May 2020
1. General
Further COVID-19 Related Relief
In recognition of the difficulties that the COVID-19 pandemic can create for the timely gathering of evidence and the execution of statutory declarations and affidavits IPONZ has introduced several measures in an attempt to limit unfairness or prejudice while still allowing proceedings and hearings to progress.
Since mid-April IPONZ has on its own initiative extended various deadlines, including the submission of evidence in proceedings cases, by giving rolling extensions up to two-weeks before the deadline.
While evidence needs to be presented in the form a statutory declaration or affidavit for the determination of a proceeding, until further notice the Hearings Office will accept unsworn evidence to in order to meet an evidence deadline in a proceeding. Where such unsworn evidence is supplied the proceedings will progress to the next stage unless an extension is requested so that a properly sworn copy can be filed, although in either case the properly sworn version still needs to be filed as soon as is reasonably possible. Where the properly sworn version contains amendments these must be highlighted, and if they are non-trivial, then they must be accompanied by an application to file evidence out of time.
Hearings have been able to be conducted by video-conferencing for quite a while and in the current circumstances it is preferred that this option be used. Until further notice the requirement to file bundles of authorities and documents in hard copy has been suspended and instead these must be filed in electronic form via the IPONZ case management system.
IPONZ has also notified that NZ Designations under the Madrid Protocol will now be able to have their examination related task deadlines extended.
Also, for trade mark non-use revocation proceedings IPONZ will no longer automatically extend deadlines for filing their counter-statement and evidence. Extensions for this will now need to be requested.
IPONZ current practice on extensions in light of the COVID-19 situation will continue until at least 31st July 2020.
Indemnity Replaces Up-Front Security for Customs Border Protection Notices
With effect from 1st June 2020 Customs no longer require up-front security from trade mark and copyright owners when requesting Customs to detain goods suspected of being pirated or counterfeit.
Prior to the recent change Customs required an up-front security of $5,000 when trade mark and copyright rights owners filed a Border Protection Notice, which would remain in effect until the earlier of 5-years or the expiry of the right. Where such a notice has been filed Customs will detain suspected pirated or counterfeit goods, whether being imported or exported, for an initial (extendable) period of 10 working days, during which rights owners need to determine whether to initiate Court proceedings (unless the goods are surrendered to the Crown).
From 1st June 2020 the up-front security has been replaced by an indemnity scheme under which rights owners will indemnify Customs for costs incurred. New and renewal applications made from that date will need to include an indemnity form available from the above link. Upon application the $5,000 security will be refunded.
Customs do not require a Border Protection Notice to be filed in order to detain goods suspected of being pirated or counterfeit, but filing such a notice makes it more likely that such pirated or counterfeit goods will be intercepted by Customs.
2. Patents
Full Court Reverses Patentability Finding for Digital Marketing Scheme
In 2020 FCAFC 86 Commissioner of Patents v Rokt Pte Ltd the Full Court of the Federal Court (FCAFC) overturned the Federal Court decision which had found a digital marketing scheme to involve patentable subject matter.
Rokt’s patent application, which was filed just prior to the 2013 ‘Raising the Bar’ amendments to the Patents Act 1990, involves a digital advertising system and method. Claim 1 of Rokt's patent application concerns a computer-implemented method for linking a computer user to an advertising message by way of an intermediate engagement offer which is operable to drive a higher level of engagement with the advertising message than if the advertising message was presented without the offer. After obtaining acceptance the application was re-examined and found to lack patentable subject matter, which was upheld in a decision by a Commissioner’s Delegate that found it to be a mere scheme or business innovation rather than being a technological innovation.
The Federal Court found the business method to be patentable on the basis that it involved the creation of an artificial state of affairs where the computer is integral to the invention, rather than a mere tool in which the invention is performed. In particular the Judge found that the intermediate engagement offer allowed for a dynamic, context-based advertising system that involved improvements in computer technology and which could not be implemented on the intended scale without the use of computer technology.
However, the FCAFC found the patent to not be patentable as it amounts to nothing more than a list of steps to be implemented by a computer using its well-known functions. Referring to the FCAFC’s earlier Encompass decision the FCAFC noted that:
where the claims in suit do not secure, as an essential feature of the invention, any particular software or programming that would carry out the method and the method is entirely left to those wishing to use the method to devise and implement a suitable program for that purpose and all the specification teaches is that the processing system may be “suitably programmed” then the method is really an idea for a computer program, it being left to the user to carry out the idea in a computer system.
While the decision does not mean that computer implemented business schemes cannot be patented, it emphasises that such computer implementation needs to involve an improvement in computer technology in order to be patentable and for this to be suitably reflected in the description and claims.
The FCAFC also found that the trial Judge fell into error by not adequately separating out the role of the expert evidence from the question of construction. The FCAFC emphasised that the role of expert evidence is to guide the Judge in the understanding of the technology involved and that the question of the construction of the claims remains with the Judge after such guidance and should be clearly differentiated.
Products Obtained by Means of Essentially Biological Processes Not Patentable
In G 3/19 – Pepper the EPO Enlarged Board of Appeal (EBA) has now confirmed that products obtained by means of essentially biological processes are not patentable, thereby bringing EPO practice in-line with European law.
As previously noted EPO and European law on this issue diverged with the March 2015 EBA decisions G 2/12 – Tomato II and G 2/13 – Broccoli II, which narrowly interpreted the patentability exclusion for essentially biological processes for the production of plants such that products obtained by such processes are not also excluded from patent protection. As the European Patent Convention (EPC) in classed as international law rather than European law the EU could not legislatively decree how the EPC is to be interpreted. Nonetheless, the EU sought to influence EPO practice.
In November 2016 the European Commission issued a notice concerning the meaning of key articles of European Parliament Directive 98/44/EC, which covers the legal protection of biotechnological inventions by setting out principles regarding the patentability of animals, plants and the human body and its parts. The Directive contains provisions additional to those in Article 53(b) of the EPC which excludes patent protection for plant or animal varieties or essentially biological processes for the production of plants or animals. However, the additional provisions were inserted into the EPC’s implementing regulations instead of the text of the EPC, with the consequence that the text of the EPC would prevail if there was any conflict between the EPC and the Directive. This has resulted in narrow interpretations of the exclusion, such as the above 2015 Enlarged Board of Appeal decisions and the Boards of Appeal T 1063/18 – Pepper decision, which reconfirmed the EPO’s practice despite the European Commission notice.
Following the December 2018 T 1063/18 – Pepper decision, and in light of EPC member states aligning their law with the European Commission’s interpretation, the President of the EPO referred questions on plant patentability to the EBA given that the context had changed since the G 2/12 and G 2/13 decisions. Further pressure from the EU came in September 2019 when the European Parliament passed a non-legislative resolution stating that fruit, vegetables or animals obtained from conventional breeding processes, such as crossing and selection, must not become patentable.
The EBA has now ruled that Article 53(b) EPC is to be interpreted to exclude from patentability plants, plant material or animals, if the claimed product is exclusively obtained by means of an essentially biological process or if the claimed process features define an essentially biological process.
Italy to Allow for PCT National Phase
For PCT applications filed on or after 1st July 2020 it will be possible to enter national phase in Italy.
Currently PCT applications can only enter Italy via the European regional phase as Italy is one of numerous states that do not allow PCT applications to enter national phase. However, from 1st July 2020 PCT applicants will have the choice of entering Italy either through national phase or via European regional phase. If Italy is to be entered via the national phase then the deadline for this will be 30-months from the priority date, whereas the deadline for European regional phase is 31-months from the priority date.
Further, from 1st July 2020 Italy will withdraw its notices of incompatibility with provisions in the PCT Regulations that allow certain formalities defects or missing parts to be remedied by way of incorporation by reference and for the restoration of the right of priority, where for the latter it will apply both the due care and unintentional criteria. (PCT Newsletter 5/2020)
3. Designs
Likely Changes to Designs Legislation Announced
Following the earlier reported call for feedback on implementing the ACIP recommendations for the Australian designs system, IP Australia has now reported back on which recommendations it seeks to implement and plans to release an exposure draft in the second half of 2020.
Notably, IP Australia considers that at the present time there is not a sufficiently strong case to allow for the registration of either partial designs or virtual designs. While significant trading partners of Australia allow for such designs, the benefits of increased harmonisation are considered to be outweighed by the extra complexity it would create for other businesses in determining whether they have freedom to operate or can challenge their validity. Further consultation and evidence will be sought on these options.
IP Australia seeks to implement the recommendation to revise section 19(4) so as to clarify that the standard of the informed user is determined in a way that is consistent with the approach taken in the 2013 Federal Court case Multisteps Pty Ltd v Source & Sell Pty Ltd. However, it also considers there is insufficient mandate to revise subsection 19(2) to clarify how the listed factors are weighed or assessed, and that the filing of a statement of newness and distinctiveness should remain voluntary.
IP Australia agrees with the majority of submitters that an automatic grace period of 12 months from the priority date should be introduced with a prior use defence based around section 119 of the Patents Act 1990.
IP Australia also backs removing the requirement to request registration of a design, with registration instead occurring automatically 6-months after the filing date, and that publication would no longer occur at the registration stage, along with clarifying that a design cannot be infringed between filing and registration.
IP Australia agrees that the formal requirements in the Designs Regulations 2004 should be moved to a non-legislative instrument to provide greater flexibility in modifying them in the future.
IP Australia considers that substituting ‘registered’ with ‘uncertified’ would not necessarily resolve confusion with the terminology relating to the different stages of protection and notes that the confusion stems from registration occurring without examination.
Other ACIP recommendations that will receive further consideration are:
- Allowing Australian applicants to claim convention priority from an Australian application
- Allowing a court to refuse to revoke a design registration
- Allowing revocation of a design registration on the basis of fraud during certification
- Allowing exclusive licensees to commence court proceedings
- Aligning the grace period for renewal deadlines with other IP rights
4. Trade Marks
Willfulness Not Required for Infringement Account of Profits Award
In 18-1233 Romag Fasteners Inc v Fossil Group Inc the Supreme Court resolved a split in practice amongst Circuit Courts by clarifying that a finding of willfulness is not required in order for an account of profits award to be made for trade mark infringement.
Fossil designs, markets and distributes various fashion items, including handbags. It entered into a licence agreement with Romag, who manufacture magnetic fasteners, for the use of those fasteners in handbags and other goods. However, Romag eventually discovered that the factories in China that manufactured Fossil’s handbags were using counterfeit Romag fasteners. In a Second Circuit District Court Romag was successful in establishing infringement on the basis of false or misleading use of a trade mark, but the District Court declined to award an account of profits on the basis that it had not been established that Fossil willfully allowed the use of the counterfeit Romag fasteners.
The Supreme Court noted that subject to the mentioned exceptions §1117 of the Trade Marks Act, which concerns the recovery of profits, damages and costs, only requires a finding of willfulness for violation of a trade mark owner’s rights by way of dilution (§1125(c)), but not for false or misleading use of trade marks (§1125(a)).
(a) When a violation of any right of the registrant of a mark registered in the Patent and Trademark Office, a violation under section 1125(a) or (d) of this title or a willful violation under section 1125(c) of this title, shall have been established in any civil action arising under this Act, the plaintiff shall be entitled, subject to the provisions of sections 1111 and 1114 and subject to the principles of equity, to recover (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.
The Supreme Court further noted its general reluctance to read into the statute language that is not there, and particularly not to do so when the language in question is, as is the case with §1117(a), mentioned elsewhere in the same provision. Fossil, though, argued that the restriction on awarding account of profits could be found in §1117(a) being subject to the principles of equity, given that equity courts historically required a showing of willfulness before authorizing a profits remedy in trade mark disputes.
However, the Supreme Court noted that the standard legal definition of “principle” is a fundamental truth or doctrine, as of law; a comprehensive rule or doctrine which furnishes a basis or origin for others. It further noted that legal treatises portray “principles of equity” generally as containing trans-substantive guidance on broad and fundamental questions about matters like parties, modes of proof, defences, and remedies, from which they considered it unlikely that Congress meant “principles of equity” to lead to the application of a narrow rule about a profits remedy within trade mark law.
Even so, on the assumption that the reference to principles of equity in §1117(a) can allow for a restriction on awarding account of profits, the Supreme Court further noted that the (mainly historical) case law on the relationship between mens rea and profits awards gave no consistent application of such a restriction. The Supreme Court noted that in cases prior to the current Trade Marks Act mens rea was as an important consideration in awarding profits on the basis of the trans-substantive principle that a defendant’s mental state is relevant to assigning an appropriate remedy. Further, that principle is the basis of several provisions in the current Trade Marks Act and remains relevant in equity practice. Nonetheless, the Supreme Court found that the principle does not create an inflexible precondition to the recovery of profits. As such, the majority of the Supreme Court held that willfulness is not an essential precondition to allowing an account of profits for false or misleading use of trade marks, and that legislative change would be required were it to be so.
In a generally concurring opinion one of the Judges stated that while willfulness is not an essential precondition to allowing an account of profits, nor should an award of profits be made for innocent or good-faith trade mark infringement as that would not be consistent with the principles of equity referenced in §1117(a). While still a relevant factor for consideration, willfulness encompasses behaviours ranging from fraudulent and knowing to reckless and indifferent and should be exercised consistently with longstanding equitable principles that seek to deprive only wrongdoers of their gains from misconduct.
The case was remanded to the District Court who will need to consider whether Fossil’s inaction in guarding against the use of counterfeit versions of Romag’s magnetic fasteners is sufficient to allow Romag to obtain an account of profits.