7 min read

Caterpillar have successfully appealed a decision by the Registrar to dismiss their opposition to registration of Puma’s procat mark (as shown below) for goods in Classes 18 and 25.

O’Bryan J held that, having regard to fair and normal use of the procat mark outside Australia, Puma’s mark was deceptively similar to Caterpillar’s earlier registrations for both CAT (word) and associated CAT logo mark (as shown below) for goods in Classes 18 and 25.  Further, his Honour was also satisfied that due to the extent of Caterpillar’s reputation in Australia for the CAT and CAT Logo marks for goods in Classes 18 and 25, Puma’s use of the procat mark for such goods in Australia would be likely to cause confusion.

Background

In October 2016, Puma sought to register the mark procat in Australia for goods in Classes 18 and 25 including clothing, footwear, bags and other accessories.  Caterpillar subsequently opposed registration of this mark under ss42(b), 44 and 60 before the Registrar, but failed to establish any of the opposition grounds.

With respect to the s44 ground, Caterpillar argued the procat mark was too similar to a number of earlier registrations for both CAT and CAT Logo that are registered for goods in Classes 18 and 25.  However, the Registrar’s delegate concluded that due to the visual, phonetic and conceptual differences between these marks, Puma’s procat mark was not deceptively similar to either the CAT or CAT Logo mark.

With respect to the s60 ground, Caterpillar argued that due to the extent of their use and reputation in both the CAT and CAT Logo marks, Puma’s use of the procat mark for the claimed goods was likely to deceive or cause confusion.  While Puma conceded that Caterpillar’s CAT Logo mark had acquired a reputation in Australia at the priority date, the Registrar agreed with Puma’s submission that Caterpillar’s use of the CAT word mark was minimal and insufficient to establish that it had acquired the requisite reputation at the priority date. 

Further, the Registrar agreed with Puma’s submission that the reputation acquired by the CAT Logo mark would serve to reduce the likelihood of deception or confusion.  On this basis, the Registrar was not satisfied that because of the reputation acquired by the CAT logo, Puma’s use of the procat mark would be likely to deceive or cause confusion.

With respect to the s42(b) ground, Caterpillar argued that due to the extent of its reputation, Puma’s use of the procat mark would be contrary to the Australian Consumer Law.  However, given the Registrar’s conclusions under the s60 ground above, Caterpillar also failed to establish this ground of opposition.

Federal Court Appeal

Caterpillar appealed the Registrar’s decision to the Federal Court of Australia, seeking to rely on the same three grounds of opposition.  As such an appeal involves a de novo hearing, Caterpillar were able to provide additional evidence in support of these opposition grounds.

Section 44

Caterpillar again sought to rely on the use and registration of its earlier registrations for both CAT and CAT Logo for goods in Classes 18 and 25.  In response, Puma again submitted there are sufficient visual, phonetic and conceptual differences between procat and Caterpillar’s CAT and CAT Logo marks, such that these marks should not be regarded as deceptively similar.

While Puma are yet to commence using the procat mark in Australia, Caterpillar submitted evidence as to how Puma have used the procat mark in the United States and Canada.  Caterpillar submitted that such evidence was relevant to illustrate what would be fair and normal use of the mark by Puma, which is relevant to the assessment of deceptive similarity.   Caterpillar’s evidence showed that Puma used the procat mark in lower case with the letters “pro” and “cat” being rendered in different shades or colours as illustrated below.  Further, Puma’s online marketing of the relevant footwear referred to the brand as “ProCat” (using the upper case “P” and “C”).

O’Bryan J accepted Caterpillar’s submission that such use falls within the parameters of fair and normal use of the mark. His Honour also took the view that Puma’s use of the procat mark in Australia (in the same manner as used in the USA and Canada), would constitute a use with alterations which do not substantially affect the identity of the trade mark.

O’Bryan J concluded that the fact Puma applied to register the procat mark as a fancy mark (in lower case with sans-serif font) does not limit the trade mark rights granted upon registration to use with a single colour or shade of lettering or indeed to use without any letters being capitalised. 

His Honour did not place any material weight on the fact that Puma’s evidence suggested that it was common for at least some traders to use multiple trade marks or branding elements on and in connection with footwear. The evidence on this issue was not conclusive and, in any event, in assuming normal and fair use of the mark applied for, the use or possible use of other marks is ignored.  

On this basis, his Honour concluded that Puma’s procat mark was deceptively similar to Caterpillar’s CAT and CAT Logo marks on the combined effect of the following:

  • the word “cat” comprises the whole of the CAT word mark and one of the two elements of the CAT device mark. The word “cat” constitutes half the letters of the PROCAT mark and one of its two syllables;
  • an ordinary consumer is likely to read, comprehend and pronounce the PROCAT mark as a combination of two words, “pro” and “cat”;
  • the relevant trade context concerns a wide range of apparel, footwear, bags and accessories sold in retail stores and online in the workwear and lifestyle market segments. The evidence showed, and it is a matter of common experience, that goods of the type under consideration are common everyday purchases that are modestly priced and sold through overlapping trade channels.

As such, O’Bryan J concluded that “there is a real and tangible risk that a significant number of consumers, who were familiar with but had an imperfect recollection of the CAT mark, would be confused as to whether goods labelled with the PROCAT mark were connected in the course of trade with CAT branded goods, as being a “professional” or high performance or otherwise special line of CAT goods. There is a real and not remote risk that the use of the word “pro” in conjunction with the word “cat” in the PROCAT mark, when used on apparel, footwear, bags and accessories, would convey to many consumers that goods branded with the PROCAT mark are professional or high performance goods which are made or endorsed by, or otherwise associated with, Caterpillar. As such, consumers would be caused to wonder whether there is commercial connection between PROCAT branded goods and Caterpillar”.

Section 60

Caterpillar also sought to establish that, due to the extent of its reputation in the CAT and CAT Logo marks in Australia for goods such as clothing, footwear, bags and other accessories, Puma’s use of the procat mark for such goods was likely to cause confusion.  In this regard, Caterpillar filed a number of affidavits by various brand managers, licencees and distributors who were responsible for the manufacture and distribution of goods bearing the CAT and CAT Logo marks.

Based on their lengthy use of the CAT and CAT Logo marks in Australia, O’Bryan J was satisfied that Caterpillar had a substantial and valuable reputation in Australia in each of the CAT marks in relation to apparel, footwear, bags and accessories.  While his Honour accepted that Caterpillar’s evidence shows far more frequent use of the CAT Logo mark (compared to the CAT word mark), he did not consider there to be any material difference in the extent of reputation associated with the CAT word and CAT Logo marks.

In contrast to the Registrar, his Honour did not accept Puma’s submission that the CAT marks had such a strong reputation in Australia (and Australian consumers had such familiarity with the CAT marks), that confusion with the PROCAT mark would be unlikely. While the evidence showed the CAT marks had a strong reputation in Australia at the priority date in respect of apparel, footwear, bags and accessories, his Honour took the view that the CAT marks could not be described as famous or very famous (in contrast to the findings made in respect of the brand “Maltesers”, the subject of the decisions in Mars1 and Delfi2).

On this basis, O’Bryan J concluded that “there is a real and tangible risk that a significant number of consumers, who were familiar with the reputation of the CAT marks but had an imperfect recollection of those marks, would be confused as to whether goods labelled with the procat mark were connected in the course of trade with CAT branded goods, as being a “professional” or high performance or otherwise special line of CAT goods”.

Section 42(b)

Caterpillar also sought to oppose registration under s42(b), namely that Puma’s use of the procat mark would contravene ss18 and 29(1)(g) and (h) of the Australian Consumer Law.  As Caterpillar sought to rely on the same evidence and contentions advanced under the s60 (reputation) ground, O’Bryan held that Caterpillar’s reliance on s42(b) was superfluous.  In this regard, his Honour remarked that reliance on s42(b) (by reference to the Australian Consumer law) only has utility where the Appellant seeks to rely on additional evidence and contentions that are not relevant to the s60 analysis.  In the absence of such additional evidence or contentions, O’Bryan decided that it was unnecessary to consider this ground of opposition further.

Puma have now filed an appeal in relation to this matter.

1 – Mars Australia Pty Ltd v Sweet Rewards Pty Ltd [2009] FCA 606; 81 IPR 354

2 – Delfi Chocolate Manufacturing SA v Mars Australia Pty Ltd [2015] FCA 1065; 115 IPR 82

Authored by Nathan Sinclair and Sean McManis

7 min read

Australia’s Federal Court Decision, Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2021] FCA 947, concerns a patent claiming two pharmaceutical substances having different first regulatory approval dates; one less than 5 years after the patent filing date and one more than 5 years after the patent filing date.  The decision considers whether the first regulatory approval more than 5 years after the filing date can be considered the first approval for PTE-eligibility purposes. 

Patent Term Extensions (PTEs) in Australia

Australia’s Patents Act provides patent term extensions (PTEs) to account for the delays that can occur when obtaining regulatory approval for pharmaceuticals (see s70-79A of Patents Act 1990).  A PTE can last for up to five years and is available when the following requirements are met:

  • the patent, in substance, discloses and claims a pharmaceutical substance per se, or a pharmaceutical substance when produced by recombinant DNA technology;
  • goods containing or consisting of the pharmaceutical substance are included in the Australian Register of Therapeutic Goods (ARTG);
  • the PTE application is made within six months after the later of (a) the date the patent was granted and (b) date of the first inclusion in the ARTG; and
  • the first regulatory approval for the pharmaceutical substance occurred more than five years after the filing date of the patent.

The length of a PTE is equal to the period between the filing date of the patent and the date of the first regulatory approval, reduced by five years.  A patent cannot be extended more than once.

Background

Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2021] FCA 947 concerns the patent term extension granted in connection with Australian patent 2002320303, which covers two pharmaceutical substances for the treatment of diabetes: sitagliptin and a composition containing sitagliptin and metformin.  The patent was filed on 5 July 2002 and its ordinary term was therefore set to expire on 5 July 2022

Sitagliptin was first included in the ARTG on 16 November 2006, i.e. less than five years after the filing date. 

The composition containing sitagliptin and metformin, however, was first included in the ARTG on 27 November 2008, six years, four months and 22 days after the filing date of the patent.  The patentee, Merck Sharp Dohme (MSD), applied for a PTE based on the regulatory approval of the sitagliptin/metformin composition and the term of the patent was extended until 27 November 2023

Sandoz contended that the extension of term was invalid and sought rectification of the register to reflect a patent expiry date of 5 July 2022

Reliance on the Ono decision

This decision relies heavily on the recent decision, Ono Pharmaceutical Co, Ltd v Commissioner of Patents [2021] FCA 643.

As recently reported here. Ono addressed the issue of “earliest first regulatory approval” in the context of a patent covering two blockbuster cancer drugs; the patentee’s drug and a competitor’s drug.  The competitor’s drug received regulatory approval before the patentee’s drug and the issue was therefore which regulatory approval date was relevant for deciding the patentee’s PTE request.

In Ono, Justice Beach noted that PTEs are intended to provide an effective patent life for pharmaceutical products.  His Honour reasoned that the drug which is the subject of the PTE application is intended to be the drug of the patentee, not that of a third party.  His Honour also commented that it is for the patentee to nominate the pharmaceutical substance for the purposes of requesting a PTE (which can be any pharmaceutical substance that is in substance disclosed and claimed in the patent). 

Justice Beach concluded that the patentee’s own first regulatory approval (rather than the competitor’s earlier first regulatory approval) could form the basis of the request. 

The “earliest first regulatory approval date”

In the present case, MSD argued that “the earliest first regulatory approval date” means either:

(a) the earliest first regulatory approval date of any substance claimed by the patent which is included on the ARTG and which received regulatory approval at least 5 years after the patent’s filing date (MSD’s primary construction), as nominated by the patentee (based on Ono), or

(b) the earliest first regulatory approval date of all substances claimed by the patent which are included on the ARTG and which received regulatory approval at least 5 years after the patent’s filing date (MSD’s alternative construction).

That is, MSD’s construction required any regulatory approvals for pharmaceutical substances less than 5 years after the patent filing date to be disregarded for the purpose of assessing PTE eligibility. 

If MSD’s construction were to be followed, the ARTG approval of sitagliptin could be ignored (being less than 5 years after the patent’s filing date) and PTE eligibility could be determined based on the date of inclusion in the ARTG of the combination of sitagliptin and metformin (i.e. the first regulatory approval which is at least 5 years after the patent’s filing date). 

Sandoz contended that “the earliest first regulatory approval date” means the earliest regulatory approval date of any pharmaceutical substance in the patent – this corresponds to the date of inclusion in the ARTG of sitagliptin.  Following this line of argument, if regulatory approval is secured for any pharmaceutical product claimed by the patent less than 5 years after the patent filing date, no patent term extension can be obtained. 

Reasoning and discussion

MSD submitted that all of the factors which Beach J considered relevant in Ono are equally relevant to the present case. Justice Jagot disagreed. 

Her Honour took the view that the absurdity identified in Ono was the fact that a patentee could be granted an extension of term of zero merely because the earliest first regulatory approval date would be that of an unrelated company relating to the same substance.  In the present case, however, it was the patentee who had obtained regulatory approval for both substances covered by the patent.

Her Honour noted:

It is one thing to conclude that it is absurd for a patentee to be denied any term of an extension due to an earlier regulatory approval by another unrelated party of which the patentee may not have known and over which the patentee would have had no control. … It is another to conclude that it would be absurd for a patentee to be denied any term of an extension due to an earlier regulatory approval by the patentee or its agent of which the patentee must have known and over which the patentee had control. In such a case, the patentee, by definition, will not have been delayed in obtaining regulatory approval for a substance or the substance in its patent for at least five years.” 

Justice Jagot also commented on the crucial presence of the word “earliest” in s77(1) of Patents Act 1990, which sets out how to calculate of an extension of term. 

Her Honour was of the opinion that it is clear that the legislature considered a delay of less than five years after a patent filing date for obtaining regulatory approval for a pharmaceutical substance covered by the patent was acceptable and did not require a capacity for an extension of term of the patent, commenting:

There is no reason to infer that the legislature intended that a patentee with a patent disclosing and claiming more than one pharmaceutical substance intended that there could be an extension of term if the patentee obtained inclusion of one or more pharmaceutical substances in the ARTG within five years of the date of the patent but then also obtained inclusion of one or more pharmaceutical substances in the ARTG five years or more after the date of the patent. Provided one pharmaceutical substance has been included in the ARTG within five years of the date of the patent, the patentee has had the benefit of the monopoly afforded by s 13 of the Patents Act within the period of delay the legislature considered acceptable.”

Conclusion

Justice Jagot agreed with Sandoz, taking the view that the regulatory approval date of sitagliptin (less than 5 years after the patent filing date) was to be used in calculating the length of the PTE.  Her Honour thus concluded that the extension of term of MSD’s patent is zero and ordered that the Register be rectified as sought by Sandoz.

Implications

This decision confirms that, if a patent covers more than one pharmaceutical substance for which the patentee has obtained regulatory approval, the calculation of the extension of term must be based on the substance that was approved first.  If the approval date of that substance is within five years of the filing date of the patent, no extension of term will be granted.

Patent Applicants should therefore consider separating substances that have received (or are expected to receive) regulatory approval into multiple patents, for example by pursuing each substance in its own divisional patent application.  This will ensure that each patent is able to enjoy the maximum extension of term that is available to it based on the substance that it covers.

Authored by Serena White, DPhil and Michael Christie, PhD

2 min read

Bega Cheese Limited v Vincenzo Fasanella [2021] ATMO 49 (10 June 2021)

Successful opposition by Bega Cheese Limited to the registration of BUTTERMITE filed in the name of Vincenzo Fasanella.

Background

Vincenzo Fasanella (Fasanella) filed an application for BUTTERMITE on 27 February 2018 for the following goods:

Class 29: Dairy spreads; Food spreads consisting principally of dairy products; Butter; Butter portions; Butter preparations; Savoury butters

Bega Cheese Limited (Bega) is an Australian food company, which has been established for almost 120 years. Bega acquired most of Mondelez International Inc’s grocery business in Australia and New Zealand in January 2017, including the VEGEMITE brand.

Bega owns various trade mark registrations for VEGEMITE and VEGEMITE composite marks in Australia, covering a broad range of goods and services.

Grounds of Opposition

Section 60 – Reputation

The VEGEMITE trade mark is an iconic and well-known brand. It has been used in Australia since 1923 in relation to a yeast spread product. Over 22 million jars of VEGEMITE brand yeast spread are sold every year

Bega submitted a substantial amount of evidence of the VEGEMITE trade mark being extensively advertised and promoted through a wide variety of channels, some of which is listed below:

  • Substantial revenue and marketing figures.
  • 1954 radio advertising jingle ‘Happy Little Vegemites’. In 1956 the jingle was developed into a television campaign, which was broadcast until the late 1960s.
  • In the 1980s and 2010 The ‘Happy Little Vegemites’ commercials were remastered, colourised and rebroadcast.
  • Advertisements from supermarket retailers including Coles, Woolworths, Metcash and Foodworks.
  • Screenshots from the vegemite.com.au website, including historical extracts.
  • Social Media Accounts – Facebook, Instagram and Twitter.
  • Agreements with Peter Alexander Sleepwear Pty Ltd, Bambis Imports Co Pty Ltd, The Lane & Co, and various food manufacturers including Arnott’s Biscuits, ABE’s Bagels and Four ‘N Twenty.
  • Men at Work song ‘Land Down Under’ – ‘he just smiled and gave me a Vegemite sandwich’.
  • Sponsorship of events.
  • Use and licensing of the suffixes MITE and MITEY to promote/and or indicate products that include the VEGEMITE food spread as an ingredient. Since 1994, Bakers Delight has offered a CHEESYMITE SCROLL with the VEGEMITE spread as an ingredient.
  • Addition of VEGEMITE BLEND 17 and VEGEMITE CHEESYBITE to its range.
  • Reference to BUTTERMITE in the context of the VEGEMITE yeast spread on its Facebook page. The post promoted a fictitious VEGEMITE & BUTTER combination spread, because its VEGEMITE yeast spread product has a strong association with butter.

Fasanella’s evidence included argument that the suffix MITE is used by other food producers of yeast spread (e.g. Marmite; Aussiemite; MightyMite; and Ozemite). However, the Delegate has indicated that Bega’s tendency to play around with the brand using the suffix MITE, as in its use in CHEESYMITE SCROLL and MITEY recipes that sets the VEGEMITE mark apart.

Fasanella included evidence that the MITE suffix is also used by bakery chains and food distributors (i.e. Baker’s Delight’s CHEESYMITE SCROLL; Brumby’s CHEDDARMITE; and Melbourne Food Distributors TASTYMITE product). However, these products include Bega’s VEGEMITE yeast spread as an ingredient.

Decision

The Delegate was satisfied that Bega’s VEGEMITE trade mark had a very substantial reputation in relation to food spreads. Further, she was satisfied that members of the public are also likely to conclude that the BUTTERMITE trade mark is used by, or under the auspices of Bega.

In coming to this conclusion, it was significant that -MITE branding has been used to identify a range of products that contain VEGEMITE as an ingredient, and that VEGEMITE and butter are both spreads that are commonly combined and used in a similar manner.

Consequently, the s60 ground of opposition was successful and costs were awarded against Fasanella.

The additional grounds of opposition, namely sections 42(b), 44 and 62A were not considered.

Final Comment

Fasanella also filed an additional trade mark for the composite mark BUTTERMITE & Device (representation below) for the same goods in class 29 as its BUTTERMITE word mark.

This trade mark was also opposed by Bega, however, a Notice of Intention to Defend was not filed by Fasanella  and the application subsequently lapsed.

Authored by Danielle Spath and Sean McManis

5 min read

The Australian Patent system is relatively forgiving in terms of missed deadlines.  The Patents Act provides extensions of time for complying with most deadlines, provided that a genuine error or extenuating circumstances can be demonstrated.  The extensions are at the discretion of IP Australia, which is generally pragmatic in their acceptance of the fact that mistakes do happen.

However, there are a small number of deadlines that are specifically excluded from the general extension of time provisions.  Perhaps most significantly, the general extension of time provisions exclude the  deadline for filing evidence during patent oppositions.  Rather, in order to extend an evidentiary period in an opposition, the party seeking the extension must be able to demonstrate that either a) they made all reasonable efforts to comply with all relevant filing requirements, and have been unable to file their evidence despite acting promptly and diligently to ensure it is filed in time; or b) there are exceptional circumstances that warrant the extension.

In general, requests for extensions falling under the “despite all reasonable efforts” limb of the test receive little sympathy from the IP Australia if they consider there has been any unexplained delay at any stage during the evidentiary process.  A delay in identifying or engaging an expert or settling the expert evidence are likely to fail the test for appropriate diligence.

Most Australian attorneys engaged in opposition work find themselves in the squeeze between IP Australia, who appear determined that the parties must complete their evidence in the minimum allotted time, and independent expert witnesses who have multiple competing priorities for their time.

The “exceptional circumstances” test requires a) a Court order or direction from the Commissioner to stay the proceedings, b) an error or omission by the Commissioner that prevents a party from filing the evidence or c) a circumstance beyond the control of a party that prevents them from filing evidence.

Previous decisions by the Commissioner have ruled that unavailability of experts due to leave, work commitments, personal commitments or short illness should be expected and is not exceptional.

Exceptional circumstances were recently tested in QIP Nominees Pty Ltd v Delinia, Inc. [2021] APO 24 (22 June 2021). In that case, the patent applicant had failed to meet their original deadline for filing their evidence in reply, but were ultimately successful in demonstrating that exceptional circumstances did apply, and an extension to file that evidence was justified.

In this case, the patent applicant was located in the US, and their US attorney only became aware of the existence of an opposition to their application one month before their evidence in answer was due.  That is, the US attorney was unaware of the filing of a notice of opposition, unaware of the opponents filing their statement of grounds and particulars  (3 months into the opposition), and unaware of the filing of the opponent’s evidence in support filed (6 months into the opposition).  Two of the three months of the applicant’s window for filing evidence in answer had elapsed before the applicant first became aware of the opposition.  In short, the opposition had progressed for eight months without the applicant’s knowledge.

All of the opposition correspondence was duly received by the Australian attorney and passed on to the applicant’s US attorney, however, unbeknownst to all parties, the US attorney’s  spam filter was diligently capturing and destroying the relevant correspondence upon receipt.  Notably, no bounce back was received by the Australian attorney.  This capture and destruction of the emails only appears to have been detected by good fortune when, for some reason, a reminder email from the Australian attorney did indeed manage to avoid the US attorney’s spam filter.

The Applicant initially requested an extension of time to file their evidence which was refused by the  opposition division.  The opposition division  acknowledged that the email communication failure was unintended, but overall, they considered that the applicant’s attorney did not act reasonably, promptly and diligently because they did not follow up on emails that were not acknowledged by the client.  In refusing the request for an extension, the opposition division said “It is reasonable to believe that the information associated with those emails would generally elicit a response and the failure to do so, especially over an extended period of time and in view of the strict deadlines in opposition matters, is quite remarkable and failing to follow up on the lack of response does not appear to be commensurate with acting reasonably or promptly and diligently.” 

The initial refusal noted a number of points, such as the failure of the applicant to check on the grant of the patent, the US attorney’s  processes involved in  checking their spam filter was not blocking legitimate emails, and the failure of the Australian  attorney to follow up on a lack of acknowledgement of their emails.

The applicant sought a hearing on the matter, arguing that “the Senior Examiner’s proposed approach is a counsel of perfection, made with the benefit of hindsight. Email is a highly reliable, mature technology. Users are accustomed to receiving non-delivery or bounce-back messages if an email is not delivered and it is entirely reasonable to assume, as [the Australian attorneys] did, that, in the absence of receiving any non-delivery message, the email has been safely delivered to its intended recipient. That was the assumption made in the present case. It was a reasonable assumption. It is not for [the Australian attorneys] to second-guess why a client does not respond to emails or indeed why a client may not wish to defend an opposition proceeding.”

In his decision, the hearing officer sided with the patent applicant, finding that “Although with the benefit of hindsight it can be envisaged that the situation could have been avoided (such as [the Australian attorneys] making a ‘follow up’ phone call when no response was received to the emails), such speculation is beyond the realm of what was reasonably beyond the control of the parties. I consider that the emails not being received (with no indication that the email was not delivered) was beyond the control of both the sender … and receiver … of the emails.”

The decision is pleasing to those in the patent profession, who in some cases deal with hundreds of emails every day, as it demonstrates that a “perfect” practice is not the starting point for determining whether “exceptional circumstances” exist when determining whether extensions of opposition deadlines are warranted.

Authored by Charles Tansey, PhD

6 min read

Ariosa Diagnostics, Inc v Sequenom, Inc [2021] FCAFC 101

The Full Court of the Federal Court of Australia has confirmed that Sequenom’s diagnostic method of detecting fetal DNA in maternal blood is eligible for patent protection in Australia.  The decision highlights the different approaches taken by Australian, European and US authorities when it comes to assessing the patentability of diagnostic methods.

However, the Full Court also found that Sequenom’s patent was not infringed by the importation of results from tests conducted overseas on the basis that the results were information and not a product that could be exploited.

The technology

Sequenom’s patent stemmed from the discovery of cell-free fetal DNA (cffDNA) in maternal blood serum and blood plasma by two researchers from Oxford University. The discovery enabled the development of a non-invasive prenatal test using maternal blood samples. 

The test could be used to determine the gender of an unborn baby, and its susceptibility to certain genetic conditions. Prior to the inventors’ discovery, obtaining a prenatal sample for testing typically involved inserting a needle through the mother’s abdomen or cervix. 

The patent

Claim 1 of Sequenom’s patent defines:

A detection method performed on a maternal serum or plasma sample from a pregnant female, which method comprises detecting the presence of a nucleic acid of foetal origin in the sample.

In the first instance decision, the Federal Court of Australia found that the use of the “Harmony” prenatal diagnostic test by Ariosa Diagnostics Inc, and by its licensees, Sonic Healthcare Limited and Clinical Laboratories Pty Ltd, infringed certain claims of Sequenom’s patent. On appeal, Ariosa challenged the validity of the claims and the finding of infringement.

Validity

Ariosa argued that the primary judge erred in finding that the claimed method is a “manner of manufacture” as required under the Patents Act because what is claimed is a mere discovery of a naturally occurring phenomenon. In a related submission, Ariosa contended that, properly understood, the end result of each claim is mere information.  The human-mediated “detection”, Ariosa argued, is no different from the discovery that cffDNA is detectable. Ariosa submitted that in substance there is no application of the discovery by simply claiming the detection of what has been discovered to exist. 

In support of their arguments, Ariosa cited D’Arcy v Myriad Genetics Inc [2015] HCA 35, in which the High Court found that claims defining isolated nucleic acids encoding mutant or polymorphic BRCA1 polypeptides were in substance directed to naturally occurring genetic information, which is not patentable subject matter.

The Full Court rejected Ariosa’s approach, finding that it disaggregated the discovery of cffDNA in maternal plasma or serum from the method used to harness that discovery. Although fetal nucleic acid occurs in nature, the Full Court found that the substance of the invention is not cffDNA itself, but the identification of that particular nucleic acid as a part of a method:

Unlike the position in Myriad, claim 1 is not, as a matter of substance, directed to genetic information, but to a method involving the practical application of a means for identifying and discriminating between maternal and foetal nucleic acid. Although foetal nucleic acid occurs in nature, the substance of the invention is not cffDNA itself, but the identification of that particular nucleic acid as a part of a method. It is impermissible to disaggregate the integers of the method to point only to the cffDNA as the “invention”. Identification of the substance of the invention does not involve disregarding material aspects of the claim language. The invention as claimed is not merely output, but the detection process which yields an output. This is the very type of subject matter considered to fall on the correct side of the line between discovery of a scientific fact or law of nature and invention (at [155]).

Their Honours observed that an invention may reside in an abstract idea that is put to a useful end, even though the way of putting it to that end can be carried out in many useful ways, all of which are otherwise known. While the mere discovery of a natural phenomenon is not eligible for a patent, the practical application of that discovery may very well be patentable subject matter.

The Full Court concluded that the invention defined by claim 1 of Sequenom’s patent ”falls firmly within the concept of a manner of manufacture as that term is to be understood having regard to the authorities, being an artificially created state of affairs of economic utility” (at [166]).

Ariosa’s other grounds of attack, namely, that the claims were invalid for lack of sufficiency and lack of fair basis, were also unsuccessful.

Infringement

Before conducting the Harmony Test in Australia, Ariosa’s Australian licensees, Sonic Healthcare and Clinical Laboratories, collected blood samples from pregnant women in Australia and sent those samples to Ariosa in the US. Ariosa then conducted the Harmony Test in the US and provided the results, in the form of a report made available by a file sharing platform, to Sonic Healthcare and Clinical Laboratories in Australia. 

The exclusive rights of a patentee to exploit an invention will ordinarily be infringed by importing the product of a patented process, even when that process is carried out overseas. This is because Australia’s Patents Act defines the term “exploit” as including:

where the invention is a method or process – use the method or process or do [acts including importing] in respect of a product resulting from such use.

The primary judge found that the method was infringed when it was performed in Australia, which was not in dispute in the present case. However, the primary judge also found that Sonic Healthcare’s and Clinical Laboratories’ “send out” model amounted to an infringement of Sequenom’s claims because it used a method that would have infringed the claims if conducted in Australia.

The Full Court disagreed, noting that the Patents Act does not provide a definition of the term “product”. Their Honours preferred a construction of the word “product” in the context of the definition of “exploit” which recognises that not all patented methods or processes will lead to a product. The Full Court observed that the broad definition applied by the primary judge could have consequences that are not sensible – a person who has heard the outcome of the Harmony Test, which may be as simple as “it’s a girl!”, and who then flies to Australia with that information may infringe the patent by importing that outcome.

The Full Court also noted the incongruity that would result from extending the patentee’s monopoly to encompass test results that are not them themselves patentable:

A claim to mere information is not patentable …. The fact that such information is derived from a patentable process or method cannot render the information itself patentable. In those circumstances, we do not consider that the word “product” in para (b) of the definition of “exploit” should be interpreted as extending the patentee’s monopoly to information which could not itself constitute patentable subject matter since it would have the unintended and odd consequence of permitting the patentee to obtain patent protection in respect of subject matter that has long been held to be unpatentable (at [269]).

Accordingly, because the imported test results are themselves information, and not a “product” as such, Sonic Healthcare’s and Clinical Laboratories’ send out model did not infringe Sequenom’s patent.  

Final comments

The Full Court’s decision highlights the different approaches taken by Australian, European and US authorities when it comes to assessing the patentability of diagnostic methods.  The corresponding patent application was found to be valid in the UK (Illumina, Inc v Premaitha Health Plc [2017] EWHC 2930), albeit under a different eligibility test, but was deemed invalid by the US Court of Appeals for the Federal Circuit (Ariosa Diagnostics, Inc. v Sequenom, Inc. 788 F.3d 1371 (Fed. Cir. 2015)).

In Australia, courts will construe a claim in its entirety, rather than considering each feature individually. While the mere discovery of a natural phenomenon may not be eligible for a patent in Australia, the practical application of that discovery may very well be, even where the application uses known methods.

The decision also confirms that not all patented methods will give rise to a “product” that can be exploited in an infringing act.

Ariosa and Sequenom have the option of applying for special leave to appeal the decision to the High Court. 

Authored by Karen Heilbronn Lee, PhD and Michael Christie, PhD

5 min read

Australia’s Federal Court Decision, Ono Pharmaceutical Co, Ltd v Commissioner of Patents [2021] FCA 643, overturns the Patent Office Decision, Ono Pharmaceutical Co., Ltd. et al [2020] APO 43, in which the Patent Office had found that the substance with the first regulatory approval date for the purpose of the patent term extension request was a competitor product.  In a Judicial Review of the Patent Office decision, the Federal Court found instead that the substance with the first approval date was the patentee’s own, later-approved product.

Patent Term Extensions (PTEs) in Australia

Australia’s Patents Act provides patent term extensions (PTEs) to account for the delays that can occur when obtaining regulatory approval for pharmaceuticals.  A PTE can last for up to five years and is available when the following requirements are met:

  • the patent, in substance, discloses and claims a pharmaceutical substance per se, or a pharmaceutical substance when produced by recombinant DNA technology;
  • goods containing or consisting of the pharmaceutical substance are included in the Australian Register of Therapeutic Goods (ARTG);
  • the PTE application is made within six months after the later of (a) the date the patent was granted and (b) date of the first inclusion in the ARTG; and
  • the first regulatory approval for the pharmaceutical substance occurred more than five years after the filing date of the patent.

The length of a PTE is equal to the period between the filing date of the patent and the date of the first regulatory approval, reduced by five years.  A patent cannot be extended more than once.

Background

Ono Pharmaceutical Co, Ltd v Commissioner of Patents [2021] FCA 643 concerned a request to extend the term of Australian patent 2011203119.  The patent claims encompassed two blockbuster cancer drugs: Merck Sharp & Dohme’s KEYTRUDA and the patentee’s OPDIVO, both of which received regulatory approval in Australia, but on different dates.  Thus, the question at issue was which regulatory approval date was relevant for deciding the patentee’s PTE request.

To cover all of its bases, the patentee simultaneously filed two PTE requests: one based on the competitor product, KEYTRUDA, which had received regulatory approval on 16 April 2015, and another based on its own product, OPDIVO, which had a regulatory approval date of 11 January 2016.  The PTE request based on KEYTRUDA was accompanied by a request for an extension of time. 

From the patentee’s perspective, the request based on OPDIVO was preferred as it would result in a longer extended term (an additional 8 months, 26 days). 

The Overturned Patent Office Decision

Initially, the Patent Office refused the PTE request based on OPDIVO, finding that KEYTRUDA was included on the ARTG first and therefore should form the basis of the request.  The patentee disagreed and requested to be heard.

At the Patent Office hearing, and as previously reported, the patentee’s request for a PTE based on OPDIVO was again refused (Ono Pharmaceutical Co., Ltd. et al [2020] APO 43).

The Federal Court Decision: Ono Pharmaceutical Co, Ltd v Commissioner of Patents [2021] FCA 643 (11 June 2021)

Justice Beach of the Federal Court observed that PTEs are “designed to remedy the mischief of a shortened period for an effective monopoly that has been caused by delays in obtaining regulatory approval”. 

Justice Beach framed the question at issue as follows:

“… it is whether an application for an extension must be filed within 6 months of the first inclusion in the ARTG of goods containing or consisting of any pharmaceutical substance falling with the claims of the patent:

(a)          where the goods were those of the patentee (the applicants’ position); or

(b)          irrespective of whether the goods were those of the patentee, that is, they could be the goods of a third party that had nothing to do with the patentee and, moreover, might be a competitor [the position taken by the Patent Office]”

Answering this question involved consideration of the intended meaning of the relevant provisions and the history of the legislation, including the 1997 Explanatory Memorandum (EM), the second reading speech to the Bill that became the 1998 Amendment Act (the speech) and the now-repealed s 76A of the Patents Act 1990. 

Justice Beach noted that PTEs are intended to provide an effective patent life for pharmaceutical products and the reference to “product” was “clearly not that of a stranger let alone a competitor”.  His Honour rhetorically asked how the legislation would provide an effective patent life if the product on the ARTG triggering the start of the extension was not that of the patentee, but rather that of a stranger or indeed a competitor, concluding, “[t]hat would not provide an “effective life” for the patentee at all”.

Justice Beach also determined that it is for the patentee to specify the pharmaceutical substance for the purposes of requesting a PTE (which can be any pharmaceutical substance that is in substance disclosed and claimed in the patent). 

His Honour reasoned that the drug which is the subject of the PTE application is intended to be the drug of the patentee, not that of a third party.  His Honour considered that the Patent Office’s interpretation of the law would place an unreasonably onerous burden on the patentee who would need to review each and every ARTG listing to identify those that contain a pharmaceutical substance falling within the scope of the claims (to the extent possible, noting also the dearth of information provided in ARTG public summaries), and to determine whether another relevant substance was previously listed on the ARTG but later removed, as can occur in certain circumstances. 

Justice Beach acknowledged, however, that the Patent Office’s approach was understandable in light of the text being construed and that a Delegate of the Patent Office is not as free as a Judge to reject any perceived ordinary meaning of the legislation by reason of manifest absurdity or unreasonableness. 

Conclusion

Justice Beach agreed with the patentee and favoured a liberal rather than a literal construction of the legislation, commenting in summary that a liberal construction can fit within the ordinary meaning of the statutory language and is consonant with the legislative purpose.

It was therefore concluded that the term of the patent should be extended based on the regulatory approval date of the patentee’s own pharmaceutical substance, OPDIVO, even though KEYTRUDA was approved earlier. 

Implications

This decision lifts the burden for patentees of the need to monitor the ARTG for approval of third party drugs.  In circumstances where a patent covers more than one approved pharmaceutical substance, the decision implies that a PTE request does not have to be based on the substance that was approved earliest. 

Authored by Serena White, DPhil and Michael Christie, PhD

4 min read

Combe International Ltd v Dr August Wolff GmbH & Co. KG Arzneimittel [2021] FCAFC 8

Following on from our previous article, in a successful appeal by Combe International Ltd, the Full Federal Court disagreed with the primary judge’s approach to assessing deceptive similarity. As a result, it refused registration of the VAGISAN trade mark by Dr August Wolff GmbH & Co. KG Arzneimittel.

Background

Dr August Wolff GmbH & Co. KG Arzneimittel(Dr Wolff) is a German pharmaceutical company. It filed an application for VAGISAN on 27 May 2015 for the following goods:

Class 3: Soaps and cosmetics, all aforementioned goods not for the indication and application of tired legs and/or arms

Class 5: Pharmaceutical products, sanitary products for medical purposes; dietetic substances for medical purposes, all aforementioned goods not for the indication and application of tired legs and/or arms

Combe International Ltd (Combe) is a US company that markets and sells a range of personal cleansing, health and grooming products and is the owner of prior registrations for or incorporating VAGISIL. These registrations include the following goods:

Class 3: Medicated lotions and medicated creams; non-medicated products for feminine use

Class 5: Medicated products for feminine use; vaginal lubricants; medicated creams, gels, lotions

A delegate of the Registrar of Trade Marks refused registration of the VAGISAN trade mark on 29 September 2017 under s60 of the Trade Marks Act 1995 based on Combe’s prior reputation in its VAGISIL trade mark.

Federal Court Decision

The primary judge disagreed with the delegate’s decision and decided that Combe had failed to establish any ground of opposition.

On the issue of deceptive similarity (section 44), the primary judge found that the VAGISAN and VAGISIL trade marks are likely to be understood as indicating products to be used in relation to the female genital area. The primary judge took the view that the prefixes VAG and VAGI are descriptive, and that, as a consequence, the words VAGISAN and VAGISIL do not have a close phonetic resemblance. In his view neither of the words lends itself to mispronunciation, and the suffixes SIL and SAN are quite distinct.

Combe was also not able to establish that a significant or substantial number of potential customers might be confused or deceived by the VAGISAN mark such as to wonder whether there is any connection between it and VAGISIL, given Combe’s reputation (section 60) in the VAGISIL trade mark

Regarding the final opposition ground (section 59), the primary judge considered the fact that soap and cosmetic products were proposed to be introduced into Australia was sufficient intention to use the VAGISAN trade mark in respect of the designated goods.

The Federal Court decision is reported here.

Appeal to the Full Federal Court

In its Notice of Appeal, Combe claimed that the primary judge erred in his assessment of deceptive similarity between VAGISIL and VAGISAN by:

  • comparing the two words side by side;
  • engaging in a meticulous comparison of the two words, letter by letter and syllable by syllable with a clear pronunciation;
  • failing to give proper consideration to the notional consumer’s imperfect recollection of VAGISIL;
  • failing to give proper regard to the importance of the first syllable of each word and the tendency of English speakers to slur the endings of words;
  • breaking each word into component parts, assessing the descriptive and distinctive qualities of those parts and thus failing to pay proper regard to the whole of each mark;
  • failing to assess the whole of each mark as a coined term with no actual meaning; and/or
  • assessing the SAN element of VAGISAN as a distinctive and not descriptive feature, despite finding that SAN is readily understood as a reference to sanitary.
  • not giving sufficient weight to the high-volume and low-value nature of the VAGISAN Goods when making his assessment.

Section 44 – Deceptive Similarity

After consideration of the primary judge’s reasoning regarding deceptive similarity, the Full Court disagreed with the primary judge’s approach for a number of reasons.

Firstly, the VAGISAN and VAGISIL trade mark both have the same first five letters, they both have three syllables, and the VAGIS component is pronounced the same way. The only differences between the marks is the final two letters “AN” and “IL, and the only aural difference, being that between SIL and SAN, may be mispronounced or slurred.

Secondly, the idea of the mark is important in the consideration of deceptive similarity. In this case, consumers are likely to consider VAG or VAGI to be a reference to the vagina. Further, the first two syllables of both marks are likely to be remembered. While a similarity in idea may be insufficient for a finding of deceptive similarity if there is an absence of visual or aural similarity, in this case, the VAGISAN and VAGISIL marks also have visual and aural similarity.

Thirdly, the primary judge appeared to wrongly assume that the classes 3 and 5 goods of both the VAGISAN and VAGISIL trade marks were confined to goods for vaginal use, due to the descriptive nature of the prefixes VAG and VAGI. However, when assessing deceptive similarity, the notional use of the respective marks should have been considered, and the range of goods went beyond those for vaginal use.

In light of the above, the Full Court concluded that VAGISAN was deceptively similar to VAGISIL. The VAGISAN trade mark was refused.

Section 60 – Reputation

This ground of opposition was not considered, as the matter had already been decided by the Full Court’s findings on the conflict with Combe’s earlier registrations.

Takeaway and final comments

The Full Court decision provides guidance on the various factors that should be considered when assessing the deceptive similarity of trade marks. In particular, it is a reminder that marks should be considered and compared in their entirety.

In a further development, Dr Wolff has filed an application for the composite mark DR WOLFF’S VAGISAN, covering similar goods in classes 3 and 5 to its VAGISAN word mark. This application has been opposed by Combe.

Authored by Danielle Spath and Sean McManis

10 min read

Office of the Retirement Commissioner v Cash Converters Pty Ltd [2020] NZIPOTM 27 (23 December 2020)

This recent decision provides helpful guidance on the principles for partial revocation of trade mark registrations in New Zealand and the determination of a “fair description” for goods and services.

The decision also highlights important differences between the law and practice on non-use removal proceedings in Australia and New Zealand.

Background

Cash Converters Pty Ltd (“Cash Converters”) sought partial revocation of the Office of the Retirement Commissioner’s (ORC) Registration No. 637400 SORTED. It covered Class 36 services in providing advisory, consultancy and information services relating to finance, investment and financial planning for and during retirement, and providing financial information relating to retirement.

They also sought partial revocation of Registration No. 976028 SORTED, which covered broadly worded Class 36 services “financial affairs; monetary affairs; real estate affairs” and various services in providing advice, consultancy and information the areas of finance, monetary affairs, retirement, real estate, property and insurance and Class 41 educational services and services in providing educational material and information relating to insurance, financial affairs, monetary affairs, real estate affairs.  The full specifications for the registrations are at [1].  

Revocation was sought on the basis of non-use of the SORTED mark for a continuous period of three years.

Facts/evidence

ORC started using its SORTED mark in 2001, when it established its website www.sorted.com for providing information and tools, such as online calculators, to help New Zealanders prepare for, and manage, their finances during retirement. 

From at least 2013 ORC’s use of SORTED expanded to a broader range of services in providing information, advice and resources to promote “the life-long financial literacy of New Zealanders”.  With this expansion in 2013, ORC obtained the later Registration No. 976028 SORTED for the broader range of services. 

ORC’s evidence of use included use of the SORTED mark on guides, booklets, seminar and course details, on online tools and calculators and on an online forum.  [2]

Discussion

As the SORTED mark had not been used on all of the services covered by the registrations, partial revocation was in order.   

The Assistant Commissioner noted the High Court decision in Sky Network Television Ltd v Sky Fiber Inc (Sky Network) confirming how partial revocation applications should be considered:

The case law establishes that the first task is to find as a fact what goods or services there has been genuine use of the trade mark in relation to; and then to ‘arrive at a fair specification of goods having regard to the use made’.”  [3]

ORC was found to have used the SORTED mark to provide generalised information, advice and education on retirement planning and financial literacy generally.  ORC was also found to have used the mark to provide online calculator tools and an online community forum which provided users with more specific information and recommendations. 

In considering what was a “fair description” of those services provided under the mark, the Assistant Commissioner identified the principles set out by Mallon J in Sky Network:

“(a) The assessment has “nothing to do with the defendant.” Defining the goods negatively by reference to the defendants’ activities is therefore not the approach. 

(b) The proprietor has protection outside his or her specification of goods in areas where he or she can demonstrate a likelihood of deception under other provisions. “There is no pressing need, therefore, to confer on the proprietor a wider protection than his [or her] use warrants by unduly broadening the specification of goods.

(c) The width of the surviving specification “must depend largely upon questions of fact and degree.”  “Wide words can cover what are commercially quite different sorts of articles”.  If there is shown to be use of just one of those things “it would be commercially nonsense to maintain the registration for all goods caused by the wide words”. [4]

In summary, and further quoting Mallon J in Sky Network, the Assistant Commissioner noted that:

The “fair description” is one “which would be given in the context of trade mark protection” and depends on the nature of the goods, the circumstances of the trade and the breadth of use proved” and should be approached as ““objective and impartial, balancing the competing interests” and “a view from the trade”.[5]

The Assistant Commissioner recognised the important “balancing exercise” of competing interests of the owner, competitors and the public:

  1. to have the Register uncluttered with unused marks or with registrations with overly broad specifications;
  2. to prevent parties being unjustifiably exposed to infringement of registrations with overly broad specifications; and
  3. “the owner’s interest in protecting its brand” which “aligns with the public interest in consumers not being deceived or confused by use of another trade mark” and the owner’s entitlement “to commercially realistic protection, remembering the test for infringement, extends to similar goods and services”.  [6]

Findings 

The scope of the original specifications was considered to “extend well beyond the actual use that had been made of the SORTED mark”.  [7]

The Assistant Commissioner considered that a “fair description” of the services offered under the SORTED mark could be reached by considering the “functions (the way the mark has been used) and the generalised, rather than personalised, nature of the education, information and advice ORC provides”.  [8] 

ORC was not using the SORTED mark in relation to all types of information, education and advisory services in the areas of insurance, finance, money, real estate and investment.  Those services were all provided in giving advice and information focusing on retirement and personal financial literacy, and not on all aspects of insurance, finance, money and other matters.

The Assistant Commissioner found that it was appropriate to limit the specifications to reflect the focus of the use and reworded the services more narrowly and as all “relating [or related] to retirement and personal finance”.

Further, ORC’s advice was not personalised advice given to individuals.  Rather, it was generalised advice and information.  The general description “advisory services relating to…” in the original Class 36 specifications for both registrations was considered too broad.  The Assistant Commissioner considered that it would be fair to describe those services as “general advice relating to…”.

The original term “consultancy services relating to…” used in the Class 36 specifications for both registrations was removed because ORC would not be reasonably understood to be a consultancy business.  The Assistant Commissioner noted that “there is no aspect of the ORC business that technically requires the description to be used. ORC is able to have commercially realistic protection without the reference to consultancy”.  [9]

The full specifications as amended are at footnote  [10].

Earlier cases considering partial revocation

The Assistant Commissioner provided a helpful summary of earlier partial revocation cases and what was found to be a “fair description” for the goods and services.  This can be found at paragraph 71. 

These decisions show that precise descriptions are applied in partial revocation actions and that broad and unqualified descriptions are unlikely to be allowed under New Zealand practice. 

Comparison with Australian law

The decision highlights some important differences between the law on revocation/non-use removal actions in Australia and New Zealand. 

1. Discretion to remove or restrict a registration

The Assistant Commissioner noted in the decision that there is no “overriding discretion to refuse to revoke or partially revoke a registration”, which follows from the decision Crocodile International Pte Ltd v Lacoste [2017] NZSC 14 at [97].  [11]  Under New Zealand law, a trade mark owner must show use during the three year non-use period, or special circumstances that justify non-use of their mark, to successfully oppose a revocation application.

Unlike New Zealand, under Australian law the Registrar has the discretion under s 101(3) of the Trade Marks Act 1995 not to remove a registration even where there has not been use of the mark if “satisfied that it is reasonable” not to remove the registration.  Further, s 101(4) provides that in deciding under subsection (3) not to remove a registration the Registrar may take into account use of the mark on similar goods or closely related services or similar services or closely related goods. 

2. Standing to apply for removal for non use

New Zealand law requires that only an “aggrieved person” can apply for revocation of a registration.   As noted in the decision “the term “aggrieved person” is given a wide and liberal interpretation.  This will generally include trade rivals.  As well as someone who is disadvantaged in a legal or practical way.”  [12]

However, under Australian law any person can apply for removal of a registration for non-use and there is no requirement for the removal applicant to show aggrievement to have standing to apply for removal. 

3. Date of revocation

In the New Zealand decision, the Assistant Commissioner noted that “the result of revocation is that the owner’s rights cease to exist on the date the application revocation was filed, or at an earlier date if the Commissioner is satisfied the non-use ground has been made out at an earlier date.”  [13]

Under Australian law, the date of removal of a registration for non-use is the date of the Registrar’s decision and the Registrar does not have the discretion to determine an earlier date for removal.

Takeaway

There are important differences in relation to standing and discretion in revocation/non-use removal proceedings in New Zealand and Australia which trade mark owners should note.

When defending a non-use removal action in Australia, and there has been no use of the mark during the 3 year non-use period, trade mark owners should still consider whether there are grounds for convincing the Registrar to refuse removal of the registration, such as some residual reputation in the mark from earlier use or possibly overseas reputation.

In New Zealand, it is much more likely than it is in Australia that broad descriptions will be restricted to more specific and limited descriptions.


[1] Services covered by Registration No. 637400 SORTED:

Class 36:Providing advisory, consultancy and information services relating to finance, investment and financial planning for and during retirement; providing financial information relating to retirement by means of telecommunication and electronic networks including online, via a global or other communications network, the world-wide web, an intranet or the Internet

Services covered by Registration No. 976028 SORTED:

Class 36: Financial affairs; monetary affairs; real estate affairs; providing advisory, consultancy and information services relating to finance, investment and financial planning for and during retirement; advisory services relating to real estate ownership; providing financial information relating to retirement by means of telecommunication and electronic networks including online, via a global or other communications network, the world-wide web, an intranet or the Internet; consultancy services relating to insurance; information services relating to insurance; insurance advisory services; insurance information; provision of insurance information; consultation services relating to real estate; providing information, including online, about insurance, financial and monetary affairs and real estate affairs; provision of information in relation to real estate; provision of information relating to property (real estate); provision of information relating to real estate; real estate advisory; services; real estate investment advice

Class 41: Dissemination of educational material; education services; educational services; life coaching (training or education services); provision of educational information; provision of education services via an online forum; publication of educational materials; publication of educational texts; the aforementioned relating to insurance, financial affairs, monetary affairs, real estate affairs

[2] Arguing that ORC did not provide financial advisory services, Cash Converters’ evidence in support of the revocation application referred to ORC’s disclaimers on its website that its information and tools “should be treated as a guide only” and should be used before seeking professional advice.  It was also noted that ORC’s “Investor Kickstarter” guide is referred to on the website as a guide only which  “does not constitute investment advice to any person”.  The evidence also noted that ORC is not a registered financial services provider under the Financial Services Provider (Regulation and Dispute Resolution) Act 2008 (RDR Act). 

In reply, ORC filed evidence that it is not required to be registered under the RDR Act as it is not a business which provides financial services as defined under the Act.  ORC also noted that their “Investor Kickstarter” tool asks high level questions to categorise participants into one of five types of investors and that their disclaimer clarifies that the advice given through this tool is not the type of financial advice to which the Financial Advisors Act 2008 would apply. 

[3] Office of the Retirement Commissioner v Cash Converters Pty Ltd [2020] NZIPOTM 27 (23 December 2020), paragraph 39.

[4] ibid, paragraph 44.

[5] ibid, paragraph 45.

[6] ibid, paragraph 52.

[7] ibid, paragraph 110.

[8] ibid, paragraph 113.

[9] ibid, paragraph 96.

[10] Registration No. 637400

Class 36: Providing information services and general advice relating to finance, investment and financial planning for and during retirement; providing financial information and general advice relating to retirement by means of telecommunication and electronic networks including online, via a global or other communications network, the worldwide web, an intranet or the Internet

Registration 976028

Class 36: Providing information and general advice, including online, about insurance, financial and monetary affairs and real estate affairs related to retirement and personal finance; provision of financial calculation services relating to retirement and personal financial planning including budgeting, personal debt, home buying, mortgages, superannuation, investment and savings, including by way of online; calculators; providing information services and general advice relating to finance, investment and financial planning for and during retirement; providing financial information and general advice relating to retirement by means of telecommunication and electronic networks including online, via a global or other communications network, the world-wide web, an intranet or the Internet.

Class 41: Education services related to retirement and personal financial matters including financial planning and budgeting, debt, home buying, mortgages, superannuation, investment and savings; provision and dissemination of educational material and information related to retirement and personal financial matters, including by way online communication, websites, web blogs, social media, forums, publications (including texts, guides and brochures), news articles, training, courses, seminars and meetings.

[11] ibid, paragraph 12 quoting  Crocodile International Pte Ltd v Lacoste [2017] NZSC 14 at [97]

[12] ibid, paragraph 28.

[13] ibid, paragraph 11.

Authored by Michelle Howe and Sean McManis

11 min read

Axent Holdings Pty Ltd t/a Axent Global v Compusign Australia Pty Ltd [2020] FCA 1373 (25 September 2020) 

This decision of Kenny J of the Federal Court of Australia considers many issues including the Crown use defence; whether information published by the Crown (and made available to it by a patentee) can be novelty defeating; and the effect that requesting an extension of time to renew a patent outside of the renewal fee grace period has on the relevant period during which the patent is taken to have ceased before it is restored.

The Background

Axent Holdings Pty Ltd, trading as Axent Global (Axent), commenced proceedings against Compusign Australia Pty Ltd and Compusign Systems Pty Ltd (together Compusign) as well as Hi-Lux Technical Services Pty Ltd (Hi-Lux) (the respondents) for infringing Australian Patent No. 2003252764 titled “Changing Sign System” (764 Patent). The 764 Patent claimed an earliest priority date of 4 October 2002 and was granted on 26 June 2008. The respondents filed a cross claim asserting the 764 Patent was invalid. Except for any issues under ss 22A and 138, the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) (Raising the Bar Act) did not apply.

The invention related to a changing sign system for use as a variable speed limit sign (VSLS) on roadways. The VSLS could be used to display a lower hazard speed limit instead of the normal maximum safe speed when a certain condition is detected. When the hazard speed limit is displayed, a portion of the sign is varied to conspicuously indicate the change of conditions.

Independent claims 1, 17 and 20 described an electronic variable speed limit sign, which has a plurality of lights forming the central speed limit numerals and annulus rings around those numerals. The specification explains that a change of conditions is indicated by flashing some of the annulus outer rings while always retaining one ring on, to fulfil the criteria of being a speed display sign, that is, by always showing a number in a circle on a display panel. Dependent claims 2 to 16, 18 to 19 and 21 to 27 specified a number of further features, and claim 28 was an omnibus claim.

In September 2001, Mr Fontaine, the director of Axent and named inventor of the 764 Patent, met with Mr Bean, who worked for VicRoads, to view a demonstration of Axent’s variable speed limit sign with a partly flashing annulus. Mr Fontaine stated that he subsequently received tender documents which included a VicRoads specification (the September 2001 specification), which contained a requirement, for variable speed limit signs, that part of the inner diameter of the annulus should be capable of flashing on and off.

The issues

Product or method claims

A preliminary question arose as to whether the claims were product or method claims for the purposes of determining infringement. Axent pleaded that the claims were to a product. The respondents submitted that the claim integers formed part of a method of using a variable speed limit sign. Her Honour rejected Axent’s submissions that the claims were framed in terms of capabilities, yet still construed the majority of the claims as product claims limited by result. Claims 12, 14 and 16 were construed as method claims which describe the operation of the claimed sign system.

Clarity

The respondents contended that independent claims 1, 17 and 23 lacked clarity because of the use of the terms “normal speed”, “input criterion” and “change in conditions”. Her Honour considered that when the claims were read as a whole, in the context of the specification, the skilled addressee would have no real doubt about what is intended by the above features and that the claims were clear.

Direct Infringement

Axent’s case was in substance that the supply by Hi-Lux and Compusign of their respective variable speed limit signs infringed all the claims of the Patent. Axent was unable to establish that either the Hi-Lux signs or the Compusign signs included relevant features of the product claims or that Hi-lux or Compusign performed the relevant claimed method in making their signs. Thus, the product and method claims were not infringed.

As omnibus claim 28 was narrowed “with reference to the examples”, and the specification included no ‘examples’, her Honour considered that there can be no infringement or alternatively that claim 28 was invalid for lack of clarity.

Indirect Infringement

Axent also relied on s 117 of the Patents Act 1990 (Act) to allege indirect infringement initially on the sole basis that the supply of a sign is, in and of itself, a supply that attracts the operation of s 117. Axent subsequently sought to broaden their case for indirect infringement to instances where the invention was for a method, rather than a product. Axent also sought leave to elicit from the respondents’ witnesses in cross-examination evidence as to the directions given and steps taken by the respondents when supplying their signage. The respondents submitted that it would be unfair to permit Axent to seek to make out an infringement case based on s 117 that it had not opened or properly foreshadowed. Her Honour agreed and held Axent to the case on which it opened. The evidence given by the respondents’ witnesses by way of cross-examination was admitted, however, it was limited in its use so that it could not be used to form the basis of an infringement case by reference to s 117. Axent was not able to make out its case of indirect infringement against the respondents.

Crown use defence

Hi-Lux submitted that each of VicRoads, the South Australian Department of Planning, Transport and Infrastructure, and the City of Greater Geelong was an authority of a State for the purposes of s 163 of the Act which provides that exploitation of an invention by or for the services of the Commonwealth, or a State is not an infringement of any patent rights.

Her Honour considered that each of the organisations were an Authority of the state and that the exploitation of the sign was for the services of each Authority. However, this was subject to s 163(3) which required that the exploitation of the invention was necessary for the proper provision of the services within Australia. Her Honour considered it may be that exploitation was not strictly necessary in the sense contemplated by s 163(3) because alternative signage was available and widely used. However, this was not considered further, in any event, as Hi-Lux failed to satisfy her Honour that the infringement  was authorised in writing by an authority of the State.

In particular, the documents in relation to Hi-Lux’s supply of signs to VicRoads and the City of Greater Geelong left open the possibility that Hi-Lux had a choice as to the electronic speed sign supplied, leaving it free to perform the relevant contract without infringing the claims of the Patent. It was clear that Hi-Lux was under no contractual obligation to supply an infringing item.

The contract for the supply and installation of variable speed limit signs between the Commissioner of Highways and Hi-Lux included a specification which set out the requirements for the variable speed limit signs. Her Honour noted the possibility this contract may have required a product that infringed the 764 Patent and thus, the infringing acts may well have been authorised for the purposes of s 163. However, in the absence of submissions or evidence to this effect, her Honour was not satisfied that the contract with the Commissioner required Hi-Lux to supply goods that necessarily infringed the patent in suit. Accordingly, Hi-Lux’s defence under s 163 of the Act did not succeed.

Innocent infringement

Compusign argued that they were not aware and had no reason to believe that a patent existed for the invention before receiving the letter of demand from Axent. Compusign gave evidence to the effect that they had not expected a patent to exist in relation to the requirements of the roads authorities’ specifications without the specifications referring to the patent. Her Honour considered that there was nothing in the relevant roads authorities’ specifications that would put a reader on notice of the existence of a relevant patent. Axent did not address the issue of innocent infringement.

Accordingly, if it were necessary to do so, her Honour would have provisionally refused to make an award of damages or an order for an account of profits in respect of any infringement by Compusign prior to the date of the receipt of the letter of demand.

Lapse of patent

Axent did not pay the renewal fees for the 764 Patent by the due date of 6 October 2015; nor did it pay the fees by 6 April 2016, within the 6 month renewal fee grace period. Axent applied for an extension of time which was granted on 1 September 2016 and the renewal fees were then applied to the 764 Patent. The 764 Patent therefore ceased to be registered for a period for the non-payment of fees.

The respondents submitted that Axent could not assert infringement of the patent from the day after that on which the renewal fee for the 764 Patent was due, 7 October 2015, to the day on which an application to extend the time to pay the renewal fee was granted, 1 September 2016. Axent submitted the relevant period began on 5 April 2016 (that is, approximately 6 months after 7 October 2015) and concluded on 1 September 2016. The commencement of the relevant period turns on the construction of reg 13.6 of the Patents Regulations 1991 (Cth), which relevantly provides that the period in which the renewal fee must be paid is the period ending at the last moment of the anniversary, however, if the renewal fee is paid within 6 months after the end of the relevant anniversary the period is taken to be extended until the fee is paid. The respondents submitted, and her Honour accepted, that the period is only “taken to be” extended if the condition of the renewal fee being paid within the 6 month grace period is satisfied. Had Axent paid the renewal fee at any time before the end of the 6 month grace period, the 764 Patent would never have ceased as the prescribed period would have been extended by reg 13.6(2)(a) to end on the day Axent paid the fee. However, Axent did not pay the renewal fee before 5 April 2016, and in consequence reg 13.6(2)(a) had no application.

Therefore, the prescribed period for renewal ended on 7 October 2015 being the point after the last moment of the anniversary date for the Patent. It follows that the Patent ceased on that day. The Patent was restored on 1 September 2016, when the extension of time for the renewal fee application was granted.

Prior use

The respondents relied on s 119(1) by way of defence to Axent’s infringement case. In the absence of evidence that either Hi-Lux or Compusign Australia was “making” an infringing product or “using” an infringing process before the priority date, neither could satisfy the requirements for the prior use defence required by s 119(1) prior to the Raising the Bar Act changes.

Invalidity of the Patent

The respondents submitted the claims were not novel because the invention was disclosed by the September 2001 specification and as part of the installation process for the Western Ring Road Project. Axent submitted that the September 2001 specification was merely a “wish list” that provided insufficiently direct disclosure and in any event was excluded from being considered for the purposes of novelty and inventive step because of s 24(1)(b) and/or s 24(2). Relevantly, s 24(1)(b) provides that, when assessing novelty and inventive step, the person making the decision must disregard any information derived from the patentee and made publicly available without their consent. Under s 24(2), the person making the decision must disregard any information given by, or with the consent of, the patentee, to the Crown, but to no other person or organisation.

Axent argued that it had disclosed its invention to VicRoads confidentially and never consented to VicRoads on-disclosing it in the September 2001 specification. The respondents contended, and her Honour agreed, that s 24(2) did not apply because the September 2001 specification was a disclosure made by, and not to, the Crown and the language of s 24(2) did not support the “reach-through effect” that Axent had argued.

There was still the further question as to whether s 24(1)(b) operated. A central issue was whether the information was made publicly available without the consent of Axent. Whilst there was no evidence that Axent expressly gave consent, having regard to the circumstances and the evidence, her Honour was satisfied that Axent positively consented to the inclusion of the claimed invention in the September 2001 specification. Accordingly, s 24(1)(b) did not apply.

Kenny J rejected the contention that the September 2001 specification was part of the common general knowledge or that it could be combined with the common general knowledge. Accordingly, the critical question was, whether each of the claims lacked inventive step by reference to common general knowledge alone. The evidence was clear that, apart from the flashing annulus feature, the other features of the claims were obvious as at the priority date. However, there was clear evidence that the skilled worker was aware of a flashing annulus feature well before the priority date.

Her Honour considered that no problem was overcome or barrier crossed by the adoption of the flashing annulus feature and that the evidence indicated a person skilled in the art would have taken the steps leading from the prior art to the claimed invention as a matter of routine. The 764 Patent was found invalid for lack of inventive step by reference to the common general knowledge alone, and claims 1, 9, 10, 14, 15, 17, 20 and 27 were invalid for want of novelty in light of the disclosure of September 2001 specification.

The Decision

Ultimately, Axent failed in its infringement case, even if it had succeeded, Compusign succeeded in its innocent infringement defence and all respondents succeeded on the lapsed patent defence. The Crown use and prior use defences failed.

Significance

The decision clarified that the prescribed period to pay a renewal fee to prevent a patent ceasing is only taken to be extended to the date of payment, if the fee is paid within the 6 month grace period. Accordingly, when the renewal fee is paid after the 6 month grace period by relying on an extension of time, the patent is taken to have ceased from the point after the last moment of the anniversary of the patent.

Regarding the Crown Use defence, the decision indicated that written authorisation by the Crown to exploit an invention may be explicit or implied, but the authorisation must be specific such that the necessary exploitation of the invention is authorised and that alternatives are not possible.

For information made available to the Crown by a patentee and subsequently published by the Crown, the decision indicated s 24(2) did not provide a “reach-through effect” to exclude such a publication from the prior art when considering novelty and inventive step.

The decision also offers guidance on the evidence required to establish innocent infringement in the case that a defendant was not aware, and had no reason to believe, that a patent for the invention existed.

Authored by Tam Huynh and Dean Bradley

8 min read

Representations on Packaging and in Advertising – the Full Federal Court finds that Kimberley-Clark has not Engaged in Misleading Conduct by using “Flushable”.

The Australian Competition and Consumer Commission (ACCC) has lost its Full Court appeal that Kimberly-Clark Australia (KCA) had misled and deceived consumers, by representing on its website www.kleenex-cottonelle.com.au and on product packaging, that its  Kleenex Cottonelle Flushable wipes (KCFC wipes) were suitable for flushing down toilets.

The full decision can be found here.

Background

Earlier Federal Court Proceedings

In 2006 the ACCC commenced Federal Court proceedings against KCA alleging that KCA had, by its advertising and marketing of the KCFC wipes during May 2013 and May 2016:

(1)     engaged in conduct in trade or commerce which was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18(1) of the Australian Consumer Law, being Sch 2 of the Competition and Consumer Act 2010 (ACL);

(2)     made false or misleading representations that its KCFC wipes had a particular quality in  contravention of s 29(1)(a) of the ACL and/or had particular performance characteristics, uses and/or benefits, in contravention of s 29(1)(g) of the ACL; and

(3)     engaged in conduct in trade or commerce that was liable to mislead the public as to the nature, characteristics, and suitability for purpose of KCFC wipes, in contravention of s 33 of the ACL.

 The ACC alleged that KCA’s packaging and website represented that the KCFC wipes:

(1)     “were suitable to be flushed down the toilet and into sewerage systems in Australia” (flushability representation);

(2)     “had similar characteristics to toilet paper when flushed”, as they would behave in a similar way to toilet paper when flushed in that they break up or disintegrate in a timeframe and manner similar to toilet paper” (characteristics representation); and

(3)    “would break up or disintegrate in a timeframe and manner similar to toilet paper” (disintegration representation).

The representations included statements on the webpages of KCA’s website www.kleenex-cottonelle.com.au , such as “Flushable Cleaning cloths” and “will break up in the sewerage or septic system like toilet paper”, use on the product packaging of words, such as “flushable” and “Cloths break down in sewerage system or septic tank” and of the logo (depicted below).

At the time there was no legislation or generally accepted industry standards governing the characteristics of what could be marketed as “flushable”, although KCA argued that the KFCF wipes met the tests for flushability under the “GD3 Guidelines for flushability”, which had been developed by manufacturers, including Kimberley-Clarke Corporation.

KCA denied making the characteristics or disintegration representations but accepted that it made the flushability representation. However, it argued that the flushability representation was not false or misleading and was within the G3 Guidelines.

While accepting that the KCFC wipes do not break down as quickly or easily as toilet paper, Gleeson J found that the characteristics and disintegration representations had not been made.  This was because in the website or packaging context in which the alleged representations appeared, they would not convey to an ordinary reasonable consumer anything about how the flushed KCFC wipes behaved, except that they might be “flushable” (although not equivalently flushable to toilet paper).

Having regard to the ACCC’s concession and the evidence, Gleeson J found that the flushability representation had been made by KCA. However, her Honour found that the flushability representation was not false, misleading or deceptive because there was insufficient evidence that harm had actually eventuated to household plumbing and the sewer network to demonstrate that the KCFC wipes were unsuitable for flushing.

While there was disagreement over the G3 Guidelines being an acceptable standard, Gleeson J found that, in the absence of this evidence of harm, they were an “appropriate framework for assessing flushability” and a “reasonable benchmark for making a flushability claim”.

The Appeal to the Full Federal Court

The ACCC unsuccessfully appealed Gleeson J’s decision to the Full Federal Court on 8 appeal grounds, all of which were dismissed. Appeal grounds 1 to 6 related to the flushability representation.

In the 1st ground of appeal,  the ACCC argued that the trial judge, Gleeson J was in error because she “approached the question of ‘harm’ as might be done in a damage claim in negligence, elevating the inquiry to proof of causation as opposed to assessing falsifiability under the consumer law”. The ACCC argued that her Honour should have considered the question of whether  there was a real risk of harm or that the KC wipes had the potential to cause harm rather than that the KC wipes contributed to or caused actual harm (including blockages) to household plumbing (including septic tanks) or to the sewerage network.

The Full Court dismissed this ground of appeal for two reasons.  First, there was no error in the primary judge’s reasons because her Honour simply responded to the case argued by the ACCC at trial on the flushability representation, which was on the basis that the actual harm had been caused, not that flushing the KC wipes posed a risk of harm. The Full Court said “No such case was run at trial. It cannot be run now”, as it was a different case.

Secondly, the Full Court found that Gleeson J had, in any event, considered and addressed the risk of harm but concluded that it was not shown to be materially greater than the risk posed by toilet paper, and that it was not erroneous to take into account, as the primary judge did, whether any harm in fact eventuated to household plumbing and the sewerage network, when assessing the level of risk posed by the KCFC wipes.

Related to this second issue, the ACCC argued in its 2nd  and 3rd  appeal grounds  that Gleeson J’s  findings that the KCFC wipes did not present a risk of harm “over and above” or “materially greater” than that posed by toilet paper and her finding that flushing the KCFC wipes down the toilet would contribute to, or cause harm, were in error because they were inconsistent with and against the weight of the evidence.

In dismissing these grounds, the Full Court found that It was not erroneous (for the trial judge) to have regard to “the paucity of evidence of harm in reaching the conclusion that the risk posed by KCFC wipes was not materially greater than the risk posed by toilet paper”.

Some of the problems identified by the primary judge in the evidence led by the ACCC were:

  • Most of the evidence was directed to how wipes in general caused blockages, but not that the KCFC wipes caused blockages. The ACCC had presented only very weak evidence of blockages in household drain lines and in the sewer (beyond the household drain line) caused by the KCFC wipes.
  • It was accepted, as a matter of logic, that the more quickly an item breaks down after flushing the less the risk of snagging or clumping in the sewerage system. The KCFC wipes were shown to break down and disperse more slowly than toilet paper but this did not support an inference that flushing KCFC wipes down the toilet led to a materially greater risk than toilet paper of causing blockages to the sewerage system, when there was a lack of evidence that KCFC wipes actually did cause blockages.
  • KCA’s change of packaging in October 2015 to indicate that it did not recommend KCFC wipes be flushed into a domestic septic tank was insufficient to support the inference (contended for by the ACCC) that the KCFC wipes contributed to or caused harm to household plumbing or the sewer network.

In the 4th ground of appeal, the ACCC argued that the trial judge erred in finding that the evidence of 26 consumer complaints in KCA’s business records (regarding how their household plumbing (including septic tanks) had been blocked by KCFC wipes) was “weak” and insufficient to support a finding that the KCFC wipes were not suitable to be flushed down toilets.

The Full Court said that the small number of consumer complaints (most of which related to  blockages in septic tanks not the sewerage systems as argued by ACCC at trial) and the absence of evidence from any consumer or plumber to verify the facts in any of the complaints  was “hardly a sound basis” for reaching the conclusion that KCA falsely representing that KCFC wipes were flushable, and “rather suggests that the KCFC wipes were suitable to be flushed into domestic drain lines”.

In the 5th ground of appeal, the ACCC argued that the trial judge erred in finding that the GD3 Guidelines were an “appropriate framework for assessing flushability”, because manufacturers, including KC had developed the guidelines themselves, “to avoid government regulation which might constrain their business”.

The Full Court dismissed this ground.  They found that the primary judge was “plainly aware that the manufacturers were developing their own guidelines” and their development had been informed by various “real world” tests.

The ACCC’s 7th and 8th grounds of the appeal concerned the characteristics and disintegration representations.

The Full Court found that the primary judge was correct to conclude that the characteristics and disintegration representations were not made and so it was not necessary to consider then whether they were false and misleading.

The Full Court noted that of the 8 representations relied upon by the ACCC, 6 did not mention toilet paper at all or compare the KCFC wipes with the characteristics or performance of toilet paper. The 5th representation, that the KCFC wipes “will break up in the sewerage or septic system like toilet paper” (appearing on a webpage of the www.kleenex-cottonelle.com.au website) was the only statement which directly compared the KCFC wipes to toilet paper. However, the Full Court agreed with the judge at first instance that this representation had to be considered in the context of the immediately following sentience; “However, do not flush an excessive amount of wipes at one time (no more than two wipes per flush)” The Full Court said that in this context (i.e. the direction not to flush any more than two wipes)the reasonable consumer would not have understood that the KCFC wipes broke up in the same way as toilet paper .

Regarding the eighth representation, the  image,  the Full Court said that he image did not, of itself, or together with the other representations read in context, convey that KCFC wipes “had similar characteristics to toilet paper when flushed” or that they “would break up or disintegrate in a timeframe and manner similar to toilet paper”.

Comment

The ACCC’s case ultimately failed because it could not prove that KCA made the false and misleading statements that the ACCC alleged.  The ACCC didn’t help its own cause by arguing at first instance (which could not be changed on appeal) that the KFCF wipes were not suitable for flushing because they caused actual harm to the sewerage system. With this argument the ACCC gave itself a higher evidentiary burden to meet than the argument that the KCFC wipes posed only a risk of harm. It is worth noting that the ACCC’s argument at first instance that the flushabiilty representation by KFA was in respect of a “future matter”, and so within section 4 of the ACL, was not successful.  If the ACCC had succeeded with this argument and section 4 found to apply, the evidentiary burden would instead have been on KCA to present evidence that it had “reasonable grounds” for making the flushability representation and so (for that reason) the representations could not be taken as misleading.

Authored by Sean McManis