcher’s contention that he had posted the Article for purely altruistic reasons. The Court held that the primary Judge’s analysis of the entire content of the blog (which was put in issue by Mr Fletcher) was relevant to rejecting this contention. This was because the blog contained various other instances of self-promotion of Mr Fletcher’s business interests from 2006 to 2010. The Court ordered Mr Fletcher to pay the costs of the appeal.

Paul Dimitriadis Lawyer, Sydney [email protected]


mailto:Dimitriadis,%20Lawyer,%[email protected]




Damorgold’s patent held novel due to “unusual” circumstances in which prior use occuredDamorgold Pty Ltd v JAI Products Pty Ltd (2015) 318 ALR 483

What you need to know• The Full Court overturned the judgment of the

Federal Court at first instance that a patent owned by Damorgold Pty Ltd claiming a spring assisted blind mechanism for facilitating the use of roller blinds was anticipated by prior use.

• The Court held, by majority, that merely demonstrating a product before the priority date of a patent, in circumstances where there are no sales of the product or retention of samples by potential customers and the integers of the claim are not revealed because they are encased within a housing, does not rob the patent of novelty.

• This case differs from the more typical situation where a product is sold or provided to members of the public without restriction as to what they might do with it. In these circumstances, it is likely that a later patent claiming the same invention will be deprived of novelty.

What you need to do• The case illustrates that public demonstration of a

product will not necessarily deprive a later patent of novelty – the critical question turns on the information “made available” by such a demonstration.

• It would not, however, be safe to rely on this case as an endorsement of demonstrations before filing patent applications, particularly outside the grace period allowed under Australian law. As the differing judicial views on the facts of this case show, the question of what information is “made available” by such a demonstration is open to interpretation, even for a product whose inner workings remain enclosed.


BackgroundThe proceedings concerned the validity of Australian Patent No. 760547 (Patent), owned by Damorgold. The Patent claims a spring assisted blind mechanism for facilitating the use of roller blinds. The mechanism controls the extension and retraction of a blind.

The key issue on appeal was whether the use of a RolaShades product before the priority date of the Patent deprived the claimed invention of novelty by reason of making prior art information publicly available through doing a single act (section 7(a) of the Patents Act 1990 (Cth) (Act)).

At first instance, Justice Middleton held that JAI Products Pty Ltd (JAI) showed the RolaShades product to some potential customers before the priority date of the Patent, but did not sell or provide the product by way of sample. It was not in dispute that the RolaShades product did possess all of the integers of the relevant claims of the Patent. However, mere display of the product did not communicate the essential integers to the public because the internal workings of the product could not be ascertained without disassembling the product. His Honour held that the Patent was anticipated because each potential customer had the opportunity to examine the internal componentry of the RolaShades product.

In the Full Court, Justices Bennett and Yates in separate judgments allowed Damorgold’s appeal. Justice Jessup dissented. JAI did not appear in the Full Court proceedings.

First ground of appealDamorgold argued that the evidence accepted by the primary Judge did not establish that the RolaShades product was available in Australia before the priority date. The Full Court unanimously dismissed this ground of appeal.

The Full Court held that Justice Middleton was not in error in weighing the evidence and concluding that the product was available, despite the fact that there was no documentary evidence to support the availability of the RolaShades product before the priority date.

Second ground of appealJustices Bennett and Yates held that the act of merely showing the product to another person did not constitute an enabling disclosure sufficient to rob the Patent of novelty.

According to Justices Bennett and Yates, the Act directs attention to whether prior art information is made publicly available through the doing of a single act. This requires identification of an act that did in fact make the information, being the integers of the invention, publicly available. Their Honours held that an enabling disclosure is required in order to constitute anticipation, ie information made publicly available by the doing of an act must be such as to enable a person skilled in the relevant art to put the claimed invention into practice.

On the evidence in this case, no person was permitted to examine the RolaShades product to ascertain the integers of the invention or how it worked. According to the majority, mere observation of the way the product worked did not provide the relevant disclosure. Justice Yates noted that the facts of the case were “special – indeed, unusual” and that his decision did not cover situations where a sale of the product had been made or a sample of the product had been given to and retained by a customer.

On the other hand, Justice Jessup would have dismissed the appeal, reasoning that the only question was whether the information in question was “made available to at least one member of the public, who, in that capacity, was free, in law and equity, to make use of it”. As the primary Judge found that potential customers of JAI were free to disassemble the product if they had so chosen (even though none, in fact, did), Justice Jessup reasoned that the necessary information was “available” in the statutory sense.

David Watson Lawyer, Sydney [email protected]

Ben Miller Partner, Sydney [email protected]


BackgroundFurther to our article in the December 2014 edition of IP @ Ashurst, which concerned the Federal Court’s decision rejecting the respondents’ application for summary judgment in the proceedings, the Court has now made costs orders in circumstances where the applicant applied for leave to discontinue the proceedings shortly after the respondents filed their evidence.

In the proceedings, the applicant had claimed that the publisher and authors of the book Brothers in Arms: The inside story of two bikie gangs (which was about the 1984 Milperra massacre) had infringed her copyright and moral rights in a photograph published in the book, which she said had been reproduced without her permission and without attribution.

The book described the photograph as being of Leanne Walters, who was killed in the crossfire during the massacre, but the applicant claimed that it was a photograph of herself which she had taken in a photo booth.

Copyright infringement proceedings discontinued but applicant not liable for all of respondents’ costsFrancis v Allen & Unwin Pty Limited & Ors (No. 2) [2015] FCA 229

What you need to know • Parties to litigation have an obligation to

conduct the proceedings in ways that are consistent with the “overarching purpose” of the court rules, which is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.

• Courts may depart from the ordinary rules regarding which party is to bear the costs in court proceedings where a party fails to promote the quick, inexpensive and efficient resolution of the dispute.

https://www.ashurst.com/doc.aspx?id_Content=11390


Summary judgment decisionThe respondents sought summary judgment on the basis that the claim had no reasonable prospect of success, because the allegation that the photograph depicted the applicant was fanciful. However, the Court declined to grant the application, with Justice Katzmann emphasising that the court’s power to order summary judgment must be applied with caution. Given that there was a factual issue capable of being disputed in the case as to the real subject of the photograph, her Honour was of the view that the evidence before her was not sufficient for her to summarily dismiss the proceeding, and orders were made for the matter to progress to trial.

Respondents’ evidenceThe respondents filed evidence from Leanne Walters’ father, in which he identified his daughter as the person in the photograph and annexed several other photographs taken from an album belonging to Leanne. Two of the photographs, which were inscribed with his daughter’s name and nickname, were taken in a photo booth and depicted two young women. Another photograph depicted just one of the women, but seemed to have been cut in half. When that photograph is compared with the photograph in dispute, as well as the other photographs showing the two women together, Justice Katzmann observed that the overwhelming inference was that the disputed photograph published in the book was a copy of the other half of the photograph taken from the album.

The day after the evidence was filed, the applicant sought leave to discontinue the proceedings on the basis of the affidavit, but submitted that she should not have to pay the respondents’ costs because the respondents should have produced the evidence earlier and she wouldn’t have pursued the case.

Rules relating to costs ordersUnder rule 26.12 of the Federal Court Rules 2011 (Cth), an applicant who files a notice of discontinuance with the leave of the court is prima facie liable to pay the costs of all other parties, unless the court orders otherwise or the parties consent. The onus is on the applicant to show why the usual order should not be made.

Justice Katzmann noted that the powers conferred by the Rules must be exercised in the way that best promotes their overarching purpose, which is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: section 37M of the Federal Court of Australia Act 1976 (Cth) (FCA Act). The parties have an obligation to conduct proceedings in ways that are consistent with the overarching purpose: section 37N of the FCA Act.

DecisionJustice Katzmann agreed with the applicant that there was no apparent reason why the album photographs had not been made available to the applicant earlier, and her Honour found that the failure of the respondents to provide them at the time their defence was filed (which was shortly after the photographs had been discovered) was at odds with their obligations under section 37N of the FCA Act to facilitate the quick, inexpensive and efficient resolution of the dispute.

Justice Katzmann therefore ordered that the applicant should pay the respondents’ costs up until when the defence was filed (excluding the costs of the summary dismissal application), but thereafter each party should pay their own costs.

Marlia Saunders Senior Associate, Sydney [email protected]

Anita Cade Partner, Sydney [email protected]

mailto:[email protected]


Background In this proceeding, the applicants, Verrocchi and Gance, trading as Chemist Warehouse (Chemist Warehouse) brought claims against Direct Chemist Outlet Pty Ltd (DCO) for engaging in misleading and deceptive conduct and trade mark infringement.

A tough pill to swallow: Federal Court dismisses claims of trade mark infringement and misleading and deceptive conduct made by discount chemistVerrocchi v Direct Chemist Outlet Pty Ltd [2015] FCA 234

What you need to knowIn this decision, Justice Middleton of the Federal Court made the following general observations regarding trade indicia and branding:

• Branding as a concept is of great importance and significance in a business model.

• Where colour is used as a key branding element, it is not to be regarded as a trivial or insignificant component of the brand concept.

• While colours are generally useful in branding for ornamentation or decoration, some colours are known to perform a specific marketing function, for example, yellow provides high visibility, but can also be used to

denote a value proposition such as discounted goods or services, or “cheapness”. Specifically, in this proceeding, Justice Middleton stated that just because the respondents did not have to use yellow, they may wish to use yellow to take advantage of these attributes.

A customer’s perception of the look or get-up of a store depends on the direction from which one approaches or views a store (eg from a passing car, or by approaching on foot). However, Justice Middleton stated that even in circumstances where the get-up of the interior of the stores is sufficiently different, this will not necessarily negate liability in circumstances where a consumer has already been misled by the exterior.


Misleading and deceptive conduct – “get up”Chemist Warehouse alleged that DCO had engaged in misleading and deceptive conduct in breach of section 52 of the then Trade Practices Act 1974 (Cth) (for conduct prior to 2011) and section 18 of the Australian Consumer Law (for conduct after 2011). In this respect, Chemist Warehouse claimed that the “get up” used by DCO for its websites, catalogues and store fronts had caused, or was likely to cause, consumers to believe that DCO pharmacies are either those of Chemist Warehouse, or are associated or affiliated with Chemist Warehouse.

In considering whether consumers are likely to be misled or deceived, Justice Middleton stated that it is “necessary to consider what was said and done against the background of all surrounding circumstances”. In the discount chemist context, consumers are likely to be interested in obtaining a cheaper price, rather than the particular brand of discount chemist from which they purchase their products.

Justice Middleton found that the websites and catalogues were not distinctively consistent with one another, and further, the appearance of Chemist Warehouse’s websites changed substantially over time. In addition, it was apparent from the evidence that DCO did not act with an intention to mislead or deceive consumers. Therefore, despite copying the ideas and concepts of the Chemist Warehouse stores, the evidence disclosed insufficient uniformity in the visual branding devices relied upon by Chemist Warehouse to support a claim for misleading or deceptive conduct against DCO.

Trade mark infringementFurther, Chemist Warehouse alleged that DCO had infringed Chemist Warehouse’s trade mark registration for IS THIS AUSTRALIA’S CHEAPEST CHEMIST? through the use of the slogan WHO IS AUSTRALIA’S CHEAPEST CHEMIST? (see images below).

In response, DCO lodged a cross-claim, seeking to cancel Chemist Warehouse’s trade mark registration for IS THIS AUSTRALIA’S CHEAPEST CHEMIST?, on the basis that it was descriptive and not capable of distinguishing Chemist Warehouse’s goods and services from those of other traders.

Justice Middleton reached the conclusion that Chemist Warehouse’s mark was not valid, as it was not inherently adapted to distinguish the designated goods or services from those of other traders. In this respect, Justice Middleton stated that descriptive or non-distinctive words cannot be protected by trade mark registration. The words in this mark in particular, denoted three main concepts, namely, location, price, and the nature of the business.

Importantly, Justice Middleton stressed that extensive use of a descriptive mark is not enough to establish a registrable trade mark. The mark must be a “reliable badge of trade origin on its own” (Unilever Australia Ltd v Societe Des Produits Nestle Sa (2006) 154 FCR 165).

Decision Justice Middleton dismissed the Chemist Warehouse’s claims that DCO had engaged in misleading and deceptive conduct and trade mark infringement. Justice Middleton also allowed the DCO’s cross-claim, cancelling Chemist Warehouse’s trade mark registration for IS THIS AUSTRALIA’S CHEAPEST CHEMIST? logo. This is obviously a reminder that a trade mark infringement claim can backfire if the respondent successfully cross-claims for the removal of the trade mark.

Chelsea Parker Lawyer, Sydney [email protected]


IP@Ashurst•June2015Page 12

What you need to know • During examination, the applicant’s trade mark

application was found to be deceptively similar to an earlier filed mark, owned by the opponent, in respect of similar goods.

• The owner of the trade mark application was able to submit evidence of use of the trade mark during the examination stage to overcome this obstacle. However, the application was then opposed and the opponent was successful at the opposition hearing because it successfully established that it had used its trade mark prior to the application and had used it continuously since.

First in, best dressed: Prior and continuous use trumps trade mark applicationJonglea Pty Ltd v Pharaoh Partners Pty Ltd [2015] ATMO 16

Page 13IP@Ashurst•June2015

BackgroundThis Trade Marks Office (TMO) decision concerned trade mark application no. 1453654, filed by Pharaoh Partners Pty Ltd (Applicant). The application (depicted below) covered various jewellery related goods in class 14.

During the examination of the application, an objection was raised by the TMO examiner under section 44 of the Trade Marks Act 1995 (Cth) (Act). The examiner was of the view that the application was deceptively similar to an earlier filed trade mark in respect of the same or similar goods, being trade mark registration no. 1303615 owned by Jonglea Pty Ltd (Opponent).

During the examination process, the Applicant was able to overcome the objection by providing evidence of prior use of its trade mark, pursuant to section 44(4) of the Act. The application was accepted and advertised and the Opponent filed a notice of intention to oppose in June 2013. After the parties filed their respective evidence in support of, and in answer to, the opposition, the Opponent requested a hearing on the matter. The Applicant did not provide written submissions and was not represented at the hearing.

The Opponent filed evidence that demonstrated:

• the company was registered in 1992, and since that time had engaged in the importation and wholesale of “jewellery, homewares and giftwares”;

• substantial and increasing profit figures for the Opponent from 2003 to 2012;

• the company has only sold goods marked with the name CHRISTIANA since 1998, and, as a result, all of the Opponent’s revenue since 1998 can be attributed to sales under that trade mark, and all advertising expenses can be attributed to advertising associated with the trade mark;

• it advertises its products in magazines, online and by regular attendance at trade fairs; and

• the company had applied for two trade marks, the first of which lapsed after an employee apparently failed to pay the registration fee and the second of which was raised as the citation against the application.

The Applicant filed evidence declaring that the name CRISTIANA was chosen in 2006, being a variation of the company director’s mother’s name. In addition, the evidence declared that the trade mark has been used continuously by the Applicant since around September 2006, “in connection with jewellery, design, manufacturing, marketing and sales”. Evidence of sales and advertising and sales figures as well as examples of use of the trade mark was also submitted.

At the hearing, the Opponent pressed three grounds of opposition:

• section 44 of the Act – identical trade marks;

• section 58A of the Act – Opponent’s earlier use of similar trade mark; and

• section 60 of the Act – trade mark similar to trade mark that has acquired a reputation in Australia.

The TMO Hearing Officer confined her deliberations to the grounds under section 58A. Essentially, section 58A allows the owner of a prior registered or pending trade mark to oppose registration of a substantially identical or deceptively similar trade mark previously accepted under the prior use provisions of section 44(4). The opponent needs to establish that it first (and continuously) used the trade mark before the owner of the new application.

Taking the Opponent’s evidence into account, including income and advertising figures, examples showing use of the registered trade mark on the same or similar goods to the Applicant’s goods dating from 2004 to 2013 (the earliest use claimed by the Applicant was in 2006), the Hearing Officer was persuaded that the Opponent established the ground under section 58A. That is, it had already been determined by the TMO that the application was deceptively similar to the Opponent’s trade mark and the Opponent successfully established that it used its trade mark prior to the Applicant and that it had continuously used the trade mark since that first use.

The Hearing Officer therefore refused to register the Application and awarded costs in favour of the Opponent.

Mary Papadopoulos Senior Associate, Sydney [email protected]



BackgroundOn 18 December 2014, Justice Beach of the Federal Court of Australia delivered judgment in Streetworx Pty Ltd v Artcraft Urban Group Pty Ltd [2014] FCA 1366, finding Artcraft Urban Group Pty Ltd (AUG) liable for infringing two innovation patents owned by Streetworx Pty Ltd (Streetworx) covering lighting assemblies for use in public areas, in particular street lighting.

In a subsequent judgment, delivered on 2 March 2015, Justice Beach considered the relief to be granted to Streetworx. Consistent with the usual practice in such cases, Justice Beach made declarations of infringement and granted a final injunction restraining AUG from marketing in Australia any infringing lighting assemblies while Streetworx’ innovation patents remained in force.

Following the infringement ruling, AUG sought a licence from Streetworx to enable it to supply otherwise infringing lighting assemblies in fulfilment of pre-existing contracts with two Victorian councils (Council Contracts). However the parties were unable to agree upon commercial terms. As an alternative measure, AUG modified its existing stocks of lighting assemblies so that they no longer fell within the claims of Streetworx’ innovation patents.

Shining a light on remedies for patent infringementStreetworx Pty Ltd v Artcraft Urban Group Pty Ltd (No 2) [2015] FCA 140

What you need to know• In appropriate cases, a court may

award a “springboard injunction”, restraining otherwise lawful conduct to deprive a party of unwarranted advantages resulting from past conduct which infringed a patent.

• A springboard injunction is most likely to be an appropriate remedy where a party’s past infringing conduct gives it a unwarranted headstart over its competitors in taking advantage of a commercial opportunity following patent expiry.

• In deciding whether to grant such relief, the court will have regard to a range of factors including whether damages or an account of profits would be adequate to compensate the patent owner, and whether an injunction would adversely affect innocent third parties.

What you need to do• When enforcing their patents, patent

owners should consider whether they may continue to suffer loss and harm post-patent expiry as a direct consequence of an infringer’s conduct during the term of their patent, and seek appropriate remedies.


The “springbroad injunction”Notwithstanding those modifications, Streetworx sought a further injunction (characterised in Justice Beach’s judgment as a “springboard injunction”) to restrain AUG from supplying its modified lighting assemblies in fulfilment of the Council Contracts. Streetworx argued that, although AUG intended to supply the Councils with a modified, non-infringing product, AUG had utilised an infringing lighting assembly for the purposes of its successful bid for the Council Contracts. Streetworx submitted that AUG ought not to be permitted to retain the unwarranted advantages of that infringing conduct.

As Justice Beach observed, previous applications of the springboard doctrine have generally occurred in cases concerned with misuse of confidential information. Where a defendant has made unauthorised use of confidential information to establish a bridgehead or springboard into a market, giving it a headstart over its competitors, the court may impose a restraint on the defendant for such period as competitors would need to bring their products to market relying only upon publicly available information.

Nevertheless, as Justice Beach noted, in the United Kingdom and Europe, springboard injunctions have also been granted in patent cases. For example:

• In Generics BV v Smith Kline & French Laboratories Ltd [1997] RPC 801, a generic pharmaceutical company utilised samples of a patented drug to obtain regulatory approval for its competing generic product before patent expiry. A Dutch court granted an injunction restraining sales of the generic product for 14 months from patent expiry, representing the period that the generic would have needed to obtain registration of its product had it not “jumped the gun”.

• In Dyson Appliances Ltd v Hoover Ltd (No 2) [2001] RPC 544, as a result of product development work undertaken, unlawfully, during the term of the plaintiff’s patent, the defendant would have enjoyed a significant headstart over its competitors in re-entering the market upon patent expiry. An injunction was granted, restraining the defendant for 12 months from patent expiry, representing the time that the defendant would have needed to develop and launch its product but for its infringing conduct.

However, as Justice Beach observed, none of the overseas cases were directly analogous to the facts before his Honour. In the overseas cases, injunctions were granted to prevent defendants taking advantage of an unlawfully gained headstart to market and sell their products following patent expiry. By contrast, the injunction sought by Streetworx would restrain AUG from utilising modified, non-infringing products to fulfil existing contractual obligations to third parties during the term of the innovation patents. It is unclear that the benefit gained through AUG’s infringing conduct could properly be characterised as a “headstart”. If not, then on existing authorities, a springboard injunction may not have been an appropriate remedy.

DecisionIn any event, on the facts of this case, Justice Beach declined to grant a springboard injunction, finding that Streetworx could adequately be compensated by an award of damages or an account of AUG’s profits. In reaching that conclusion, Justice Beach took into account a number of matters, including that:

• on the limited evidence available, the particular features of AUG’s lighting assembly which caused it to infringe Streetworx’ innovation patents appear to have been of little, if any, significance in the Councils’ decisions to award the relevant contracts to AUG; and

• the injunction sought by Streetworx would adversely affect the Councils, who were innocent third parties, in circumstances where there were only a limited number of competing lighting products available for them to choose from.

Although Justice Beach considered that a springboard injunction ought not to be granted on the facts of this case, his Honour was of the view that, where appropriate, the Court has power under the Patents Act 1990 (Cth) and the Federal Court of Australia Act 1976 (Cth) to grant a springboard injunction to deprive a party of unwarranted advantages arising from patent infringement.

AppealAUG has filed an appeal against Justice Beach’s substantive judgment on patent infringement / validity, which is to be heard by the Full Court in August 2015.

Andrew Rankine Senior Associate, Sydney [email protected]



BackgroundOn 13 March 2015, Justice Farrell of the Federal Court handed down her decision in proceedings brought by the Australian Competition and Consumer Commission (ACCC) against Safety Compliance and three of its employees concerning the telemarketing practices employed by Safety Compliance between June 2010 and May 2012.

This article focuses on the allegations by the ACCC that, through unsolicited telemarketing calls, Safety Compliance made misleading or false representations to prospective customers by expressly or impliedly telling them that:

• they were required under workplace health and safety legislation to have wall charts and first aid kits of the kind sold by Safety Compliance (the Wall Chart Representation and First Aid Kit Representation respectively); and

• Safety Compliance was either affiliated with or was itself a government workplace health and safety agency (the Government Agency and Affiliation Representations).

The case against Safety Compliance proceeded by way of no contest as the company was in liquidation and the ACCC relied primarily on affidavit evidence of small business owners and managers.

Liar, Liar: Telemarketing practices of Safety Compliance Pty Ltd found to have misled small business owners

What you need to know• The Federal Court has ruled that

Safety Compliance Pty Ltd (Safety Compliance) contravened various provisions of the Trade Practices Act 1974 (Cth) (TPA) (in respect of conduct prior to 2011) and the Australian Consumer Law (ACL) (in respect of conduct after 2011) after its telemarketing practices were found to be misleading.

• In particular, the Federal Court found that the conduct and business system of Safety Compliance had, and was likely to continue to, cause ordinary and reasonable small business owners and managers to form the erroneous impression that certain workplace health and safety materials supplied by Safety Compliance were required by law and that Safety Compliance was either affiliated with or was itself a government agency.

Australian Competition and Consumer Commission v Safety Compliance Pty Ltd (in liq) [2015] FCA 211


The Wall Chart and First Aid Kit Representations With regard to the Wall Chart Representation, Justice Farrell held that Safety Compliance’s conduct did and would be likely to lead potential customers who were ordinary and reasonable small business owners and managers to the erroneous impression that there was a requirement under workplace health and safety laws to maintain a wall chart of the kind offered for sale by Safety Compliance.

Although no express statement was made to the effect that a wall chart was required by law, her Honour was satisfied that, in a telemarketing context, the name “Safety Compliance” coupled with the officious language that was employed by Safety Compliance’s staff in relation to workplace health and safety materials was apt to create such an impression.

Similarly, with regard to the First Aid Kit Representation, Justice Farrell held that Safety Compliance’s conduct was capable of inspiring in ordinary and reasonable small business owners and managers, and did induce in at least one small business owner, the erroneous belief that there was both a legal requirement and need for a first aid kit of the kind sold by Safety Compliance.

A key piece of evidence relied upon in support of this finding was Safety Compliance’s First Aid Kit Order Confirmation Form which stated that “under state and territory workplace legislation all workplaces must have a least one first aid kit” and “the possible fines and or penalties for noncompliance far exceeds the purchase price of the first aid kit”.

As a result of these findings, her Honour ruled, in respect of both the Wall Chart Representation and the First Aid Kit Representation, that Safety Compliance had:

• engaged in conduct which was misleading or deceptive or likely to mislead or deceive (in contravention of section 52 of the TPA and section 18 of the ACL); and

• made false or misleading representations concerning the need for the goods (in contravention of section 53(f) of the TPA and section 29(1)(l) of the ACL).

The Government Agency and Affiliation RepresentationsWith regard to the Government Agency and Affiliation Representations, Justice Farrell found that the business system employed by Safety Compliance coupled with the conduct of its staff was capable of, and did, convey to ordinary and reasonable small business owners and managers the erroneous impression that Safety Compliance was either affiliated with a government workplace health and safety agency or was itself one. Her Honour also found that, in doing so, Safety Compliance had led customers to the erroneous impression that the wall charts it was selling were of a particular standard or quality.

Some of the key factors which led her Honour to the above conclusions again included use of the name “Safety Compliance” coupled with the mandatory and officious language employed by Safety Compliance’s staff in relation to workplace health and safety materials. Also relevant in this context was the absence of any express statement to the contrary in either the telemarketing spiels used by Safety Compliance or its invoices for the wall charts and first aid kits.

As a result, her Honour ruled that Safety Compliance had:

• engaged in conduct which was misleading or deceptive or likely to mislead or deceive (in contravention of section 52 of the TPA and section 18 of the ACL);

• made false or misleading representations that Safety Compliance had a sponsorship, approval or affiliation (in contravention of section 53(d) of the TPA and section 29(1)(h) of the ACL); and

• made false or misleading representations that the wall charts were of a particular standard or quality (in contravention of section 53(a) of the TPA and section 29(1)(a) of the ACL).

OrdersJustice Farrell made declarations reflecting all of her findings but declined to make any other orders against Safety Compliance in light of the fact that it had ceased to carry on business.

James Hoy Lawyer, Sydney [email protected]

Anita Cade Partner, Sydney [email protected]


BackgroundSome people may be surprised to know that the Registrar of Trade Marks has the power to revoke acceptance of a trade mark. Passing examination does not necessarily end the Registrar’s role. This power is used relatively rarely but with increased frequency in recent times.

In this case, the Registrar proposed to revoke acceptance of four applications by Henkel AG & Co (Henkel) for three dimensional shape trade marks on the basis that the trade marks lacked distinctiveness. Henkel objected and requested a hearing. Ultimately, Henkel failed and the revocation proceeded, with Henkel being given a further 15 months to overcome the objection that the marks lacked distinctiveness.

Henkel’s applications described the trade marks noting the shape and the colour of some parts. An example of this was “the shape of a toilet rim block cage with four round compartments containing alternate blue and yellow balls as shown in the representations attached to the application form”. Images of the trade marks were as shown below.

Flushing out poor trade mark examination practices: revocation of acceptance by the RegistrarHenkel AG & Co. KGaA. [2015] ATMO 13

What you need to know• The Registrar of Trade Marks has power

to revoke acceptance of an application.

• Shape trade marks with any level of functionality are difficult to register.

• The presumption of registrability emphasised in the Raising The Bar legislative amendments will not help to overcome a finding of lack of inherent distinctiveness.

What you need to do • If filing three-dimensional shape trade

marks, consider defining the mark clearly to exclude any functional parts of the shape.

• Consider whether an application for a shape mark should be filed only after use has commenced to improve the prospects of showing acquired distinctiveness.

• Prior to opposing a mark, consider whether the Registrar may consider revoking acceptance.

The Registrar’s proposal no doubt surprised Henkel, as opposition proceedings had already been commenced when the Registrar proposed revoking acceptance.

The Registrar’s power to revoke acceptanceThe power to revoke acceptance may be exercised prior to registration or protection being granted if:

• the application should not have been accepted taking into account all of the circumstances existing at the time of acceptance; and

• it is reasonable to do so in all of the circumstances.


Henkel’s argumentsHenkel’s application was made as a designation from an International Registration, though a locally filed application would be subject to the same considerations.

Henkel contended there was no basis to find the applications should not have been accepted and supported this with evidence of other toilet blocks on the market, none of which were the same shape as those depicted in the applications and all of which had different shapes – but the same basic functionality. This was intended to show that the shape was “concocted” such that no other trader would have a legitimate need to use the shape.

This argument was rejected. The Hearing Officer held that inherent distinctiveness must be assessed independently from any distinctness arising from use. While this is an orthodox statement of the law, the reasons did not deal squarely with Henkel’s contention that other traders would not have any need to use the same or a similar shape to that of the trade marks for similar goods.

Henkel also argued that revocation of acceptance was not reasonable in circumstances where the ground was not raised during examination and where opposition proceedings were on foot which included a non-distinctiveness ground.

Applications returned to examinationThe Hearing Officer found it was in Henkel’s interests for the applications to be returned to examination to deal with the distinctiveness objection, this not necessarily being fatal to the applications. The opposition proceedings carried no weight, as the Hearing Officer said the opponent may not fully address the distinctiveness ground in their opposition. It was, therefore, in the public interest that “the proper examination processes of the Office are consistently maintained”.

Possible implicationsThe short treatment given to Henkel’s arguments demonstrates that resisting a proposal by the Registrar to revoke acceptance is difficult. This decision may also signal an intention by the Trade Marks Office to raise distinctiveness objections to almost all shape trade marks. Whether this will result in “consistency” – and if it does whether that is a positive development – remains to be seen.

For now, anyone considering shape trade mark registrations should factor in the risk of a distinctiveness objection and the cost and delay that may arise. Strategies to maximise registrability may include defining a shape trade mark to exclude any purely functional elements, or waiting until after use has commenced to file an application so that evidence of acquired reputation may be available.

Additionally, for any party concerned about a competitor’s application and who thinks that there has been an error or omission in examination, raising this with the Registrar prior to or even during an opposition could potentially lead to a revocation of acceptance.

Liam Nankervis Senior Associate, Melbourne [email protected]

Peter Chalk Partner, Melbourne [email protected]



Lesson of the Day: Misleading consumers can result in a $600,000 penalty Australian Competition and Consumer Commission v Spreets Pty Ltd [2015] FCA 382

In 2015, the Australian Competition and Consumer Commission (ACCC) renewed its promise to concentrate on consumer issues in the online marketplace. One area of particular focus for the ACCC has been “daily deal” or “deal of the day” websites. These websites often operate as an online group buying business which offer consumers various goods and services for discounted prices by way of voucher deals. After success in the Federal Court against Scoopon (as reported in the March 2014 edition of IP @ Ashurst), and accepting a court enforceable undertaking from Living Social (as reported in the March/April 2015 edition of IP @ Ashurst) the ACCC commenced proceedings against Spreets Pty Ltd in June 2014.

Spreets offered promotions which typically included a link to the relevant deal page on the Spreets website, an advertisement for the deal, the terms and conditions and a link to where vouchers could be purchased. During 2011 and 2012, Spreets offered a number of promotions which both parties agreed contravened the Australian Consumer Law (ACL) and fell into the following categories:

• Representations to consumers about the price of deals (for example, deals that were advertised for “only $375”, but did not disclose an additional compulsory levy required in most circumstances);

• Representations about the consumer guarantees and refund rights of vouchers sold through the website (for example, inaccurately stating to consumers that “Refunds are NOT APPLICABLE”, despite a statutory right applying in certain circumstances);

• Representations to individual consumers about their rights, and the effect of, Spreets’ terms and conditions (for example, Spreets made representations to consumers that did not form part of the terms and conditions applying to the voucher deals); and

• Contraventions relating to undisclosed limitations on voucher deals sold to consumers (for example, despite being aware of the limitations, Spreets’ did not disclose that some deals were not available during certain periods).

Spreets admitted the conduct and contraventions of the ACL claimed by the ACCC and co-operated with the ACCC, reaching an agreement regarding the facts and the proposed relief. The Federal Court, having taken into consideration the principle of deterrence and the nature of the contravening behaviour, ordered that Spreets pay a pecuniary penalty of $600,000 in addition to the ACCC’s costs of $25,000.

Following the commencement of the ACCC proceedings, Spreets took steps to upgrade its compliance program. Spreets also agreed to maintain this upgraded program for a period of 3 years. Spreets’ willingness to improve its compliance program (as well as co-operating with the ACCC to avoid a contested hearing) was considered a mitigating factor.

Jessica Norgard Lawyer, Sydney [email protected]


IP Bite

https://www.ashurst.com/page.aspx?id_Content=10233

https://www.ashurst.com/page.aspx?id_content=11813


BackgroundThe Applicants (Pacific) sued Bernen Pty Ltd and its sole director and sole shareholder, Qi (Robert) Li, alleging infringement of its innovation patents, including Australian Innovation Patent No 2013100937 (Patent), which was directed to a window winder for a casement and awning window including a locking means for the winder.

Pacific also alleged that Mr Li was liable for authorising Bernen’s infringement of the Patent. Neither Bernen nor Mr Li appeared at the trial.

Bernen and Mr Li admitted on the pleadings filed in the proceedings that Bernen had imported, sold and offered to sell a casement winder product which the Court held had each of the features claimed in the Patent.

Justice Pagone also found that by virtue of Mr Li’s roles as sole shareholder and sole director he had authorised Bernen’s sale and importation of its casement winders. His Honour also relied on Mr Li’s admissions that at the relevant time he was solely responsible for or directly involved in the day to day running of Bernen’s activities, including the importation, marketing and sale of the casement winders.

It all adds up: Lost profits, convoyed goods, mitigation losses and now additional damages for patent infringement Pacific Enterprises (Aust) Pty Ltd v Bernen Pty Ltd [2014] FCA 1372

What you need to know• Compensatory damages are aimed at

restoring the patentee to the position it would have been in but for the infringement. The calculation of damages may include lost profits on the sales of the infringing items and lost sales of components commonly sold as a “whole unit” with the patented item.

• In this case, the Judge also awarded damages for the cost of surplus stock, retooling and air freighting products to deal with stock shortages on the basis that such costs were caused by the infringing conduct and were reasonably foreseeable consequences of the infringing conduct.

• For the first time in Australia, the Federal Court has awarded additional damages for flagrant infringement. The amount of additional damages should operate as a sanction on whom it is imposed and act as a deterrent to others.


Compensatory damagesPacific relied on several heads of damages with a total claim of over $355,000.

Lost profitsBernen had imported and then supplied 4,900 casement winders to A&L Windows Pty Ltd (A&L). Before this supply, Pacific had been the exclusive supplier to A&L of casement winders as well as their associated components. There were no non-infringing products on the market and Pacific made no sales to A&L once Bernen started making its infringing sales.

Justice Pagone awarded Pacific over $87,000 being the profit Pacific would have made on the sales Bernen in fact made to A&L. Importantly, the lost sales also included the loss of sales of components typically supplied with the patented item as a “whole unit”, such as a key, handle and sash lock for the window. In doing so Justice Pagone agreed with the UK Court of Appeal in Gerber Garment Technology Inc v Lectra Systems Ltd [1997] RPC 443 in rejecting the argument that lost profits must be limited to the scope of the monopoly alone. His Honour adopted the “elementary rules” referred to by Lord Justice Straugton in Gerber v Lectra:

• that the overriding principle is that the victim should be restored to the position he would have been in if no wrong had been done; and

• that the victim can recover loss which was: (i) foreseeable;

(ii) caused by the wrong; and

(iii) not excluded from recovery by public or social policy.

Justice Pagone also awarded Pacific for sales it would have made to A&L during the period after Bernen stopped its infringing sales up until expiry of the Patent on the basis that it was reasonably foreseeable that Pacific would have sold the units to A&L at least up until the Patent had expired.

Cost of surplus stock and retoolingPacific also claimed the cost of surplus stock that it was not able to sell due to the infringing sales. His Honour found that Mr Li, an ex-employee of Pacific whose responsibilities included having contact with A&L as a key client, would have foreseen that Pacific would be unable to sell its surplus stock to A&L as a result of the infringement.

Pacific also lost trust in and ended its relationship with Ningbo, Pacific’s manufacturer of its casement winders, once Ningbo began to manufacture Bernen’s infringing products. Pacific had invested in the development in the tooling used by Ningbo in the manufacture of the casement winder and also additional products in its range. Once Pacific stopped using Ningbo as its manufacturer, Pacific had to reinvest in developing tooling with another manufacturer for all of its products. Justice Pagone found that the retooling costs were also reasonably foreseeable consequences of the infringing conduct and awarded Pacific damages on that basis.

Costs of air freight to mitigate lossesAs a result of having to change manufacturer, Pacific experienced delays in obtaining stock and therefore lost sales. His Honour noted that Pacific’s solution, namely to import products by air freight at a greater cost than it would have incurred had it used sea freight as it had previously done, had the effect of mitigating its loses. His Honour therefore awarded Pacific damages for the difference between its air freight costs and its estimated sea freight costs.

Additional damages for flagrant infringementPacific’s claim for damages also included a claim for an amount of $300,000 under section 122(1A) of the Patents Act 1990 (Cth), which confers on the court a broad discretion to award additional damages for matters including the flagrancy of the infringement. Pacific submitted that the infringing conduct was “an extreme example of flagrant infringement”. Pacific relied on the fact that the Bernen product was essentially the same product as Pacific’s, it was produced by the same manufacturer, sold to the same customer for whom the patented product had been developed, and sold to that customer by a former employee.

Although the claim was undefended, Justice Pagone’s reasons provide some useful guidance to the Court’s approach to the award of additional damages under section 122(1A), a provision which has received very little judicial consideration since its enactment in 2007. Indeed this is the first case in Australia in which additional damages have been awarded for patent infringement.

Justice Pagone noted that an award of additional damages should operate as a sanction on whom it is imposed and also act as a deterrent to others. His Honour thus had regard to the available evidence as to the profits made by the respondents, as well as their likely ability to pay. While his Honour agreed that the respondents’ conduct amounted to flagrant infringement, his Honour noted that the respondents had not sought to persist with or conceal their activities. Nor did they seek to frustrate the claim, making reasonable admissions in the proceedings. Ultimately his Honour determined that an amount of $40,000 should be awarded, being about half the profit gained by the infringement, and bearing in mind that the total amount of damages awarded already greatly exceeded that amount.

Christina Forsyth Senior Associate, Sydney [email protected]


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