Australia and NZ: ‘Reasonable Efforts’ to Join the Hague Agreement on Industrial Designs Mean Nothing

Recently, both Australia and New Zealand have reached ‘agreement in principle’ on proposed free trade agreements (FTAs) with the UK.  Details of the Australia-UK agreement in principle can be found on the Australian Department of Foreign Affairs and Trade (DFAT) website, while the NZ-UK agreement in principle is available from the NZ Foreign Affairs and Trade website.  Each document states that Australia/NZ will make all reasonable efforts to join the UK as members of the Hague Agreement, which provides an international registration system for industrial designs.  An article which appeared on the Lexology site last month stated that these developments imply that ‘Australia has (finally!) agreed to join the Hague Agreement on Industrial Designs’.

This is not true.  I do not see Australia joining the Hague Agreement in the foreseeable future, Australia-UK FTA notwithstanding.  I am less familiar with the political position in New Zealand, but suspect that the situation is not much different in the Land of the Long White Cloud.

Here is a fun fact…  Article 17.1(5) of the Australia-US Free Trade Agreement (AUSFTA), which entered into force on 1 January 2005, states that:

Each Party shall make its best efforts to comply with the provisions of the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs (1999), and the Patent Law Treaty (2000), subject to the enactment of laws necessary to apply those provisions in its territory.

Yet here we are, nearly 17 years later, and Australia is still not a member of the Hague Agreement.  It would seem that the phrase ‘best efforts’ in a trade agreement basically amounts to nothing more than a promise to think about it over an unspecified – and potentially indefinite – time frame.  I suspect, therefore, that an undertaking to make ‘reasonable efforts’ in an agreement in principle is code for ‘they want us to do it; we have no plans to commit to doing it; but we do not want to hold up negotiations by actually saying no.’

And there are very good reasons – namely three separate processes of review and consultation since 2012 – for believing that Australia has no intention of joining the Hague Agreement any time soon.

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Tags: Australia, Designs, International treaties, New Zealand

Federal Court Throws Self-Represented Litigant a Life-Line

Enviro Pak Pty Ltd v New Horticulture Pty Ltd [2013] FCA 306 (2 April 2013)
Enviro Pak Pty Ltd v New Horticulture Pty Ltd (No 2) [2013] FCA 624 (25 June 2013)

It is not common for the Federal Court of Australia to allow a corporation to be represented by a non-lawyer.  Nor is it common for the court to cede authority to an administrative decision-maker.  So when a judge of the Federal Court does both in the course of the same litigation, there is no avoiding the fact that the court is doing the beneficiary of these decisions a significant favour.

The dispute between Enviro Pak Pty Ltd and New Horticulture Pty Ltd (trading as Green Pack, which is how I shall refer to the company) relates to Australian registered design no. 304960, owned by Enviro Pak.  The registration protects the design of a corrugated paper coffee cup, which Enviro Pak claims to be unique in that the corrugations are aligned vertically, which in turn requires that the width of the corrugations increases from the bottom to the top of the cup (since the circumference of the base of the cup is smaller that that of the lip).  Notwithstanding this functional aspect of the design, it is important to keep in mind that a registered design protects only the visual appearance of the coffee cup, and not its functionality or associated benefits.

Enviro Pak is suing Green Pack, and its sole director and shareholder, for alleged infringement of the registered design.  Initially, Green Pack had legal representation, however the financial circumstances of the company appear to have resulted in termination of this representation in February 2013.  In the meantime, two applications challenging the validity of the registered design had been filed with the Designs Office at IP Australia.

While an individual (i.e. a ‘natural person’) is entitled to represent him- or herself in court, a corporation normally is not, and must be represented by a qualified legal practitioner.  Furthermore, the Designs Act 2003 is structured such that when proceedings are on-foot both in court, and at IP Australia, in relation to the same registered design, the Registrar of Designs is generally unable to proceed without permission from the court.  (The Patents Act 1990, incidentally, is similarly structured.)

This state of affairs creates potential difficulties for a party with financial limitations, once a court action has commenced.  In this case, however, the court has made exceptions for Green Pack.

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Tags: Designs, Federal Court practice, Litigation, Stay of proceedings

Entitlement Matters

Foster’s Australia Limited v Cash’s (Australia) Pty Ltd [2013] FCA 527 (29 May 2013)

What happens if a patent application is inadvertently filed in the wrong name?  By ‘wrong’ I mean that a party is named as an applicant which is not actually entitled to ownership of the rights in the claimed invention.  More importantly, what happens if the patent proceeds to be granted to the wrong proprietor?  When such mistakes occur, and are subsequently discovered, what should be done to correct them?

These questions recently arose in Federal Court of Australia, in relation to four innovation patents owned by the well-known producer of alcoholic beverages Foster’s Australia Limited (FAL) (now known as CUB Pty Ltd).  Similar questions also arose in relation to two registered designs.

You might think that simple errors in filing details might be easy to fix.  You might also think that once they had been fixed, that might be the end of the story.  But the judgment of the Federal Court in this case demonstrates that you would be wrong on both counts!  Even after reassigning the patents and design registrations to the correct owner, the alleged infringer in this case – Cash’s Australia Pty Ltd (Cash’s) – challenged the validity of Foster’s rights based upon an initial error in the identification of the applicant.

Resolving this challenge was not a mere formality.  It involved numerous submissions to the court, a day of hearings, and resulted in a 139 paragraph judgment.

The moral of the story is that entitlement matters!  It is important that everybody involved in the process of applying for registration of IP rights takes the appropriate steps to ensure that all of the filing details are correct – especially the identity of the rights-owner.

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Tags: Designs, Entitlement

Apple v Samsung – Design Patents and ‘Damages’

In writing a few days ago about the $1.05 billion jury verdict in the US Apple v Samsung trial, we observed that there was a significant disparity between amounts awarded by the jury where it found design patent infringement and those awarded where only utility patent infringement was established.  (See Billion-Dollar Jury Verdict a Blow to Samsung – But How Bad Is It?)

We speculated that this may be due to the theory that consumers might be ‘tricked’ into buying Samsung devices which have been ‘slavishly copied’ from Apple products, resulting in greater loss of sales by Apple.

However, we have now learned that there is a very specific reason for the high awards for design patent infringement.  As explained in this article on the intellectualIP blog, written by Professor Thomas F. Cotter of the University of Minnesota Law School, there is a peculiar anomaly in the US law relating to the remedies available in cases of design patent infringement which justifies such high monetary compensation.

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Tags: Account of profits, Apple-v-Samsung, Damages, Designs, Infringement, US

Billion-Dollar Jury Verdict a Blow to Samsung – But How Bad Is It?

We presume that everyone reading this blog is by now aware that the jury considering the patent dispute between Apple and Samsung in California reached its verdict on Friday, finding strongly in favour of Apple on numerous counts, and awarding total damages of just over $1 billion against Samsung.

Right now it is harder to avoid coverage of the decision than to find it.  But for posterity, and since it is de rigueur to provide a link, this article at ZDNet provides the basic facts of the jury’s findings.

Clearly this is – for now at least – a big win for Apple.  Equally clearly, however, the dispute is far from over.  The court (i.e. Judge Lucy Koh) now has to review the jury’s decision, and it is certain that Samsung (at least) will request that she overrule many of its findings.  Apple, for its part, may push for Judge Koh to overrule one of more of the points on which it did not prevail, and will also then be pressing for injunctions preventing the continued sale of infringing Samsung products in the US.  Any such injunctions that may be granted will be preliminary in nature, however, because an appeal to the Court of Appeals for the Federal Circuit – at least by Samsung, and possible also by Apple – is also a certainty.

There is not much we could add to the plentiful general reporting of the verdict, however there are four aspects that we find interesting, and worthy of closer scrutiny:

1. firstly, it seems notable that the jury found that Samsung’s Galaxy Tab 10.1 does not infringe Apple’s US design patent no. D504,889, i.e. the Galaxy Tab is not substantially similar in appearance to Apple’s iPad;
2. secondly, for at least two of the three utility patents asserted by Apple, workarounds are either relatively straightforward, or are already in place in the current versions of Samsung’s software;
3. thirdly, the damages awarded by the jury – while substantially less that the $2.5 billion dollars Apple was seeking – are nonetheless strikingly high in some cases, relative to the apparent significance of the infringed Apple IP; and
4. finally, the jury found that Apple’s 3G devices do not infringe the patents asserted by Samsung, even though these are said to be essential to the 3G telecommunications standards.

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Tags: Apple-v-Samsung, Designs, Infringement, Patent litigation, US

Manager’s Salary Safe From Claim for Account of Profits

Polyaire Pty Ltd v K-Aire Pty Ltd & Ors [2012] SASC 75 (10 May 2012)

Infringement – remedies – account of profits – whether managing director of infringing company is required to account for salary paid during period of infringing conduct

In the latest episode in a case that has been running since 1996, the Supreme Court of South Australia has ruled that a successful plaintiff in a design infringement case cannot claim a portion of a company director’s salary after electing to receive compensation in the form of an ‘account of profits’.

This decision arises out of two recurring features of intellectual property litigation in Australia, and the reasoning and outcome are presumably applicable to patent, trade mark and copyright cases, as well as to cases – such as this – involving infringement of registered designs.

The two relevant factors are:

1. a successful plaintiff in an IP infringement action is generally entitled to elect compensation in the form of damages or an account of profits, but not both; and
2. it is common for a plaintiff to bring proceedings not only against a company that may have been providing infringing products or services, but also against any company managers or directors who may be deemed to have controlled the activities of the company.

Damages are calculated based upon the harm done to the rights-holder, e.g. due to lost sales and/or other commercial opportunity.  An account of profits, on the other hand, is based upon the benefits accruing to the respondent as a result of the infringing activities.  Damages are likely to be the preferred option where an infringer has, for example, eroded the market share of the rights-holder by undercutting on price, such that the losses of the plaintiff exceed the profits made by the infringer for the same sales.  An account of profits would be preferred where the infringer has, for example, developed a market and made sales that would not have been made by the plaintiff.

When an account of profits is elected, the infringing company is clearly liable for all sales of infringing products or services.  But what about a company director?  Are there ‘profits’ accruing to an individual as a result of the infringement which must be accounted in addition to the company’s profits on sales?  Here, the South Australian court has said ‘no’.

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Tags: Account of profits, Designs, Infringement, Remedies

Did Stanley Kubrick Invent the iPad2?

The short answer to the question in the subject line is ‘no’.  Neither the director Stanley Kubrick, nor writer Arthur C. Clarke, can be credited with having invented the iPad2 in their depiction of tablet-style devices in the film 2001: A Space Odyssey.

However, they may have designed its external appearance, and this may be enough to prevent Apple from enforcing its alleged intellectual property rights in relation to the physical appearance of its latest tablet.

As is being widely reported today (e.g. in the Fairfax press here in Australia, and on the FOSS Patents blog), Samsung has offered a still image, and a YouTube clip, from Kubrick’s film in its defence of a US ‘patent’ lawsuit brought against it by Apple.  There has been some confusion, however, due to the fact that in the US there are three kinds of ‘patents’.  The familiar ‘utility patent’ protects functional inventions, while the ‘design patent’ protects physical appearance.  The third type of patent is a ‘plant patent’ which protects new plant breeds.

Here in Australia, as in many other countries, we avoid this confusion by calling our equivalent to the ‘design patent’ simply a ‘registered design’.

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Tags: Apple-v-Samsung, Australia, Designs, Litigation, Smartphone wars, US

‘Additional Damages’ Awarded for HSV Design Infringement

GM Holden Ltd v Paine [2011] FCA 569 (30 May 2011)

To Australians, at least, Holden Special Vehicles (HSV) – the official branded performance vehicle division of General Motors Holden – requires little introduction.  Whether you love them or hate them, the modified Holden vehicles with their unique body-work, alloy wheels, interiors, upgraded performance engines, brakes, transmissions and suspension are hard to miss on the roads. 

The HSV-branded performance division is operated by a company called Premoso Pty Ltd under licence from GM Holden.  Premoso only sells genuine spare parts and accessories for HSV vehicles to the network of authorised HSV Dealers, which are required to only sell spare parts and accessories to customers who provide a build and tag number to certify their ownership of a HSV vehicle.

This exclusive arrangement (which would no doubt otherwise fall foul of competition law) is supported by relevant intellectual property rights, including registered trade marks for HOLDEN and HSV, as well as relevant badges, and design registrations, all of which are owned or controlled in Australia by GM Holden Ltd and related companies.

The decision of Justice Gordon in the Federal Court of Australia in GM Holden Ltd v Paine concerns what appears to have been a particularly flagrant case of counterfeiting of HSV parts, and alloy wheels in particular.  While Her Honour also found in favour of Holden in relation to accusations of trade mark infringement and the common law tort of ‘passing off’, our interest was piqued by an award of A$10,000 by way of ‘additional damages’ under subsection 75(3) of the Designs Act 2003.  Notably, since 2007 there have been similar provisions available under subsection 122(1A) of the Patents Act 1990.

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Tags: Australia, Damages, Designs

‘Mere Failure’ No Excuse for Missed Convention Filing Deadline

Kmart Australia Limited v Joseph Joseph Limited [2011] ADO 2 (21 April 2011)

Designs Act 2003 – Extensions of time – whether ‘misapprehension’ or ‘ignorance’ of the law provides basis for an extension of the time to file a design application claiming convention priority from earlier foreign application

We have previously used the excuse that protection for industrial designs is provided by ‘design patents’ in some jurisdictions (most notably the US) to justify commenting on this blog in relation to decisions on registered designs matters.

In this case, we have two additional excuses.  Firstly, we do not believe that there has been any previous published decision in relation to an application for an extension of time under section 137 of the Designs Act 2003.  Secondly, the relevant provisions in the Designs Act are almost identical with those set out in section 223 of the Patents Act 1990, such that decisions under one act are likely to be pertinent to the other.  (Section 224 of the Trade Marks Act 1995 also includes similar provisions.)

Hearing Officer Heath Wilson was required to consider whether it was appropriate to grant an extension of time so that the applicant could belatedly (by 20 months) file two applications – for a chopping board and a bowl respectively –  in Australia claiming priority from earlier European Community Design Registrations.  The evidence provided on behalf of the applicant suggested that the reason for failing to file the applications in time was merely that the applicant was unaware that the designs were not protected in Australia.

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Tags: Australia, Designs, Extensions of time