Intellectual Property from the Land Down Under, 2010 Part 2

Picking up where we left off in Part 1

4.            High Court Rules on Trade Mark ‘Use’

What? A ruling of Australia’s top court on what is required for a trade mark to be ‘used’ in Australia.

Why does it rate #4? For being the more significant one of only two cases yet to be accepted by the High Court under the Trade Marks Act 1995 (the other of which was also decided in 2010).

Although Australia’s current Trade Marks Act has been in-force since 1995, the High Court of Australia (the top court in the land, equivalent to the US Supreme Court) had never granted leave to appeal a decision made under the Act.  Was it, perhaps, that the legislation was so perfect that it did not require interpretation at the highest judicial level?  Or maybe the Federal Court was doing such a good job that no higher review was necessary.  In any event, the situation changed in 2010, when the High Court issued two opinions in relation to the Trade Marks Act 1995.  The more significant of these was E&J Gallo Winery v Lion Nathan Australia Pty Limited [2010] HCA 15 addressed the issue of what constitutes ‘use’ of a trade mark in Australia, sufficient to defend against removal of the mark from the register on grounds of non-use.

The importance of this decision is that it establishes that a trade mark may be ‘used’ in Australia through the sale of goods bearing the mark, even if the trade mark owner is unaware of the sale, and has taken no steps to distribute its goods in Australia.

Unlike the US and Canada, the Australian trade mark law does not require a proprietor to provide periodic declarations or evidence of use.  Instead, if a registered trade mark has not been in use for a continuous period of three years, a party may request that the trade mark be removed from the register on the basis of non-use.  In other words, the market is empowered to police the state of the Register, rather than placing the onus on the proprietor to provide a periodic showing of use.  A non-use removal action may be successfully defended by a establishing any use of the trade mark in Australia, during the relevant period, by the registered owner, or by an authorized user. An “authorized use” will only be considered such if the user uses the trade mark under the control of the trade mark owner.

Gallo is the largest exporter of California wines, which had acquired a small winery called Barefoot Cellars, along with its trade marks, including the BAREFOOT trade mark in Australia.  Australian brewery Lion Nathan had applied in 2007 for registration of the trade mark BAREFOOT RADLER in respect of beer, and in 2008 Gallo commenced proceedings in the Federal Court for infringement of its BAREFOOT trade mark.  In its defense, Lion Nathan cross-claimed for removal of the BAREFOOT trade mark from the register, on the basis that it had not been used by the registered owner during the relevant three-year period.

Neither Barefoot Cellars nor Gallo had ever exported wine to Australia under the BAREFOOT trade mark.  Nonetheless, an Australian company, Beach Avenue Wholesalers Pty Ltd, had obtained the product via a German distributor, and sold it into the Australian marketplace.

A single judge of the Federal Court, at first instance, and the full bench, on appeal, held that the sales by Beach Avenue did not constitute ‘use’ of the BAREFOOT trade mark because the proprietor had not wittingly or deliberately made use of the trade mark, or ‘projected’ the goods into the market, in Australia.

The High Court granted Gallo leave to appeal, and overturned the lower court decisions.  The Court focused on the primary function of a trade mark as a badge of origin, which does not cease merely by first sale of the goods by the trade mark owner, since the mark may continue to be “used” in relation to the goods, in the sense that it indicates a connection in the course of trade between the goods and the trade mark owner.

This decision represents a victory for consumers, who have a reasonable expectation that if a particular trade mark is affixed to goods then it is indicative of the origin of those goods.  It is hard to see how the manner in which the goods found their way into the Australian marketplace is at all relevant in this regard.  Trade marks do not exist solely to provide a basis for litigation between competitors!

The decision also introduced some welcome consistency into the Australian trade mark law.  The Australian courts have repeatedly refused to allow trade mark infringement to be used as a basis for preventing parallel importing of goods that are the authentic products of the trade mark proprietor.  It was therefore a somewhat absurd situation that a parallel importer would  be immune from infringement on the basis that the trade mark was applied to the goods by, or with the authorization of, the trade mark owner, but that the presence of the goods in the Australian market did not amount to a ‘use’ of the trade mark by the owner.

While the High Court may have taken its time in deciding to accept an appeal under the Trade Marks Act 1995, it is pleasing that when it finally did so, it was to introduce some much-needed common sense into the law.


3.            New Zealand’s Surprise Attack on Software Patents

What? Out of the blue, a New Zealand review committee recommended a last-minute amendment to the country’s new Patents Bill that would declare computer programs to be unpatentable.

Why does it rate #3? While it remains to be seen how the provision, which seems likely to become law, will be interpreted by the courts, on the face of it the New Zealand government may be about to enact the most restrictive software exclusion in the patent law of any developed nation.

New Zealand is still laboring under the provisions of patents legislation originally introduced in 1952, based on the UK law of the same era.  Among the exciting features of the current New Zealand Patents Act are ‘local novelty’ (i.e. only prior art published in New Zealand is available to establish lack of novelty or inventive step), and an examination procedure in which examiners are not permitted to assess claims for inventive step, but only novelty.  A third party can argue lack of inventive step during opposition proceedings, but only an aggrieved person (i.e. someone who can show that they are actually harmed by the grant of the patent) is permitted to oppose.  These are hardly the hallmarks of a patent system for a modern, developed, nation.  Unsurprisingly, therefore, the New Zealand government (in fact, successive governments) has been working for a number of years on a new Patents Act that will wholly replace the existing law.

After much research, consultation and drafting, a proposed Patents Bill was introduced into the New Zealand Parliament on 9 July 2008.  Having failed to progress during that term, it was reinstated in the next Parliament on 9 December 2008.  On 5 May 2009 it was referred to the New Zealand Commerce Committee, which received comments up until 2 July 2009.  The Committee received 67 written submissions from interested groups and individuals, and heard 36 submissions.

Since all formal opportunities for comment and consultation are closed by this stage of the process, it was generally anticipated that the Commerce Committee would make recommendations only for minor amendments and fine-tuning of the Bill.  Most stakeholders were therefore taken completely by surprise when the Committee returned an amended draft Bill to which had been added an express exclusion to the patenting of software, in the form of clause 14(3A), which states that ‘a computer program is not a patentable invention.’

The Committee appears to have accepted submissions from the ‘open source community’ that, with the possible exception of the category of ‘embedded software’, computer-implemented technology is inherently non-inventive, that software patents can be obtained for trivial advances, and that they generally stifle innovation.  Stakeholders with a contrary (or at least more nuanced) view on the matter were, for the most part, unaware that they needed to step up and make submissions to the Committee, since there had been no suggestion of a software exclusion at any earlier stage of the process.

There is no formal opportunity for public comment before the Bill is again considered by the New Zealand parliament – it is presently waiting in line for a second reading.  Despite some hurried lobbying, the New Zealand Commerce Minister determined, in his wisdom, that further amendments to the Bill were neither necessary nor desirable, rejecting even the proposal that a European-style reference to ‘computer programs as such’ may be appropriate.  Instead, he referred the matter to the Intellectual Property Office of New Zealand (IPONZ), to prepare proposed guidelines for the practical implementation of the exclusion so as to permit desirable ‘embedded software’ to be patented, while preventing the grant (unspecified) undesirable software patents.

To close the year, on 20 December 2010 IPONZ released its draft guidelines, and invited public comment up until 11 March 2011.  The draft guidelines are, as it happens, very much European in their approach to assessing the patentability of computer-implemented inventions.  However, they are only guidelines that will be applied initially in the examination of patent applications.  They do not have the force of law, and will be subject to review and rejection if, and when, a court eventually comes to consider the meaning of the phrase ‘a computer program is not a patentable invention.’

To read more on the Patentology blog, click here, here, here and here.

2.            Kookaburra Laughs All the Way to the Bank

What? A quintessentially Australian intellectual property story that captured the hearts and souls of many citizens in 2010.  Indeed, this story is so Australian it almost needs an interpreter for international consumption.

Why does it rate #2? This story has it all – pop stars, record companies, childhood memories, patriotic overtones, and even girl guides!  It is no wonder that it made headlines, and even got the general public interested in the arcane workings of copyright law.

The accused infringing work was the pop song Down Under, which was recorded by the band ‘Men at Work’ and which reached the top spot on the charts in many countries in the early 1980’s (including three weeks at the top of the US Billboard Hot 100 in January 1983).  The song also became the unofficial anthem of the Australia II yachting team which famously ended the longest (132 year) winning streak in history by taking the America’s Cup from Dennis Connor’s Liberty in September 1983.

The work that was said to be infringed was the popular children’s song Kookaburra (Sits in the Old Gum Tree), which many Australians seemed to believe was a folk song, or part of the country’s ‘cultural heritage’, and a possession of the nation as a whole.  In other words, it was one of those ‘cultural artifacts’ to which copyright somehow ought not to apply.  How wrong this view turned out to be!

In fact, as the Australian Federal Court held in a 2009 opinion (Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited [2009] FCA 799), Kookaburra was written in around 1932 by Melbourne schoolteacher Marion Sinclair.  In 1934 she entered the song into a competition conducted by the Girl Guides Association, from which the rights to the winning song were to be sold in order to raise money for the purchase of a camping ground.  Through a somewhat convoluted series of events, following Ms Sinclair’s death in 1988 the rights to Kookaburra came to be owned by Larrikin Music Pty Ltd in Australia, and Music Sales Corporation in the United States.  (Incidentally, the word ‘larrikin’ is a predominantly Australian term used to describe a person given to irreverent, comical or outlandish behavior.)

Although Larrikin had held the rights since 1988, the possibility of infringement did not occur to it until a 2007 episode of the Australian music quiz television program Spicks and Specks included the question ‘what children’s song is contained in the song Down Under?’  This question eventually led to Larrikin suing the song’s publisher, EMI, along with ‘Men at Work’ songwriters Colin Hay and Ron Strykert, in the Federal Court of Australia for copyright infringement.

Kookaburra is only four bars long, and is hardly one of the most complex musical works ever devised.  But in February 2010, the Federal Court found that the flute riff from Down Under took two bars from Kookaburra, which constituted a ‘substantial part’ of the original work, and was therefore an infringement of copyright (Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited [2010] FCA 29).  The court was, however, at pains to point out that this did not make the infringing bars a ‘substantial part’ of Down Under.  This impacted upon the eventual orders of the court regarding damages and future royalties, where 5% was estimated as a reasonable royalty rate – far short of the 40-60% that Larrikin contended it should receive (Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited (No 2) [2010] FCA 698).

The court’s rulings received considerable publicity in the Australian media, and dominated talkback radio, newspaper letters pages, and the usual internet forums for a few days in each case.  Very little of the public response was supportive of the copyright holder, with the following comments (taken from The Age newspaper’s Letters to the Editor on 6 and 8 February 2010) being typical: ‘I come from a land down under; of corporate greed where judges blunder …’; ‘The Men at Work court decision is a victory for exploitation over art.’; ‘The Federal Court’s decision against Men at Work over the Kookaburra Sits in the Old Gumtree riff is a sorry day for Australian tradition.  Few Australians in the 1970s or 1980s would have been aware that Kookaburra had a known writer, and they would have regarded it as a folk song, and therefore in the public domain.’; and ‘In its Men at Work decision, the Federal Court has demonstrated just how stupid copyright law can be.  No wonder it is so often ignored.’

It is just as well the Federal Court does exist to uphold copyright law, otherwise authors such as Marion Sinclair, and their assigns, would be fated to be the victims, rather than beneficiaries, of their own success!

1.            ‘Gene Patents’ in the Spotlight

What? Public and political debate, and mainstream media coverage of the ‘gene patents’ issue.

Why does it rate #1? For its superlative level of public and political exposure alone, the ‘gene patents’ debate is a clear winner for 2010.  Indeed ‘debate’ may be too mild a term, for it seems that the ability to obtain patents for genetic technologies in Australia is experiencing a sustained attack from a number of social, academic and political quarters.

Patents covering genetic technologies generally, and those that purportedly confer proprietary rights over human genes in particular, are controversial in many countries.  As many readers will no doubt be aware, early in 2010 a judge in the District Court for the Southern District of New York found numerous claims in patents held by Myriad Genetics, Inc, and others, invalid on the ground that ‘isolated DNA’, which contains sequences ‘found in nature’, do not constitute patentable subject matter.  The patents in question relate to certain gene sequences (termed ‘BRCA1’ and ‘BRCA2’) that have been found to act as indicators in the susceptibility of women to developing breast cancers.  As such, these genes can be used as the basis for powerful predictive, preventative and diagnostic tools.

The District Court decision has been appealed to the Federal Circuit in the US, but this initial victory was sufficient to encourage cancer advocacy group Cancer Voice Australia and Brisbane breast cancer patient Yvonne D’Arcy to initiate invalidity proceedings in the Federal Court, in relation to the equivalent Australian patent.  The litigation is supported by patent law expert Dr Luigi Palombi from Australian National University and Sydney University, and is being run on a pro bono basis by Maurice Blackburn partner Rebecca Gilsenan and well-known IP barristers David Catterns QC and Peter Cashman.

The gene patents issue had been simmering in Australia for some time, with a Senate Enquiry into the subject having been underway for over a year, but with the Myriad decision in the US, and the Australian litigation, it exploded into the headlines.  Within the space of a few months, gene patents became the subject of numerous news articles and opinion pieces (including one by the former leader of the Opposition, and current Shadow Minister for Communications and Broadband, Malcolm Turnbull), and a major report on the Australian national broadcaster’s flagship current affairs program Four Corners.  Almost all of this coverage was generally critical of ‘gene patents’, without ever providing a satisfactory definition of the term.

Myriad responded to the legal action and the adverse publicity by offering to ‘gift’ the BRCA gene patent to the ‘people of Australia’, in exchange for withdrawal of the law suit.  As far as we are aware, this offer has not been taken up.

Then, after a number of delays (including one resulting from the calling of an early Federal election), the Senate Committee conducting the gene patents enquiry finally produced an ambivalent report, which expressed skepticism as to the value (and validity) of patents claiming isolated genetic material, but stopped short of recommending an express prohibition on the patenting of genes.

Somewhat dramatically, however, the Committee’s report was overshadowed by the introduction into the Australian Senate, only two days earlier, of proposed legislation intended to outlaw the patenting of ‘biological materials including their components and derivatives, whether isolated or purified or not and however made, which are identical or substantially identical to such materials as they exist in nature.’  Since two of the main supporters of the legislation were member of the Gene Patents Committee, it is hardly plausible that the timing was coincidental.  If this legislation is passed, it could have far-reaching consequences for the patent system in Australia, since the proposed exclusion would apply not only to isolated genes, but also to a wide variety of other useful ‘biological materials … components and derivatives’ that happen to exist in nature.

The year thus concluded with the invalidity action pending against the BRCA patent, and yet another Senate Committee being established to review and solicit comments on the proposed ‘anti-gene-patent’ legislation.  Submissions to the Committee are due by 25 February 2011, so it seems that the gene patents issue will remain on the agenda for the foreseeable future.

Read more on the Patentology blog: about the Myriad litigation; about the Senate Enquiry; about the Four Corners program; about the print media coverage; about the proposed amendments to the Patents Act, and the new enquiry.

Intellectual Property from the Land Down Under, 2010 Part 2


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