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IP @ Ashurst

September 2014

From the EditorsWelcome to the September 2014 edition of IP @ Ashurst. In this edition, we report on three recent decisions by the Full Court of the Federal Court of Australia.

Firstly, we cover the Full Court’s decision in Kosciuszko Thredbo, in which the appeal by the operators of the Thredbo resort and village to prevent a competitor from using the word THREDBO in various company, business and domain names was unsuccessful. We also report on a similar result in the Lift Shop case, whereby the Full Court affirmed the first instance finding that the use of the words “Lift Shop” in respect of online search results using search engine optimisation practices did not constitute “use” in a trade mark context. The third Full Court decision in Tramanco concerned patent infringement claims – of note was that the unsuccessful appellant was not ordered to pay the respondent’s costs.

Also in patents, we report on the Fieldturf case which illustrates the difficulties that can arise where it is alleged that an invention was used before the priority date and therefore lacks novelty, and the Vringo case concerning the grant of a “Sabre order” in patent infringement proceedings.

In marketing and advertising, we report on the Telstra v Phone Directories case, in which Telstra’s claims that competitors’ use of the colour yellow in relation to print, online and mobile phone directories constituted misleading and deceptive conduct were unsuccessful. We also report on Unilever’s unsuccessful application for an interlocutory injunction against rival Revlon in relation to alleged misleading representations concerning clinical deodorant products.

This edition also includes reports on the release of the Australian Government’s Online Copyright Infringement Discussion Paper and plans to combat online piracy, and the infringement of the “Halal Certification” trade mark.

In overseas developments, we have also covered two noteworthy US cases. The Aereo case considered copyright infringement by an online streaming service and the Alice case considered the patentability of “business method” inventions.

We hope you enjoy this edition!

Elizabeth Ireland, Senior Associate, Sydney [email protected]

Lisa Ritson, Partner, Sydney [email protected]

IP @ Ashurst • September 2014

ContentsFrom the Editors 1

IP Bite: US Supreme Court halts Aereo’s Internet TV service 3

Ski resort fails in second attempt to wipe-out business using Thredbo name 4

Court elevates importance of “use” in the trade mark context 6

Federal Court orders Tramanco to pay 20% of BPW Transpec’s costsfollowing patent proceedings 8

Not so distinctive directories: The Federal Court finds that the colour Yellow is not inherently distinctive of Telstra’s products 10

Nothing new under the sun? The perils of hindsight when proving prior use 12

No sweat for Revlon as Unilever fails to pass the sniff test in interlocutory injunction proceedings 14

Government releases Discussion Paper in plan to combat online piracy 16

“That’s a lot of kebab” – Trade mark infringement leaves kebab shop with a bill of $91,015 18

The Federal Court clarifies the use of Sabre orders for third party discovery 20

IP Bite: Alice Corporation v CLS Bank – the shape of things to come for “business method” patents? 22


IP Bite

US Supreme Court halts Aereo’s Internet TV service American Broadcasting Cos., Inc. v Aereo, Inc., Supreme Court of the United States, 25 June 2014

On 25 June 2014, the US Supreme Court held that Aereo, Inc. had infringed copyright by communicating television programs to the public via its online streaming service. The decision echoes the Full Federal Court of Australia’s finding in 2012, that a similar service provided by Optus, called “Optus TV Now”, infringed copyright (see our alert on the “Optus TV Now” case in the February 2012 IP Alert ).

Aereo’s serviceAereo provided its subscribers with the ability to record and stream television programs over the internet. Like Optus TV Now, Aereo’s service was designed to be a cloud-based personal digital video recorder. When a subscriber selected a program via Aereo’s website, Aereo’s server assigned to the subscriber a dedicated television antenna (one of thousands located in a warehouse). The antenna received the broadcast and Aereo’s server saved a unique copy of the program for the subscriber. Within seconds after the broadcast commencing, the subscriber could stream and watch their copy of the program.

The US Supreme Court’s decision A 6:3 majority of the US Supreme Court held (contrary to the courts below) that Aereo’s service infringed the exclusive rights of television producers, distributors and broadcasters to communicate their copyright works to the public.

Aereo argued that it did not “communicate” any television programs because it merely provided the equipment to its subscribers, who were responsible for initiating and determining the content of each communication. The majority rejected that argument and held that both Aereo and its subscribers communicated the programs. The majority likened Aereo to a cable television company re-broadcasting free-to-air television via its network.

The dissenting judges criticised this analogy and held that Aereo did not communicate any television programs because “the subscribers call all the shots”. Unlike a cable television system, Aereo’s system lay dormant until the subscriber activated it.

Aereo argued that it did not communicate television programs “to the public” because each copy of a television program was personal to a subscriber and not streamed to any other subscriber. The majority rejected that argument and held that the number of discrete copies and communications made no difference. Viewed overall, Aereo transmitted the same television program to a large number of unrelated people.

ImplicationsAs the dissenting judges recognised, the decision has implications for all providers of cloud-based services that transmit copyright works to their users. Such service providers should review whether their legal position is affected by the US Supreme Court’s expansive interpretation of the communication right in this case.

Stuart D’Aloisio, Senior Associate, Melbourne stuart.d’[email protected]

Peter Chalk, Partner, Melbourne [email protected]

http://www.ashurst.com/doc.aspx?id_content=6922


What you need to know• The Full Federal Court has dismissed an appeal by

the operators of the Thredbo resort and village to prevent competitors from using the word THREDBO in various company, business and domain names.

• When determining whether a particular product is likely to mislead or deceive, there is no requirement for the claimant to demonstrate exclusivity. Rather, what must be demonstrated is that the use of a particular get-up or name in relation to that product is likely to mislead or deceive persons to believe that the two products are associated.

• The meaning of the terms of a commercial contract are ascertained by what a reasonable person in the position of the parties would have understood those terms to mean, which involves consideration of purpose, context and market.

What you need to do• The appeal judgment reiterates the difficulties

encountered when claiming a secondary meaning over a geographic name. Companies should be aware that choosing trade names or slogans that use geographic, or otherwise descriptive, words is likely to result in difficulties in preventing competitors from adopting similar names or phrases.

• Companies also need to consider the practical working of any clause in a commercial agreement that seeks to limit the other party’s activities. This case demonstrates that it is in both parties’ interests to bed these matters down before entering into an agreement, as a judicial decision on a clause may not align with either party’s understanding of the clause.

BackgroundLast year the operators of the New South Wales ski resort village of Thredbo lost proceedings in the Federal Court of Australia that sought to restrain competing accommodation providers in the village from using the word THREDBO in their marketing (as reported in our September 2013 edition of IP @ Ashurst). The operators claimed that the use was misleading or deceptive and passing off, as the word had acquired a meaning or brand name beyond its use as a geographic descriptor.

In July of this year, the resort operators (the appellants) were unsuccessful in an appeal of the decision before Justices Siopis, Rares and Katzmann of the Full Federal Court.

Secondary meaning in the word THREDBOThe first issue that arose on appeal was whether the primary Judge applied the wrong test in concluding that the appellants had not established a secondary meaning in the word THREDBO. The appellants submitted that rather than asking whether it had been demonstrated that THREDBO was identified exclusively with the appellants’ business, the Court should have asked whether the use of the word by the competing businesses was calculated to lead consumers to the belief that their businesses were that of the resort operators.

The Full Federal Court agreed that the primary Judge had erred in holding that the appellants had to prove exclusivity in order to demonstrate a secondary meaning and establish a contravention of sections 18 and 29 of the Australian Consumer Law. Their Honours pointed to Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397 in holding that the correct question is whether the use of a particular name in relation to a product is likely to mislead or deceive persons familiar with the claimant’s product to believe that the two products are associated, having regard to consumers’ knowledge of the product.

Ski resort fails in second attempt to wipe-out business using Thredbo name

Kosciuszko Thredbo Pty Limited v ThredboNet Marketing Pty Limited [2014] FCAFC 87

http://www.ashurst.com/doc.aspx?id_Content=9619


Whether respondents’ conduct was misleading or deceptiveDespite the fact that the primary Judge had erred in relation to the issue of secondary meaning, the Full Court nevertheless found that his Honour’s reasoning regarding the alleged misleading or deceptive nature of the respondents’ conduct, which applied Hornsby Building Information Centre Proprietary Limited v Sydney Building Information Centre Limited (1978) 140 CLR 216, was sound. The Full Court rejected the appellants’ argument that they were identified as THREDBO in the public mind and that any use of the word in relation to business that was or could be conducted at that place would be associated with them. The Full Court found that:

• the appellants were not entitled to monopolise the use of THREDBO;

• the name had not become distinctive of the appellants’ goods or services;

• the respondents’ websites did not have the appearance of those of the appellants and were sufficiently distinguished through the use of disclaimers and the their limited offerings to accommodation;

• search results for THREDBO demonstrated that its usage was consistent with honest and legitimate trading where traders offering accommodation at Thredbo used the geographical name as part of their names; and

• the respondents were therefore not using the name to pass off their offerings as those of the appellants.

The Full Court looked at the respondents’ domain name www.thredbo.com in context, pointing out that a Google search result contained a snippet of content that associated it with accommodation in one particular area of Thredbo and that this content would be reinforced by the disclaimer when the webpage was accessed. Interestingly, their Honours acknowledged that mistaking a search result as a link to a particular site is an error frequently made and found that an ordinary reasonable consumer concerned about an operator’s identity online would have understood the disclaimer’s content. The ordinary reasonable consumer looking for holiday accommodation would be careful in selecting a provider, accommodation and price, considering the likely cost involved.

While there was some evidence of confusion led by the appellants, it did not suggest that an ordinary reasonable consumer would have been misled or deceived into believing that the websites were associated with the appellants.

Whether a clause in the sublease was invalidAt first instance, the primary Judge found that a clause in subleases between the appellants and the respondents, prohibiting the respondents from using the word THREDBO in connection with their business, was a restraint of trade and could not be read down.

The Full Court noted that the meaning of a commercial contract is to be ascertained by what a reasonable business person in the parties’ position would have understood the terms to mean. It dismissed the appellants’ submission that the clause should be construed as restricting the use of the word only in the name of a business carried on by the respondents, finding that the clause on its terms did not limit the prohibition in such a way, but rather created a “very wide ambit” of operation. However, their Honours found that the parties could not have intended the clause to prohibit the use of THREDBO as part of the premise’s address, as the sublease required the respondents to let the premises as holiday accommodation, which would necessarily require the provision of the address to others. Reading the clause as prohibiting the use of THREDBO in any advertising for the premises would be commercially nonsensical and would create a commercial inconvenience when reading the two clauses. A reasonable business person in the parties’ position would have understood the clause as restraining the use of THREDBO in respect of activities other than those central to the purpose of the sublease, meaning that the respondents did not breach the clause.

While the clause’s practical working imposed a restraint of trade, the clause’s construction, when read with the sublease as a whole, meant that questions regarding unreasonableness and reading down did not arise. Their Honours did however agree with the primary Judge that the clause was void at common law.

As the appellants failed to succeed on any ground, the appeal was dismissed with costs.

Leah Jessup, Lawyer, [email protected]

Anita Cade, Partner, [email protected]

www.thredbo.com


What you need to know• On 20 June 2014, the Full Federal Court of Australia

affirmed a decision by a primary Judge which found that the use of the words “Lift Shop” in respect of online search results using search engine optimisation practices did not constitute “use” in a trade mark context.

• The decision highlights the importance of proving “use” in the trade mark context in order to establish infringement.

What you need to do• Companies alleging trade mark infringement by their

competitors will bear a heavy burden in proving that an impugned mark was used “as a trade mark” in circumstances where the mark possesses descriptive elements. Potential claimants should consider whether, notwithstanding the presence of such descriptive elements, the impugned mark functions as a “badge of origin” to distinguish their competitor’s good and services.

BackgroundEasy Living Home Elevators Pty Ltd (Easy Living) and Lift Shop Pty Ltd (Lift Shop) are competitors in the supply of customised elevators and disability platform elevators.

Lift Shop is the owner of Australian Trade Mark No. 1198409 – a composite mark registered in respect of elevators:

In 2012, Lift Shop commenced proceedings against Easy Living alleging that Easy Living had infringed one of its registered trade marks, engaged in misleading and deceptive conduct in breach of the Australian Consumer Law and committed the common law tort of passing off in respect of Easy Living’s use of the words “Lift Shop” on its website and in search engine results influenced by Easy Living’s search engine optimisation practices.

FindingsAs reported in our December 2013 edition of IP @ Ashurst, on 10 September 2013, the Federal Court of Australia held that Lift Shop had not made good its claims (see Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd [2013] FCA 900). Among other things, Justice Buchanan held that Easy Living’s use of the words “lift shop” was descriptive and therefore did not satisfy the requirement of “use” in order to establish trade mark infringement.

Lift Shop appealed Justice Buchanan’s decision. On 20 June 2014, the Full Federal Court of Australia dismissed Lift Shop’s appeal. Justices Besanko, Yates and Mortimer affirmed Justice Buchanan’s decision and found that Easy Living had not used the words “Lift Shop” “as a trade mark” insofar as Easy Living’s search engine results were concerned. The Full Court found that the search terms “lift shop” would have been understood by internet users as referring to the character of Easy Living’s business, namely, the supply of elevators.

“Use” in a trade mark contextIn order to prove trade mark infringement under section 120 of the Trade Marks Act 1995 (Cth), a trade mark owner must prove that the alleged infringer used the impugned mark “as a trade mark”.

“Use” in a trade mark context is likely to be established if an impugned mark is used as a “badge of origin” to distinguish an alleged infringer’s goods and services with those of other traders, notwithstanding that the impugned mark may possess descriptive elements.

In the present case, the Full Federal Court found that when considered objectively, Easy Living’s use of the words “Lift Shop” in the title of its web page did not function to distinguish its goods or services from those of other traders.

Ben Teeger, Lawyer, Sydney [email protected]


Court elevates importance of “use” in the trade mark contextLift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd [2014] FCAFC 75

CREDIT: This article first appeared on WTR Daily, part of World Trademark Review, in July 2014. For further information, please go to www.worldtrademarkreview.com

http://www.ashurst.com/page.aspx?id_content=9919

www.worldtrademarkreview.com


What you need to know • Although orders for costs in patent infringement and

revocation proceedings usually “follow the event”, a court may, where appropriate, deal with costs on a global basis in a way that reflects the outcome of both the infringement case and the validity case taking into account each party’s relative lack of success on the issues tried.

• In this case, although the respondent was ultimately successful in defending the infringement claim, a considerable amount of time was taken at trial and on appeal on questions of construction of the relevant claims, on which the respondent was ultimately unsuccessful. The Court did not, therefore, order that the appellant pay the respondent its costs of the proceedings.

• Two factors were considered by the Full Court as supporting a modest award of costs to the respondent:

– the fact that the respondent was ultimately successful in the sense that it is free to market its product; and

– the fact that there were general costs of the proceedings both at first instance and on appeal that could not be tied to any particular issue.

BackgroundOn 16 May 2014, the Full Court of the Federal Court made costs orders in respect of proceedings brought by the appellant, Tramanco Pty Ltd (Tramanco), against the respondent, BPW Transpec Pty Ltd (BPW), for alleged patent infringement.

Tramanco is the holder of a patent said to concern a method for logging the performance of a vehicle suspension system (Patent). BPW is a wholly owned Australian subsidiary of a German company that manufactures trailer axles and electronic braking systems for trailers (Parent Company).

Tramanco claimed that BPW had infringed the Patent by importing, making, selling or otherwise dealing with an electronic braking system manufactured by the Parent Company.

BPW cross-claimed for revocation of the Patent on grounds that the relevant claims were invalid on the basis that they:

• lacked novelty;

• lacked an inventive step; and

• failed to disclose the best method of performing the invention and were not clear, succinct and fairly based on the specification.

Federal Court orders Tramanco to pay 20% of BPW Transpec’s costs following patent proceedingsTramanco Pty Ltd v BPW Transpec Pty Ltd (No 2) [2014] FCAFC 58


The decisions at first instance and on appealAt first instance (Tramanco Pty Ltd v BPW Transpec Pty Ltd [2012] FCA 613), Justice Dowsett dismissed Tramanco’s infringement claim, finding that the electronic braking system manufactured by the Parent Company and supplied by BPW did not infringe the relevant claims.

His Honour also upheld BPW’s claim for revocation of the Patent on the basis that the relevant claims had been anticipated by certain prior art, were not clear, succinct and fairly based on the specification, and that the specification failed to disclose the best method of performing the invention.

On appeal (see Tramanco Pty Ltd v BPW Transpec Pty Ltd [2014] FCAFC 23), Chief Justice Allsop and Justices Greenwood and Nicholas of the Full Court of the Federal Court upheld the primary Judge’s finding that none of the relevant claims of the Patent were infringed.

On the question of validity, their Honours found that none of the claims were shown to be invalid except for three (claims 21, 22 and 23), in respect of which the specification failed to disclose the best method of performing the invention.

The costs principles applied by the Full CourtIn deciding the appropriate costs order to be made in this case, the Full Court applied the following principles stated by Chief Justice Black and Justice French in Ruddock v Vadarlis (No 2) (2001) 115 FCR 229:

• Ordinarily costs follow the event and a successful litigant receives costs in the absence of special circumstances justifying some other order.

• Where a litigant has succeeded only upon a portion of the claim, the circumstances may make it reasonable that the litigant bear the expense of litigating that portion upon which he or she has failed.

• A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered to pay the other parties’ costs of them.

Key factors considered regarding costsWith regard to the infringement case, the Full Court noted that the principal argument relied upon by BPW in response to the allegations of infringement was based upon a construction of the relevant claims that was rejected on appeal. As such, even though the infringement action taken against the respondent failed both at trial and on appeal, each side had a measure of success in relation to some issues but not others.

With respect to BPW’s cross-claim, the Full Court noted that BPW was largely unsuccessful on the issue of validity, with its success in relation to claims 21, 22 and 23 bearing little relationship to the hearing time spent at trial and on appeal. To the contrary, nearly all of the time taken up in the hearing of the appeal in relation to validity was devoted to issues upon which BPW failed.

The Full Court also noted that this was not a case in which the evidence relevant to infringement and validity could be readily disentangled. In particular, the construction argument which featured most prominently in the infringement case was also central to the issues of novelty and insufficiency raised in the context of BPW’s cross-claim.

The decision of the Full CourtAs such, their Honours held that it was appropriate to deal with costs on a global basis and in a way that reflected the outcome of both the infringement case and the validity case, taking into account Tramanco’s lack of success on infringement and BPW’s lack of success on various issues raised under its cross-claim.

The Full Court also found that there were two factors that supported a modest award of costs to BPW:

• the fact that BPW was ultimately successful in the sense that it is free to market its product; and

• the fact that there were general costs of the proceedings both at first instance and on appeal that could not be tied to any particular issue.

For the reasons above, the Full Court ordered that:

• The costs orders made by the primary Judge be set aside and, instead, that Tramanco pay 20% of BPW’s costs of the proceedings (including the cross-claim).

• Tramanco pay 20% of BPW’s costs of the appeal.

James Hoy, Lawyer, Sydney [email protected]

Ben Miller, Partner, [email protected]


What you need to know • On 30 May 2014, Justice Murphy delivered judgment

in Telstra Corporation Limited & Anor v Phone Directories Company Pty Ltd & Ors [2014] FCA 568. Justice Murphy also issued supplementary reasons for judgment in Telstra Corporation Limited v Phone Directories Company Pty Ltd (No 2) [2014] FCA 741.

• Telstra alleged that a number of telephone directory companies (respondents) had engaged in misleading and deceptive conduct and passing off in relation to the use of the colour yellow in respect of print directories, websites and mobile apps.

• Ultimately, while Justice Murphy found that Telstra had acquired a secondary reputation in the colour yellow in respect of directories, his Honour was not satisfied that Telstra had made out its claims, including because the colour yellow was not distinctive in and of itself and is internationally recognised as a standard colour used in respect of directories.

• In addition, Justice Murphy found that Telstra itself had engaged in misleading and deceptive conduct in respect of comparative advertising which purported to compare the customer usage of its own telephone directories and those of its competitors.

• His Honour’s decision is significant in that it considers the international recognition of a colour as relevant insofar as international use of that colour affects the perception of Australian consumers.

Not so distinctive directories: The Federal Court finds that the colour Yellow is not inherently distinctive of Telstra’s productsTelstra Corporation Limited & Anor v Phone Directories Company Pty Ltd & Ors [2014] FCA 568

Telstra Corporation Limited v Phone Directories Company Pty Ltd (No 2) [2014] FCA 741


What you need to do • In the context of misleading and deceptive conduct

and / or passing off, companies should be aware that if they use a single primary colour to signify products, small differences in the get up of other traders using that same colour may render those traders immune from action.

• The international use of a particular colour will be relevant insofar as the international use becomes known to Australian consumers and affects the association between the colour and specific goods and services provided by an Australian trader.

The judgmentTelstra contended that, due to a historically strong yellow theme in its marketing, it had achieved a secondary reputation in the colour yellow, such that consumers associated the colour yellow with Telstra as the producer of the Yellow Pages directories and associated products.

Therefore, Telstra alleged that the respondents, by publishing their print directories with yellow covers and designing their website and mobile app with prominent use of yellow, created the impression or represented to consumers that their products were published by, originated from or were otherwise associated or affiliated with Telstra or its Yellow Pages directories.

Justice Murphy held that Telstra failed to establish that a significant proportion of the classes of directory users or advertisers would have suffered from such a misconception, as:

• the association between yellow and Telstra or its products was not a strong one for consumers; and

• the respondents had done enough to distinguish their directories.

The association between the colour yellow and TelstraJustice Murphy was willing to accept that Telstra had a secondary reputation in the colour yellow, but did not consider that the association between yellow and Telstra or its products was a strong one for consumers, as:

• yellow is not distinctive in itself, being a colour widely used on products and services;

• yellow is internationally recognised as a standard colour of classified directories and to some extent was so recognised by Australian consumers;

• Telstra only ever used the colour yellow coupled with its well-recognised Yellow Pages Trade Marks including the Walking Fingers, and never independently; and

• Telstra’s use of yellow on its directory covers after 1996 was inconsistent and declined over time.

In his supplementary reasons for judgment, his Honour also noted that online and mobile app directory users are more likely to be concerned with functionality rather than branding, and it is unlikely that directory users would locate and use a website or app due to its use of the colour yellow.

Justice Murphy considered that even if Telstra had acquired a strong reputation in yellow, the respondents had done enough to distinguish their directories, and noted in particular the greater local focus of the respondents’ directories, along with their smaller, more compact formats. His Honour stated that:

In using a single primary colour to signify its directories Telstra must accept that small differences in the get up of other traders using yellow will render them immune from action. Otherwise, to paraphrase Stephens J in Hornsby [Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd [1978] HCA 11; (1978) 140 CLR 216], s 52 becomes an instrument for the creation of a monopoly in the use of a primary colour.

The cross-claimsThe respondents filed a cross-claim alleging misleading and deceptive conduct by Telstra in publishing advertisements which purported to set out the comparative consumer usage of Telstra’s and respondents’ directories. Justice Murphy held that the advertisements were misleading because the advertisements did not provide a fair or accurate picture of the comparative usage of the rival directories. Furthermore, Telstra made no attempt to set out the limitations of the survey data in a footnote.

The respondents also filed a cross-claim of unjustifiable threats of copyright infringement pursuant to section 202 of the Copyright Act 1968 (Cth). However, Justice Murphy did not consider that the relevant threats were unjustifiable within the meaning of section 202, as the threat of proceedings and the proceedings themselves were soundly made on the law as it stood at the time (ie at the time Telstra made its threat, Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd [2002] FCAFC 112; (2002) 119 FCR 491 was binding Full Court authority, and remained good law until the High Court decision in IceTV Pty Ltd v Nine Network Australia Pty Ltd [2009] HCA 14; (2009) 239 CLR 458).

An ongoing “yellow” sagaAs reported in the June 2014 edition of IP @ Ashurst, Justice Murphy also refused Telstra’s YELLOW trade mark application in Phone Directories Company Australia Pty Ltd v Telstra Corporation Limited [2014] FCA 373 and Phone Directories Company Australia Pty Ltd v Telstra Corporation Limited (No 2) [2014] FCA 418, as the YELLOW mark lacked capacity to distinguish Telstra’s telephone directory-related goods and services.

Amber Dalrymple, Lawyer, Sydney,[email protected]


http://www.ashurst.com/doc.aspx?id_content=10602


Nothing new under the sun? The perils of hindsight when proving prior useFieldturf Tarkett Inc v Tigerturf International Limited [2014] FCA 647

What you need to know• Fieldturf Tarkett Inc v Tigerturf International Limited

[2014] FCA 647 concerned an opposition to two patent applications relating to synthetic turf.

• The judgment delivered by Justice Jagot of the Federal Court of Australia on 20 June 2014, explains the principles that apply, and illustrates some difficulties that can arise, where it is alleged that an invention was used before the priority date and so lacks novelty.

What you need to do• Where a patent or patent application is to be

challenged on grounds that the invention was used before the priority date, care must be exercised when gathering evidence to ensure that oral testimony is unaffected by hindsight and is corroborated by documentary records wherever possible.


BackgroundFieldturf filed Australian patent application no. 2004201711 (2004 Application) for an invention relating to synthetic grass surfaces. Compared to earlier forms of synthetic turf, the product described in the 2004 Application employed wider spacing between the blades of artificial grass (called “ribbons”), a relatively long ribbon length, and infilling with sand and rubber to a depth corresponding to two-thirds of the ribbon length, to give the surface resiliency.

Tigerturf opposed the 2004 Application on grounds which included that the alleged invention was not novel at the 1997 priority date. Tigerturf asserted that synthetic turf having the features claimed in the 2004 Application had been installed at several locations in Australia before 1997.

Tigerturf’s opposition succeeded in part before the Commissioner of Patents, who found that three claims of the 2004 Application lacked novelty. That finding was challenged by Fieldturf on appeal to the Federal Court.

The legal principlesUnder Australia’s Patents Act 1990 (Cth) (Act), novelty is assessed by reference to information comprising the “prior art base”. In the case of a document published before the priority date, the information contained in that document will be taken to form part of the “prior art base”.

On the other hand, where an invention is alleged to lack novelty by reason of an act done before the priority date, it will first be necessary to determine what information was made “publicly available” by the doing of that act.

In a 2008 decision, the Full Federal Court explained that, to be “publicly available”, information said to destroy novelty must enable a person skilled in the relevant field to perceive, understand, and practically apply the discovery (Insta Image Pty Ltd v KD Kanopy Australasia Pty Ltd (2008) 78 IPR 20). In a 2005 decision, the Full Court observed that the Act is concerned not simply with whether acts done before the priority date involved prior use of an alleged invention, but with whether those acts “disclosed” the alleged invention (Jupiters Ltd v Neurizon Pty Ltd (2005) 65 IPR 86).

Following Insta Image and Jupiters, Justice Jagot accepted that, even if synthetic grass having the dimensions specified in the 2004 Application was used before the priority date, it would still be necessary to consider whether that use would have enabled a skilled person to perceive, understand and practically apply the interactions between those dimensions claimed in the 2004 Application, including interactions between ribbon spacing, ribbon length and infill depth.

Tigerturf’s evidenceTigerturf relied upon evidence from a witness with more than 20 years experience in the synthetic turf industry, who had been personally involved with the installations alleged to anticipate the 2004 Application. Little documentary evidence was available concerning those installations and Tigerturf’s novelty case was critically dependent upon the reliability of the witness’s recollections.

Justice Jagot applied authorities establishing that oral testimony concerning alleged prior use of a claimed invention will be scrutinized with particular care, especially where the prior use is said to have occurred many years earlier and the witness’s testimony is uncorroborated.

In this case, Justice Jagot expressed difficulty in accepting that Tigerturf’s witness was able to reliably recall the dimensions and features of synthetic turf installed some 18 years earlier, noting that the witness had been involved in hundreds of synthetic turf installations spanning a period of over 23 years. Her Honour’s doubts were reinforced by inconsistencies in the witness’s evidence exposed under cross-examination. In her Honour’s view, the witness’s evidence amounted to reconstruction, rather than recollection, of products used before the priority date.

Justice Jagot also emphasised that, in evaluating evidence of prior use, it is necessary to guard against the effects of hindsight. Her Honour considered it to be highly significant that Tigerturf’s witness had been shown a patent specification which disclosed the features subsequently claimed in the 2004 Application before he was asked to describe the features of the prior art installations relied upon by Tigerturf as destroying novelty. Justice Jagot considered it highly likely that the witness’s attempts to recall the features of the prior art installations had been influenced by his knowledge of the features later claimed in the 2004 Application.

In the circumstances, Justice Jagot was not satisfied that anticipation by prior acts had been established. The case illustrates the difficulties of relying upon uncorroborated oral evidence to establish that a claimed invention was used before the priority date, and the importance of taking care to avoid hindsight when gathering such evidence.

Andrew Rankine, Senior Associate, [email protected]

Ben Miller, Partner, [email protected]


No sweat for Revlon as Unilever fails to pass the sniff test in interlocutory injunction proceedingsUnilever Australia Ltd v Revlon Australia Pty Ltd [2014] FCA 573

What you need to know• The Federal Court rejected a claim for interlocutory relief by Unilever Australia Limited (Unilever) against Revlon Australia Pty

Ltd (Revlon), in relation to alleged misleading representations concerning clinical deodorant products.

What you need to do • When assessing applications for interlocutory relief, the courts will consider whether there is a serious question to be

tried in the light of any applicable discretionary factors which affect the balance of convenience. These factors include, for example:

– the relative prejudice and hardship likely to be suffered by both parties; and

– the impact upon the relevant class of consumers;

if an injunction is granted or refused.


BackgroundUnilever manufactures and sells clinical anti-perspirant deodorant products under the trade names “Rexona Clinical Protection” and “Dove Clinical Protection”. Unilever’s clinical deodorant products were the only such products sold in Australia until January 2014, when Revlon released its competing clinical deodorant product named “Mitchum Clinical”.

To support the release of its Mitchum Clinical product, Revlon conducted an advertising campaign commencing on 3 May 2014. As part of this campaign, Revlon released certain advertisements describing its Mitchum Clinical product as the “ULTIMATE sweat + odour control”, and depicting the words:

• OXYGEN

• NEUTRALISES ALL ODOURS

• NO ODOUR

On 23 May 2014, Unilever filed a claim in the Federal Court alleging (among other things) that Revlon’s advertisements breached section 18 of the Australian Consumer Law.

Unilever also sought interlocutory relief pending the final hearing, seeking to restrain Revlon from:

• publishing advertisements in the form of those which appeared in certain magazines and on YouTube; and

• making representations that:

– Mitchum Clinical controls sweat and odour more effectively than any other antiperspirant deodorant on the Australian market, where Rexona and Dove clinical deodorant products are sold in Australia (First Representation); and

– the use of Mitchum Clinical neutralises all body odour (Second Representation).

Key principlesThe key question before Justice Jacobson was whether Unilever had demonstrated a prima facie case that the relevant advertisements were misleading, and whether the balance of convenience favoured the grant of interlocutory relief.

The fundamental issue was whether Unilever had demonstrated a sufficient probability of success to justify the grant of interlocutory relief, in light of the relevant discretionary considerations. These included the comparative prejudice and hardship likely to be suffered by the parties, and the impact on the relevant class of consumers, if injunctive relief is granted or refused.

First RepresentationUnilever argued that the First Representation was made in the words “ULTIMATE sweat + odour control”, and that these words implied that Revlon’s product was more effective than Unilever’s Rexona and Dove clinical deodorant products. In response, Revlon asserted that the First Representation was a mere puff of the type commonly used in advertising.

Justice Jacobson held that there was a serious question as to whether the First Representation constituted a representation, or a mere puff. However, his Honour declined to grant the injunctive relief sought, on the basis of discretionary considerations. In particular, his Honour noted that an early final hearing had been planned for the following month (scheduled for September 2014). His Honour also considered that there was a need to determine the impact of the advertisement on the relevant class of consumers.

Second RepresentationJustice Jacobson acknowledged that the Second Representation (ie, that Mitchum Clinical neutralises all body odour) was made in all of Revlon’s advertisements. However, his Honour noted that Unilever had chosen not to pursue relief in respect of certain paragraphs of the originating application, which sought orders restraining Revlon from making representations that Mitchum Clinical contained oxygen. This made it difficult for Justice Jacobson to form a view about Revlon’s claim in the Second Representation.

On balance, his Honour found that the accuracy or otherwise of the Second Representation could not be resolved during the interlocutory stage of the proceeding. The evidence provided was insufficient to establish a prima facie case to the level required for the grant of interlocutory relief.

Other considerationsJustice Jacobson also noted that it would be difficult to determine the precise effect on Revlon of any grant of interlocutory relief. However, it was clear that an injunction would have “some adverse effect” on Revlon’s worldwide marketing campaign. His Honour was also influenced by the fact that Unilever still retained 93% of the market for clinical deodorant products, following the arrival of Revlon’s Mitchum Clinical product.

Amruta Bapat, Lawyer, Melbourne [email protected]

Peter Chalk, Partner, Melbourne [email protected]


Government releases Discussion Paper in plan to combat online piracy

What you need to know • The Australian Federal Government has officially released the Online

Copyright Infringement Discussion Paper.

• The Discussion Paper contains three draft proposals which would amend the Copyright Act 1968 (Cth), being the proposed extension of the:

– authorisation liability to ISPs;

– injunctive relief to block infringing overseas sites; and

– safe harbour scheme.

• The deadline for submissions in response to the Discussion Paper was 1 September 2014.

BackgroundThe Federal Government has now officially released (after a prior leak) the Online Copyright Infringement Discussion Paper and has also sought public submissions on the draft proposals to address online piracy.

In February this year, the Commonwealth Attorney-General, Senator the Hon George Brandis QC, signalled that an online piracy crackdown would be upcoming when he spoke at the Australian Digital Alliance Copyright Reform Forum.

The Discussion Paper contains three draft proposals to change the Copyright Act 1968 (Cth) to address the issue of online piracy.


1. Extended authorisation liabilityIn what appears to be an attempt to avoid the High Court decision in Roadshow Films v iiNet Limited [2012] HCA 16 (as reported in IP @ Ashurst on April 2012), the first proposal states:

“ The Copyright Act would be amended the clarify the application of authorisation liability under sections 36 and 101 to ISPs…The “power to prevent” the infringing act would no longer be a separate element, but would be only one of a number of relevant factors in determining whether “reasonable steps” were taken to prevent or avoid the infringement. The amendments would clarify that the absence of a direct power to prevent a particular infringement would not, of itself, preclude a person from taking reasonable steps to prevent or avoid an infringing act.”

The Government has also posed the following questions in relation to the proposal:

• What would constitute “reasonable steps” for ISPs to prevent or avoid copyright infringement?

• How should the costs of any “reasonable steps” be shared between industry participants?

• Should the legislation provide further guidance on what would constitute “reasonable steps”?

• Should different ISPs be able to adopt different “reasonable steps” and, if so, what would be required within a legislative framework to accommodate this?

• What rights should consumers have in response to any scheme or “reasonable steps” taken by ISPs or rights holders? Does the legislative framework need to provide for these rights?

The discussion paper states that the Government is looking to industry to agree on appropriate schemes or arrangements on what would constitute “reasonable steps” to be taken by ISPs. The Government has explicitly stated that it “would not expect any industry scheme or commercial arrangement to impose sanctions without due process, or any measures that would interrupt a subscriber’s internet access”.

2. Extended injunctive relief to block infringing overseas sitesThe second proposal is that the Copyright Act be amended to “enable rights holders to apply to a court for an order against ISPs to block access to an internet site operated outside Australia, the dominant purpose of which is to infringe copyright. Rights holders would be required to meet any reasonable costs associated with an ISP giving effect to an order and to indemnify the ISP against any damages claimed by a third party.”

The Government has also asked what matters a court should consider when determining whether to grant an injunction to block access to a particular website.

3. Extended safe harbour schemeThe third proposal is to amend the Copyright Act “to extend the application of the safe harbour scheme to entities engaged in the activities set out in sections 116AC to 116AF. This would be achieved by removing the reference to ‘carriage service provider’ and replacing it with a definition of ‘service provider’, being any person who engages in activities defined in sections 116AC to 116AF”.

The Government has posed the question whether the proposed definition would adequately and appropriately expand the safe harbour scheme.

The Discussion Paper explains that adopting the definition of “carriage service provider” from the Telecommunications Act 1997 (Cth) has resulted in entities providing services that fall within the four categories of activity (in sections 166AC to 116AF) being unable to take advantage of the safe harbour scheme unless they provide network access “to the public”. For example, the Discussion Paper states that the definition currently excludes a university but that such an entity should be captured by the safe harbour scheme.

Other questions posed in the Discussion Paper are:

• How can the impact of any measures to address online copyright infringement best be measured?

• Are there alternative measures to reduce online copyright infringement that may be more effective?

• What regulatory impacts will the proposals have on you or your organisation?

• Do the proposals have unintended implications, or create additional burdens for entities other than rights holders and ISPs?

Interestingly, despite widespread speculation, the draft proposals do not include a three-strikes policy. Generally, under a three-strikes policy, often known as “graduated response schemes”, internet users can receive two warnings for allegedly infringing behaviour before further action (such as a penalty, internet disconnection or reduced internet speed) is taken at the third strike.

Mary Papadopolous, Lawyer, [email protected]

Peter Chalk, Partner, [email protected]


What you need to know• In 2013, the Halal Certification Authority Pty Limited

brought proceedings against Scadilone Pty Ltd (owner of Sofra Pizza Pide & Kebab House), White Heaven Pty Ltd (owner of White Heaven Kebabs) and Quality Kebabs Wholesalers Pty Limited (together, the respondents).

• For a 13 month period during 2012 and 2013, the respondents used the applicant’s registered trade mark by displaying false certificates which incorrectly suggested that the establishments had been certified by the Halal Certification Authority.

• The respondents were found liable for;

– trade mark infringement under section 120(2)(d) of the Trade Marks Act 1995 (Cth); and

– misleading and deceptive conduct under section 18 of the Australian Consumer Law (ACL).

• The director of Quality Kebabs was also found personally liable for being knowingly involved in misleading and deceptive conduct for his involvement in creating the false certificates.

• Nominal damages were awarded for trade mark infringement, as well as additional damages under section 126(2) of the Trade Marks Act.

• An injunction and an order of corrective advertising were also ordered against Quality Kebabs to avoid trade mark infringement in the future.

BackgroundThe applicant in these proceedings, the Halal Certification Authority Pty Limited, is in the business of certifying that food has been prepared in such a way that it is “halal”, that is, it has been slaughtered in accordance with relevant Islamic rites.

The respondents in this matter; Scadilone Pty Ltd (owner of Sofra Pizza Pide & Kebab House) (Sofra Pizza Pide & Kebab House); White Heaven Pty Ltd (owner of White Heaven Kebabs) (White Heaven Kebabs); and Quality Kebabs Wholesalers Pty Limited (Quality Kebabs), as well as their directors and an employee from Sofra Pizza Pide & Kebab House, were alleged to have used the applicant’s

“That’s a lot of kebab” – Trade mark infringement leaves kebab shop with a bill of $91,015Halal Certification Authority Pty Limited v Scadilone Pty Limited [2014] FCA 614


trade mark without its permission. The respondents did so by displaying false certificates in their premises entitled “Certificate of Halal Products”, which most importantly contained the applicant’s trade mark.

Mr Kose, the director of Quality Kebabs was found either to have made the false certificates himself, or instructed an employee to do so. As a matter of practice, Quality Kebabs then supplied the false certificates to its customers, including Sofra Pizza Pide & Kebab House and White Heaven Kebabs, to display. Mr Kose knew that Quality Kebabs had not been certified by the applicant, yet supplied the false certificates in any event.

The applicants sought an award of damages (in order of the licence fees which would have been paid had the respondents sought appropriate certification from the applicants), injunctions and the administration of a course of corrective advertising.

LiabilityIn June 2014, Justice Perram handed down orders in respect of the infringement of the applicant’s seal (registered trade mark number 1005647).

Quality Kebabs and Mr KoseQuality Kebabs was found to be liable for trade mark infringement under section 120(2)(d) of the Trade Marks for using the applicant’s trade mark on the certificates in relation to kebabs, which are goods that were closely related to the services for which the mark was registered.

In addition to this, Quality Kebabs was also found liable under section 18 of the ACL for misleading and deceptive conduct in relation to the certificates.

Mr Kose was also found personally liable under section 236 of the ACL for being knowingly involved in the contravention of section 18 of the ACL through his actions in ordering an employee to make, or perhaps himself making, the false certificates.

Sofra Pizza Pide & Kebab House, and White Heaven KebabsSofra Pizza Pide & Kebab House and White Heaven Kebabs were likewise found liable of trade mark infringement (under section 120(2)(d) of the Trade Marks Act) and misleading and deceptive conduct (under section 18 of the ACL) for displaying the infringing certificates supplied to them by Quality Kebabs.

The directors of Sofra Pizza Pide & Kebab House and White Heaven Kebabs, however, were not liable under section 236 of the ACL, as they were not found to have been knowingly involved in the contravention of section 18, as they were unaware that the certificate supplied by Quality Kebabs was not authentic.

QuantumAs it was found that the respondents would not have otherwise sought certification from the applicant, and there was no diminution in the capital value of the trade mark as a result of infringement, Justice Perram declined making a damages award, instead handing down an order of only nominal damages of $10 against Quality Kebabs, Sofra Pizza Pide & Kebab House and White Heaven Kebabs for trade mark infringement. In doing so, Justice Perram considered MJA Scientifics International Pty Ltd v S C Johnson and Sons Pty Ltf (1998) 43 IPR 275 in which nominal damages were given for copyright infringement, and Nokia Corporation v Liu (2009) 80 IPR 286 in which the principles of copyright infringement under the Copyright Act 1968 (Cth) (such as the ability to award nominal damages for infringement) were extended to trade mark infringement.

Despite these nominal damages, Justice Perram held that through their actions Quality Kebabs had showed a “complete lack of respect for the applicant’s property rights”, and Mr Kose’s behaviour “signalled an arrogant attitude that they would continue to get away with that misconduct for as long as possible”. Therefore, Justice Perram made an order of additional damages in respect of Quality Kebabs of $91,015 (two annual certification fees, with an uplift of 50%) to act as a deterrent from future infringement. Quality Kebabs were also restrained from using the applicant’s trade mark under an injunction, and ordered to conduct corrective advertising to make clear that Quality Kebabs has not been certified as halal by the applicant.

Further interlocutory applicationsOn 11 August 2014, Justice Perram handed down further orders in response to two further interlocutory applications filed by Quality Kebabs in Halal Certification Authority Pty Limited v Quality Kebab Wholesalers Pty Limited (No 2) [2014] FCA 840.

The first issue was an application to vary the orders handed down by Justice Perram in June to have the additional damages awarded reduced (by approximately half) under Federal Court Rule 39.05. This application was dismissed with costs.

The second issue dealt with on this date was in relation to the content and form of the corrective advertising to be published in accordance with the June 2014 orders. Justice Perram made orders regarding the specific content and the specific newspapers where the advertising should be published.

Chelsea Parker, Graduate, Sydney [email protected]



What you need to know • A “Sabre order” may be made in infringement proceedings

in the Federal Court of Australia to require a company to take all reasonable steps available to it to obtain access to documents held by a related third party company.

• If a request for documents pursuant to a Sabre order is refused, adverse costs consequences may result for the party subject to the order, and adverse inferences may be drawn to the effect that any documents would not have assisted the party’s case.

• An ancillary order can be made in addition to the Sabre order, requiring a director of the company with personal knowledge of the facts to file and serve an affidavit deposing to the efforts the company made to obtain the documents, including details of related correspondence.

BackgroundIn the principal proceeding, the applicant Vringo Infrastructure, Inc (Vringo) sued the respondent ZTE (Australia) Pty Ltd (ZTE Australia) in the Federal Court of Australia for alleged or threatened infringement of two patents. ZTE Australia is the Australian sales arm of ZTE Corporation, which is said to be China’s largest listed telecommunications equipment company.

Orders were made for ZTE Australia to give discovery of a number of categories of documents and identify whether it had various types of source code, and to inform Vringo whether it had those documents or source code in its possession. It transpired that some of these

documents and source code were in the possession of ZTE Corporation, not ZTE Australia. However, ZTE Corporation refused to identify the documents it possessed and refused to allow any documents to be used for the purposes of the infringement proceeding.

As a result, Vringo filed an interlocutory application in the Federal Court seeking what has become known as a “Sabre order” for third party discovery, following Sabre Corporation Pty Ltd v Russ Calvin’s Hair Care Company (1993) 46 FCR 428. The form of the order sought was that ZTE Australia take all reasonable steps available to it to obtain specified documents and source code from ZTE Corporation, and produce such documents and copies of each communication between ZTE Australia and ZTE Corporation in relation to these issues.

Circumstances of a Sabre orderIn deciding the application, Justice Yates expressed the view that it is in precisely these circumstances that a Sabre order should be granted. He applied the rationale expressed in Zapf Creation AG v OWT Australia Pty Ltd [2001] FCA 759, that the purposes of discovery orders ought not to be frustrated because relevant documents are or may be held by a member of a group of companies other than the member who is a party to the proceedings. His Honour noted that a lack of compliance with an applicant’s informal request is a background circumstance common to most or all applications for Sabre orders.

Justice Yates noted that ZTE Corporation was protective of its source code, and discussed a number of measures that could be taken to regulate access to and use of the information.

The Federal Court clarifies the use of Sabre orders for third party discoveryVringo Infrastructure, Inc v ZTE (Australia) Pty Ltd (No 2) [2014] FCA 525


Notably, production to the Court is the appropriate course to adopt when documents are produced under a Sabre order, unless the non-party consents to an informal mode of production. His Honour also suggested that a condition of making an order could include a requirement of an express undertaking as to non-disclosure and non-use outside the proceeding (in addition to the usual implied undertaking). Justice Yates also noted that discovered documents will not necessarily form evidence in the proceeding; other procedures can be put in place to agree facts and in any event the Court may make non-publication orders under section 37AF of the Federal Court of Australia Act 1976 (Cth).

Justice Yates was not persuaded by the respondent’s argument that a Sabre order would lack utility because ZTE Corporation would inevitably refuse to comply with the request. His Honour stated that when faced with a court order, ZTE Corporation would be mindful of the possibilities of adoption of protective measures such as those outlined above, and would understand that the Court considered the order appropriate and necessary in the interests of justice.

Without discussing the merits of the contention, Justice Yates noted that ZTE Corporation should be on notice that Vringo had made it clear that if the request were refused, it would invite the court to draw adverse inferences on the question of infringement. Further, his Honour raised the possibility that such a refusal may result in adverse costs consequences for the party subject to the order, especially if additional costs were unnecessarily incurred in proving matters that could have been established by the production of the documents.

Appropriate scope and form of the Sabre order Justice Yates then considered the appropriate scope and form of the Sabre order.

His Honour rejected the respondent’s argument that the order should simply stipulate that the documents be sought by making a written request, and held that the order should be made in terms that the respondent take “all reasonable steps available to it” to obtain the relevant documents.

His Honour did not, however, extend the order to the production of documents regarding communications between ZTE Australia and ZTE Corporation on the question of compliance with requests by the applicant for discovery. Justice Yates did not consider that discovery of these documents was warranted. His Honour followed Zapf Creation AG v OWT Australia Pty Ltd [2001] FCA 759 in making an ancillary order that a director of ZTE Australia with personal knowledge of the facts file and serve an affidavit deposing to “the efforts it has made to obtain the documents or copies of the documents, including details of each of its requests to any company, person or entity, and the responses thereto”.

Rhiannon Thomas, Graduate, Sydney [email protected]

Ben Miller, Partner, Sydney [email protected]


Alice Corporation v CLS Bank – the shape of things to come for “business method” patents?Alice Corporation Pty. Ltd. v CLS Bank International et al. 573 US (2014)

On 19 June 2014, the Supreme Court of the United States delivered its latest decision on the patentability of so-called “business method” inventions in Alice Corporation Pty. Ltd. v CLS Bank International et al. 573 US ___ (2014) (Alice v CLS Bank).

FactsThe patents in suit disclosed a scheme for mitigating “settlement risk”; that is, the risk that only one party to a settlement will satisfy its obligations. The claims related to the exchange of financial obligations between parties to a settlement using a computer system. The inventions can thus be characterised as computer-implemented business methods.

JudgmentThe opinion of the Supreme Court, delivered by Justice Thomas, affirmed the earlier landmark decision in Bilski v. Kappos 130 S. Ct. 3218 (2010) (Bilski). In Bilski, the Supreme Court rejected the machine-or-transformation test for patentability, under which the claimed process must be tied to a particular machine or transform a particular article. Rather, the Supreme Court in Bilski noted that the only patent-ineligible subject matter is the laws of nature, physical phenomena and abstract ideas.

The principle in Bilski was further developed by the Supreme Court in Mayo Collaborative Services v Prometheus Laboratories, Inc. 132 S. Ct. 1289 (2012) (Mayo). According to the framework espoused in Mayo, in determining patentability, a court must ask two questions:

• Are the claims at issue directed to a patent-ineligible concept (as set out in Bilski)?

• If so, do the claim’s elements, considered individually and together as a combination, transform the nature of the claim into a patent-eligible invention?

For the patents in suit in Alice v CLS Bank, Justice Thomas found that the claims were drawn “to the abstract idea of intermediated settlement”, and were thus directed to a patent-ineligible abstract idea. His Honour said that the inventions in both Bilski and in Alice v CLS Bank related to a “fundamental economic practice”, notwithstanding that each was “a method of organizing human activity, not a ‘truth’ about the natural world ‘that has always existed’”.

Applying the Mayo test, Justice Thomas then considered whether the addition of computer implementation transformed the patent-ineligible abstract idea into a patent-eligible application. His Honour noted that simply implementing an abstract idea on a generic computer using generic computer functions will not be sufficient. Therefore, the inventions in suit were not patentable subject matter. Justice Thomas stated that if the aspect of computer implementation “purport[ed] to improve the functioning of the computer itself” or “effect[ed] an improvement in any other technology or field”, it may have transformed the underlying abstract idea.

CommentThe Full Court of the Federal Court of Australia is currently grappling with the same problem faced by the Supreme Court in Alice v CLS Bank. In Research Affiliates LLC v Commissioner of Patents [2013] FCA 71 (Research Affiliates), Justice Emmett was faced with a patent in some respects similar to the patent in suit in Alice v CLS Bank (a computer-implemented financial scheme). His Honour held that the alleged invention was not a manner of manufacture. The appeal was heard in November 2013, by Justices Kenny, Bennett and Nicholas and, at the date of publication, judgment in the appeal was still reserved.

Duncan Longstaff, Senior Associate, [email protected]

George McCubbin, Lawyer, [email protected]

Sophie Dawson, Partner, [email protected]

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IP @ Ashurst · 2017-04-07 · No sweat for Revlon as Unilever fails to pass the sniff test in...

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