Regulatory Systems Bill set to Tweak Some IP Legislation
The Regulatory Systems (Economic Development) Amendment (No 2) Bill 2019-2 has been reported back from the Economic Development, Science and Innovation Committee, and is set to make clarificational changes as well as reducing renewal grace periods in some IP Acts amongst others.
Both the Geographical Indications (Wine and Spirits) Registration Act 2006 and the Trade Marks Act 2002 (as well as the associated regulations) will be amended in regards to registered geographical indications and trade marks that have expired but which are still within the renewal grace period. Currently such marks are removed from the register after the renewal due date, but during the 12-month grace period they can still be renewed and must be taken into account when examining applications. The Bill will reduce the grace period to 6-months, and deem that the marks remain on the register during that time, but specify that they are not considered registered in respect of specific provisions. For the Geographical Indications Act the specific provisions are sections 21-24, which concern restrictions on use of a New Zealand or foreign registered geographical indication for wine or spirits. For the Trade Marks Act the specific provisions are subparts 1-3 of part 4, which concern civil and criminal proceedings and border protection measures. During the grace period the marks will have the status “registered-past expiry date”.
The Fair Trading Act 1986 will have a minor rewording of section 30 so as to make its provisions more objective. The Plant Variety Act 1987 and the regulations will be amended so as to provide that an address for service can be in Australia.
2. Trade Marks
Shape Mark Held to Lack Distinctiveness Despite Long Use
In 2019 NZIPOTM 17 Kellogg Company v Société des Produits Nestlé SA the Assistant Commissioner held that Kellog’s application for the shape of a whole piece of its NUTRI-GRAIN cereal shown from various perspectives must not be registered as it lacks distinctiveness.
Kellogg’s application consisted of these images along with the following description: The mark consists of a three dimensional shape of a piece of cereal as shown in the representation attached to the application. During examination of the shape mark the examiner raised a lack of distinctiveness objection (amongst others), but after sufficient evidence of acquired distinctiveness was provided the objection was dropped and the mark eventually proceeded to acceptance. Following publication Nestlé opposed registration of the mark on the following grounds: it comprises more than one sign; it does not contain a clear representation of the mark, it was made in bad faith and that there is a lack of distinctiveness.
The Assistant Commissioner addressed the first two grounds of opposition together. Nestlé claimed that the various representations are incongruous in that they do not collectively clearly represent a single shape mark given that there are variations in shape between the depicted representations. Following the hearing but prior to issuing the decision the Assistant Commissioner sought to resolve this by issuing a Direction under which only the second image would be considered in conjunction with the following amended description: The mark consists of a three dimensional shape of a rectangular piece of cereal with rounded ends and three holes as shown in the representation attached to the application. Kellogg supported the amendment, but Nestlé objected on the basis that such amendments can only be made if there was an error and that such amendment is not allowed as it would materially alter the identity of the mark. However, the Assistant Commissioner considered that the other depictions could have been filed in error if the applicant had assumed they all represented the same shape and that the minor differences in small parts of the images do not materially alter the identity of the mark.
In considering distinctiveness under section 18(1)(b) the Assistant Commissioner noted that given the nature of the goods the relevant persons in respect of which the assessment of the mark’s distinctiveness is to be made will be very broad. While accepting that the mark is not functional, the Assistant Commissioner found the mark to have a simplistic form that is capable of few variations or combinations and that the ordinary customer would not find it memorable or inherently distinctive in relation to the goods.
The Assistant Commissioner also noted post-application evidence of other traders using similar shapes and found them to be doing so without improper motive. In conjunction with the simple shape of the opposed mark, the Assistant Commissioner found this to point towards other traders being likely to want to use a similar shape to the opposed mark without improper motive prior to the application date. Consequently, the mark was held to lack inherent distinctiveness.
The Assistant Commissioner then noted that acquired distinctiveness can trump a finding of a lack of inherent distinctiveness and that there was evidence that the product has longstanding and geographically widespread use in New Zealand and significant market share. While the product shape in use is subject to manufacturing variations, the Assistant Commissioner found these to be minor and not such as would alter the distinctive character of the mark. However, the Assistant Commissioner also noted that significant use does not necessarily entail distinctiveness as recognition does not necessarily mean recognition as a trade mark. It was noted from other cases that establishing distinctiveness through use of a shape mark is difficult in the scenario at hand where the mark is not packaged in the shape of the goods and where the mark is only used in conjunction with distinctive marks. On its own the available evidence of use and promotion of the mark was held not to establish distinctiveness. Kellogg had also supplied other evidence regarding the distinctiveness acquired by the mark, but the Assistant Commissioner found that to be opinion or hearsay evidence from people who were not independent of Kellogg and so was ruled inadmissible. Consequently Kellogg was held not to have discharged its onus of establishing acquired distinctiveness on the balance of probabilities.
Although not required to the Assistant Commissioner went on to reject the bad faith pleading as unwarranted on the evidence, which was inconclusive as to whether other traders were using a significantly similar mark at the application date.
Court of Appeal Finds No Copyright Infringement of Sealegs' Amphibious Boat Technology
In Zhang v Sealegs International Limited the Court of Appeal allowed the appeal and set aside the trial Judge’s finding of copyright infringement.
In the High Court decision the trial Judge found that Sealegs had a valid claim to copyright on account of its original arrangement of known elements to form retractable wheel assemblies on small amphibious crafts, and that the defendants had copied a substantial amount of those copyright works.
However, the Court of Appeal held that there was negligible originality in the sequence of arrangement of the generic components from which the leg assemblies were constructed. While acknowledging that the selection of the shape and dimensions of some of the components required skill and effort, the Court of Appeal held that this only conferred the arrangements of features with a modest rather than a high degree of originality.
The Court of Appeal held that the trial Judge was wrong to ignore the extent to which functional constraints could influence the assessment of objective similarity. On account of its finding of only a modest degree of originality, the Court of Appeal gave more significance to the differences between each party’s components and their arrangement on the basis that the protection provided by copyright in an arrangement is proportionate to the work’s originality. The trial Judge’s decision was also criticised for discounting the effect of the differences by extending copyright protection in Sealeg’s arrangement to functional equivalents, as that is the domain of patents. Further, while there were similarities in dimensions and geometry, the Court of Appeal found that such similarities would be expected in that market segment on account of functional constraints.
On its own assessment the Court of Appeal found there to be a lack of originality in the functional sequence of generic components adopted by Sealegs and that as a consequence there was no subject matter for which an objective similarity comparison could be made.
No Deal Brexit Implications for Copyright Further Elaborated
UKIPO recently updated its guidance on changes to copyright law in the event of no Brexit deal following the issuing of the Intellectual Property (Copyright and Related Rights) (Amendment) (EU Exit) Regulations 2019, which will commence on exit day if no deal is reached.
Given that the UK’s membership of international copyright conventions such as the Berne Convention is independent of whether or not the UK is a member of the EU, in general in the absence of a deal UK copyright will continue to be recognised in the EU and EU copyright will continue to be recognised in the UK.
However, EU legislation on copyright exceeds or creates exceptions to the protection available under the international conventions and that legislation has either been incorporated into UK law following EU Directives aimed at harmonisation, or exists as stand-alone EU Regulations that do not require national implementation in order to have effect. The above Amendment Regulations remove the application of the EU exceptions in UK law as they will no longer be reciprocated by the EU in the event of no deal. The following are notable changes that the Amendment Regulations will make if no deal is reached by exit day.
Currently the EU Portability Regulation allows consumers across the EU to access their online content services (e.g. video-on-demand streaming services) as if they are at home when they travel within the EU. Under that regulation online service providers are obligated to provide content ordinarily available in the UK to a UK customer temporarily present in any other EU Member State and likewise for other EU customers temporarily visiting the UK. The Regulation applies only to travel between EU Member States. Under the Amendment Regulations the EU Portability Regulation will no longer apply to the UK.
Under the EU Database Directive databases created by an EEA national, resident, or business which involved a substantial investment of time, money or effort automatically get sui generis protection whereby the owner has the right to restrict the use or extraction of the database’s data. That Directive is implemented in the UK in the Copyright and Rights in Databases Regulations 1997. Under the Amendment Regulations the UK will continue to recognise both UK and EEA database rights existing at exit day, but for databases created after exit day the UK will only recognise database rights in databases created by UK citizens, residents and businesses.
The EU Satellite and Cable Directive has a country of origin principle whereby if a satellite broadcaster wants to transmit a copyright work from one EEA member state to another, they are only required to obtain the copyright holder’s permission for the state in which the broadcast originates. Currently the UK extends the country of origin principle to broadcasts originating in any country, EEA or non-EEA. Under the Amendment Regulations the UK will continue to apply the country of origin principle to broadcasts into the UK from any country. However, the country of origin principle will not apply to broadcasts from the UK, meaning that broadcasts from the UK into the EEA could require the copyright holder’s permission for every EEA state into which it is received, depending upon how each EEA state applies the law.
Currently, under the freedom of services provision of the Treaty on the Functioning of the European Union it is possible for a UK consumer to use non-UK decoder devices intended for use in another EU country to access programmes broadcast from the UK that are otherwise available for a charge from a legitimate UK broadcasting service. Under the Amendment Regulations after exit day the use of non-UK decoder devices to avoid paying charges to UK Broadcasters will be a criminal offence. The use of the non-UK decoder devices for accessing foreign broadcasts will continue to be allowed, provided there is no intent to avoid any charge associated with the programmes.