Our TMT predictions for 2013

Posted by Tarryn Ryan and Paul Kallenbach

2012 has been a big year in the TMT space. We've had Apple and Samsung fighting it out across the globe over patent rights, the highly anticipated High Court judgment in Roadshow Films v iiNet,[1] and even the announcement of Google Glasses. So what exciting things does 2013 have in store for us, and what will the fallout be from the major events of 2012? Here are some predictions for the coming year.

1.  Device wars to intensify

With the demand for mobile devices so high, the device wars will only intensify over the next 12 months. Recently we've seen the launch of the iPhone 5 and iPad Mini, new Nexus devices from Google and Galaxy and Note devices from Samsung, and Microsoft's foray into the market with the launch of its Surface tablets in concert with its touchscreen-centric Windows 8 operating system. As the battle begins to move to enterprise – thanks in part to the BYOD ('Bring Your Own Device') to work trend – the focus will move away from the 'look and feel' of these devices, to the software and services that power them.

Prediction: Competition in the mobile device market will intensify, with software and services becoming the main battleground. NDP predicts that sales of tablet devices will soon overtake sales of laptop PCs, while according to Strategy Analytics, the number of smartphones worldwide has just passed one billion. Rapid hardware and software innovation, downward price pressure, ever-faster telecommunication networks and closer integration with ubiquitous web services will ensure that consumers will ultimately triumph in the device wars.

2.  BYOD growth will need to be managed by enterprises

BYOD is reflective of the current shift to more flexible work practices. Its uptake has also been assisted by the fact that mobile devices are increasingly better equipped for use in the corporate sphere. However BYOD raises a number of security and legal issues for enterprise. Data security and confidentiality are of concern, particularly with devices that readily connect to public clouds (think iCloud, Dropbox and many others besides). Intellectual property protection is another issue, as BYOD may blur the line between what someone does in his or her personal capacity and in their capacity as an employee. Other issues include employee privacy, software licensing, insurance and employment issues. Nevertheless, it's clear that many employees bring their own devices to work regardless of whether their employer has a formal BYOD policy in place.

Prediction: The uptake of BYOD will continue to increase over the next 12 months. As it does, expect to hear more about the problems and risks facing enterprises. Gartner predicts that BYOD devices will be affected by malware at more than double the rate of corporate owned devices. Organisations need to get on the front foot and ensure that they have effective BYOD policies and technical controls in place to regulate the use of BYOD devices within their workplace and on their internal network and systems.

3.  Uptake of social media policies as legal and reputational risks start to hit home

These days businesses have a lot to lose by ignoring social media. Not only do consumers expect businesses to have a social media presence, but their competitors are already there, taking advantage of the benefits of building an online community of advocates around their products and services. As organisations begin to feel their way around social media platforms, they need to be aware of how the law is responding to new media. Last year the Federal Court found that a company was responsible for misleading third party content posted on its Facebook page once it had become aware of that content and chose to do nothing about it.[2] A determination of the Advertising Standards Bureau earlier this year went even further, stating that organisations are required to actively monitor their social media pages.[3] And most recently, the Supreme Court found Google to be liable in defamation in connection with content appearing on its search results pages.[4]

And it's not just third party content that is proving problematic. Employee use of social media has thrown up challenges for employers and the courts alike. In a number of recent incidents, employees have used Facebook and other social media platforms to post negative comments about their employer, their co-workers and their employer's customers – apparently forgetting that social media is a very public forum. In some instances, such conduct has led to termination of employment.

Prediction: Expect there to be more developments in 2013 in the areas of responsibility for third party content and employee use of social media. As the legal and reputational risks hit home, there will be an increased focus by organisations on implementing and enforcing social media policies. This will include policies governing how people within the organisation should use social media (both during and after work hours), as well as policies directed at third parties, such as 'house rules' on company-branded social media pages setting boundaries for acceptable third party content.

4.  Patent litigation fuels trend away from monopoly rights of patentees

Patent infringement litigation exploded in the mobile space around the world in the last 18 months. The most well known example is, of course, the Apple v Samsung proceedings in courts across the EU, the United States and elsewhere (including Australia). But what will be the fallout? Some tech experts suggest it will mean longer waits for new product launches, as developers are forced to start from scratch rather than building on existing technology. From a policy perspective, these lawsuits are fuelling the push towards providing for more equitable access to patented inventions. There is growing concern that patent law (particularly in the US) may have gone too far in protecting 'look and feel', rather than the actual inventiveness. The effect of this, along with the expense of drawn out patent infringement litigation, is potentially stifling on competition and innovation.

Prediction: 2013 will see a trend away from a focus on the monopoly rights of patent holders in Australia, towards more equitable access to patented inventions. This has already begun to some extent with the 'Raising the Bar' reforms to the Patents Act 1990 (Cth). Watch out for the Productivity Commission's review of the current regime for the compulsory licensing of patents (which is widely regarded as being ineffective). The final report is due out in March 2013. Our tip is that we could be looking at an interoperability exception to patent infringement (similar to the exception that exists for copyright).

5.  ISPs and copyright owners unlikely to agree on solution to online copyright infringement but promise of more legitimate content

Copyright owners and ISPs have been in discussions mediated by the Federal Attorney General for over a year now, in a drawn out attempt to develop an industry scheme to address online copyright infringement. However, the High Court's recent decision in Roadshow Films v iiNet, where it held that ISP iiNet had not authorised copyright infringement by its subscribers in their downloading of movies and TV shows, has left ISPs less willing to compromise in these consultations. In Roadshow Films v iiNet, the High Court stated that the issue of illegal downloading would be best addressed by legislative change, and noted that the government has in the past been receptive to making amendments to the Copyright Act 1968 (Cth) as new technologies emerge. However, even with government intervention, the problem of coming up with a workable monitoring and enforcement scheme remains. Many have suggested that the answer lies not in enforcement or litigation, but in making the content users want available quickly, in the format they want, and at a reasonable price. This might sound simplistic, but one need only look at the success of iTunes, and more recently Netflix, Spotify and Pandora, to see that consumers are willing to pay for reasonably priced content.

Prediction: We're unlikely to see an industry or legislative scheme relating to online copyright infringement up and running in the next 12 months. The current ALRC inquiry into Copyright and the Digital Economy is not due to report back to the Attorney General until November 2013, and discussions between copyright owners and ISPs have all but stalled. However, expect to see ISPs (and others) working on making legitimate content more widely available. Recent comments by the managing director of the Australian Federation Against Copyright Theft suggest that rights holders may be beginning to warm to this approach.

6.  Cloud technology to mature and offer more enterprise-grade services

Cloud services offer enterprise a range of advantages including flexibility, workforce mobility, reduced capital costs, and the freeing up resources which can be reallocated to the core activities of the business. However concerns such as privacy, lack of control and performance have so far held some businesses back from embracing the technology. Yet approximately 58 percent of Australian organisations have moved to the cloud in some manner, meaning that many have found that the benefits, along with the dangers of being left behind by their competitors, outweigh these risks. With service providers already working on addressing the concerns of organisations considering adopting the cloud, we can expect the scale to tip further in this direction over the next 12 months.

Prediction: Cloud services will mature in 2013 with an increase in enterprise-grade service offerings. Gartner predicts that in the next year spending on cloud technologies in Australia will increase by 22 percent, up to more than $3 billion. In particular more businesses will be moving their IT infrastructure offsite and turning to co-location services.

7.  Potential of big data beginning to be harnessed by enterprise

Big data refers to unstructured data that is either too big, too fast, or too complex to be processed by traditional database technology. In our increasingly digital world, data production has skyrocketed in recent years, to the point where there is now 2.7 zettabytes of data in existence, growing at a rate of 60 percent per year. Forrester puts the current rate of growth of corporate data at 94 percent. But rather than being overwhelmed by the growth on such a massive scale, the IT industry has developed methods of storing and analysing this data, giving enterprises access to valuable information they did not even know they had. Big data is already and integral part of corporate giants such as Google, Walmart, Amazon and Facebook, but big data solutions are becoming increasingly more affordable.

Prediction: Expect to see enterprise beginning to harness the potential of big data. However these organisations will have to grapple with issues such as the governance and management of big data, as well as finding people with the right combination of skills to work with it and make the most of what it has to offer.

8.  Wearable tech industry to grow, but Google Glasses still some way off

Wearable technology hit the headlines in April this year when Google made its announcement about Google Glasses, developed as part of Project Glass. But wearable technology is already here. Particularly popular at the moment are devices that allow users to track training sessions and fitness data such as Nike+ and Jawbone Up. While these sorts of devices are easing consumers into the world of wearable tech, researchers and developers are more excited about the possibilities of head-mounted displays, such as Google Glasses. The buzz around these products was fuelled when fashion designer Diane von Furstenberg had her models wear prototypes of the Google Glasses to film the audience at her runway show at New York Fashion Week. Despite the hype, these products are unlikely to become available to the general public in the immediate future, with Google saying that Google Glasses will not be available for general sale until at least 2014.

Prediction: We'll be hearing a lot more about wearable technology as the market grows. Juniper Research estimates that by 2014, the wearable tech market will be worth over US$1.5 billion, almost double its current worth. However don't expect to see people walking down the street in their Google shades just yet.

[1] [2012] HCA 16
[2] ACCC v Allergy Pathway Pty Ltd (No 2) [2011] FCA 74
[3] Case number 0271/12 (Fosters Australia, Asia & Pacific - VB), 11 July 2012
[4] Trkulja v Google (No 5) [2012] VSC 533

Instagram's backflip

Posted by Tarryn Ryan and Paul Kallenbach

The past few days have been eventful to say the least for Instagram and Instagram users. On Monday, Instagram proposed new changes to its privacy policy and terms of service that sent users on a war path. Just as remarkable was Instagram's rapid response and backflip following the outcry.

In a post uploaded to the Instagram blog a few hours ago, Instagram co-founder Kevin Systrom acknowledged the response from Instagram users and promised to 'fix any mistakes, and eliminate the confusion' around the proposed changes.

The changes that sparked this series of events were scheduled to come into effect on 16 January 2013, and included the following new terms being added to Instagram's terms of service:

 

RIGHTS

1. Instagram does not claim ownership of any Content that you post on or through the Service. Instead, you hereby grant to Instagram a non-exclusive, fully paid and royalty-free, transferable, sub-licensable, worldwide license to use the Content that you post on or through the Service, except that you can control who can view certain of your Content and activities on the Service as described in the Service's Privacy Policy, available here: http://instagram.com/legal/privacy/.
2. Some or all of the Service may be supported by advertising revenue. To help us deliver interesting paid or sponsored content or promotions, you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you. If you are under the age of eighteen (18), or under any other applicable age of majority, you represent that at least one of your parents or legal guardians has also agreed to this provision (and the use of your name, likeness, username, and/or photos (along with any associated metadata)) on your behalf. 

The language used in section 1 is essentially identical to that used in the terms and conditions of Instagram's new parent company, Facebook. (We've previously written about Facebook's terms and conditions in the context of the viral Facebook copyright post.)

Although the licence set out in section 1 is arguably broad enough to give Instagram the right to use posted images in advertising without compensating the user, this licence is qualified by reference to Instagram's Privacy Policy.  Presumably, Instagram chose to explicitly spell out its right to commercialise images in section 2 because section 2 is not qualified in this way. Also, although the reference to metadata in section 2 appears as something of an afterthought, it is significant because it refers to information such as where the photo was taken and the type of device used, which is embedded in the image. 

 

Despite the specific language, Systrom said that the documents have been 'misinterpreted' and that Instagram has no intention to sell users' photos, or allow them to appear in advertisements. He promised that 'the language that raised the question' would be removed from the new terms. It remains to be seen what the revised new terms will look like, and whether Instagram has managed to stave off a mass exodus of its users with its rapid response. 

The HathiTrust Digital Library case: digitisation, fair use and fair dealing

Posted by Tarryn Ryan and Paul Kallenbach

Image courtesy of elmorsa

In a recent decision of the District Court of New York, the HathiTrust Digital Library's 'digitisation' of literary works was held to fall within the fair use exception to copyright infringement because of the purposes behind the making of the reproductions. This decision has significant implications for the US fair use doctrine in the digital age.

What is the HathiTrust Digital Library?

The HathiTrust Digital Library is a service provided by the University of Michigan in partnership with other major universities, research institutions and libraries. Currently the HathiTrust Digital Library contains over 10 million volumes. Judge Baer in his judgment described the process by which the books are digitised:

[the HathiTrust partners] have entered into agreements with Google, Inc ("Google"), that allow Google to create digital copies of works in the Universities' libraries in exchange for which Google provides copies to the [Universities]....  After Digitization, Google retains a copy of the digital book that is available through Google Books, an online system through which Google users can search the content and view "snippets" of the books. Google also provides a digital copy of each scanned work to the universities, which includes scanned image files of the pages and a text file from the printed work....  After Google provides the Universities with digital copies of their works, the Universities then "contribute" these digital copies to the HathiTrust Digital Library.

The case 

The case involved a group of authors who brought proceedings against HathiTrust and those behind the service, claiming copyright infringement for alleged unauthorised reproduction and distribution of books held by the university partners. HathiTrust brought a motion for summary judgment on the basis that the conduct fell squarely within the fair use exception.

 

Judge Baer accepted HathiTrust's arguments, holding that a fair use defence was available based on the proposed purpose and character of the use of the reproductions. He identified the purposes of the reproductions as being:

 

(a) the protection of fragile books; 

(b) enabling print-disable individuals equal access to the works; and

(c) enhanced search capabilities.

His Honour also held that the character of the reproductions was transformative, and that where a use is transformative, fair use is likely to be made out. Here the use was transformative because the copies served an entirely different purpose to the original works. The new purpose was the enhanced search capabilities – rather than actual access to copyright material – and this was already enabling new and innovative techniques of academic inquiry.

Judge Baer's interpretation of the fair use doctrine to allow reproduction for transformative uses is an important development for organisations in the technology space. At least in the US, this decision may pave the way for organisations to rely on the fair use exception to enable copying of copyright works in circumstances where it is necessary in order to enable indexing, cataloguing, backing-up, searching and the maintenance of digital collections.  

The position in Australia

There is no broad-based fair use exception to copyright infringement under Australian law. However, there are some other provisions within the Copyright Act 1968 (Cth) that may offer a defence to copyright infringement where reproductions are being made for similar purposes to those in the HathiTrust case. 

Protecting fragile books 

In relation to the protection of fragile books, section 51A of the Copyright Act provides an exception to infringement for libraries and archives. The exception applies where the making of a reproduction of a work is done for the purpose of preservation, replacing a damaged or deteriorated work, or replacing a lost or stolen work.

Enabling print-disabled individuals to have equal access

Section 135ZN of the Copyright Act provides an exception for institutions assisting persons with a print disability. Where such an institution makes a reproduction of the whole or part of an edition of a published work for use in the provision of assistance to persons with a print disability, they will not infringe copyright. However, this provision is unlikely to be broad enough to capture the type of digital reproductions that were created in the HathiTrust case.

Enhanced electronic searching capabilities

The Copyright Act does not have a specific provision that exempts from copyright infringement reproductions made for the purpose of enhanced electronic searching. There are provisions in Division 5 of Part III of the Copyright Act that allow libraries and archives to make digital reproductions of works in their collections in certain circumstances. However these provisions are tightly constrained and would not extend to allowing such institutions to digitise their entire collections in order to provide enhanced public access.

Another option would be to argue that the use fell within one of the four fair dealing defences under the Copyright Act. Unlike in the United States, where a broad-based fair use exemption to copyright infringement exists, the Australian Copyright Act codifies four specific fair dealing defences. They are where the infringing act has been carried out for the purpose of criticism or review; parody or satire; reporting news; or research or study.

The most relevant defence for present purposes would be fair dealing for the purpose of research or study, which is found in section 40 (in respect of works and adaptations) and section 103C (in respect of audio-visual items) of the Copyright Act. This defence requires the court to first ask whether the purpose of the infringing act was research or study, and secondly whether the infringing act was fair in all the circumstances.

Courts give the terms 'research' and 'study' their ordinary dictionary definitions when considering whether the infringing act has been done for the purpose of research or study. When determining whether an infringing act is fair in the circumstances, the factors that Australian courts may have regard to are similar to those considered by US courts in relation to fair use, only they are more limited to the particular type of dealing. The factors to which Australian courts may have regard when considering whether the reproduction of a work or adaptation is a fair dealing for the purpose of research or study are set out in the Copyright Act, and include: 

(a) the purpose and character of the dealing;

(b) the nature of the work or adaptation;

(c) the possibility of obtaining the work or adaptation within a reasonable time at an ordinary commercial price;

(d) the effect of the dealing upon the potential market for, or value of, the work or adaptation; and

(e) in a case where part only of the work or adaptation is reproduced – the amount and substantiality of the part copies in relation to the whole work or adaption.

While these factors give some guidance on how the courts will approach the question of fairness, the defence remains uncertain in its application. In the end, whether the fair dealing for research or study defence applies comes down to impression, and must be determined on a case by case basis.  One significant problem that HathiTrust would have encountered had the case been brought in Australia is that the relevant purpose that the court considers is that of the person doing the infringing act, not an end user who might access a reproduction that has been made by the alleged infringer.[1] Consequently HathiTrust would not have been able to invoke the defence just by showing that its subscribers used the Digital Library for the purpose of research or study.

The final possible defence is the 'special cases' exemption in section 200AB of the Copyright Act. This section provides educational institutions, libraries and archives, and those with print disabilities with a defence to copyright infringement where the use in question does not prejudice the copyright owner's legitimate interests and ability to exploit his or her copyright material. The section will also not be available if the use is for a purpose of gaining a commercial advantage or making a profit. Section 200AB was only introduced in 2006 in accordance with Australia's obligations under the Berne Convention and the TRIPS (Trade-Related Aspects Of Intellectual Property Rights) Agreement. It is yet to be tested in this country and has also been criticised for its uncertainty.

Transformative use

The Copyright Act does not currently provide an exception to copyright infringement for the transformative use of copyright material, unless that use falls within one of the fair dealing defences or other exceptions under the Copyright Act. This means that the current position under Australian law does not adequately distinguish between the copying of content for the purposes of distribution, as opposed to copying for the purposes of facilitating digital content management systems. Unfortunately this is an area in which the legislation has not kept pace with advancing technology.

The ALRC inquiry

The Australian Law Reform Commission (ALRC) is currently looking at the issue of exceptions to copyright infringement as part of an inquiry into Copyright and the Digital Economy. More specifically, the ALRC has been asked to consider whether the current exceptions to infringement in the Copyright Act are sufficient in our increasingly digital environment. In the Issues Paper released by the ALRC earlier this year, transformative use and the digitalisation of works by libraries and archives have been identified as areas of particular interest to the inquiry. The ALRC is also considering whether a broad-based fair use exception, like that in the United States, should be introduced into the Copyright Act.

The ALRC is due to report back to the Attorney-General on 30 November 2013.

[1] De Garis v Neville Jeffress Pidler Pty Ltd [1990] FCA 218 at [28] - [34].

Penalties and technology contracts after Andrew v ANZ

Post by Paul Kallenbach

We've previously commented on the High Court's landmark decision in Andrew v ANZ [2012] HCA 30, which concerned the law of contractual penalties in the context of various fees and charges levied by the ANZ bank on its customers.  

 

Old ground …

 

The case confirms what every law student is taught in Contract Law 101:

• a provision in a contract that is considered to be a 'penalty' will be unenforceable; 
• a provision will be considered to be a penalty (and therefore unenforceable) where it is in the nature of a 'punishment'; and
• since at least the 19th century, the test that the Courts have laid down in determining whether a provision is a 'punishment' – or alternatively whether it will pass muster – is to consider whether the compensation required to be paid under the provision represents a 'genuine pre-estimate' of the damages that would be suffered by the claimant: see Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79, subsequently affirmed by our own High Court in Ringrow Pty Ltd v BP Australia Pty Ltd [2005] HCA 71. 

… and new

 

In Andrews, the High Court further expanded the application of the penalty doctrine.  

More specifically, the Court held that fees or other amounts can be unenforceable penalties even where the provision requiring the payment is not triggered by a breach of contract. That is, a fee or other amount that is payable on the occurrence (or non-occurrence) of an event may still be an unenforceable penalty even where the event itself is not a breach.

 

For example, in the context of bank fees, such fees may still be a penalty even where they are expressed (in the relevant contract with the bank) to be invoked on the occurrence of some event – for example, the customer exceeding his or her credit or withdrawal limits – and this event is not a breach of the customer's contract with the bank. In Andrews, the High Court said that whether the dishonour, non-payment and over-limit fees were penalties was a matter for further trial in the Federal Court.

 

What limits apply to this expanded penalty doctrine?

 

The High Court did identify some limits around this expanded penalty doctrine. It found that the penalty doctrine will not be invoked where the contractual provision in question gives rise to an 'additional obligation'. That is, a provision will not be a penalty if a party is required to make the payment in question in exchange for some service, accommodation or other benefit.

 

The example given by the High Court (which is from the NSW Court of Appeal's judgment in Metro-Goldwyn Mayer v Greenham [1966] 2 NSWR 717) nicely illustrates this distinction. In that case, the contract in question permitted Greenham to exhibit only one screening of a film, and went on to provide that Greenham was obliged to pay an amount for each additional screening equal to four times the original contract fee.  

 

The NSW Court of Appeal construed the relevant provision as an option to conduct further screenings in exchange for the payment of the additional amount. In other words, the required payment was not in the nature of a penalty, but rather was required to be made in exchange for an additional benefit (namely, an option to exhibit additional screenings).

 

What does this mean for technology contracts?

 

Technology contracts sometimes require a party to pay a specified amount should certain events occur. This may include, for example:

• 'liquidated damages' should the supplier fail to meet one or more milestones;
• 'service credits' should the supplier fail to meet certain specified service levels; and
• a 'payout' amount should the customer terminate the agreement for convenience before a particular time. 

In the first two examples above, the payment of 'liquidated damages' and 'service credits' usually also constitutes a contractual breach (ie the supplier has failed to perform to the requisite standard under the contract), so these examples fall within the traditional penalties doctrine. A court would then need to determine whether the liquidated damages or service credits are a 'genuine pre-estimate' of the supplier's loss (otherwise they are unenforceable penalties).

 

In the third example, however, the obligation to pay the 'payout' amount does not arise from a breach. Rather, termination for convenience is simply a right exercised by the customer that triggers a payment obligation. Nevertheless, on the basis of Andrews, it seems that this may fall within the expanded penalty doctrine – unless the supplier can show that the customer is required to make that payment in exchange for some service or other benefit.

 

This leaves the enforceability (or otherwise) of termination for convenience payments in a state of some uncertainty. One thing that suppliers could do would be to expressly describe in their contracts the service or benefit that customers obtain in exchange for the termination fee (for example, discounted pricing in exchange for a committed term). However, whether that's enough to avoid the penalties doctrine remains to be seen.

Breaking down the Facebook copyright post that went viral

Posted by Tarryn Ryan and Paul Kallenbach

 

You may have seen the Facebook post that went viral over the last week or so, supposedly invoking copyright protection over everything you've ever uploaded to Facebook. There were similar posts on privacy rights going around earlier this year when Facebook was floated on the stock market. 

 

 

As you may have realised, the post does not mean very much.  There has been a lot of reporting on this, but we thought it would be a good idea to go through the post and break it down to show you why it lacks any real legal significance. 

 

In response to the new Facebook guidelines I hereby declare that my copyright is attached to all of my personal details, illustrations, literary works, professional photos, videos, etc. (as a result of the Berner Convention) 

 

Apart from a few inaccuracies, this first statement is not really wrong, just redundant. Yes, you do own the copyright in your photos, videos, and any other copyright works that you might post. This is explicitly stated in Facebook's Statement of Rights and Responsibilities, which forms part of the terms and conditions that you agree to when you sign up for your Facebook account: 

2. Sharing Your Content and Information

You own all of the content and information you post on Facebook, and you can control how it is shared through your privacy and application settings.

Copyright is a protection that comes into existence with the creation of certain types of work (for example, literary works and artistic works).  In Australia, it is implemented under the Copyright Act 1968 (Cth). Automatic protection of copyright works is one of the key requirements of the Berne Convention (yes, it's the Berne Convention, not Berner).  Over 160 countries (including Australia and the United States) are signatories to the Berne Convention, which was one of the first international agreements on copyright.  Now its provisions are also binding on member States of the WTO by reason of the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement. Consequently, there is no need to register anything, or 'declare' anything, in order to obtain copyright protection for your copyright works.

 

However, not all the information that you put on Facebook will constitute a copyright work. For something to be a copyright work, it must be 'original'.   Facts and information are not 'original' enough to be protected by copyright (see, for example, IceTV Pty Ltd v Nine Network Australia Pty Ltd [2009] HCA 14 and Tonnex International Pty Ltd v Dynamic Supplies Pty Ltd [2012] FCAFC 162).   This means that you can't claim copyright over the personal details that you put up on Facebook, like your date of birth or your email address.   What rights you may have in relation to that kind of information is a privacy issue, not a copyright one. 

 

For commercial use of the above, my written consent is needed at all times!

 

By the present communiqué, I notify Facebook that it is strictly forbidden to disclose, copy, distribute, disseminate, or take any other action against me on the basis of this profile and/or its contents. The aforementioned prohibited actions also apply to employees, students, agents and/ or ANY staff under Facebook's direction or control. 

 

When you sign up to Facebook, you accept the terms contained in its Statement of Rights and Responsibilities.   If you don't accept the terms, you simply don't not get an account.   If you do accept the terms, you have a contract with Facebook.   What you've agreed to under that contract, in relation to Facebook's use of your content, can be found in section 2.1:

For content that is covered by intellectual property rights, like photos and videos (IP content), you specifically give us the following permission, subject to your privacy and application settings: you grant us a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any IP content that you post on or in connection with Facebook (IP License). This IP Licence ends when you delete your IP content or your account unless your content has been shared with others, and they have not deleted it. [emphasis added]  

The buzz words here are transferrable, sub-licensable and royalty-free.   What this means is that when you sign up, you give Facebook the right to use any of the content that you post at any time throughout the world, as well as giving it the right to allow others to use that information for free and without any further consent from you.   Unfortunately, unless you can renegotiate your contract with Facebook (which is extremely unlikely), the only way to stop Facebook from using your content is not to put it up there.  

 

The content of this profile is private and confidential information. 

 

There is certain information which will always be public on Facebook.   This includes your name, profile pictures and cover photos, networks you are in, your gender, and your username and user ID. Facebook sets this out in its Data Use Policy, which also forms part of the terms and conditions you agree to when signing up.   Even where you have used the strictest privacy settings for the rest of your information, Facebook can still use this information because, as already explained above, you have already consented to that use. 

 

It is also questionable whether you would have any privacy rights that are enforceable against other parties unrelated to Facebook.   Certainly in the United States there have been a number of cases where the courts have held that a user does not have a reasonable expectation of privacy in relation to information posted on social networking sites – see, for example, People v Harris (N.Y. Crim. Ct. June 30, 2012) in relation to the expectation of privacy in a tweet.  

 

In Australia the courts have barely begun to scratch the surface in this area.   But it is important to remember that in Australia you cannot sue someone for breach of privacy.   The closest cause of action we have is breach of confidence.   While courts have liberalised their approach to breach of confidence in recent years, there are still substantial hurdles that you would have to overcome in order to convince a court that the information you posted on Facebook was confidential information.   For example, confidential information must have the required 'quality of confidence', and case law shows that information in the public domain will not satisfy this requirement. 

 

The violation of my privacy is punished by law (UCC 1 1-308-308 1-103 and the Rome Statute) 

 

The first reference here is meant to be to sections 1-103 and 1-308 of the United States Uniform Commercial Code (UCC).   The UCC has been adopted (with some local variations) in all 50 States in the United States.   However, it deals with commercial law and contracts, not privacy.  

 

Section 1-103 deals with how the UCC is to be interpreted.   Section 1-308 is supposed to allow a party to a commercial transaction to accept the other side's ongoing performance without waiving a right which it might have to make a claim for breach of contract.   Somehow this section has come to be seen by some in the US as a get-out-of-jail-free card, with people citing the section next to their signature and thinking that it will get them out of anything that they sign their name to.  The only way section 1-308 could be of any use to you is if you were able to show that Facebook had breached your contract by using your information in a way that was contrary to its Statements of Rights and Responsibilities.   Then you might be able to invoke it to preserve your right to sue for breach of contract while still continuing to use Facebook's services.   However it is highly questionable whether expressing this reservation of rights in a Facebook post would be effective. 

 

The reference to the Rome Statute is even more unhelpful.   The Rome Statute is the international treaty that established the International Criminal Court (ICC).  Under the Rome Statute, the ICC has jurisdiction to hear only the most serious international crimes.   These are the crime of genocide, crimes against humanity, war crimes, and the crime of aggression.   Prosecuting Facebook for misuse of your information is not something that you'd be doing before the ICC under the Rome Statute.

 

Facebook is now an open capital entity. All members are recommended to publish a notice like this. If you do not publish a statement at least once, you will be tacitly allowing the use of elements such as your photos as well as the information contained in your profile status updates. 

 

Facebook's status as a publicly listed company, or an 'open capital entity', has no impact on your rights in relation to copyright or privacy.   How Facebook uses your information continues to be governed by the Statement of Rights and Responsibilities and other terms and conditions that you agreed to when you signed up (as well as any amendments that Facebook may make from time to time). 

 

Anyone reading this can copy this text and past it on their Facebook Wall; this will place them under protection of copyright laws.

 

As previously mentioned, copyright protection is automatically conferred when a copyright work is created.   Therefore you are already protected by copyright law in relation to all of your copyright works on Facebook.   Posting a statement on your wall to this effect is not necessary to invoke that protection.

Copyright, compilations, originality and IceTV: Tonnex International v Dynamic Supplies

Posted by Tarryn Ryan and Paul Kallenbach

In the wake of the High Court's decision in IceTV Pty Limited v Nine Network Australia Pty Limited [2009] HCA 14 (IceTV), a recent decision of the Full Federal Court has provided some helpful guidance on when a compilation will be an original literary work protected by copyright.

In Tonnex International Pty Ltd v Dynamic Supplies Pty Ltd [2012] FCAFC 162 the Full Federal Court upheld the primary judge's finding that Tonnex International Pty Ltd (Tonnex) had infringed the copyright of Dynamic Supplies Pty Ltd (Dynamic) in a compatibility chart for printer and computer consumables.

This compatibility chart was embodied in an electronic file called the 'March 2008 CSV file' which was used to upload the chart to Dynamic's website.  It featured certain product information arranged in columns, laid out to facilitate cross-referencing and customer searches via the website.  All of the information in the chart had been taken from the one source, Dynamic's inventory database (the Navision database). 

Dynamic's case was that by copying information from Dynamic's website, Tonnex had reproduced a substantial part of the March 2008 CSV file in compatibility charts accompanying various price lists released by Tonnex in 2008, 2009 and 2010.

The key issue at trial and on appeal was whether the March 2008 CSV file was an original literary work within the meaning of section 32 of the Copyright Act 1968 (Cth).

Was the March 2008 CSV file an original literary work?

At first instance, Yates J identified three key principles for determining whether a compilation is an original literary work.  These principles were endorsed by the Full Federal Court on appeal, and drew on recognised authorities, including (in particular) the decision in IceTV.  The principles were:

1. original works must come from authors (in the sense that they cannot have simply been copied);
2. the work must be the result of human intellectual endeavour, which means: 
• the work 'must have required some independent intellectual effort or exercise of sufficient effort of a literary nature for its creation'; but
• the work need not show any 'literary merit nor novelty or inventiveness as understood in patent law'; and
3. copyright will protect the particular form of expression that is the compilation, but will not protect 'mere facts, ideas or information contained in a compilation'. 

Had the work come from an author?

Dynamic initially sought to argue that the March 2008 CSV file was the result of the joint authorship of two Dynamic employees, Mr Campbell and Ms Sacristan.  It also argued that a number of other employees could be joint authors because of their involvement in entering product information into the Navision database.  The gist of Dynamic's argument was that it was unnecessary to make a definitive decision on the identity of the authors of the March 2008 CSV file, as all possible authors were Dynamic employees and so Dynamic would in any event, own the copyright by virtue of section 35(6) of the Act.

Yates J did not accept this argument at trial, though instead concluded that while Ms Sacristan and other employees had played a part in the creation and maintenance of the Navision database, the compatibility chart had been authored by Mr Campbell alone. 

Was the work the result of human intellectual endeavour?

This second issue formed the basis of Tonnex's main ground of appeal. Tonnex argued that the primary judge had erred in finding that Mr Campbell had exercised more than a negligible amount of skill and judgment in creating the March 2008 CSV file (this being sufficient to make it an original literary work).

Yates J held that it was irrelevant that the information in the compatibility chart had only come from the Navision database. Mr Campbell had still exercised judgment by selecting which information would be useful to customers searching a website for product information, and by arranging that information in a way that would be most convenient for customers.

On appeal, Tonnex challenged the evidence Mr Campbell had given at trial, saying that the thrust of his evidence had been that the intellectual effort was exerted in relation to the compiling of the Navision database, not the compatibility chart.   The Full Federal Court rejected this submission, saying that Tonnex had misunderstood the effect of Mr Campbell's evidence.   Their Honours stressed that it was Mr Campbell's selection and arrangement of the information (in the CSV file) that was decisive in this case, not the information itself.

Was the form of expression more than just mere facts, ideas or information?

Dynamic's arguments on the subsistence of copyright were bolstered by evidence of other compatibility charts that were laid out in very different ways, while still containing the same basic information. Yates J held that here, unlike in IceTV, the particular information did not dictate the form it was expressed in.   His Honour remarked:

... simplicity itself may be a virtue and does not deprive a work of originality for copyright purposes, unless that simplicity is a demonstration of the absence of skill or effort in the circumstances.

This finding distinguished the case from IceTV, where the High Court held that there was no originality in the form of expression of a television program schedule, as 'a chronological arrangement of times at which programmes will be broadcast is obvious and prosaic, and plainly lacks the requisite originality'.

Other grounds of appeal

On appeal, Tonnex also sought to have the matter remitted to the trial judge in light of what it claimed was further evidence about the authorship of the another file which Mr Campbell had referred to in his evidence at trial (the tab delimited file).  The tab delimited file was a price list issued by Dynamic featuring a compatibility chart which Tonnex argued had substantial similarities in composition to the March 2008 CSV file.

The Full Federal Court declined to remit the matter to the trial judge, but nevertheless made some observations about the tab delimited file and the March 2008 CSV file.  Their Honours observed that possibly one of these works was created from the other, or perhaps they were both originally created as one work, but either way there was no reason why both works could not be copyright works.   Their Honours said that, at the very least, copyright subsisted in one of these works and Tonnex had infringed the copyright in that work.

Conclusion

This case provides some much needed guidance in the wake of the High Court decision in IceTV. Yates J's reasoning, approved by the Full Federal Court, followed the High Court's approach by considering whether the form of expression of the compilation is the result of some 'independent intellectual effort' on the part of the author (or authors).  Unlike IceTV, here the Court found that the author had exerted intellectual effort in selecting and arranging information, and that that effort was not negligible.

Tobacco plain packaging: when a taking is not an acquisition

Posted by Genevieve Watt and Paul Kallenbach

Introduction

Image courtesy of xoxoryan

On 5 October 2012 the Australian High Court handed down its decision in JT International SA v Commonwealth of Australia; British American Tobacco Australasia Limited v The Commonwealth [2012] HCA 43, better known as the tobacco plain packaging case. 

The case concerned separate challenges by JT International SA (JTI) and British American Tobacco Australasia Limited (BAT Australasia) to the Tobacco Plain Packaging Act 2011 (Cth), which were heard at first instance by Gummow J in the original jurisdiction of the High Court. The joint case came before the Full Court of the High Court on several reserved questions.

The first challenge was brought by JTI, a Swiss-based company that manufactures cigarettes under brands including Camel and Old Holborn, and the second challenge by three related plaintiffs, BAT Australasia (incorporated in Australia), British American Tobacco (Investments) Limited (incorporated in England and Wales), and British American Tobacco Australia Limited (collectively, BAT).  BAT imports, sells and distributes cigarettes under the brand names Winfield and Dunhill. 

Phillip Morris Ltd, Van Nelle Tabak Nederland BV and Imperial Tobacco Australia Ltd intervened in the BAT matter in support of the plaintiffs. The Northern Territory and the ACT intervened for the Commonwealth. 

Although the parties each raised several arguments, the essential question under consideration was a simple one: had the Commonwealth, by imposing restrictions on the design of the plaintiff's tobacco product packaging, acquired the plaintiffs' intellectual property (including their trade marks, patents, and get up and associated goodwill) otherwise than on just terms contrary to the Constitution? Six of the seven judges found that this was not the case.

Victorian Parliament considers regulation of R18+ computer games

Posted by Tarryn Ryan and Paul Kallenbach

A Bill which would regulate the availability of R18+ computer games in Victoria is currently before the Victorian Parliament.

 

The Classification (Publications, Films And Computer Games) (Enforcement) Amendment Bill 2012 (Vic) follows legislation passed by Federal Parliament earlier this year creating an R18+ classification for computer games, which will come into effect on 1 January 2013.  The Guidelines for the Classification of Computer Games that will be used by the Classification Board were published in September. 

 

The creation of the new classification for computer games is seen by many as well overdue.  In 2009, when the Commonwealth Attorney-General called for submissions in response to a discussion paper on the introduction of an R18+ classification, 98% of the 58,437 submissions received were in favour of the proposal.  An adult classification for computer games already exists in many other countries including the United States, Canada, New Zealand, the European Union, Singapore and Japan.   

  

In Australia, the highest classification is currently MA15+ and over recent years there have been a number of high profile 'bannings' of games that failed to fit within that classification.  These have included Mortal Kombat, Syndicate and House of the Dead: Overkill Extended Cut.  In the case of another game, Fallout 3, the Classification Board's decision to refuse classification famously led to the company behind it, Bethesda Softworks, modifying the game prior to its world wide release.  This prompted criticism of Australia's classification system from other parts of the world.      

 

The Classification (Publications, Films And Computer Games) (Enforcement) Amendment Bill 2012 (Vic), and its equivalents in other States and Territories, is the last step in the reform process.  It seeks to limit access to R18+ computer games to adults, and will make it an offence:

• to demonstrate R18+ computer games in a public place or in a manner that is visible from a public place;
• to privately demonstrate R18+ computer games in the presence of a minor;
• to sell or deliver R18+ computer games to a minor unless the person is a parent or guardian; and
• to leave an R18+ computer game in a public place or on private property without the occupier's permission.

The Bill also contains provisions restricting the advertisement of R18+ computer games, and imposes different penalties for existing offences where they involve R18+ computer games, such as copying a computer game with the intention of selling or demonstrating. 

 

New South Wales and the A.C.T. have already passed similar legislation and other States and Territories are set to follow. 

 

The Classification (Publications, Films And Computer Games) (Enforcement) Amendment Bill 2012 (Vic) will be debated in the Victorian Legislative Assembly at the end of October.

Federal Government considers mandatory data breach notification

Posted by Paul Kallenbach

The Federal Government has released a Discussion Paper on mandatory data breach notification.  You can read our alert here.

Federal Government announces Review of Pharmacuetical Patents

Posted by Daniel Fuller and Peter Kearney

On 15 October 2012, the Federal Government announced the appointment of an expert panel to review pharmaceutical patents in Australia (Review). 

The Review will focus particularly on the extension of term provisions in Chapter 6, Part 3 of the Patents Act 1990 (Cth). Those provisions currently allow the extension of pharmaceutical patents up to five years beyond their standard 20-year term. Medicines Australia has expressed concern that current patent terms are too short given the time taken for patent applications to pass through the Government's administrative processes. On the other side is the Generic Medicines Industry Association, whose view is that too lengthy patent terms and too regular extensions stifle innovation and competition.

The Terms of Reference of the Review specifically require it to 'consider whether there is evidence that the patent system is being used to extend pharmaceutical monopolies at the expense of new market entrants'. If such evidence is found, the Review must consider its impact on competition, innovation and investment. The panel must have particular regard to:

• The availability of competitively priced pharmaceuticals in the Australian market 
• The role of Australia's patent system in fostering innovation and hence to bringing new pharmaceuticals and medical technologies to the market
• The role of the patent system in providing employment and investment in research and industry
• The range of international approaches to extensions of term and arrangements for pharmaceutical inventions
• Australia's obligations under international agreements (including free trade agreements and the World Trade Organisation agreements)
• Australia's position as a net importer of patents and medicines

The Review comes as the Australian Government's Advisory Council on Intellectual Property (ACIP) continues its review of the innovation patent system in Australia. That review has also emphasised issues around patent terms, particularly the practice of 'evergreening' to effectively extend terms using secondary derivative patents. It is expected to produce an interim report this month.

The Review of Pharmaceutical Patents also comes in the wake of a number of other Government reviews and consultations on patents that have commenced since the 'Raising the Bar' reforms passed in March this year.

The Review panel is chaired by Tony Harris (former New South Wales Auditor-General and Parliamentary Budget Officer). Its other members are Professor Dianne Nicol (Associate Dean, Research, Faculty of Law at the University of Tasmania) and Dr Nicholas Gruen (CEO of Lateral Economics).

The panel will begin consulting stakeholders and invite public submissions in the coming months, before reporting in early 2013.

Geographical connotations: When a building name can be trade marked

Posted by Lucy McGovern and John Fairbairn

Can a building name become a geographical indicator with the consequence that businesses operating from that building cannot include the name in their trade marks?

The recent decision of the Federal Court in Mantra IP Pty Ltd v Spagnuolo [2012] FCA 769 has held that the mark "Q1" is inherently adapted to distinguish the services of the accommodation provider, Mantra IP Pty Limited (Mantra), even though "Q1" was also the name of the iconic high rise apartment in which the services were delivered. The judgment analyses the test under section 43 of the Trade Marks Act 1995 (Cth) for rejecting a trade mark on the basis that it has a geographical connotation.

Background

Q1 is a skyscraper located on the Gold Coast; it is advertised as Australia's tallest residential Tower. Mantra holds and licenses certain intellectual property rights on behalf of the Mantra Group. Companies within the Mantra Group operate from Q1 including conducting leasing, conference and resort businesses. Mantra applied to register the trade mark 'Q1' in classes 36, 39 and 43.

The trade mark was opposed by someone who owned apartments in the building and operated a short term holiday accommodation business under the name 'Ql Holidays Gold Coast' and domain name qlholidaysgoldcoast.com.au.

Delegate's decision

The Registrar's delegate originally rejected the mark pursuant to section 43. Section 43 provides:

An application for the registration of a trade mark in respect of particular goods or services must be rejected if, because of some connotation that the trade mark or a sign contained in the trade mark has, the use of the trade mark in relation to those goods or services would be likely to deceive or cause confusion.

The delegate found that "Q1" was a geographical connotation for the location where the services were provided, rather than being a badge of origin. On this basis, she considered that other traders may wish to use the name "Q1" to promote their rental accommodation in the Q1 building. The delegate considered that the sign was the only name of a building and, as such, had become "part of the common heritage". Due to the geographical connotation in the mark, consumers would be likely deceived or confused by the use of the mark for Mantra's services.

Federal Court

On appeal, the Federal Court rejected the delegate's conclusion, and found that the mark was inherently adapted to distinguish Mantra's services. In essence, Reeves J thought that the delegate had incorrectly focused on the use of the sign "Q1" as the name of a building, rather than focusing on the mark, and the inherent adaptability of the coined word "Q1" to distinguish Mantra's services.

In reaching this conclusion, Reeves J referred to the test in Clark Equipment Co v Registrar of Trade Marks (1964) 111 CLR 511 (Clark Equipment) and its application in MID Sydney Pty Ltd v Australian Tourism Co Ltd (998) 90 FCR 236 (MID Sydney). In Clark Equipment, the court commented that a sign is not inherently adapted to distinguish the goods or services of a particular trader where it "includes words or names over which there is a common or public right of use in that they form part of the "common heritage", either in the English language..., or in a geographical name such as that of a town, suburb, district, municipality, region or state."

In MID Sydney, the court determined that "Chifley Tower" could distinguish the services of a trader, as it was not part of the "common heritage" in the same sense as a town, suburb or municipality. However, the court suggested that there may be a borderline exception, where a plaza or other public space adjoining a building has become part of the common heritage.

Applying MID Sydney, Reeves J held that a sign does not lose its inherent adaptability to distinguish services merely by being applied as the name of a privately owned building at the same time as the mark is applied to distinguish certain services provided from, or in relation to, that building.

Like the Chifley Tower, his Honour found that the name "Q1" was developed to signify the building; when the sign was first coined it did not have any obvious meaning and did not adopt or incorporate a geographical name, like "Surfers Paradise" or the "Gold Coast" into it. As the mark was distinctive of Mantra's services at the time of inception, it necessarily remained so. The mark did not lose its inherent adaptability to distinguish the services by virtue of concurrent use as the name of a privately owned building. Reeves J cast doubt on whether a "borderline exception" in the sense expressed in MID Sydney exists, and made clear that such an exception would not arise in these circumstances.

His Honour held that there was no connotation or secondary meaning contained in the Q1 mark itself.

Conclusion

The Mantra case shows the ability of traders to register the name of a building for their services, where the building has a "coined" or inventive name.

The case also demonstrates the inherent danger for service providers who seek to promote their services using a building's name as a badge of origin, without first conducting trade mark searches or registering protection in the trade mark for the services provided. It may be that the building owner or other tenants have registered trade marks and can prevent other residents from using it.

When one design looks much like another, what are your rights?

Posted by Rachel Cox and Peter Kearney

From 25-31 August, Brisbane will host the Mercedes-Benz Fashion Festival. Emerging and established designers and well-known Australian labels will showcase their latest collections. In an industry where one of the key drivers is to capitalise on popular trends and have the 'it' item, copycat fashion is rife. In these circumstances, how can designers and fashion labels protect their designs and brand from copycats?

Registered designs

The Designs Act 2003 allows for the protection of the overall appearance of the product resulting from one or more visual features ie shape, configuration, pattern or ornamentation. For example, this could include ruffles, pleating or a signature fabric pattern. To be registrable, a design must be new and distinctive compared to other designs. The design must not be identical or give a substantially similar impression when compared with other designs. As such, prior publication of a design (photo spreads in magazines, runway shows) can affect whether a design is registrable.

It is important to keep a design confidential until an application is made for a registered design. The process to obtain a fully registered and enforceable design involves two general steps: registration and certification.

1. Registration: The applicant for a registered design has six months in which to decide whether to seek a registered design. Provided that an application complies with formal requirements, registration is usually 'automatic'.
2. Certification is a rigorous process which can be instigated by the design owner or a third party. It is during this process that the design is assessed against the 'new and distinctive' and 'not substantially similar' criteria. If the criteria are satisfied, the registration of the design will stand and the design will be certified. However, if the design is shown to be not new and distinctive or is substantially similar to another design, the registration of the design may be revoked.

Registration of a design gives the registered holder an exclusive right to use or licence use of the design. Certification of the design enables the design owner to undertake infringement proceedings if necessary to prevent others from using the design without their permission. The initial term of registration of the design is 5 years from the date the application was filed (with an option to renew the registration for a subsequent term of 5 years).

Practicalities

The full certification process can be time-consuming and costly and it is not guaranteed that a design will pass certification. It can be particularly difficult for emerging designers or small players to register every design they create for a short season.

Designers should keep in mind that the Designs Act enables applicants to file an application containing several designs of the same classification class. Once an application for a registered design is filed, the applicant has six months to decide whether to register any of the designs. This means that if one or more styles are copied, the applicant need only register the infringed designs. Given the cyclical nature of the fashion industry, this may provide adequate protection, particularly where designs are trend focussed and unlikely to be used for an extended period of time.

If an application does proceed to registration, it can be beneficial to deter infringement by placing a registered design notice on the swing tag or packaging.

Other methods of protection

Design registration generally only protects the shape and configuration of designs. These factors are not necessarily the most important component of every design and other methods of protection relevant to the fashion industry can include:

• copyright to protect photos, graphics, logos and swing tickets as 'artistic works';
• trade marks to protect branding and names and unique signature elements of designs like fabric patterns and buckles; and
• patents to protect inventions and innovations.

Bill Granger's cookbook copyright case

By Nicholas Liau and Paul Kallenbach

Bill Granger, an Australian chef, has written a series of very popular cookbooks over the years which have been published by Murdoch Books (Murdoch). Murdoch published a series of cookbooks entitled Best of Bill and Bill Cooks for Kids, which were compilations of recipes that had been previously published by Murdoch in Bill Granger's other cookbooks.

In May 2012, Bill Granger commenced court proceedings against Murdoch for copyright infringement, on the basis that he had not given Murdoch permission to add his recipes to the compilation books. Murdoch claimed that under the terms of its agreement with Mr Granger, it was able to re-publish the recipes in the compilation cookbooks, and that its actions were legitimate because it was still paying Mr Granger royalties for the use of the recipes.

This month, the parties reached a settlement agreement before the case was heard by the Federal Court. Murdoch has admitted that it infringed copyright in Mr Granger's recipes by publishing the compilation cookbooks. It also admitted that it had engaged in misleading and deceptive conduct under the Australian Consumer Law, as the publication of the compilation cookbooks suggested that Mr Granger had personally selected the recipes, or at least approved of their publication.

Murdoch will now be required to stop selling the compilation cookbooks – it must immediately cease selling the cookbooks in e-book format, but it has until 1 October to sell any remaining paper copies of the books. It will also be required to continue paying royalties on these sales.

As well as being exciting for its involvement of a celebrity chef, this case also shows that companies should be wary about what they do with the intellectual property of others. And particularly where a licence agreement is involved, as was the case here, it is important to understand what can and can't be done under that agreement.

Canadian Supreme Court considers copyright and fair dealing (x3)

Posted by Genevieve Watt and Paul Kallenbach

Three recent Canadian Supreme Court decisions involving the Society of Composers, Authors and Music Publishers of Canada (SOCAN) have tested the application of the fair dealing provisions in the Canadian Copyright Act, R.S.C 1985, c. C-42 to relatively new technologies including music streaming, internet sales of video games and free previews of musical works on music publishing sites. These cases test the boundaries of the principle of technological neutrality and raise interesting issues that Australian courts may well need to consider at some stage.

In most common law countries, including Australia and Canada, fair dealing is a statutory exception or defence to infringement of copyright and where it applies, no royalties need be paid to a copyright owner. Under both the Canadian and Australian legislation, there are two hurdles to establishing fair dealing, the first being that an action that would otherwise constitute copyright infringement must be for one of the purposes prescribed under the fair dealing provisions of the legislation. Some of the permitted purposes in Canada and Australia are research or private study, criticism, review, news reporting and parody or satire.

The second limb involves an assessment of whether the use of the copyright work was 'fair', a question of fact determined by considering factors including the nature of the work and the effect the dealing has on it, as well as the purpose, character and amount of the dealing and whether there are any alternatives to the dealing. This limb goes to the heart of the purpose of fair dealing, which is to strike a balance between the private rights of a copyright owner and the public interest in encouraging the dissemination of creative works.

While the concept of fair dealing appears to be relatively straightforward, the recent Canadian decisions illustrate the creativity courts sometimes need to adopt to fit new forms of technology into the existing legal framework.

Canadian decisions

In SOCAN v Bell Canada 2012 SCC 36 (Bell Canada), the Supreme Court of Canada considered whether an online music publisher had infringed copyright by allowing potential purchasers to stream short, low quality previews of musical works for free without purchasing and downloading the work. The holders of copyright in the musical works were entitled to receive royalties when the works are purchased and downloaded; however SOCAN sought additional compensation in respect of the previews.

Citing the landmark 2004 Canadian Supreme Court decision CCH Canadian Limited v Law Society of Upper Canada [2004] 1 SCR 339 (CCH) in which it was held that there is a low threshold to meet the first limb of fair dealing, the majority ruled that the previews fell within the scope of the 'research' purpose, giving the term a large and liberal interpretation not limited to its dictionary meaning. They held that in listening to previews prior to downloading a musical work, consumers were conducting market research.

Again following the CCH decision, the majority in Bell Canada stated that the 'heavy hitting' of fair dealing analysis was to be done in relation to the second limb – establishing whether the dealing was 'fair'. In this case, the majority concluded that the dealing was fair, based on the fact that the previews were short and of poor quality, and were streamed, meaning no copy was stored on the consumers' computers. They were also persuaded by the fact that they could see no alternative method of conducting market research that would be as effective in demonstrating what the musical work sounds like as listening to a section of it.

A crucial point was the majority's decision that in considering the 'amount of dealing factor', the assessment should be based on the length of each individual preview or clip in proportion to the overall musical work, and not on the total number of previews that a particular consumer had listened to. Although the majority did not say as much, their reasoning on this point appears to be an application of the principle of technological neutrality, as the assessment of the proportion of work here is analogous to the established law in both Canada and Australia that when pages or chapters of a published literary work are copied, the proportion of the work dealt with determines whether copyright has been infringed.

The issue in the second case, Rogers Communications Inc. v Society of Composers, Authors and Music Publishers of Canada 2012 SCC 35 (Rogers Communications), was the distinction in copyright law between a copyright holder's exclusive right to communicate or broadcast a work to the public, and their exclusive right to reproduce that work. The case was an appeal from a decision of the Canadian Copyright Board to impose tariffs on online music services that offer downloads and on-demand streams of musical works.

By the time of this appeal, it was established that offering music downloads gives the copyright owner a right to claim royalties, so the question was whether enabling consumers to stream musical works amounts to communicating those works 'to the public'. The appellant argued that streaming, which is initiated by individual consumers, constitutes a communication of the work streamed to a single individual and therefore does not infringe copyright. They likened their business model to the factual scenario in CCH, which involved the Canadian Great Library faxing copyright works to individual lawyers on request, a service which was found not to constitute a communication to the public as the communications emanated from and were received at single points.

The majority in Rogers Communications, however, rejected the analogy to CCH and instead likened streaming musical works to traditional push methods of broadcasting such as radio, holding that it is irrelevant whether the members of the public to whom a work is communicated receive it simultaneously or at different times in different places, or whether the consumer or the online music service initiates the communication. Where there is a series of repeated transmissions, each transmission must be viewed in the broader context of all the transmissions. The majority pointed out that if this were not the case, the method of communication chosen would determine whether the communication was to the public, and would result in all interactive communications being excluded from the scope of copyright law. The principle of technological neutrality required that these kind of arbitrary results be avoided.

The third case, Entertainment Software Association v SOCAN 2012 SCC 34 (ESA), was also an example of the application of the principle of technological neutrality to a new method of dealing with copyright works. The case concerned the sale of video games online by ESA, an association representing a coalition of video games publishers and distributors who already had the right to sell copies of video games in stores. The claim was again brought by SOCAN, this time in respect of copyright musical works contained in the video games, for which royalty payments for reproduction when the games were sold had already been agreed.

SOCAN contended, and the Copyright Board at first instance accepted, that an additional tariff should be applied for the communication of those musical extracts when the games were sold online as opposed to in a store or by mail. The Supreme Court rejected this argument and ruled that the exclusive right to communicate is concerned with performances, not with communications that result in a permanent copy being stored. Citing the principle of technological neutrality, they held that it was irrelevant whether the games were sold in a store or delivered via the internet, as the sales were reproductions in each case. The internet should be seen simply as a 'technological taxi' enabling the delivery of a copy of the same work.

Lessons

Of course, Australian courts will not be obliged to follow the Canadian lead in comparable cases. However the similarities between Canadian and Australian copyright law and the topical nature of these decisions certainly make them interesting precedents to consider.

We think it unlikely that Australian courts would reach the same conclusion as the majority in Bell Canada, as Australian courts have previously taken a restrictive view of the research or study permitted purpose. The Federal Court, for example, ruled in De Garis v Neville Jeffress Pidler Pty Ltd (1990) 37 FCR 99 that 'study' and 'research' are limited to their dictionary meanings, which gives the terms a more traditional, academic slant.

The decisions in the Rogers Communications and ESA fit more easily with the way in which courts and legislatures in common law jurisdictions have previously adapted the law of fair dealing to fit earlier technological developments, such as radio broadcasting and films.

Paul's Pushes Parallel Importers' Defence

Jacqueline Kroll and John Fairbairn

 

Although the trial judge stated that it was not a case about parallel or 'grey' marketing, the judgment in Lonsdale Australia Limited v Paul's Retail Pty Ltd [2012] FCA 584 has significant implications for the practice in Australia, which has become increasingly attractive in recent times due to a high Australian dollar.

 

In yet another case in which the court rejected the application of the so called parallel importation defence, Paul's Retail Pty Ltd (Paul's) was found to have infringed Lonsdale Australia Ltd's (Lonsdale Australia) trade mark rights by importing sporting goods manufactured by a licensee of a company within the Lonsdale corporate group.

 

Background

 

Lonsdale Australia is the registered owner of a number of trade marks protecting the Lonsdale brand (Lonsdale Australia Marks). Punch GmbH (Punch) is licensed by Lonsdale Sports Limited, a company related to Lonsdale Australia, to promote, distribute and sell in Europe clothing bearing certain Lonsdale trade marks (Licensed Marks).

 

Paul's purchased and imported sporting apparel that had been manufactured by Punch, which featured Lonsdale Australia marks. Importantly, some of those trade marks were not the Licensed Marks and goods that Lonsdale Australia manufactured differed from those of Punch in terms of design, composition and quality.

 

Lonsdale Australia sued for trade mark infringement seeking, amongst other things an injunction restraining the sale of the goods in the Australian market.

 

This is not the first time Paul's has been found liable for importing sporting apparel. Earlier this year, the Full Court handed down its decision[1] relating to the use of the name 'Greg Norman' and the stylised depiction of the shark (Greg Norman Marks). In that case, Paul's had imported goods from India bearing the Greg Norman Marks, which were then sold in Australia. The company that manufactured the goods was a licensed manufacturer of Greg Norman branded goods in India, but the court found that they had been manufactured for sale outside of its licensed territory and consequently were not made with the trade mark owner's consent i.e. they were not genuine goods.

 

In this more recent case concerning Lonsdale goods, the Court considers the application of the parallel importation defence where the goods are 'genuine' in the sense that they were manufactured within the terms of a licence, albeit granted by a related body corporate of the Australian trade mark owner.

 

First Instance Decision

 

Paul's sought to rely on the Champagne Heidsieck principle, namely that there can be no infringing use where the goods are 'genuine goods'[2] (i.e. goods to which the trade mark owner has affixed the mark) and section 123 of the Trade Marks Act 1995 (the Act), which provides that:

... a person who uses a registered trade mark in relation to goods that are similar to goods in respect of which the trade mark is registered does not infringe the trade mark if the trade mark has been applied to, or in relation to, the goods by, or with the consent of, the registered owner of the trade mark.

Paul's argued that there could be no infringing use as the trade marks were legitimately applied by Punch GmbH.

 

The court considered that Paul's had mischaracterised the issue and that what needed to be determined was whether Lonsdale Australia's exclusive rights in the Lonsdale Australia Marks had been infringed.

 

Gordon J found that at least some of the trade mark had not been legitimately applied by Punch and therefore could be considered 'counterfeit goods'. More relevantly to parallel importation, the judge found that:

1. Consistent with the approach taken by the Full Court in E&J Gallo Winery v Lion Nathan Australia Ltd (2009) 175 FCR 386, Champagne Heidsieck had been usurped by s 123 of the Act and the principle is not relevant to the question of infringement under s 120 of the Act; and
2. Even if the Champagne Heidsieck principle is applied, properly construed it requires consideration of whether the trade marks in issue had been applied by the 'registered owner' (or its licensee) i.e. similar considerations to those under s 123; and
3. In order to rely on s 123 of the Act, Paul's bore the onus of establishing that Lonsdale Australia had consented, expressly or impliedly, to the application of the Lonsdale Australian Marks. Gordon J commented that the authorities reveal three ways in which consent under s 123 might be established — chain of title or supply chain, related entities within the same corporate group and other conduct. Those categories are not closed.

In this case, Paul's failed to discharge that onus. In particular, the judge found:

1. Lonsdale Australia played no role in the application of a mark to or in relation to any of Paul's goods;
2. The corporation that applied the trade marks to the goods (Punch) was not a member of the same corporate group as Lonsdale Australia;
3. In any event, the principal authority regarding implied consent in the case where the registered owner and the entity applying the mark are in the same corporate group, Revlon Inc v Cripps and Lee Ltd [1980] FSR 85, has not been definitively accepted within Australia on this point: see Brother Industries Ltd v Dynamic Supplies Pty Ltd (2007) 163 FCR 530; and
4. There was no evidence to establish that Lonsdale Australia took any step, or failed to take any step, that could be considered consent by it to the application of the Lonsdale Australia Trade Marks to the Paul's goods.

Application for leave to appeal[3]

 

Paul's has been granted leave to appeal and the hearing of that appeal has been expedited to August 2012 due to the significant financial costs and burdens which would not be recoverable even if the judgment was overturned. In the application for leave to appeal, Paul's summarised its proposed case as:

1. Seeking a reversal of the finding that the marks had been applied without the consent of Lonsdale Australia;
2. The Punch licence included a licence of the LONSDALE word mark, which is the form that conventionally embraces all uses in all forms of the word mark; and
3. The Champagne Heidsieck principle continues to apply in Australia.

This case follows a recent trend in Federal Court decisions to give s 123 of the Trade Marks Act a narrow application and thereby make parallel importation much harder. As things stand, a trade mark owner's strategy of having different but related entities controlling trade mark portfolios in different territories may be sufficient to prevent parallel importation. Whether the Full Court is able to provide greater certainty on this issue following Paul's appeal remains to be seen, but the decision is likely to have significant implications for the practice of parallel importation in Australia.

 

 

 

[1] Paul's Retail Pty Ltd v Sporte Leisure Pty Ltd [2012] FCAFC 51.

[2] Champagne Heidsieck et Cie Monopole Societe Anonyme v Buxton [1930] 1 Ch 330.

[3] Paul's Retail Pty Ltd v Lonsdale Australia Limited [2012] FCA 724.