Classification, protection or freedom of speech? [updated]

Image courtesty of sjsharktank

Posted by Anna Martin

The latest term of the United States Supreme Court ended with an interesting decision involving a California law prohibiting the sale of violent video games to minors.  In Brown v Entertainment Merchants' Assn, the majority of the Court found that the law of California was contrary to the First Amendment, specifically that it was an unjustifiable restriction of free speech.

"Phone hacking": what's legal? Part 2: Remedies

Posted by Tarryn Ryan, Nick Petrie and Veronica Scott

In the first part of our post-News of the World series of posts, we looked at the techniques which were used by News of the World journalists and/or private investigators they hired to access the voicemails of targets and relevant offences under the Australian Commonwealth Telecommunications (Interception and Access) Act 1979 and Criminal Code.

In this second part of our series, we look at what remedies victims of these offences may have under breach of confidence and breach of privacy laws and the development.

"Phone hacking": what's legal? Intercepting voicemails and recording conversations under Australian law

Posted by Nick Petrie, Tarryn Ryan and Veronica Scott

After 168 years of publication, the News of the World published its last edition as a result of what has become known as the 'phone-hacking scandal'. There have been arrests and resignations. There is a police investigation and there will be a public inquiry. The debate has now moved to Australia with calls for a statutory media watchdog and the establishment by News Ltd of an internal review of editorial expenditure to confirm it has paid only for "legitimate services".

Getting access to information for news stories is a crucial part of any journalist's work. This may involve paying for the information. But how far can a journalist go before their actions become unlawful? In the first entry of our post-News of the World series on the Minter Ellison TMT blog, we look at how Australian law would apply to the 'phone-hacking' activities of News of the World, which activities are lawful and which would be an offence, what penalties could be imposed, what remedies victims might have under of breach of privacy and breach of confidence laws. We will also look at the extent to which journalists can record conversations in order to secure newsworthy information and the application of statutory privacy laws.

It all comes down to the evidence. The Federal Court considers comparative advertising in the home furniture industry in Nick Scali Limited v Super A-Mart Pty Ltd

Image courtesy of yachtfan

Posted by Nicholas Stewart

So you want a new leather lounge? Ever wondered why different lounge suites at different retailers look similar but are priced unequally? Sure, you say, it's because of quality. You're generally right, of course.

But when Retailer A comparative advertises against Retailer B and says in a television advertisement (TVC) 'don't pay more elsewhere for this leather recliner lounge', ordinary consumer viewers might be justified to believe that, if purchased from Retailer B, the subject lounge will cost the viewer more than the price for which it can be purchased from Retailer A. In other words, the viewer should purchase "this leather recliner lounge" from Retailer A, who will not be beaten on price.

This very scenario was considered in Nick Scali Limited v Super A-Mart Pty Ltd [2011] FCA 751 before Justice Yates.

The complaint

Nick Scali alleged Super A-Mart had contravened ss 52 and 53 of the Trade Practices Act 1974 (Cth) (Act) when it made price comparisons about lounge suites offered by both retailers. Nick Scali argued that in a television advertisement, in-store placards and through sales representatives, Super A-Mart represented that its "Excellence" lounge suite was of the same or equivalent 'standard, quality, grade or composition' as Nick Scali's "Rajah" lounge suite.

The TVC

Super A-Mart's TVC is described by Yates J in detail at paragraph 87 of His Honour's judgment.  In summary, the TVC's theme was price.  Images of the Rajah suite appeared against the background of an image of the Excellence suite, where the image of the Rajah suite was shown with the words: "NICK SCALI $7030" and the image of the Excellence suite was shown with the price of "$2999.95". This display was accompanied by a female voice saying: 'At Nick Scali you’ll pay over $7,000' and 'Don’t pay more elsewhere for this leather recliner lounge'.

The Court's consideration of the issues

Yates J reviewed the evidence of expert witnesses to determine the differences between the Excellence lounge suite and the Rajah lounge suite. His Honour considered the size, leather, seat areas, wing areas, back cushions, lumbar support, outside backs, metal frames, wooden frames, recliner frames, inside arm cushions, footrests, stitching and recliner mechanisms. His Honour came to the conclusion that the two lounge suites were very different:

Overall, the Rajah suite is larger in size and is upholstered in significantly more top grain leather than the Excellence suite .... I am satisfied that, overall, the quality of both the top grain leather and the split leather used in the Rajah suite is superior to the quality of the corresponding leather used in the Excellence suite .... In my view the Rajah suite is, overall, of sturdier construction than the Excellence suite.

Yates J also analysed the TVC in light of his conclusions as to the differences between the two lounge suites. He found the TVC conveyed to consumers that the lounge suites are relevantly 'the same'. His Honour drew a correlation between that representation and the words spoken in the voice-over during the TVC, namely 'this leather recliner lounge', which suggested that consumers only had to compare the price of the two lounge suites and would 'understand from viewing the commercial that the lounge suites possess materially the same physical attributes'.

His Honour was satisfied that Super A-Mart's TVC:

... falsely represented that the Excellence suite is of a particular “quality” or “composition” (namely, that it has the same qualities and composition - the same physical attributes - as the Rajah suite) contrary to s 53(a) and s 52 of the Act.

In assessing other elements of Nick Scali's claim, Yates J held:

• Super A-Mart's in-store placards made different representations from those contained in the TVC. Rather than draw an association between the respective lounge suites' attributes by saying 'this leather recliner lounge', the placards invited comparison and evaluation of the products and did not contravene ss 52 and 53(a) of the Act.
• Despite 'compelling' evidence from Nick Scali's Queensland State Manager (posing as a customer) who recorded a conversation he had with a sales representative at Super A-Mart's Benowa store, establishing that Super A-Mart had contravened of ss 52 and 53(a) of the Act, other evidence of conversations between Nick Scali representatives and Super A-Mart sales staff at its MacGregor, Oxley and Virginia stores did not assist Nick Scali's case. The latter evidence did not prove that Super A-Mart represented in the course of conversations at those stores that the lounge suites offered by the competitors were the same.

Relief

Despite finding that Super A-Mart had contravened the Act, Yates J determined that on the evidence Nick Scali had not suffered loss or damage as a result. Nick Scali's claim for damages was therefore dismissed. In relation to injunctive relief, his Honour thought it appropriate in light of the findings he made that the parties address the Court on the question of both injunctive relief and costs. The matter was stood over to 18 July 2011.

Why is this case instructive?

The case illustrates why comparative advertising can be, in Conti J's words in Energizer Australia Pty Limited v Gillette Australia Pty Limited [2001] FCA 1887, 'potentially fraught with risk' (at 47).  In that decision, Conti J cited Gummow J in Hoover (Australia) Pty Ltd v Email Ltd [1991] FCA 511 who was of the opinion that comparative advertising may be misleading, because it creates a "half truth" by omitting material necessary in order to make the comparison fair (at 375).

Super A-Mart omitted from its TVC that there were significant differences between the Excellence and Rajah lounge suites. By relying on price comparisons and representing the two lounge suites were the same, ordinary consumers were misled.

Apart from illustrating the legal principles that are applied by courts considering comparative advertising and misleading or deceptive conduct, the Nick Scali case demonstrates the level of interrogation that judges will apply to evidence in Australian courts. Yates J delved deep into expert and lay evidence to determine the facts of the case and assess liability. His Honour's conclusion demonstrates how important it is for a company building a trade practices claim against a competitor to brief lawyers before undertaking investigations and take comprehensive notes of all relevant evidence, including conversations with competitors' sales representatives.

Note: with the introduction of the Australian Consumer Law from 1 January 2011, sections 52 and 53 of the former Trade Practices Act (which relate to misleading and deceptive conduct and false or misleading representations) are now found in ss 18 and 29 of the Australian Consumer Law.

Partner: Paul Kallenbach

Coadec pushes for the UK to adopt progressive IP reforms

Image courtesy of plusonetwo

Posted by Nicholas Stewart

The United Kingdom's Coalition for a Digital Economy (Coadec) is lobbying David Cameron's Government to adopt the recommendations contained in Professor Ian Hargreaves' May 2011 report Digital Opportunity: A Review of Intellectual Property and Growth.

In the context of copyright, Professor Hargreaves is of the opinion that:

… digital technology is transforming copyright, for better and for worse. Infringement is widespread; understanding of the law is poor; millions of works cannot be digitised for conservation or accessed at all and content industry business models are under strain, prompting companies to look to Government for vigorous enforcement action against consumers and suppliers of “pirate” content.

Professor Hargreaves cites examples of inefficiency in copyright licensing in the UK, such as:

• the BBC taking nearly five years to assemble the rights necessary to launch its iPlayer service;
• an online business providing on demand streaming of radio shows and DJ mixes undertaking lobbying of collecting societies for about nine months before it could 'make any headway on licensing';
• other businesses reporting inconsistency in licensing discussions, with some users offered access to licences and others denied access without clear explanation; and
• some businesses threatened with legal action instead of the opportunity to negotiate terms.

He recommends, among other things, that the United Kingdom should establish a Digital Copyright Exchange. Professor Hargreaves says a Digital Copyright Exchange would, for creators of copyright:

• improve routes to market;
• provide a means to record unmistakeably the ownership of rights, and the terms on which they are available;
• provide a clearer understanding of licensing terms and conditions throughout the market;
• increase options available to license an individual creator’s works directly;
• provide a defence against rogue “orphaning” of works, through digital fingerprinting; and
• provide a single point of access to UK collecting societies and eventually to competitor societies in other territories.

Coadec's open letter to the UK Government of 29 June 2011 expresses a belief that:

… the Hargreaves report represents a watershed for this country’s digital economy. The report recognises - as many digital businesses and entrepreneurs have known for a long time - that the nation’s intellectual property laws, and in particular copyright law, must adapt to business, social and technological change.

With the latest developments in cloud computing in the digital music space in the United States (we're thinking Apple's iCloud and iTunes Match products, Google's Google Music Beta and Amazon's Cloud Player), it will be interesting to observe how the UK approaches the regulation of IP in the context of rapidly evolving technologies and platforms.

Partner: Paul Kallenbach

Excessive use of social media - a valid reason for termination of employment

Posted by Rory Jolley

In a recent decision, Fair Work Australia has confirmed again that proof of excessive use of social media during work hours may constitute a valid reason for termination of employment.

 

Richard O'Connor had been employed as a landscape architect by Outdoor Creations Pty Ltd since January 2009. In February 2011, Mr O'Connor's employer accessed his work computer, to find that he had been using the Google Mail chat service while at work, and that he had engaged in some 3,000 chats online.

 

In a dismissal letter, Mr O'Connor's employer stated that he had been:  

… accepting wages and not undertaking the work but instead engaging in personal activities … to the point where [he had] in effect, justified to [himself], the theft of hundreds, if not thousands of dollars worth of paid time from this office.

Given that this view had been reached, unsurprisingly, Mr O'Connor was summarily dismissed.

 

At the hearing of a subsequent unfair dismissal application, Mr O'Connor denied the extent of the social media usage at work attributed to him. He claimed that his records showed that he had engaged in 3,061 chats since opening his Gmail account in 2006 – not since the commencement of his employment in 2009.  He also stated that he rarely spent over 20 minutes chatting on any given day, and often worked through his lunch break to compensate.

 

Commissioner Anne Gooley observed that excessive social media use during work hours could indeed be a valid reason for termination.  However, in this case, because the employer had failed to comply with the directions of Fair Work Australia to file the evidence it relied upon, she found that the employer had not proven that misconduct justifying dismissal had occurred.

 

Partner: Amanda Watt

Making broadband speed claims? You should read this

Image courtesy of Peyri

Posted by Nicholas Stewart

The Australian Competition and Consumer Commission (ACCC) has this month published an Information Paper to assist telecommunications providers with their marketing of hybrid fibre-coaxial (HFC) and fibre to the premises (FTTP) broadband internet services.

The Information Paper addresses issues which apply to services on the National Broadband Network (NBN) as well as services being provided over pre-existing HFC and FTTP networks. The ACCC is concerned that the nature of the NBN means speed will become more of a focus in marketing campaigns for these services.

ACCC Chairman Graeme Samuel's clear view on the issue is expressed in the ACCC's media release:

ISPs that under-deliver on their promises and fail to demonstrate a reasonable basis for their claims will be liable to ACCC enforcement action.

The Information Paper provides instructive guidance for telecommunications companies. You can read it here.

Partner: Paul Kallenbach

Louis Vuitton, Burberry tackle counterfeiters in the Federal Court of Canada

Posted by Nicholas Stewart

Image courtesy of autoreverse tiramisù

In any metropolitan city around the world – east or west – you will see women and men clutching designer bags and wallets with conspicuous pride and exhibition. If you're like me, you will:

1. observe the fashion accessory;
2. check out the person clutching the accessory; and
3. try and work out if the fashion accessory is the genuine article.

As one conducts this analysis, all kinds of things may come to mind – does the owner look like they could afford a real Louis Vuitton handbag or Burberry scarf? Does the handbag look fake? What shoes is the owner wearing? What are they driving?

The increase in the quality of fake goods means that many are willing to risk the potential embarrassment of owning them. And in some quarters, fake seems to have become a status symbol in itself: 'I own a fake Louis Vuitton handbag, saved myself $3,000 and you can't tell the difference between mine and a real one'.

So the prestigious fashion houses are fighting a war on two fronts. On the one side are the consumers who don't particularly care if people judge them for owning a fake. And on the other are the manufacturers, importers and retailers of counterfeit products.

In Canada, Louis Vuitton and Burberry have just won significant damages against certain manufacturers and retailers of counterfeit Louis Vuitton and Burberry goods. In Louis Vuitton Malletier S.A. v. Singga Enterprises (Canada) Inc. (2011 FC 776), Russell J held the Louis Vuitton and Burberry trade marks were infringed by the defendants, contrary to the Canadian Trade-marks Act. His Honour also found the defendants had infringed certain copyrights owned by Louis Vuitton in the Louis Vuitton Multicoloured Monogram Prints contrary to sections 3 and 27 of the Canadian Copyright Act.

Applying a previous decision of the British Columbia Supreme Court (Louis Vuitton Malletier S.A. et al. v. 486353 B.C. Ltd. et al., 2008 BCSC 799, [2008] B.C.W.L.D. 5075) Russell J pierced the corporate veil and found the individuals behind the defendant corporations personally liable for the counterfeit operations conducted through the corporations.

His Honour ordered the defendants to pay almost C$2.5 million in damages and granted injunctions to permanently restrain the defendants from undertaking further infringing conduct.

While Louis Vuitton and Burberry may have enjoyed success in prosecuting infringements in the western world, in many parts of Asia, it’s a different story. A walk down any number of well known shopping districts in Bali, Shanghai and elsewhere reveals thousands of counterfeit products on sale at 'bargain' prices. These end up on the shoulders of many an Australian visitor - on show for puzzled bystanders back home to wonder to themselves, 'Is that a fake?'

Partner: Paul Kallenbach

UGG Boots from Australia? ACCC brings action to stop false "Australian Made" claims

Posted by Nicholas Stewart

Image courtesy of UggBoy♥UggGirl

It's Australian winter time. That means those of us living in Australia's southern regions who forget how cold it can get in winter suffer from frozen feet when leaving our warm beds each morning. Ugg Boots (Uggs) are thought to be a good remedy, and if you're a teenage girl in Bondi, maybe even a fashion accessory for visiting your local video store.

Uggs are considered to have originated in Australia. With the explosion of online retailing, like many other products, they are available online. Consumers may readily believe that the Uggs they are buying from online stores such as www.australiauggbootssale.com.au are made in Australia.

In Australian Competition & Consumer Commission v Marksun Australia Pty Ltd [2011] FCA 695, Marksun Australia Pty Ltd (Marksun), an online retailer of Uggs who operated the www.australiauggbootssale.com.au website (and several others), was found by Gilmour J to have 'structured its marketing to benefit from the perception of an iconic Australian product being “Made in Australia”, when it is actually made in China'. His Honour was of the opinion that deterrence in this case was 'a significant factor, particularly given the involvement of promotion and sale of products over the Internet'.

Rightly so. The "Australian Made" logo is a registered certification trade mark, licensed to companies whose products are registered with the Australian Made, Australian Grown Campaign. Many Australian consumers are influenced by retailers whose marketing efforts seek to associate their products with the "Made in Australia" image. Marksun was penalised heavily for its conduct – pecuniary penalties totalling $430,000 were ordered as well as an injunction and corrective advertising.

So rug up this winter, and if you're making "Australian Made" claims, make sure you comply with the law.

Partner: Paul Kallenbach