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

In the Registrar’s decision of National Australia Bank Limited [2020] ATMO 41 (19 March 2020), National Australia Bank (“NAB”) have successfully relied upon the their significant reputation in Australia to overcome citations of prior rights and secure acceptance of the composite logo mark (“NAB Logo mark”) shown below.  The Registrar followed the previous decision of the Full Federal Court in Registrar of Trade Marks v Woolworths [1999] FCA 1020, which held that in certain circumstances, an applicant’s reputation may be considered as a “surrounding circumstance” when determining whether two marks should be regarded as “deceptively similar”.

NAB applied to register the NAB Logo mark for a wide range of goods and services.  The Examiner raised an objection against this mark under Section 44, on the basis that it was too similar to four earlier registrations and covered the same or similar goods and services. Each of the earlier cited registrations were comprised of the plain words “THE BRIDGE” and covered goods and services that are the same or similar to those covered by the NAB Logo mark (although, while not noted in the decision, the only same goods or services concerned philosophical education and certain personal services).  After several failed attempts to persuade the Examiner to reconsider this objection (on the basis of written submissions), NAB filed a request for this matter to be heard by the Registrar.

When assessing whether the NAB Logo mark is substantially identical with or deceptively similar to each of THE BRIDGE marks, the Registrar applied the traditional test for the comparison of marks as outlined in Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd.  The Registrar also took guidance from the comments of Jacobson J in Millennium & Copthorne International Limited v Kingsgate Hotel Group Pty Ltd with respect to the various historical principles outlined in past authorities as follows:

Without seeking to reformulate the various statements of principle stated in the Full Court authorities, it is sufficient for present purposes to identify the critical elements which seem to me to inform the issue of deceptive similarity in the present case. There are nine elements.

First, the judgement of likelihood of deception is a practical one. It requires an assessment of the effect of the challenged mark on the minds of potential customers.

Second, the question of deceptive similarity is not to be decided by a side-by-side comparison. It is to be determined by a comparison of the impression based on recollection of the opponent’s mark that persons of ordinary intelligence and memory would have, and the impression that those persons would get from the opposed trade mark.

Third, allowance must be made for imperfect recollection.

Fourth, the effect of the spoken description must be considered.

Fifth, it is necessary to show a real tangible danger of deception or confusion.

Sixth, a trade mark is likely to ‘cause confusion’ if the result of its use will be that a number of persons are ‘caused to wonder’ whether the two products come from the same source.

Seventh, all surrounding circumstances must be taken into consideration. The circumstances include those in which the marks will be used, and in which the goods or services will be bought and sold, as well as the character of the probable acquirers of the goods and services.

Eighth, the question of whether there is a likelihood of confusion is not to be answered by reference to the manner in which a party has used the mark, but by reference to what an applicant can do. That is to say, the use to which it can properly put the mark if registration is obtained.

Ninth, if a registered trade mark includes words which can be regarded as an ‘essential feature’ of the mark, another mark that incorporates those words may cause a tangible danger of deception or confusion by reason of consumers retaining an imperfect recollection of those words. However, care must be taken to not too readily characterise words in a composite trade mark as an ‘essential feature’ because to do so may effectively convert a composite mark into something different.

Reference was also made to comments by French J in the Woolworths decision (see above), where it was held:

reference to the familiarity of the name ‘Woolworths’ in Australia was appropriate. Where an element of a trade mark has a degree of notoriety or familiarity of which judicial notice can be taken, as is the present case, it would be artificial to separate out the physical features of the mark from the viewer’s perception of them. For in the end the question of resemblance is about how the mark is perceived. In the instant case the visual impact of the name ‘Woolworths’ cannot be assessed without a recognition of its notorious familiarity to consumers.

The Hearing Officer concurred with NAB’s assertion that the NAB Logo is as well-known as “WOOLWORTHS” and there was nothing before the Hearing Officer which obviously distinguishes that case (Woolworths) from the present matter.  On this basis, the Registrar held that the NAB Logo mark was not substantially identical or deceptively similar to the earlier THE BRIDGE marks and accepted it for potential registration.

The decision is short on detail and while not stated specifically, it seems that NAB’s mark was accepted as well-known simply on the basis of general knowledge, rather than evidence. As NAB is a well-known bank, the extent to which that reputation is relevant in respect of the cases of the direct conflict with services covered by the prior registrations, namely ‘Courses, lectures and seminars on philosophical subjects’ and ‘Personal care services (non-medical nursing assistance); Providing non-medical assisted living services for personal purposes’ is debatable. However, the Hearing Officer seems to have accepted it as sufficient, irrespective of the nature of the services.

When examining a trade mark for potentially conflicting rights under Section 44, Australian examiners do not consider the “reputation” of the respective marks involved in their initial assessment.  However, where one particular element of a trade mark has a high degree of notoriety or familiarity to Australian consumers, the owner’s reputation in that element may be considered as a “surrounding circumstance” when determining whether or not two marks are “deceptively similar”.  While the degree of notoriety or familiarity required by a trade mark is not entirely clear, and examiners will typically need this to be proved, it is reasonable to conclude that the owner must have made lengthy and widespread use of the relevant mark in Australia, such that most Australian consumers are familiar with the mark and its owner.

Authored by Nathan Sinclair and Sean McManis

Vehicle Monitoring Systems Pty Ltd v SARB Management Group Pty Ltd [2020] FCA 408

This decision forms part of an ongoing battle between two Australian companies over patented technology for improving the efficiency by which authorities monitor and manage access to public parking.  In this decision, the Federal Court of Australia provides some helpful guidance on the approach to assessing whether or not a claimed invention involves an inventive step (i.e. is not obvious) under the current provisions of Australian patent law.

Background

Vehicle Monitoring Systems Pty Ltd (VMS) developed a Parking Overstay Detection System (the POD system), which uses in-ground sensors to detect changes in the earth’s magnetic field when a vehicle enters a parking space (or bay).  A message is sent wirelessly to a device carried by a parking officer who can then issue an infringement notice, as required.

VMS sought to collaborate with SARB Management Group Pty Ltd (SARB) to advance the POD system technology.  SARB is the designer and distributor of software popularly used with generic handheld PDAs for issuing parking infringement notices by council officers.  However, no collaboration eventuated from these discussions.  Instead, SARB developed its own vehicle detection system which was also based on the use of a sensor to detect changes in the earth’s magnetic field when a vehicle enters a parking space.

More specifically, SARB’s system incorporated a vehicle detection unit (VDU) using a magnetic sensor capable of detecting occupancy of a vehicle space by a vehicle; a storage device carrying parameters which define notifiable vehicle space occupancy events; and a processor operable to initiate a communication from the VDU to a supervisory device (such as a PDA) upon occurrence of a notifiable event (such as a parking violation), wherein the communication includes data items pertaining to the notifiable event and is communicated in a format suitable for pre-population into infringement issuing software.

SARB’s system became the subject of Australian Patent Application No. 2013213708, entitled ‘Vehicle Detection’ (SARB application).  Relevantly, VMS opposed the SARB application on the grounds that the claimed invention lacked an inventive step and that SARB was not entitled to the grant of a patent for this invention under the Patents Act 1990.

An opposition hearing was conducted before the Australian Patent Office (Vehicle Monitoring Systems Pty Ltd v SARB Management Group Pty Ltd [2017] APO 63).  The Patent Office rejected each of these grounds as advanced by VMS, determining that claims 1-24 should proceed to grant (but claims 25-28 should not be granted).

VMS appealed this decision to the Federal Court of Australia and the present decision concerns the outcome of this appeal.

Arguments

VMS submitted that claims 1-24 of the SARB application lacked an inventive step in light of the common general knowledge and five sources of prior art information, including: a published PCT application (filed by VMS); a published Australian patent, a published journal article; slides of a presentation given at an industry conference in 2005; and details of an oral presentation given at an industry conference in 2006.

Additionally, VMS submitted that SARB is not entitled to be the person to whom the patent is granted because Mr Welch of VMS, or alternatively Mr Welch and Mr Gladwin of Maribyrnong City Council conceived of all or part of the invention disclosed in the SARB application and communicated it to Mr Del Papa of SARB, and in doing so sufficiently contributed to the invention to be named as inventors.

Decision

The decision involved a comprehensive assessment of facts, technical details, claim construction, and a determination of the common general knowledge involving expert witnesses and submissions from both parties.

Claim construction

For ease of reference, claim 1 is reproduced below:

  1. vehicle detection unit (VDU) comprising:
    1. magnetic sensor able to sense variations in magnetic field and for outputting a sensor signal caused by occupancy of a vehicle space by a vehicle;
    2. storage device carrying parameters which define notifiable vehicle space occupancy events;
    3. processor (a) operable to process the sensor signal to determine occupancy status of the vehicle space, and (b) operable to compare the occupancy status of the vehicle space with the parameters in order to determine whether a notifiable event has occurred, and (c) operable to initiate a communication from the vehicle detection unit to a supervisory device upon occurrence of a notifiable event, wherein the communication includes (i) data items pertaining to the notifiable event and (ii) communicated in a format suitable for pre-population into infringement issuing software.

There were contentions over the construction of the scope of claim 1, particularly as to whether the VDU initiates a communication only upon the occurrence of a notifiable event or whether the claim includes that the VDU is operable (i.e. able) to initiate a communication at a time other than when a notifiable event has occurred.  The Court preferred the latter construction advanced by VMS as to do otherwise would inappropriately add a limitation to the claim that is not present – that is, inserting the word ‘only’ before ‘operable’.  Additionally, the Court considered that data items pertaining to the notifiable event did not include ‘all’ data items as the plain language of the claim simply refers to ‘data items’ not ‘all data items’.

Furthermore, there was consideration of the feature ‘communicated in a format suitable for pre-population into infringement issuing software.’  VMS submitted that this required the data communicated from the VDU to the supervisory device to be able to be pre-populated into the data fields in the infringement issuing software without further data processing by the supervisory device.  SARB largely accepted this construction but submitted that the language of claim 1 does not preclude additional necessary processing at the supervisory device; for example to receive and organise the data packets.  The Court agreed with VMS’s construction and SARB’s qualification.

Inventive step

In Australia, an invention is taken to involve an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art in the light of the common general knowledge as it existed before the priority date of the relevant claim.  The assessment can be made against the common general knowledge separately or together with certain other pieces of prior art information.

Accordingly, when assessing whether or not a claimed invention involves an inventive step it is first necessary to establish the relevant common general knowledge of the trade.

The prior information that can be used to supplement the common general knowledge to support an assertion of lack of inventive step is provided by section 7(3) of the Patents Act 1990 as follows:

(a)  any single piece of prior art information; or

(b)  a combination of any two or more pieces of prior art information that the skilled person could, before the priority date, be reasonably expected to have combined.

Section 7(3)(a) enables any publicly available single item of prior art information to be added to the common general knowledge for the purpose of considering whether or not an invention involves an inventive step.  Section 7(3)(b) facilitates the addition of a combination of two or more (publicly available) pieces of prior art information to supplement the common general knowledge for the consideration of invention step, subject to the condition that the skilled person could be reasonably expected to have combined them.

The requirement that the prior information merely be publicly available for it to be available for the consideration of inventive step represents a significant departure from the more rigorous requirements that existed before the changes to Australian patent law introduced by the Raising the Bar Act.  Previously, no prior art information could be added to the common general knowledge unless the skilled person could, before the priority date, be reasonably expected to have ascertained, understood, and regarded it as relevant.

Despite this framework, there was some dispute between the parties as to the proper approach to be taken when seeking to combine two or more pieces of prior art information under s 7(3)(b).  The Court reviewed the submissions from each party and summarised the relevant law before stating:

‘It follows that I do not accept that it is necessary for VMS to demonstrate any more for the purpose of s 7(3)(a) than that the prior art information has been made publicly available. Once it has done so, such information is notionally supplied to the person skilled in the art within s 7(2). For combining two or more pieces of prior art information, s 7(3)(b) deems that if those pieces of information are ‘publicly available’, they are be made available to the person skilled in the art. It will be a question of fact whether or not they may be reasonably be expected to be combined.’

In the respective approaches to inventive step, there was general agreement on the common general knowledge of electrical engineers with respect to wireless sensor networks.  However, there was some disagreement over whether or not the POD system formed part of the common general knowledge and, if so, what information concerning that system was known at the time.

The Court considered that the broad working of the POD system formed part of the common general knowledge in the art but did not accept that the common general knowledge would include a detailed understanding of the mechanisms of the POD system, or experience of using the POD system. In particular the means of communication between the in-ground sensor and the various remote terminals was not considered common general knowledge nor was the manual entry problem of transcription errors when using the POD system.

VMS first relied on the combination of the PCT application with information contained in an article on the POD system entitled ‘PODS – the Next Big Thing’.  However, the article did not consider pre-population of data items into infringement issuing software, which was a crucial item of detail absent from the disclosure of the PCT application.

VMS also cited a PowerPoint presentation, by Mr Gladwin, only as a publication of the slides.  The meaning of the slides, shorn of detail provided during the presentation, was opaque and the information in them was not considered to be of any practical use in the implementation of the PCT application.

Additionally, VMS cited a presentation given by Mr Welch at a conference in November 2006.  However, VMS faced insurmountable hurdles in proving the content of the presentation was made publicly available.  The Court noted the intrinsic danger in relying on an unaided recollection of events.  Whilst it was agreed Mr Welch was doing his best to assist the Court, it was noted that memories fade and, as such, it was unlikely that he would recall what he said with any reliable accuracy.

In considering inventive step, the Court was conscious that the question is whether the combination, not each integer, is obvious.  On this basis, the Court identified four points of uncertainty for the skilled team seeking to implement a system or method as disclosed in the PCT application.  Referring to the four identified points of uncertainty, the Court considered that each point required decisions on how to proceed which would involve prototype testing and evaluation. The Court noted the following:

“In my view, whilst the number of alternative solutions is relatively limited, there is no single line of logic that leads to the invention as claimed such that it can be concluded that the combination arrived at was ‘very plain’, or obvious. In my view the qualitative evaluation weighs sufficiently in favour of SARB to arrive at this conclusion.”

Accordingly, the Court held that VMS had not discharged its onus of demonstrating, on the balance of probabilities, that the invention claimed in claim 1 lacks an inventive step in view of the prior art PCT Application.  The remaining prior art information relied on by VMS was also not successful in demonstrating that the claimed invention lacked an inventive step, as they did not touch upon the most material aspects of the claimed combination.

Entitlement

Regarding VMS’s claim that SARB lacked entitlement to the invention, there was some dispute over the content of the conversations between Mr Del Papa, Mr Gladwin and Mr Welch when proposing the collaboration between VMS and SARB.

The Court found that the message conveyed to Mr Del Papa was, at its highest, the idea that the POD system could possibly be adapted in the way suggested by Mr Welch and Mr Gladwin. In the Court’s view the invention disclosed in the specification and the subject of the claims was not that obvious, high level idea, but rather a more prosaic, practical implementation. It was the reduction of that concept to a working apparatus that is the invention. The Court considered that neither Mr Welch nor Mr Gladwin played any role in arriving at the solution and rejected that Mr Welch or Mr Gladwin should be named either as the sole inventor or as a co-inventor.

Orders

The Court found that the grounds of opposition to the grant of a patent on the SARB application, as advanced by VMS, had not been made out.  Accordingly, the appeal was dismissed and it was ordered that claims 1-24 of the SARB application proceed to grant.

Significance

This decision provides some helpful clarification that publicly available prior art information can be readily added to the common general knowledge when assessing whether or not a claimed invention possesses an inventive step, following changes made to Australian patent law under the Raising the Bar Act.  This decision also highlights the practical difficulties that can arise when relying on non-documentary publications such as presentations and lectures, particularly the difficulty in determining precisely what information was made publicly available by such events over time.

For further information, please contact Dean Bradley and Greg Whitehead.

Authored by Dean Bradley and Greg Whitehead

In the recent decision, CSIRO v BASF Plant Science GmbH [2020] FCA 328, the Federal Court of Australia considered the allowability of amendments to patent specifications under s 102(1) of the Patents Act 1990, as amended by the ‘Raising the Bar’ Act[1]. In overturning a decision of the Commissioner of Patents, Beach J decided that BASF’s proposed amendments were impermissible because they claimed and disclosed matter that extended beyond the specification as filed. In so doing, the Court decided that the same strict test used by UK Courts should also be applied in relation to added matter in Australia.

The Background

At issue is a patent application filed by BASF Plant Sciences GmbH (BASF) entitled “Process for the production of polyunsaturated fatty acids in transgenic organisms”, which relates to genes from a species of unicellular algae that code for enzymes which can be employed for the recombinant production of polyunsaturated fatty acids (PUFAs) in plants. Specifically, the invention relates to a pathway for the synthesis of long-chain PUFAs, that involves a sequence of enzymatic reactions to convert shorter-chain PUFAs into commercially desirable long-chain PUFAs. The claims relate to isolating the genes for those enzymes in a species of unicellular algae, Ostreococcus lucimarinus, and introducing those genes into suitable oil-producing crops. Performing the invention enables the production of the valuable fatty acids in transgenic commercial crops.

CSIRO opposed BASF’s accepted application, and during the opposition proceedings BASF applied to amend its patent and introduce new dependent claims. The Australian Patent Office initially refused the proposed amendments on the basis that, as a result of the proposed amendments, the specification would not comply with the requirements of s 40(3). However, a second set of proposed amendments was submitted, which a Delegate of the Commissioner of Patents subsequently allowed. CSIRO then lodged an appeal to the Federal Court against that decision under s 104(7) of the Patents Act 1990.

The amendments

In a passage referred to by the parties as the “bridging paragraph”, the specification as filed stated that:

      “The invention, the subject of the present application, is directed to the following:

  • a CoA-dependent delta-6 desaturase having the substrate specificity of the delta-6 desaturase shown in SEQ ID NO:14 [referred to by Beach J as Feature A]and
  • the above CoA-dependent delta-6 desaturase which has a preference for conversion of alpha linolenic acid compared to linoleic acid [referred to by Beach J as Feature B].” (emphasis added)

The experts agreed that the words “the above” in the statement in the second bullet point of the bridging paragraph meant that this statement (i.e., the “conversion preference”) must be read together with the statement in the first bullet point of the bridging paragraph (i.e., the “substrate specificity”). In other words, the invention is directed to the claimed enzyme having the substrate specificity shown in amino acid “SEQ ID NO:14”, and having a certain conversion preference. The bridging paragraph is the only place in which a conversion preference is disclosed in the body of the specification of the application as filed. The invention described in each bullet point of the bridging paragraph is claimed in claims 1 and 2 respectively of the application as filed.

BASF removed the bridging paragraph and deleted corresponding claims 1 and 2 by amendment during prosecution and replaced it with a description that defines the invention as:

  • a process for the production of a substance of general formula I … wherein the process comprises the cultivation of (i) a host cell … or (ii) a transgenic non-human organism comprising … “an isolated polynucleotide comprising a nucleic acid sequence coding for a CoA-dependent delta-6 desaturase having at least 75% identity to a nucleotide sequence which codes for a polypeptide as shown in SEQ ID NO: 14” [referred to by Beach J as “Feature C”]; and
  • use of an isolated polynucleotide … (or vector, host cell, or transgenic non-human organism comprising said nucleic acid sequence) … for the production of an oil, lipid or fatty acid composition.

In light of the amendments to the bridging paragraph and the deletion of the corresponding claims, the application as accepted did not refer to Feature A, Feature B or Feature A combined with Feature B.

As Beach J noted at [130], Feature C captures a broader range of polypeptides than Feature A. That is, Feature A (substrate specificity of the Δ6-desaturase shown in SEQ ID NO:14) is a subset of Feature C (at least 75% identity to SEQ ID NO:14).

In a further round of post-acceptance amendments BASF sought to insert new dependent claims, to a process for production of, and use of, a CoA-dependent Δ6-desaturase:

a) having at least 75% identity to a nucleotide sequence which codes for a polypeptide as shown in SEQ ID NO:14 [Feature C]; and

b) that preferentially converts alpha linolenic acid compared to linoleic acid [Feature B].

The amendments also sought to introduce the following description after the consistory clause:

“According to an embodiment of the abovementioned process and use, the CoA-dependent desaturase preferentially converts alpha-linolenic acid compared to linoleic acid.” [Feature B]

CSIRO argued (at [166]) that the post acceptance amendments were not allowable as they would introduce a claim combining Feature C with Feature B, when the only disclosure of Feature B in the specification as filed was in the context of Feature A (a much narrower subset of Feature C) in the bridging paragraph.

Issues and Decision

Section 102(1) relevantly provides:

(1) An amendment of a complete specification is not allowable if, as a result of the amendment, the specification would claim or disclose matter that extends beyond that disclosed in the following documents taken together:

(a) the complete specification as filed;

(b) other prescribed documents (if any).

Beach J noted that that the Raising the Bar provisions were intended to mirror other jurisdictions, such as the UK and Europe, and that it was intended that Australian courts would have regard to the developments of case law in those jurisdictions when interpreting the Raising the Bar provisions. More specifically, he noted the intention disclosed in the explanatory memorandum to the Raising the Bar amendments that the operation ss40(2) and (3) as amended (which deal with sufficiency and support) be as close as practicable to that given to the corresponding provisions in the UK Patents Act and the European Patent Convention,

Beach J therefore commenced a review of the UK authorities and in coming to his decision, noted two “conceptual themes permeate the UK authorities”, namely “added matter” and “intermediate generalisation”.

In terms of the former, and with reference to several landmark UK decisions on added matter (including Bonzel[2]Richardson-Vicks[3], and European Central Bank[4]), it was noted that subject matter will be impermissible added matter “unless it is clearly and unambiguously disclosed in the application as filed”, having reference to what has been disclosed both explicitly and implicitly.

As to intermediate generalisations, it is useful to consider the EPO guidelines[5], which explain:

“…the content of the application as filed must not be considered to be a reservoir from which individual features pertaining to separate embodiments can be combined in order to artificially create a particular combination.

When a feature is taken from a particular embodiment and added to the claim, it has to be established that

  • the feature is not related or inextricably linked to the other features of that embodiment and
  • the overall disclosure justifies the generalising isolation of the feature and its introduction into the claim.

… it has to be ensured that the skilled person is not presented with information which is not directly and unambiguously derivable from the originally filed application, even when account is taken of matter which is implicit to a person skilled in the art using his common general knowledge”

In other words, the concept of “intermediate generalisation” requires that an amendment is not allowable if it takes a feature which is only disclosed in a particular context and seeks to introduce it into a claim deprived of that context.

Beach J found that there was “no good reason not to follow the UK authorities” to apply these analogous concepts for the purposes of construing the present form of s 102(1) of the Act.[6] In doing so, Beach J confirmed that, after Raising the Bar “the test is a strict one” in Australia, and that the concept of intermediate generalisation applies to s 102(1).

BASF argued that the relevant amendments, including the addition of new claims, were narrowing amendments. Beach J accepted this insofar as the comparison was with the accepted claims, however he noted that this did not resolve the issue of whether the amended specification would claim or disclose matter extending beyond that disclosed in the specification as filed.

BASF further argued that there was disclosure of Feature C in a particular paragraph of the specification as filed. However, Beach J decided that this paragraph could only be read in the context of the description of ‘the invention’ in the bridging paragraph. In this regard, Beach J considered that the bridging paragraph did not provide disclosure of a delta-6 desaturase with Feature B (the “conversion preference”) in the absence of Feature A (the “substrate specificity”).  As mentioned above, Justice Beach also considered that Feature A was not the same as the 75% homology requirement that BASF sought to introduce into the claims (Feature C).  This was because two enzymes can have different substrate specificities and still have 75% homology to each other at the DNA level.

Justice Beach concluded that BASF’s amendment sought to remove Feature B from the context in which it was disclosed in the application as filed (namely, in conjunction with Feature A) and introduce it into the specification and the claims deprived of that context.  The amendments generalised the originally disclosed technical information (applying Feature B in the broader context of Feature C, as opposed to Feature A), thereby introducing subject-matter extending beyond the content of the application as filed. This was an example of an impermissible intermediate generalisation.

As a result, BASF’s amendment was refused, and CSIRO’s appeal was upheld.

Commentary

In the first Federal Court decision on “added matter” under the Raising the Bar Act, Beach J has confirmed that the test in Australia for added matter is strict, and that subject matter will be impermissibly added “unless it is clearly and unambiguously disclosed in the application as filed”. Importantly, until now it has not been clear whether the prohibition on “intermediate generalisation”, a familiar concept in European patent law, would be adopted in Australia. Beach J has confirmed that an intermediate generalisation is not permissible, where a feature which is only disclosed in a particular context (e.g. a particular example) is introduced into a claim deprived of that context.

At the time of filing a patent application, it is important to provide a full disclosure of your invention as adding subject matter later will not be allowable. It is also important to ensure that your patent application discloses your invention in terms that encompass all variants of the invention that you may later wish to claim.

Such limitations should also be borne in mind if seeking to limit granted claims in pre-litigation or litigation to avoid prior art brought to the attention of the patentee.

Shelston IP is well placed to advise its clients on how to best draft a patent specification to satisfy these important requirements and on related issues in a litigation context. If readers have any questions, please do not hesitate to contact any of our Shelston IP patent attorneys or lawyers.


[1] Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) (the Raising the Bar Act)

[2] Bonzel v Intervention Ltd (No 3) [1991] RPC 553 (Bonzel)

[3] Richardson-Vicks Inc’s Patent [1995] RPC 568 (Richardson-Vicks)

[4] European Central Bank v Document Security Systems Inc [2007] EWHC 600 (European Central Bank)

[5] https://www.epo.org/law-practice/legal-texts/html/guidelines/e/h_v_3_2_1.htm

[6] Commonwealth Scientific and Industrial Research Organisation v BASF Plant Science GmbH [2020] FCA 328 at [214]

Authored by Michael Christie, PhD and Katrina Crooks

Caterpillar Inc. v Sayvest Pty Ltd [2020] ATMO 16 (5 February 2020)

Caterpillar Inc. (Opponent), the well-known US construction equipment manufacturer, was partially successful in its oppositions to registration of two trade marks (Trade Marks) IRONCAT (Word Mark) and IRONCAT TYRES logo shown below by Sayvest Pty Ltd (Applicant) for various tyres in class 12 and related services in classes 35 and 37 (Sayvest Goods and Services):

Composite mark

The Opponent relied principally on grounds of opposition under ss44 and 60 of the Trade Marks Act 1995 (the Act). The opposition to the Word Mark was successful under ss 44 and 60, but it failed in respect of the Composite Mark.

Section 44

Section 44 involves a comparison of the Opponent’s trade marks with the Applicant’s Trade Marks, as well as a comparison of the respective parties goods and services.

The Opponent is the registered proprietor of over 150 Australian trade marks, but relied on four registrations for the word CAT covering goods and services in classes 12, 35 and 37 (Opponent’s Marks). The Applicant conceded that a number of the goods and services of the Opponent’s Marks are similar to the Sayvest Goods and Services, and the parties agreed that the issue to be determined was whether the marks are too close.

The Opponent did not contend that CAT is substantially identical with either of the Trade Marks and the delegate determined that the marks are not substantially identical.

The delegate then considered whether the marks are deceptively similar. A trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark that its use is likely to deceive or cause confusion. Confusion is a lower bar than deception. It is enough to show that consumers would be caused to wonder whether the goods or services offered by the Applicant come from the Opponent.

In considering the impression conveyed by the marks, the word marks IRONCAT and CAT marks were found to be conceptually similar as both give the impression of a cat. The word IRON was considered to be mildly descriptive in the context of heavy machinery that commonly has iron and its alloys as a major element . Thus, the element CAT was found to be the more distinctive part of the trade mark IRONCAT and the delegate found the Word Mark was deceptively similar to the Opponent’s Marks.

With respect to the Composite Mark, while the emphasis in the comparison of the marks was still on the word CAT, the idea of the Composite Mark is that of a big cat, namely a tiger. This coupled with the word IRONCAT communicated an overall different impression of a powerful creature. Further, the design features are likely to be retained by the consumer as a distinctive feature of the Composite Mark. On that basis, the delegate found that the Composite Mark was not deceptively similar to the Opponent’s Marks.

Section 60

Section 60 is concerned with whether the Applicant’s use of the Trade Marks, in respect of the Sayvest Goods and Services, is likely to cause confusion as a consequence of the Opponent’s reputation in its trade marks

The Opponent’s evidence in support almost exclusively concerned the extent of reputation it enjoyed in its trade marks.

The Applicant argued that the Opponent’s reputation was a “compounded form of reputation” which involves the use of three brand elements in close proximity – a consistent yellow get up, the CATERPILLAR house mark and the CAT mark. However, the delegate was satisfied that the Opponent’s CAT word mark had acquired a significant Australian reputation in relation to heavy vehicles and machinery and other vehicles, and that it was a small step beyond to recognise that it extends to the servicing and spare parts of those goods, including solid rubber tyres.

Adopting the same analysis for confusion as under the s 44 ground, the delegate found that use of the IRONCAT word mark would be likely to cause confusion. However, the differences between CAT and the Composite Mark, featuring a distinctive orange tiger, reduced the risk of confusion and the s60 ground failed for the Composite Mark.

Conclusion

The Word Mark was refused but the Composite Mark was permitted to proceed to registration.

While the word mark in a composite mark is commonly the key feature, the present case demonstrates that a design element can change the impression conveyed, so that the composite mark conveys a different impression from that conveyed by the word alone.

Authored by Kathy Mytton and Sean McManis

Dr August Wolff GmbH & Co. KG Arzneimittel v Combe International Ltd [2020] FCA 39 (3 February 2020)

On 3 February 2020, Dr August Wolff GmbH & Co. KG Arzneimittel (Dr Wolff) successfully appealed against a decision by the Registrar of Trade Marks, which refused registration of its VAGISAN trademark.

Background

The VAGISAN trade mark was filed by Dr Wolff on 27 May 2015 for a broad range of personal care products in classes 3 and 5.

This registration was successfully opposed by Combe International Ltd (Combe), the owner of prior VAGISIL trade mark registrations which also cover personal care products classes 3, 5 and 10.

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 reputation of its earlier VAGISIL trade mark.

Dr Wolff subsequently appealed this decision.

Grounds of Opposition

Section 44

The VAGISAN application covers 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

(VAGISAN Goods).

The VAGISIL registrations cover 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

(VAGISIL Goods).

Dr Wolff accepted that the class 3 VAGISAN Goods are similar to the class 3 VAGISIL Goods.  However, it did not consider the class 5 VAGISAN Goods to be similar due to the “highly specialised” nature of the class 5 VAGISIL Goods.

Stewart J found that “pharmaceutical products” and “sanitary products for medical purposes” covered by the VAGISAN trade mark are similar to the class 5 VAGISIL Goods on the basis that:

(1) the goods would typically sold through the same trade channels (i.e. pharmacies, supermarkets and online);

(2) producers of pharmaceutical products might also produce medicated lotions and medicated creams; and

(3) producers of sanitary products for medical purposes might also produce medicated products for feminine use, medicated douches and various other goods.

On the issue of deceptive similarity, Stewart J found that both the VAGISAN and VAGISIL trade marks are likely to be understood as being associated with products to be used in relation to the female genital area. However, while the idea of VAG (or VAGI) is descriptive, the words VAGISAN and VAGISIL do not have a close phonetic resemblance and neither of the words lends itself to mispronunciation. Further, both words are invented words and the suffix elements SIL and SAN are quite distinct.

Stewart J also dismissed Combe’s argument that there is a greater likelihood of confusion as consumers of products for feminine use are not likely to pay attention to what they are purchasing.

The s44 ground of opposition was unsuccessful

Section 60

Section 60 requires a reputation amongst a significant or substantial number of people or potential customers in the relevant mark i.e. the potential customers of the VAGISAN goods. Although, there is not a significant distinction given the overlap in the goods provided by the VAGISAN and VAGISIL trade marks.

Combe sought to rely on evidence comprised of schedules of sales figures and consumption data for VAGISIL products, extracted from a computer database by IRi Australia. It argued that the evidence should be admissible as an exception to the rule against hearsay on the basis that it constitutes business records. Dr Wolff objected to the admissibility of the schedules, not the data contained in the schedules. However, Stewart J was satisfied that the schedules should be admitted.

Both Combe and Dr Wolff sought to tender survey evidence, although Dr Wolff’s evidence was in relation to consumer behaviour rather than Combe’s reputation. Dr Wolff objected to Combe’s survey reports on the basis that they were not business records of the survey companies or Combe itself. Stewart J was satisfied that the reports submitted form part of the records belonging to or kept by Combe in the course of, or for the purposes of a business. The survey evidence from both parties were admitted and Stewart J indicated that there is no reasons to suppose that the hearsay statements recorded in the reports are other than accurate.

There has been consistent use of the VAGISIL brand in Australia since 1986 for personal products for feminine use, which have been sold through approximately 6,400 supermarkets and pharmacies. Further, there has been significant advertising and promotional activity through various channels. Despite the relatively small market share based on the sales figures provided, Stewart J considered that reputation of the VAGISIL trade mark was established in Australia as at the priority date. However, the form of trade mark which enjoys reputation is the VAGISIL trade mark used in conjunction with a “V” Device, rather that VAGISIL on its own. It is used in this composite form:

Consequently, confusion between the trade marks is likely to be less in light of the distinctive “V” Device.

Combe was not able to establish that because of the reputation of the VAGISIL trade marks 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.

Accordingly, the s60 ground of opposition was also unsuccessful

Section 59

As at May 2015, Dr Wolff had the intention to sell five VAGISAN products in Australia. Based on evidence provided on behalf of Dr Wolff, none of these products were directed for use on any part of the human body other than the female genital area. On this basis, Combe submitted that there was no intention to use the trade mark in relation to soaps and cosmetics for use on other body parts

Even though the goods were limited for use on a specific area of the body, Stewart J considered the fact that soap and cosmetic products were proposed to be introduced is sufficient intention to use the VAGISAN trade mark in respect of the designated goods.

The s59 ground of opposition was also unsuccessful

Decision

Combe failed to establish any ground of opposition and, therefore, Dr Wolff’s appeal was successful.

Combe subsequently filed an appeal to the Full Federal Court of Australia.

Takeaway

This decision is under appeal and it will be interesting to see if the first instance decision is maintained. Nevertheless, the decision provides some guidance regarding what might be admitted into evidence as business records, and the potential for difficulty establishing reputation in a word alone when it is used with other significant branding elements.

Other Opposition / Invalidity Actions

The VAGISAN trade mark has also been opposed by Combe in a number of other countries. The most recent decisions handed down were in Singapore and the United States.

Combe filed an application for declaration of invalidity with the Intellectual Property Office of Singapore based on the grounds of likelihood of confusion. Combe successfully invalidated the VAGISAN trade mark in Singapore, however, an appeal from this decision to the High Court is pending.

In the United States, the Trademark Trial and Appeal Board (TTAB) dismissed an opposition filed by Combe in the first instance. This decision was subsequently appealed to the US District Court. However, on appeal, the VAGISAN trade mark was found to be likely to cause confusion with the VAGISIL registration.

Authored by Danielle Spath and Sean McManis

The relatively new “bad faith” (section 62A) ground of opposition can be a strong basis for action against misappropriation of a trade mark owners’ goodwill, where the more commonly used grounds of deceptive similarity with an earlier mark (section 44) and likelihood of confusion due to reputation in an earlier mark (section 60) would fail.

Recent Trade Marks Office decisions illustrate some types of exploitative conduct that can give rise to a finding of “bad faith”.

The issue

The key issue in all cases was whether Southcorp Brands Pty Ltd (SCB) met its onus of demonstrating that the applicant had acted in “bad faith” in filing its trade mark application.

Bad faith has been described in the following way:

“… mere negligence, incompetence or a lack of prudence to reasonable and experienced standards would not, in themselves, suffice, as the concept of bad faith imports conduct which, irrespective of the form it takes, is of an unscrupulous, underhand or unconscientious character

(Fry Consulting Pty Ltd v Sports Warehouse (No 2) (2012) 201 FCR 565)

The Cases

SCB’s well known Penfolds” mark

SCB is a subsidiary of Treasury Wines Estate (TWE) Limited and produces wines under various well known marks, including “Penfolds”.

SCB filed evidence of the extensive reputation and promotion of its “Penfolds” wines, which have been in existence since 1844, and are labelled with the trade mark “Penfolds” in plain script or in red cursive script.

In each opposition case below, the applicant had applied to register its mark/s in relation to wines and other alcoholic beverages.

Facts in each case

Oppositions to “Barry Ford and “Ben Ford”
(Southcorp Brands Pty Limited v Li Li Shen [2019] ATMO 42 (26 March 2019)

SCB’s “Penfolds” Label

SCB filed evidence of use of the Chinese Characters  in relation to its “Penfolds” wines sold in China. Those characters are transliterated to “Ben Fu” – the Chinese phonetic approximation of “Penfolds”.  SCB also owns Australian registrations for its  and “Ben Fu” trade marks.

The applicant had repeatedly used its mark “Barry Ford” in red cursive font (similar to SCB’s font) combined with SCB’s  mark on its wine labels.  SCB also submitted evidence that the applicant had used trade dress similar to SCB’s, such as a red capsule attached to the bottle neck, red cursive font against a white label and the use of “BIN” to indicate wine vintages.

Prior to the date of filing, the Beijing High People’s Court had issued a decision regarding an application by SCB to remove one of the applicant’s Chinese trade mark registrations for non-use.  In that decision the Court recognised that the Chinese Characters   would be seen as identifying SCB’s wines.  The applicant was therefore clearly aware of SCB and its trade mark rights and reputation at the date of filing its application.

Opposition to “MAISON RICH”
(Southcorp Brands Pty Limited v BIN-VIN (Shanghai) Trading Co. Ltd [2020] ATMO 27 (24 February 2020)

The English translation of SCB’s Chinese Character version of the “Penfolds” mark is “Rush Rich”.  SCB was the owner of the trade mark MAISON DE GRAND ESPRIT.

The applicant’s mark combined the word “MAISON” with the word “RICH” – being the second word in the English translation of SCB’s Chinese Character version of “Penfolds”.

The applicant was part of a corporate group, with shared ownership and directors, which had applied to register various marks similar to SCB’s marks in the names of different, but related, entities.  SCB had opposed numerous applications filed by entities within the group and rather than defending those oppositions, new applications had been filed for additional marks similar to SCB’s in the name of different related entities.

Entities within the group had also been the subject of judgements in the Federal Court in Australia and the Shanghai Pudong District People’s Court for infringement of SCB’s marks or engaging in unfair competition through the making of false allegations. See for example Southcorp Brands Pty Ltd v Australia Rush Rich Winery Pty Ltd [2019] FCA 720 (3 May 2019) for the finding of infringement by some of the entities within the applicant’s group.

Again, the applicant was therefore clearly aware of SCB and its trade mark rights and reputation at the date it applied for “MAISON RICH”.

Opposition to mark


(Southcorp Brands Pty Ltd v Shanghai Benka Wines Co., Ltd [2020] ATMO 9 (29 January 2020)

The applicant had sought registration of various marks identical or similar to SCB’s marks in China and Australia, and one application in China had been opposed by the Opponent well before the filing date.

It had also produced wine labelling copying SCB’s trade dress by using similar script stylisation and colour schemes.

The applicant had also used a different company name for filing the Australian application to the name it had used to file the earlier Chinese applications which had been opposed by SCB. SCB argued (successfully) that this was intended “to obscure its true identity in order to prevent detection of its activity in Australia”.

Findings

In all three cases the Hearing Officer decided that each applicant was aware of the reputation in SCB’s “Penfolds” marks at the time of filing their application.  The pattern of behaviour in each case, such as adopting similar trade dress and trade mark stylisation to that used by SCB and applying for identical or similar marks to SCB’s in Australia and China in related company names, was found indicative of a desire to exploit SCB’s trade marks and reputation and to convey an association, affiliation or endorsement by SCB that did not exist.

The Hearing Officer found that the behaviour in each case fell short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons and constituted “bad faith”.\

Authored by Michelle Howe and Sean McManis

In the case of In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd, in considering whether use of Down-N-Out infringed a registration for In-N-Out, and amounted to misleading conduct and passing off, the Federal Court considered questions of:

– whether the alleged infringer’s intentions are relevant to assessing whether two trade marks are deceptively similar

– whether, despite the fact that a business has no permanent business operations in Australia, it may nevertheless have sufficient reputation to establish misleading and deceptive conduct in breach of Australian Consumer Law and passing off

Short answers are below, while information about the case and reasons for the decision can be found in the subsequent report:

– Intention will not always be relevant but in circumstances where, as in the present case, the party adopts a name with the intention of benefiting from an association, it will be relevant

– Use outside Australia, in combination with some local use, can be sufficient, particularly where there is evidence of a strong overseas reputation and the name is distinctive

In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd [2020] FCA 193 (26 February 2020)

In-N-Out Burgers, Inc (“INOB”) is an American company that has, for many years, operated a chain of burger restaurants in the United States. The business was founded in 1948 and the company was incorporated on 1 March 1963. It is a family owned private company, which operates a chain of restaurants in California, Arizona, Oregon, Nevada, Texas and Utah. As at May 2016, there were over 300 In-N-Out restaurants in the United States. They include restaurants in locations such as Fisherman’s Wharf in San Francisco, Sunset Boulevard in Hollywood and South Sepulveda Boulevard in Westchester, Los Angeles, which is within a mile of LAX airport.

As well as owning registrations for a IN-N-OUT BURGER logo, depicted below as registered in black and white and as used in colour, INOB also owns a registration for the word mark IN-N-OUT BURGER, along with ANIMAL STYLE and PROTEIN STYLE.

INOB established its website around June 1999 and an online store was established in May 2004, allowing promotional merchandise to be purchased around the world, including from Australia. In 2013 there were 37,631 visitors to the website from Australia. In 2014 there were 50,108, in 2015 61,988 and in 2016 there were 78,098 visitors.

Over the years 2012 to 2017, INOB hosted one pop-up event each year in Australia and in 2018 it hosted two. At the 2017 event, 400 burgers and 420 T-shirts were sold, prior to that sales were below 300 burgers.

Prior to incorporation of Hashtag Burgers Pty Ltd (“HB”) on 23 June 2017, the directors conducted their own pop-up event in June 2015 using the logo depicted below:

In May 2016, they had the following logos designed:

They then advertised an event to be held on 7 June 2016 with a media release titled “Sydney’s Answer to In-N-Out Burgers has finally arrived” in which they referred to “the cheekily named Down-N-Out” and advertised “secret menu hacks such as Animal Style and Protein Style”

When it opened, the pop-up used the first Down-N-Out logo shown above, and outside the premises the following sign was displayed:

Following this, the business received a letter of demand from INOB, in response to which there were denials concerning use of Animal Style and Protein Style. It also denied that use of Down-N-Out infringed any registrations claiming that the business had received legal advice and asserting that:

This expression has its own separate and distinct meaning in the English language which is unlikely to conflict with the meaning of “In-N-Out”. Further, the word Down also relates to “Down Under” which relates to the fact that we are an Australian business.

It was, however, indicated that use of the Arrow designs would cease.

Subsequently, there was use of the following designs:

The inclusion of the word BURGERS in the registered word mark was acknowledged by the parties as not significant. Further, in determining the infringement issue Justice Katzmann did not attribute any significance to the use of the hashtag in D#WN-N-OUT, noting that any verbal references would still be to Down N’ Out.

HB argued sufficient differences based on:

  • Differing ideas and impressions between DOWN N’ OUT and IN-N-OUT with “down and out” referring typically to a person who has fallen on hard times
  • That use of the word DOWN was also a deliberate allusion to Australia, which is colloquially referred to “the land down under”
  • Visual and phonetic differences
  • Differences in essential features, claiming that the essential feature of the registered mark is IN-N-OUT not just N-OUT.
  • The absence of any evidence of actual confusion.

Justice Katzmann recognised authority indicating that the first part of a trade mark is often the most important for the purposes of distinction. However, she also referenced cases where similarities in suffixes have been sufficient.

She found that:

  • N-OUT is a distinctive and significant feature and an essential ingredient of all the [INOB] trade marks
  • notwithstanding differences in meanings, imperfect recollection is sufficient to give rise to a likelihood of confusion, noting also that the word “down” can be used in a directional sense, like “in”, and that this was the more likely context of recollection

As regards the evidence presented, she noted:

  • Social media posts raising questions concerning whether these is some association with INOB. While not decisive, and noting that their meaning and intent was debatable, they were of some probative value
  • The intentions of HB and the failure of the directors to give evidence in the proceedings

On the issue of intention, Justice Katzmann quoted authoritative precedent, which states:

The rule that if a mark or get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse, no doubt, is as just in principle as it is wholesome in tendency. In a question how possible or prospective buyers will be impressed by a given picture, word or appearance, the instinct and judgment of traders is not to be lightly rejected, and when a dishonest trader fashions an implement or weapon for the purpose of misleading potential customers he at least provides a reliable and expert opinion on the question whether what he has done is in fact likely to deceive.

In relation to this, she made the points:

  • Cases where intention is relevant ae not restricted to cases of “deliberate” dishonesty;
  • An imitation of another person’s product does not necessarily signify an intention to deceive;
  • The selection of the name was not coincidental, with HB’s own media release referring to the adoption of the name as “cheeky”;
  • There was no evidence of use in association with get up or imagery consistent with the claimed meaning of “down and out”;
  • There were initial advertising references to Animal Style and Protein Style products;
  • Initial logo designs incorporating arrows indicated an intention to reflect similarity;
  • No steps were taken to dispel any potential for confusion;
  • No evidence was presented to indicate that N-Out or N Out had been used in the brand names of anyone other than INOB, before HB decided to use it in DOWN-N-OUT;
  • HB failed to comply properly and fully with their discovery obligations

Consequently, there was a finding of infringement and a likelihood of confusion.

Australian Consumer Law and Passing Off

While reputation is not a factor in determining infringement of a trade mark registration, it is relevant in misleading conduct (Australian Consumer Law) and passing off cases.

Notwithstanding no established business in Australia, Justice Katzmann found sufficient reputation in Australia arising from:

  • International trade and notoriety in the United States, resulting in spill over reputation in Australia
  • Media references, and the success of pop-up events conducted in Australia

Having found relevant reputation in Australia, Justice Katzmann found a likelihood of HB’s conduct misleading or deceiving consumers, for reasons similar to those mentioned in respect of the infringement action.

In relation to changes made to get up used, it was noted this that there was a failure on the part of HB to address the “potential hangover effect” arising from the previous activities using designs similar to those of INOB.

Personal liability

Australian Consumer Law legislation includes fairly broad provisions for recovering damages against persons “involved in” contraventions. Consequently, the directors were liable for breaches of the Act even subsequent incorporation of HB.

However, in respect of trademark infringement and passing off, it was necessary to establish that the directors were joint tortfeasors. Notwithstanding the close involvement of the directors of the business with the activities of HB, there was insufficient evidence that the company was merely an instrument for the perpetration of infringement so that the directors could hide behind the corporate veil. Consequently, there was no finding of personal liability for actions amounting to infringement or passing off that occurred after the incorporation of the company.

Conclusion

There can be a fine line between inspiration and association. In trying to be clever and ‘cheeky’, HB crossed the line in this case.

Authored by Sean McManis

The Australian Patent Office’s decision in The University of British Columbia [2020] APO 15 (20 March 2020) considers how the “raised bar” requirements of support (section 40(3)), enablement (section 40(2)(a)) and best method (section 40(2)(aa)) are to be assessed. The decision is a reminder that these requirements are now more onerous than they were previously in Australia, and (with respect to the ‘best method’ requirement) in other major jurisdictions. When drafting specifications intended for prosecution in Australia, especially in biotechnology and pharmaceutical areas which are often struck by unpredictability, inventors should provide, and attorneys must include, not only as much detail as possible on the experimental methods for producing, evaluating and testing but also the best method known to perform the claimed invention. 

Background

The claimed invention related to antibodies exhibiting selectivity for the ‘eta’ isoform of the 14-3-3 protein over other isoforms of that protein. The ability of the antibodies to discriminate between the isoforms has utility in the diagnosis of inflammatory conditions such as arthritis. The claims, as proposed to be amended, were directed to methods of determining the presence of the eta isoform of the 14-3-3 protein in a sample using the antibodies, and kits containing an immobilised antibody.

The applicant (The University of British Columbia) requested a hearing after receiving a third adverse examination report for its patent application (No. 2015202689), which maintained objections raised under section 40 with respect to the requirements for clear enough and complete enough disclosure, support and best method of performance. The Examiner reserved his opinion on novelty and inventive step pending resolution of the section 40 issues. The applicant submitted a declaration from the inventor, Dr Marotta, during prosecution. This declaration proved to be very useful for the hearing and was closely considered by the Delegate, as detailed below.   

Issues and findings

The Delegate (Dr Stephen Barker, the Deputy Commissioner of Patents) considered the following section 40 issues:

a)   Section 40(2)(a) – enablement
b)   Section 40(3) – support
c)   Section 40(2)(aa) – best method

In relation to the first issue, enablement, the Delegate cited the approach taken in the earlier Patent Office decision Evolva SA [2017] APO 57 (Evolva), which confirmed that enablement of a claim should be determined according to a 2-step approach involving “plausibility” and “undue burden”. The Delegate stated that the Evolva decision “sets out a proper understanding of the law” (emphasis added) and noted at [7] the guidance in Evolva as to relevant factors for enablement:   

“EP and UK decisions have provided some general guidance on factors that come into consideration, including: uncertainty and a lack of predictability, incomplete experimental details and a lack of guidance in the specification including instructions on how to proceed in case of failure.”

Turning to the question of “plausibility” the Delegate further cited Evolva at [43]:

“the scope of the monopoly, as defined in the claims, must correspond to the technical contribution the patentee has made to the art. If the assertions made in the specification are not plausible then it cannot be reasonably said that the patentee has made a contribution to the art.”

and at [44]:

“an invention that is plausible may still fail on sufficiency if the specification essentially sets out a research programme and there is an undue burden of experimentation required to put it into practice. If an invention is implausible then it would inherently require an undue burden of experimentation to put it into practice (if at all).”

Applying the approach from Evolva and on the basis of Dr Marotta’s declaration, the Delegate was satisfied that the specification provided a general method of producing hybridomas and sufficient description of how to distinguish hybridomas that produce the desired antibodies. He accepted that the required testing is routine in the art and is not onerous.

As to the second issue, support, the Commissioner cited CSR Building Products Limited v United States Gypsum Company [2015] APO 72 (CSR), which suggested that to meet the (relatively) new Australian requirement of support, the claims should correspond to the technical contribution to the art. The Delegate referred to the indication in CSR at [113] that:

“An important question will often be whether the technical contribution to the art is a general principle or the specific examples in the specification.”

The Delegate found that both the specification and information provided by Dr Marotta indicated that the technical contribution was the use of select epitopes to produce antibodies selective to the eta isoform. Accordingly, the Commissioner decided there was a principle of general application and thus the claims, although broader than the examples disclosed in the specification, were supported.    

For the final issue, best method, which is not a major consideration in jurisdictions outside of Australia (i.e. Europe and the US), the Commissioner referred to Kineta, Inc [2017] APO 45 (Kineta) at [18]:

“it is necessary to determine what method is disclosed in the specification, and then to ask whether there is any evidence that the applicant was aware of a better method of performing the invention.”

The Delegate explained at [21] that the specification identified four immunogens and their use in preparing hybridomas for producing the antibodies of interest, and that there was no evidence that the applicant was aware of a better method.

The objections raised under section 40 were therefore all overruled by the Delegate. However, the application will now undergo examination for novelty and inventive step. The deadline for acceptance is 3 months post the date of the hearing and may be extended upon request by the applicant at the discretion of the Commissioner.  

Implications

This recent decision highlights some of the leading Patent Office decisions in Australia regarding enablement (Evolva), support (CSR) and best method (Kineta). While assessment of these requirements will continue to be required on a case-by-case basis, the findings here shed further light on how the Australian Patent Office is likely to assess section 40 provisions, particularly given the limited guidance provided by Australian courts on the “raised bar” requirements of sufficiency and support.   

When drafting specifications in the areas of biotechnology and pharmaceuticals intended for prosecution in Australia, it is important that inventors provide, and attorneys must include, not only as much detail as possible on the experimental methods for producing, evaluating and testing but also the best method known to perform the claimed invention. 

The decision is also a good reminder that a declaration from the inventor (in some cases more preferably from an independent expert) can assist in showing that a skilled person can perform the claimed invention on the basis of the disclosure in the specification. Further, the ability to request a hearing is worth considering to address an Examiner’s maintenance of objections in Australia. This effectively “stops the clock” on the acceptance deadline and provides an opportunity for the matter to be heard by a hearing officer who may take a different view to the primary and/or supervisory Examiner.

Authored by Duncan Longstaff

In July 1969 the United States of America put two men on the moon. Years later in 2011, the then Prime Minister of Australia, Julia Gillard, stood before US Congress and recalled the same moon-landing memory and with acquiescence wept that “Americans could do anything!” Today, the US seems to have entered, what was once described in an episode of Seinfeld as, “Bizzaro world” – Donald Trump is in the White house and, even more astonishingly, researchers are unable to protect what have been described judicially as “truly meritorious” and “ground breaking” innovations in the diagnostics and personal medicine space. Today it is Australia that reigns supreme over the US, as the Federal Court in Sequenom, Inc. v Ariosa Diagnostics, Inc. [2019] FCA 1011 (27 June 2019) confirmed that a non-invasive method of detecting fetal characteristics and abnormalities is patent eligible subject matter in Australia!

The set up

The inventors of the patent-in-suit, Australian Patent No 727919, in the name of Sequenom, Inc., discovered that the cell-free fractions of a pregnant woman’s blood contain surprisingly large amounts of cell-free fetal DNA (cffDNA). Traditionally, this portion of the plasma or serum was discarded as medical waste. This pioneering discovery led to the development of the claimed non-invasive method to determine fetal characteristics and abnormalities, such as Down syndrome. Ariosa Diagnostics Inc, who sought to revoke Sequenom’s Patent, conducts and licenses others to conduct a non-invasive prenatal diagnosis test, marketed under the name “Harmony”, which Sequenom claims infringes their patent.

The significance of the Australian Sequenom decision has been fuelled by the corresponding US case where the claims of the Sequenom’s patent were found to be patent ineligible because they were held to be directed to naturally-occurring matter. The ensuing detrimental impact on US diagnostics industry has subsequently resulted in a proposal for changes to the patentable subject matter legislation, which is currently being considered by US congress.

Issues and findings

Under Australian law, patent eligibility is guided by the principles of the High Court’s decision in National Research Development Corporation v Commissioner of Patents(‘NRDC’) [1959] HCA 67. In that landmark decision, it was held that subject matter was considered patent eligible if it was “an artificially created state of affairs” having “economic significance”.

Ariosa’s case relied heavily on the approach that proved successful in the US, namely that the claims cover a mere discovery, that being the presence of cffDNA, which can be detected in the plasma or serum of pregnant women, and that the end result of each claim is not an artificially created state of affairs. Ariosa further submitted that the claims involve nothing more than the use of well-known techniques to detect cffDNA in maternal blood.

Ariosa also suggested that the Court should follow the US position, which they suggested was in harmony with the Australian Myriad decision. Judge Beach’s response was an emphatic, “I hardly think so”. In fact, in considering the Australian High Court Myriad decision, Beach J emphasised the difference between the gene product claims considered in Myriad and the method defined in the claims of Sequenom’s patent. In particular, he stated that “in nature, the presence of cffDNA in the maternal blood has not and cannot be detected without human action. Accordingly, unlike the claims considered in Myriad, the invention claimed adds to human knowledge and involves the suggestion of an act to be done which results in a new result, or a new process”.

The Court also agreed with Sequenom that the substance of the claimed method is distinct to simply the identification of a natural phenomenon, namely the presence of cffDNA in maternal blood. This, the Judge said, is made clear by the patent specification, which explains that the invention offers a new approach for non-invasive prenatal diagnosis, which only occurs through human intervention and provides a significant advantage over existing fetal DNA detection methods, thus producing a result possessing economic utility.

Consistency with foreign law

Given the intense spotlight that has illuminated patentability issues in the US for diagnostic methods in recent times, the consistency of the Australian decision and the corresponding UK proceedings between Ariosa and Sequenom (Illumina, Inc v Premaitha Health Plc[2017] EWHC 2930), will likely go unnoticed. Those, however, looking for controversy in the conflicting Australian/US findings should look no further than Judge Beach’s swatting away of the issue by stating that the conclusion reached in the US decision is problematic because of the US Court’s dissection of the claims into their constituent parts, which is contrary to Australia’s NRDC and Myriad decisions, – end of story.

Conclusions

This decision, and the recent decision in Meat & Livestock Australia Limited v Cargill, Inc [2018] FCA 51, make it clear that claims directed to practical applications of naturally-occurring phenomena, including gene sequences, used in methods of diagnosis and prognosis are patent eligible subject matter in Australia. This will come as a welcome relief to the diagnostics and personal medicine industry and can be considered as “one small step” forward for Australian patent law but also, hopefully, “one giant leap” that influences beneficial change to the patent eligibility laws in the US.