Full Court Finds ‘In Prescribed Circumstances’ Only Allows Narrow Construction
In Fuchs Lubricants (Australasia) Pty Ltd v Quaker Chemical (Australasia) Pty Ltd 2021 FCAFC 65 the Full Court of the Federal Court (FCAFC) has allowed Fuchs’ appeal finding that Quaker’s standard and innovation patents were invalid on account of prior public disclosure.
Quaker had obtained a standard patent and a divisional innovation patent for methods of detecting high pressure fluid injection injuries. Such injuries were known to occur, particularly in mining operations, when fine jets of high pressure hydraulic fluid escaped from machinery at velocities high enough to pierce skin. The method patents involved specific sequences of steps, including the addition of a dye in the high pressure fluid which fluoresces when exposed to UV or blue light thereby allowing emitted fluid to be visible.
Quaker asserted contributory infringement by Fuchs for supplying or offering to supply its high pressure fluid products with a fluorescing dye additive, where the dye was not acquired from Quaker. It was accepted that there is an implied licence for dye additive sourced from Quaker to be added to Fuchs and other third party high pressure fluids. Fuchs counterclaimed that the patents are invalid on various grounds, including lack of novelty.
The trial Judge held that none of the invalidity attacks applied and that Fuchs is liable as a contributory infringer. Fuchs appeals that decision only in respect of the trial Judge’s finding that the public disclosures made before the priority date all fall within the grace period provision allowing for reasonable trials in public. The disclosures in question involved oral disclosure of the key concepts of the inventions along with some demonstrations showing that the dye could be detected under pig skin to key mine staff. These disclosures were considered necessary in order to get approval to conduct a reasonable trial using mining machinery. While the public disclosures did not amount to working of the invention, the trial Judge held that they fell within the ambit of the grace period as they were necessary precursors to enabling reasonable trials to take place in public.
The priority date of both patents was 2nd September 2011, meaning that the 12-month grace period for public disclosures due to trials that were reasonably necessary to be conducted in public extended back to 2nd September 2010. These dates also mean that the pre-Raising the Bar legislation applies.
Fuchs argued that the Patent Regulations are quite precise in specifying the prescribed circumstances in which the grace periods apply, and that the trial Judge erred by finding that preparatory steps fell within the reasonable trial grace period provisions. Fuchs argued that section 24(1)(a) and in regulation 2.2(2) do not permit of an approach whereby anything at all done “for the purposes of” or “as a necessary precursor” or “directed towards” the prescribed circumstances are “in the prescribed circumstances”. With specific regard to in regulation 2.2(2)(d) providing a grace period the reasonable trials that were reasonably necessary to be conducted in public Fuchs argued that the necessity criterion had to be met but was not for the disclosures in question.
Quaker argued that Fuchs construction gave too much weight to the regulations to the extent that it changes the legislative effect of the relevant primary legislation – being section 24 and its ‘any information made publicly available’ criterion. Quaker argued that properly understood the grace period provision is not limited to particular uses of the invention in trials, but extends to actions undertaken in order to have the trials conducted.
The FCAFC rejected Quaker’s argument and held that the trial Judge had been too expansive in construing the provisions. It held that the ‘any information made publicly available’ criterion in section 24 needs to be understood relative to how the information was made publicly available as required by the ‘in the prescribed circumstances’ criterion of that section. The FCAFC found that the prescribed circumstances are limited to and must describe a publication or use of the invention. It is only once it has been identified that a working in public satisfies the purpose and reasonable necessity requirements that the phrase “through any publication or use of the invention in the prescribed circumstances” can be meaningfully applied. As such they agreed with Fuchs’ contention that section 24(1)(a) is not so broad as to permit of an approach whereby anything at all done “for the purposes of” or “as a necessary precursor” or “directed towards” the prescribed circumstances are “in the prescribed circumstances”.
The FCAFC were prepared to accept that the concept of working in public can be broader than actually carrying out or performing the method, and could include for example written or oral communications that have some direct or close connection to the physical working. However, they found that at least two of the disclosures would not qualify as working in public as they were too distant and did not need to have been conducted in public settings, and so held the patents to be invalid.
2. Plant Variety Rights
Plant Variety Rights Bill Introduced to Parliament
Following on from the September 2018 Issues Paper, the July 2019 Options Paper and the August 2020 Outstanding Issues Paper, the Government has now introduced the Plant Variety Rights Bill 2021 to Parliament with the expectation of replacing the Plant Variety Rights Act 1987.
A new Act is effectively required by the need to make the PVR legislative regime compliant with the Treaty of Waitangi and to ‘give effect’ to the 1991 version of the UPOV Convention (UPOV 91) so that New Zealand can meet its obligations under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The Bill attempts to give meaningful effect to the Treaty of Waitangi by recognising kaitiaki interests – in this context being Māori guardianship, protector or caretaker roles in relation to taonga species, being indigenous plants and non-indigenous plant species that came on the migrating waka, which are of special cultural significance and importance to Māori. The Bill provides for the establishment of a Māori Plant Varieties Committee. The Committee will consider all applications for a new variety, where that variety is wholly or partly derived from a taonga species and where the material from which that variety was derived was sourced in New Zealand. They will assess the effect of the grant of a PVR on kaitiaki relationships and, in contrast to the Māori Advisory Committees under the Trade Marks Act 2002 and the Patents Act 2013, will have the power to make decisions on whether the PVR application should proceed which are binding on the Commissioner. The Committee will also have advisory roles, providing non-binding advice to the Commissioner on: (1) whether use or approval of a proposed denomination for a plant variety is likely to be offensive to Māori; and (2) information relevant to the application of the novel, distinct, uniform, stable, and denomination criteria.
A kaitiaki relationship with a plant species can be claimed to exist in relation to a person, iwi, hapu or group. A PVR application cannot be opposed on the basis of an adverse effect on a kaitiaki relationship with a plant species. However, after grant any person can allege that the granted PVR is having an adverse effect on a kaitiaki relationship, or that the PVR holder has breached a condition or undertaking designed to mitigate an adverse effect on kaitiaki relationships with the plant species. The Commissioner will refer any such allegation to the Committee. If the Committee finds that the granted PVR is having an adverse effect on a kaitiaki relationship they can require the PVR grant to be nullified. If they find that a condition or undertaking designed to mitigate an adverse effect on kaitiaki relationships with the plant species has been breached by the PVR holder they can require the PVR grant to be cancelled. In both cases the PVR holder can retain the PVR grant if they make a further undertaking that is found acceptable by the Committee.
Recognition of kaitiaki relationships with plant species is outside the UPOV 91 framework and so prevents New Zealand from ratifying that convention. This was acknowledged during the negotiations that led to the CPTPP and New Zealand was exempted from the requirement to be a member of UPOV 91 provided they gave effect to UPOV 91 to the fullest extent possible while giving recognition to kaitiaki relationships. New Zealand has three-years from the CPTPP entering into force in New Zealand to give effect to UPOV 91, meaning the Bill needs to be enacted by 30th December 2021.
In order to transition from UPOV 78 compliance to being closer to UPOV 91 compliance some notable legislative differences are required. Alga will become eligible for PVR protection. Clause 9 of the Bill defines the term ‘breed’ and will have the effect that PVRs will no longer be obtainable from mere discovery of a plant in the wild. The scope of rights allowed for expands from being based on reproduction for sale to include a wider array of rights around the commercial exploitation of a variety, including the rights to import for non-reproductive purposes, export and authorise stocking of propagating material. Harvested material is also protected, but only if the rights holder has not had a reasonable opportunity to assert their rights in relation to the propagating material from which it is derived.
Protection will also be extended to provide protection to essentially derived varieties (EDVs) and dependent varieties. If the EDV was derived from a variety protected by a PVR or from another EDV of that PVR, then the EDV cannot be commercially exploited without the permission of the PVR holder. The definition of an EDV will likely require further clarification from the Courts as the line between an EDV and a new plant variety could be contentious. EDVs need to be predominantly derived from a variety protected by a PVR or from another EDV of that PVR and retain the essential characteristics that result from the genotype(s) of the variety protected by a PVR and not exhibit any important features that differentiate it while still being clearly distinguishable.
A plant variety qualifies as a dependent variety if either it (1) is not clearly distinguishable from the variety protected by a PVR while being clearly distinguishable from other plant varieties whose existence was common knowledge at the PVR grant date, or (2) cannot be reproduced without the repeated use of the protected plant variety or a dependent variety thereof. Permission of the PVR holder is required in order to exploit a dependent variety.
If a farmer is using lawfully obtained seeds they can save produced seeds for use on their own farm and are free to sell harvested material from that saved seed as long as it is not used for propagation. Regulations will be made that provide exceptions to the farm saved seed rule in relation to some varieties in order to better balance the interests of breeders and farmers.
It is not an infringement of a PVR and permission is not required to exploit a protected plant variety for: private or non-commercial purposes; experimental purposes; or breeding other plant varieties.
The term of protection for woody plants for which a PVR is obtained under the new Act will increase from 23-years to 25-years from the grant date. All other plant varieties will retain the 20-year term of protection.
Where a PVR is applied for under the current Act, but granted after the new Act enters into force the rights attaching to the grant will be those under the Plant Varieties Act 1987.
The Bill provides for certain other matters not directly related to UPOV 91, modernising the PVR regime to include—
- introducing a public interest test for compulsory licences:
- repealing the offence provisions in the PVR Act 1987, as these are adequately covered by other legislation:
- clarifying the infringement provisions and providing remedies consistent with other intellectual property regimes:
- clarifying that all applications for a PVR require a growing trial and empowering the Commissioner to direct the type of growing trial:
- introducing a general right to be heard whenever the Commissioner exercises a discretionary power under this Bill that might adversely affect a person:
- providing that, consistent with other intellectual property policy regimes, appeals against a decision of the Commissioner are to be heard by the High Court:
- clarifying procedural issues relating to the PVR regime, including aligning these with the processes in the Patents Act 2013 where appropriate.
It is intended that provision of the Act will commence in 3 stages—
- the Māori Plant Varieties Committee will be established following Royal assent so that its terms of reference can be finalised and work can commence on guidelines for breeders and kaitiaki:
- the bulk of the provisions will then commence by Order in Council once the new regulations are made:
- the provisions relating to consideration of applications by the committee will commence by Order in Council no less than 1 year (and no more than 2 years) after Royal assent to give breeders sufficient time to understand their new obligations to engage with kaitiaki (where relevant) prior to making their applications.
Launch Date of Eurasian Industrial Designs Announced
From 1st June 2021 it will be possible to apply for a Eurasian Design, with applications able to be made either directly with the Eurasian Patent Office or through one of the member states.
The Eurasian Design right was established in principle on 9th September 2019 within the framework of the Eurasian Patent Convention by way of the Protocol on the Protection of Industrial Designs to the Eurasian Patent Convention. Following subsequent ratifications by five of the eight member states of the Eurasian Patent Convention and the establishment of the regulations and fees the EAPO Administrative Council decided that the Eurasian Design system will commence accepting filings from 1st June 2021.
The five states that have ratified the Protocol are Armenia, Azerbaijan, Kazakhstan, Kyrgyz Republic and the Russian Federation. Eurasian Design rights will initially have effect in these countries through the filing of a single application. When the remaining Eurasian Patent Convention members – Belarus, Tajikistan and Turkmenistan – ratify or accede to the Protocol, Eurasian Design applications filed 3-months or more after their ratification or accession date will have effect in those countries.
Applications need to be filed in Russian and can claim the right of priority in accordance with the Paris Convention. It will have a pre-grant opposition system. Where registration is denied the applicant will have 6-months to convert it into national applications. The initial term will be for five years, and will be renewable in five year increments up to a maximum term of 25 years from the application date. Assignment can only be made in respect of all the member states in which it has effect.
4. Trade Marks
Specialist Market Evidence Principle Not Applicable Under Section 25(1)(b) for Dissimilar Goods
In Guangzhou Baiyunshan Pharmaceutical Holdings Co Ltd v Multi Access Limited 2021 NZIPOTM 8 the Assistant Commissioner confirmed that where goods in a specialist market are found to be dissimilar there is no residual onus on the applicant to establish that deception or confusion is not likely under section 25(1)(b).
Guangzhou’s application for a minimally stylised version of WONGLO – as shown – in classes 5, 30, 32 entered New Zealand via designation from a Madrid Protocol application. Despite Multi Access’s prior registration for WONG LO KAT in classes 5, 30, 32, 33 the application was accepted less than a month after being submitted to IPONZ by WIPO in May 2016. Multi Access then opposed registration of the stylised WONGLO mark on the basis of its ownership of the WONG LO KAT mark as well as registrations for the Chinese character equivalent and a transliteration thereof, which also cover goods in classes 5, 30, 32.
Generally in oppositions the applicant for registration has the initial onus of establishing that none of the grounds prohibiting registration apply. However, an exception to this is the section 17(1)(a) absolute ground for not registering a trade mark, which prohibits registration for a trade mark the use of which would be likely to deceive or confuse. If an opponent raises section 17(1)(a) there is an initial onus on them to establish that they have a reputation in their mark, as without such a reputation there would be no prospect that consumers would be deceived or confused. As recently confirmed by the Court of Appeal in Pharmazen Limited v Anagenix IP Limited 2020 NZCA 306 the purpose underlying section 17(1)(a) is to protect the public from deception or confusion and is determined in relation to actual use rather than the notional use that applies under the section 25(1)(b) relative ground. Consequently, where a business has a New Zealand trade mark registration, but is not currently using the mark or does not provide evidence of use, they cannot rely upon expected future use to argue under section 17(1)(a) that use of the applicant’s mark will be likely to deceive or confuse.
In the case at hand Multi Access had pleaded the absolute ground – 17(1)(a) – and the relative grounds – 25(1)(b) and 25(1)(c). However, while there was a long history of its marks being used in New Zealand, at the Hearing Multi Access withdrew evidence of use as it could not reach a satisfactory agreement on the use of its confidential evidence. Consequently, the Assistant Commissioner was left to establish reputation on the basis of assertions in declarations, which were considered to carry little weight as evidence, and so held that Multi Access had not met the low threshold of establishing reputation for section 17(1)(a) purposes.
In regards to section 25(1)(b) the Assistant Commissioner found that the applicant’s goods in classes 30 and 32 comprised goods that are either the same or similar to the opponents. This was similarly the case for the applicant’s class 5 goods except for some goods which were found to be dissimilar. Given the similarity of the marks, the Assistant Commissioner held the section 25(1)(b) opposition to be successful in relation to the goods that are the same as or similar to those covered by the opponent’s WONG LO KAT registration. Interestingly, if the opponent did not have the WONG LO KAT registration and could only rely upon its Chinese character and transliteration marks, the Assistant Commissioner cast doubt upon section 25(1)(b) being established in respect of those marks. They were considered to be visually different and in respect of the relatively low number of consumers in New Zealand who understand Chinese characters and transliterations they were held to be only phonetically and conceptually similar to a low degree. Given the fair and notional use test under section 25(1)(b) the Assistant Commissioner held it was not appropriate to consider that the opposed mark would be used on goods directed at Chinese consumers in New Zealand.
The Assistant Commissioner then considered whether registration should be allowed in respect of the goods that were found to be dissimilar. All but one of those dissimilar goods were considered to be goods that would be sold in a specialist market. It was noted that various New Zealand Court and Assistant Commissioner decisions have applied a principle established in the UK House of Lords decision GE Trade Mark 1973 RPC 273 regarding goods sold in a specialist market. Namely, for goods sold in a specialist market evidence of persons accustomed to dealing in those goods is essential for establishing the likelihood of deception or confusion. If the applicant does not provide such evidence, then they have been found to not discharge their onus for establishing that none of the grounds prohibiting registration apply. However, the Assistant Commissioner noted that those New Zealand decisions were under section 17(1)(a) of the current Act or the equivalent section of the prior Act. Given that dissimilar goods do not fall within the ambit of section 25(1)(b) the absence of evidence from persons accustomed to dealing in specialist goods does not result in the applicant being found to have not discharged their onus in respect of that provision. Given that the opponent had failed to discharge their onus for meeting the low threshold for establishing reputation for section 17(1)(a) purposes, the applicant was not required to provide evidence from people accustomed to dealing in specialist goods. Similarly, the higher reputation threshold under section 25(1)(c) could not be met. Consequently, the dissimilar goods could proceed to registration.