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.

ALRC releases issues paper on copyright and the digital economy

Posted by Lucy McGovern and John Fairbairn

On 20 August 2012, the Australian Law Reform Commission (ALRC) released its IssuesPaper for the inquiry into Copyright and the Digital Economy. The Paper sets out 55 questions reflecting the issues that will be the focus of the Inquiry as well as proposed guiding principles for reform.

The Terms of Reference for the inquiry are available here. The closing date for submissions in response to the Issues Paper is 16 November 2012.

What is the Inquiry about?

On 29 June 2012 the ALRC received the Terms of Reference for its inquiry into Copyright and the Digital Economy. In particular, the ALRC is to report on whether the exceptions and statutory licences in the Copyright Act 1968 (Copyright Act), are adequate and appropriate in the digital environment.

The terms of reference are broad in scope potentially re-igniting a large number of highly charged debates between disparate industry sectors. The ALRC has sought to give structure and direction to this debate by releasing an Issues Paper that sets a number of specific questions to which the public is invited to respond. We have extracted below some of the key issues raised in the Paper.

Copying for private use

One of the issues under consideration is whether there should be a broader exception for copying for private and domestic use. To this end, the ALRC notes that there are format and time shifting exceptions in the Copyright Act that allow individuals to make copies of copyright material for their own private use, but that technological developments have limited the application of these exceptions. The ALRC draws attention to the recent Full Federal Court decision in National Rugby League Investments Pty Ltd v Singtel Optus Pty Ltd (2012) 201 FCR147 (discussed previously on this blog) in which the court found that Optus was liable for copyright infringement for offering a service that enabled subscribers to record free to air television programmes and play the recordings back at a later time. In reaching this decision, the court held that there is no principle of 'technology neutrality' when interpreting statutory exceptions.

The ALRC has posed the following questions:

Question 7: Should the copying of legally acquired copyright material including broadcast material, for private and domestic use be more freely permitted?

Question 9: The time shifting exception in s111 of the Copyright Act 1968 (Cth) allows users to record copies of free-to-air broadcast material for their own private and domestic use, so they may watch or listen to the material at a more convenient time. Should this exception be amended and if so, how? For example:

(a) should it matter who makes the recording, if the recording is only for private or domestic use; and

(b) should the exception apply to content made available using the internet or internet protocol television?

Fair use and fair dealing

The Paper reopens discussion on whether Australian copyright law should provide a broader US-style 'fair use' exception to copyright infringement. The Paper outlines international developments (including the recent cases handed down by the Canadian Supreme Court, two of which concerned 'fair dealing', legislative developments in India, and the United Kingdom's Hargreaves review). The Paper concludes that 'there may be more of an appetite for a broad, flexible exception to copyright – perhaps based on US-style fair use'.

The Paper also questions the adequacy and appropriateness of the current fair dealing exceptions in the Copyright Act. In particular, the ALRC suggests that the exceptions could be simplified, and examines the possibility of adding statutory exceptions, such as an exception for 'quotation'. The Paper suggests that a 'quotation exception' may occur where three criteria are met:

(a) a work has been lawfully made available to the public;

(b) the making is compatible with fair practice; and

(c) the extent does not exceed that justified by the purpose.

In making the suggestion, the Paper notes Emmett J's 'disquiet' in holding that the Men at Work song 'Down Under' infringed the copyright of the iconic Australian song 'Kookaburra sits in the Old Gum Tree' (EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd (2011) 191 FCR 444).

The ALRC has posed the following questions:

Question 52: Should the Copyright Act 1968 (Cth) be amended to include a broad, flexible exception? If so, how should this exception be framed? For example, should such an exception be based on ‘fairness’, ‘reasonableness’ or something else?”

Question 47: Should the Copyright Act 1968 (Cth) provide for any other specific fair dealing exceptions? For example, should there be a fair dealing exception for the purposes of quotation, and if so, how should it apply?

Question 48: What problems, if any, are there with the operation of the other exceptions in the digital environment? If so, how should they be amended?

Question 49: Should any exceptions be removed from the Copyright Act 1968 (Cth)?

Question 50: Should any other specific exceptions be introduced to the Copyright Act 1968 (Cth)?

Question 52: How can the free-use exceptions in the Copyright Act 1968 (Cth) be simplified and better structured?

Cloud computing and internet functions

The Paper seeks clarification on the operation of copyright law for specific technologies, such as caching and cloud computing. The ALRC gives an example of caching used by search engines 'to improve the internet's performance, allowing search engines to quickly retrieve cached copies rather than having to repeatedly retrieve the copies from remote services'. ALRC notes that, under the current copyright law, such a process may infringe copyright. The ALRC also acknowledges that cloud computing services that provide on demand access to copyrighted material may infringe copyright. The Paper queries whether allowances should be made for these emerging technologies and poses the following questions:

Question 3: What kinds of internet-related functions, for example, caching and indexing are being impeded by Australia's copyright law?

Question 4: Should the Copyright Act 1968 (Cth) be amended to provide for one or more exceptions for the use of copyright material for caching, indexing or other uses relating to the functioning of the internet? If so, how should such exceptions be framed?

Question 5: Is Australian copyright law impeding the development or delivery of cloud computing services?

Question 6: Should exceptions in the Copyright Act 1968 (Cth) be amended, or new exceptions created to account for new cloud computing services, and if so, how?

User-generated content

The Paper considers potential reform for user-generated content that contains copyright materials, such as videos that are uploaded and shared across the internet (the prime example being YouTube). At present, not all user generated content falls within the fair dealing exceptions of criticism or review, or parody or satire. The Paper questions whether there should be an exception framed for using copyright material by individuals for 'social, private and domestic purposes':

Question 12: Should some online uses of copyrighted materials for social, private or domestic purposes be more freely permitted? Should the Copyright Act 1968 (Cth) be amended to provide that such use of copyright materials does not constitute an infringement of copyright? If so, how should such an exception be framed?

Question 13: How should any exception for online use of copyright materials for social, private or domestic purposes be confined? For example, should the exception apply only to (a) non-commercial use; or (b) use that does not conflict with normal exploitation of the copyright material and does not unreasonably prejudice the legitimate interests of the owner of the copyright?

Retransmission of free to air broadcasts

The Paper analyses licensing schemes in light of emerging technologies. For example, the Paper notes that it is currently unclear whether internet protocol television (IPTV) falls within the statutory licensing scheme for the retransmission of free to air broadcasts. The Australian Copyright Act provides that a free to air broadcast is not infringed by retransmission of the broadcast if remuneration is paid under a statutory licensing scheme. Section 135ZZJA then provides that the regime does not apply if the retransmission takes place over the internet. The Paper seeks clarification on the operation and appropriateness of these provisions:

Question 35: Should the retransmission of free to air broadcasts continue to be allowed without the permission or remuneration of the broadcaster, and if so, in what circumstances?

Question 36: Should the statutory licensing scheme for the retransmission of free-to-air broadcasts apply in relation to retransmission over the internet, and if so, subject to what conditions – for example, in relation to geoblocking?

Question 37: Does the application of the statutory licensing scheme for the retransmission of free-to-air broadcasts to internet protocol television (IPTV) need to be clarified, and if so, how?

Other issues

In addition to the themes discussed above, the ALRC poses questions on:

• The operation of the statutory licensing schemes, including the schemes currently in place for educational institutions and the crown;
• The digitalisation of copyright works by libraries;
• The legal treatment of orphan works;
• Data and text mining (that is, the storing of text, images and numbers in databases and repositories);
• The legitimacy of using copyright materials in 'transformative' and 'collaborative' ways (such as using 'samples' and creating 'remixes' and 'mashups'); and
• The ability of copyright owners and users to 'contract out' of statutory exceptions for copyright infringement.

Importantly, the Paper sets out the ALRC's 'starting point' on the guiding principles for reform, namely:

1. Promoting the digital economy;
2. Encouraging innovation and competition;
3. Recognising rights holders and international obligations;
4. Promoting fair access to and wide dissemination of content;
5. Responding to technological change;
6. Acknowledging new ways of using copyright material;
7. Reducing the complexity of copyright law;
8. Promoting an adaptive, efficient and flexible framework.

The closing date for submissions in response to the Issues Paper is 16 November 2012. The ALRC then proposes to issue a discussion paper and call for submissions in relation to that paper. The Final Report is due to be delivered to the Attorney-General by 30 November 2013.

Is it better that your employees spend time on Facebook? Now there's good reason ...

Posted by Kate Vaughan and Anthony Borgese

Last month, the Advertising Standards Bureau (ASB) made two determinations that will change the way businesses use Facebook to promote brands.

The ASB received various complaints in relation to comments on both the VB and Smirnoff brand Facebook pages.

Complaints were made that certain comments by third-party users breached advertising codes, particularly on the basis that they:

• were discriminatory; and
• promoted irresponsible drinking.

'We didn't make them write that!'

The question for the ASB was whether comments posted by third party users of the Facebook profiles could constitute advertisements to which the advertising codes would apply.

Reference was made to the decision in Australian Competition and Consumer Commission v Allergy Pathway Pty Ltd (No 2) [2011] FCA 74, in which the Federal Court held that an organisation may be accountable for third-party comments by fans on their Facebook pages if:

• the organisation is aware of the comments; and
• makes a decision not to remove them.

VB and Smirnoff argued that this was not the case here. In fact, Smirnoff responded in saying:

... any opinions or statements posted ... by fans are not the opinion or view of Diageo [Smirnoff], and to demonstrate this we try and allow Facebook to be an honest open channel for discussion not controlled or closed off by Diageo. This is a universal strategy recommended by Facebook and applied by many successful, global brands.

Facebook might well recommend it, but following these two ASB determinations, we probably wouldn't.

The ASB made clear that advertising codes did apply to advertisers' Facebook pages:

Facebook is a marketing communication tool over which the advertiser has a reasonable degree of control and ... draw[s] the attention of a segment of the public to a product or in a manner calculated to promote ...

This interpretation is consistent with the definition of an 'advertising communication' under, as an example, the Advertiser Code of Ethics.

Further, the ASB held that the fact that user comments were posted in reply to questions posed by VB and Smirnoff meant that they should be considered advertising.

What'll I do?

The key message from the ASB is that marketing via social media requires monitoring by an organisation to ensure that inappropriate material is removed within a reasonable timeframe.

Commercial use of Facebook will now constitute advertising and, as with more traditional forms of marketing, organisations will need to consider the applicable advertising codes if they wish to maximise its benefits.

RVs and IP

Posted by Nick Liau ● Partner: Paul Kallenbach

Winnebago Industries, Inc (Winnebago) is a popular American manufacturer of motor homes (commonly known as RVs in the US). Knott Investments (Knott) had been using the Winnebago name to manufacture motor homes in Australia since 1982 without any official endorsement from the American company.

The Federal Court recently held in Winnebago v Knott Investments that Knott Investments had breached a number of laws by using the Winnebago brand name in the way it did. The Court has ordered Knott to rebrand its products with a different brand name.

The facts

Winnebago began manufacturing RVs in the US in 1966 for the American market. It has since exported RVs to other countries around the world, but has never exported any products to Australia.

Bruce Binns, principal of Knott, began manufacturing RVs in Australia in the mid 1960s. In 1982, Knott started using the Winnebago name on its own RVs. Not only was the name itself used on Knott's motor homes, but the Winnebago logo was also copied. Knott also represented in some advertising material that its products were related to products of the American company.

Passing off

Justice Foster held that Knott's actions amounted to passing off, as Knott was using the reputation of the Winnebago brand name to sell its own goods in Australia.

The contentious element was whether Winnebago had a sufficient reputation in Australia when Knott started manufacturing motor homes using the name in 1982. (If Winnebago did not have sufficient reputation in Australia, then it would not have been passing off for Knott to use the same brand name and logo.) At that time, Winnebago did not sell any products in Australia, nor did it conduct any advertising in Australia. Nonetheless, it was held that even in 1982, enough Australians would have been aware of Winnebago from their overseas travels that there would be at least some reputation in the Winnebago brand in Australia.

Further, the fact that Knott had chosen Winnebago as its own brand name indicated that it did, in fact, want to trade off the back of the American company's reputation. Under cross examination, Mr Binns claimed (somewhat incredulously) that he chose the name 'Winnebago' for his company's products because two other names (Fleetwood and Coachmen) were already being used in Australia by other companies manufacturing motor homes, and Winnebago was the only remaining name he could think of.

The Court ultimately rejected this evidence, and held that the only credible reason why Mr Binns would have chosen the Winnebago name was to appropriate the reputation of the American brand, to the extent that this reputation existed in Australia. Justice Foster found that, 'No doubt Bruce Binns thought that, by taking such action, he could keep Winnebago out of Australia or, at the very least, hold it to ransom and extort a significant payment from Winnebago. In the meantime, he and Knott would be able to trade off its reputation.'

Trade marks

In 1973, Winnebago tried to register the Winnebago logo as a trade mark in Australia. The application was refused on the grounds that a geographic name could not be registered as a trade mark. However, in 1997, Knott succeeded in registering the trade mark, as the way in which the examiner applied the Trade Marks Act had changed.

Under section 88 of the Trade Marks Act, this registration could be removed because the use of the trade mark was contrary to law. In the present case, the use of the trade mark amounted to passing off, so the Federal Court ordered that Knott's trade mark be removed from the register.

Copyright

Although Winnebago tried to claim that the brand name was protected by copyright, this ground was rejected by the Court. A single word or a short phrase will almost never attract copyright protection. Further, although the logo itself was drawn in a stylised way, it was mainly comprised of elements made from existing typefaces.

Lessons

At first glance, it would seem that this was a fairly clear cut case of appropriation of a famous overseas brand name. However, the fact that this case ended in costly litigation holds some lessons.

The case hinged largely on the evidence of Winnebago's Australian reputation in 1982, when Knott first used the brand name. Although Winnebago would certainly be said to have a reputation now, its status in 1982 was far less clear. Earlier action against Knott may have saved Winnebago the trouble of having to find evidence about its reputation dating back 30 years.

Similarly, Winnebago could potentially have more vigorously opposed Knott's 1997 application for the Winnebago trade mark.

However, a problem for Winnebago is that it would need to actually sell products in order to sustain a trade mark registration – and it cited the fact that it did not want to export its products to Australia as a key reason why it did not take decisive action against Knott earlier. Therefore Winnebago faced a rather difficult problem: on the one hand, it faced evidential issues because it had waited so long to pursue Knott over the appropriation of its brand; but on the other hand, its ability to obtain rights itself was weakened by the fact that it was not actively selling its products in Australia.

Ultimately, this case highlights the difficulty of maintaining and defending brand reputation in a jurisdiction where a company is not active.