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02

OCT

2021

Pipers Bulletin 2021-9

Contents Patents, Plant Variety Rights, Designs, Trade Marks, Copyright

  1. Patents (Go to Plant Variety Rights or Designs or Trade Marks or Copyright)

PCT

Forthcoming PCT Fee Changes for Australia

Effective from 1st November 2021 the International Filing fees will change for Australia. The table below gives the changes in the equivalent amounts in AUD: (PCT Newsletter; 2021/9)

PCT Intl Filing Fees

Intl Filing Fee

Fee per sheet over 30

PCT-EASY Reduction

(Varies according to electronic format)

Current Fee (AUD)

1,860

21

280 – 420

Fee from 01/11/2021

2,019

23

304 – 455

Effective from 1st November 2021 the Handling fee for an International Examination carried out by IP Australia will change as indicated below. (PCT Newsletter; 2021/9)

IPEA (Currency)

IPEA Handling Fee (Current)

IPEA Handling Fee (1/11/2021)

IP Australia (AUD)

280

304

  1. Plant Variety Rights (Go to Contents or Patents or Designs or Trade Marks or Copyright)

New Zealand

Zespri Prevails Despite Minor Technical Setbacks to Infringement Findings

In Haoyu Gao v Zespri Group Ltd 2021 NZCA 442 the Court of Appeal overall upheld the infringement findings in the trial Judge’s decision, but found that Gao’s assumed authority to licence a Chinese grower did not infringe Zespri’s New Zealand plant variety rights (PVRs).

During the 2000’s Zespri had a commercially successful variety of golden kiwifruit, but by the end of that decade that variety proved to be susceptible to the Psa3 bacteria and resulted in vines for that variety being removed. As a result of research by Zespri to find a Psa3 tolerant variety of golden kiwifruit, Zespri developed what are known as the G3 and G9 varieties, with the G3 variety in particular proving to be commercially successful, and has since been granted PVRs for those varieties in New Zealand, China and other jurisdictions.

Prior to establishing their own orchard in 2013 the appellants ran a kiwifruit contracting business. For their own orchard they obtained licences from Zespri to grow the G3 variety and to sell the produce.

However, by early 2016 Zespri became aware that the G3 and G9 varieties were being grown in China and investigations led Zespri to claim that Gao, his wife Xue and their company Smiling Face Ltd infringed their New Zealand PVRs. Zespri did not allege that the appellants had infringed their Chinese PVRs. The trial Judge held Gao and Smiling Face (a) supplied G3 and G9 to a Mr Shu (and purported to license him to exploit those varieties throughout the whole of China), (b) entered into a joint venture to exploit and sell G3 and G9 in China with a Mr Yu (including planting a 6 ha “demonstration park” containing G3 plantings supplied by Gao), and (c) offered to sell G3 to a Mr Li, while also finding that (d) Mr Gao and Ms Xue breached the terms of their G3 Licence Agreements with Zespri. The trial Judge determined the evidence established that the varieties were grown in China on several sites totalling 174.2 hectares and assessed damages on a notional licence fee basis.

The appellant’s most substantive point on appeal was that the trial Judge had erred in applying the PVR Act extraterritorially. The trial Judge held that the offers to sell and the execution of the purported licence agreement along with the preparations for the export of the G3 and G9 budwood all occurred in New Zealand. The trial Judge found that Gao’s conduct within New Zealand diminished the value of Zespri’s exclusive rights within New Zealand.

On appeal it was common ground between the parties that Zespri’s exclusive rights under its New Zealand PVRs does not include the exclusive right to export those varieties as the right to export is not part of a grantee’s exclusive rights. This stems from New Zealand only being a member of UPOV 78 rather than UPOV 91, which gives grantees a broader range of rights. As recently discussed New Zealand has introduced a Bill that is intended to replace the current PVR Act and which will implement UPOV91 to the fullest extent possible while giving meaningful effect to the Treaty of Waitangi.

The Court of Appeal noted that the presumptive position at common law is that a statute has territorial-only effect unless extraterritorial reach is provided for expressly or by necessary implication. The Court of Appeal held that the text and context of the PVR Act points to it having a territorial-only reach. Consequently the Court of Appeal held that the trial Judge erred in holding that the execution of the purported licence agreement infringed Zespri’s New Zealand PVRs, as that agreement only purported to authorise propagation of the varieties in China. The Court of Appeal did not rule out a New Zealand Court having jurisdiction if Zespri had alleged infringement of its Chinese PVRs, but in the absence of such an allegation it could not do so.

Nonetheless, the Court of Appeal upheld the trial Judge’s findings of infringement on account of offering to sell and making preparations for export of the budwood. However, the Court of Appeal found that the trial Judge had fallen into error when determining the total area for which stock had been supplied and so assessed damages on a notional licence fee basis for 141.3 hectares.

  1. Designs (Go to Contents or Patents or Plant Variety Rights or Trade Marks or Copyright)

Australia

AU Designs Amendment Bill Enacted with Split Commencement

The Australian Designs Amendment (Advisory Council on Intellectual Property Response) Act 2021 was assented to on 10th September 2021 and was registered on 16th September 2021.

As previously discussed the associated Bill was read a first time in late 2020 following the adoption of the majority of the recommendations in the report by the Advisory Council on Intellectual Property.

For now the Amendment Act only changes the Designs Act 2003 with the following two amendments, which took effect and only apply to applications filed from 11th September 2021:

  • replacing of the standard of the informed user with the standard of the familiar person;
  • enabling a registered design to be revoked on account of the use of fraud or false suggestion when certifying the design in addition to on account of such use to obtain registration.

The rest of the Amendment Act will only change the Designs Act 2003 from the sooner of either (i) a single day fixed by proclamation, or (ii) 6-months and 1-day from the assent date of the Amendment Act – hence, 10th March 2022 by the latest.

Those other provisions will be:

  • replacing the current restricted 6-month grace period with a general 12-month grace period for relevant disclosures by the applicant or their predecessor or the creator of the design and for such disclosures by another entity who derived or obtained the disclosed design from those first mentioned entities;
  • introducing a prior use exemption from infringement where another entity has prior used or taken definite steps towards using an otherwise infringing design and who did not derive or obtain the design from the applicant or their predecessor or the creator of the design;
  • allowing publication to be deferred for up to 6-months by not selecting the registration option when filing;
  • extending the innocent infringer relief so that it is available for otherwise infringing acts until the sooner of either registration or when the applicant notifies the innocent infringer. To be eligible for relief, an infringer has the onus of showing they did not know and could not reasonably be expected to know of the application disclosing the infringed design;
  • allow exclusive licensees of a registered design to commence infringement actions against third parties in respect of infringing conduct subsequent to the commencement of the amendments;
  • repealing the provisions which sets out the form that documents must take to be accepted for filing or publication, and instead allowing the Commissioner of Designs to issue non-legislative instruments to determine formality requirements;
  • clarifying that a design is still active for infringement purposes provided it is renewed before the end of the renewal grace period, but that if it is not so renewed it ceases from the renewal due date.

  1. Trade Marks (Go to Contents or Patents or Plant Variety Rights or Designs or Copyright)

Madrid Protocol

United Arab Emirates Joining Madrid Protocol

On 28th September 2021 the United Arab Emirates (AE) deposited its instrument of accession to the Madrid Protocol. The deposit makes the United Arab Emirates the 109th member of the Madrid System, which now covers 125 countries. The Protocol will enter into force for the United Arab Emirates on 28th December 2021 and they can be entered as a subsequent designation from that date.

New Zealand

High Bar Set for Proving Ownership of Conjunction of Individually Owned Marks

In Goldstone Homes Ltd v Goldstone Aluminium Ltd 2021 NZIPOTM 23 a registration was found to be invalid on account of bad faith, but the pleading of ‘not the owner’ was rejected even though the registration was merely a simple arrangement of the invalidity applicant’s unregistered marks.

In February 2018 Goldstone Homes applied to register the first shown device mark, consisting of a golden stylised GS device above the word GOLDSTONE all against a black background in classes 6, 19, 37, and it was registered 6-months later.

On 3rd September 2020 Goldstone Aluminium applied for registration of the word mark GOLDSTONE in classes 6, 35, 37. A week later they filed an application for a declaration of invalidity against the Goldstone Homes registration and in November 2020 they applied for registration of the second shown device mark, consisting of a golden stylised GS device against a black background. Both marks have Goldstone Home’s registration cited against them.

Goldstone Aluminium pleaded invalidity on three grounds: (i) section 17(1)(a) Use likely to deceive or cause confusion; (ii) section 17(2) Bad faith; and (iii) section 32(1) Not the owner.

Goldstone Aluminium provided evidence of genuine use of the word mark from February 2015 and of the golden GS Device mark from February 2016. That evidence detailed separate use of each of those marks on building signage at building sites, as well as use of the golden GS Device mark on signage as a Strategic Partner at a New Zealand Chinese Building Industry Association (NZCIA) event, and on team clothing. Yet, in the absence of pleadings about how many people may have been exposed to the examples of use of each mark, the Assistant Commissioner found that the relatively low threshold of awareness of the marks had not been established. This reluctance to infer the requisite low level of reputation from the evidence seems particularly harsh. All the more so given that three paragraphs later when discussing the bad faith ground the Assistant Commissioner considered when it is acceptable to rely upon inference. At [30] the Assistant Commissioner stated:

While it may sometimes be necessary and proper to rely upon inference, this means a reasonable conclusion drawn as a matter of strict logical deduction from known or assumed facts, which can be distinguished from mere conjecture, or a guess. (footnotes omitted)

This definition of “inference” stems from the Australian case Gurnett v Macquarie Stevedoring Co Pty (1955) 55 SR (NSW) 243, and has been applied by Assistant Commissioner’s since it was applied in the UK Trade Mark Appointed Person decision Target Fixings Ltd v Brutt 0-372-06. In the Australian decision the Judge stated:

The plaintiff … must establish that by evidence from which an inference to that effect may be drawn in his favour as distinct from a mere guess. … A guess is a mere opinion or judgment formed at random and based on slight or uncertain grounds. In contradistinction to such a conjectural opinion, an inference is a reasonable conclusion drawn as a matter of strict logical deduction from known or assumed facts. It must be something which follows from given premises as certainly or probably true, and the mere possibility of truth is not sufficient to justify an inference to that effect.

As outlined above Goldstone Aluminium had been using their word mark and device mark for 3-years and 2-years respectively before Goldstone Homes filed their application, and the Assistant Commissioner accepted that genuine use had been made of those marks. It seems reasonable to infer that such use would have established at least a low-level of reputation. The signage at each building site would have been in place for a considerable duration. The signage at an NZCIA event was likely only seen by people in the trade rather than the general public, but at least evidences active self-promotion. The device mark on team clothing would have been seen by members of the public when team members were off-site such as when shopping. While it would have been preferable if information such as turnover figures had been submitted from which the Assistant Commissioner could ascertain the number of customers who may have purchased goods or services under the marks, it seems reasonable to infer from the evidence that there is at least a low level of reputation. Put another way, to claim that the evidence does not establish a low level of reputation seems more akin to speculating on a possibility than inferring what is probable.

In considering the bad faith ground the Assistant Commissioner noted that when Mr Jiang formed Goldstone Homes in November 2017 he was still the Marketing Manager for Goldstone Aluminium and one of its shareholders. He attended the NZCIA event as the Marketing Manager and wore a polo shirt with the golden GS Device mark. As the sole director and shareholder Mr Jiang’s knowledge of these matters could be imputed to Goldstone Homes. The Assistant Commissioner also noted as a fact that Goldstone Home’s registration combines an exact reproduction of the golden GS Logo with the word mark. Given that there was no evidence that Goldstone Aluminium had relinquished any rights in those marks the Assistant Commissioner found that Goldstone Homes had acted in bad faith when applying to register the mark.

However, when considering the ground of not the owner the Assistant Commissioner applied the Australian Federal Court case Carnival Cruise Lines Inc v Sitmar Cruises Ltd 1994 FCA 936, which held that the marks in question must be the same, or “substantially identical” for a claim to proprietorship. That case used the test for substantial identity developed by the Australian High Court in Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd [1963] HCA 66. That required the Court to have regard to similarities and differences and the importance of these assessed having regard to the essential features of the registered mark and the total impression of resemblance or dissimilarity that emerges from the comparison. This test for substantial similarity was subsequently approved in New Zealand by the Court of Appeal in North Face Apparel Corporation v Sanyang Industry Co Ltd 2014 NZCA 398, which concerned North Face’s opposition to Sanyang’s sideways S device mark on the basis of its unregistered S device mark. At [47] the Court of Appeal noted North Face’s argument that where the marks are not completely identical, the proper inquiry is whether it is apparent or recognisable that the property has been taken. At [51] the Court of Appeal rejected that argument stating that:

In an opposition based on s 32 of the Act, the enquiry is not whether Sanyang’s mark apparently took, included, incorporated or absorbed North Face’s S device mark. It is simply whether Sanyang owns its mark, by which we mean an identical mark.

In rejecting the claim that the marks are substantially identical the Court of Appeal endorsed the trial Judge’s finding that the marks are visually and conceptually distinct and further stated:

We add on the substantially identical test that in our judgment the three dimensional and metallic features of Sanyang’s mark are reminiscent of the automobile industry. By contrast North Face’s S device mark represents a mountain peak and its two dimensional, simpler appearance is reminiscent of mountain conditions for which its products are suited.

While noting in footnote 64 that recent Australian Full Court decisions may have broadened the Shell v Esso substantially identical test, the Assistant Commissioner considered bound by the Court of Appeal’s application of that test. The Assistant Commissioner considered each of Goldstone Aluminium’s marks separately and found that each of them lacked a significant element within Goldstone Home’s mark. However, it is not apparent that the Court of Appeal would have rejected the substantially identical claim in the case at hand. In the North Face case there were distinguishing features. Yet, in the case at hand the opposed mark is composed of a simple arrangement of Goldstone Aluminium’s unregistered marks. As the owner of each of these marks Goldstone Aluminium should be free to use them in conjunction. The Assistant Commissioner appears to be remiss in finding that Goldstone Aluminium is the owner of each of its marks individually but not in the simple conjoined arrangement of the marks.

  1. Copyright (Go to Contents or Patents or Plant Variety Rights or Designs or Trade Marks)

New Zealand

Art Imitates Life - Copyright Works Created During Relationship are Relationship Property

In Palmer v Alalaakkola [2021] NZHC 2330 the Judge overturned a Family Court decision by holding that the copyright in paintings produced during a 20-year marriage by one of the parties thereto is relationship property under the Property (Relationships) Act 1976.

Ms Alalaakkola produced a number of original paintings during the marriage. Following separation Mr Palmer entered the former family home and removed a substantial number of the paintings. Ms Alalaakkola agreed that Mr Palmer could keep (or sell) the physical paintings, but objected to Mr Palmer also having the copyright in them.

The Family Court Judge held that copyright in the artworks was Ms Alalaakkola’s separate property as being the creator of the works she alone was the author of them, and as the owner of the copyright has the exclusive right to reproduce them. Further, Mr Palmer’s purchase of the raw materials for the paintings did not qualify him as a joint-author. The Family Court Judge found that in theory copyright falls within the ambit of property that is subject to the Property (Relationships) Act. However, while the paintings were created during the marriage, the Judge found that the creative skill necessary for their creation preceded the marriage and remains Ms Alalaakkola’s separate property. From this the Judge held that the physical paintings are relationship property, but the copyright solely belongs to Ms Alalaakkola.

If wrong in that respect the Family Court Judge noted that section 113(1)(c) of the Copyright Act 1994 allows copyright to be transferred by operation of law, but stated that he would have declined to exercise the Court’s discretion to do so for the following reasons:

  • the sharing of copyright would create on-going copyright exploitation accountability obligations on each party which would be inconsistent with the clean break principle under the Property (Relationships) Act;
  • if Ms Alalaakkola cannot control the number of prints that Mr Palmer produces, then that could adversely affect the prices she can charge as she would effectively be in competition with her own works;
  • any issues that arise from the exploitation of the copyright could bring the parties into conflict which would be contrary to the clean break principle under the Property (Relationships) Act.

After noting that New Zealand courts do not seem to have previously considered the interaction of the Copyright Act and the Property (Relationships) Act and that each Act allocates property differently, the Judge outlined why the Family Court Judge fell into error in solely allocating the copyright to Ms Alalaakkola.

After finding that copyright falls within the scope of property within the Property (Relationships) Act, the High Court Judge found there to be no basis within the Copyright Act for finding that property rights allocated thereunder are beyond the reach of the Property (Relationships) Act. This finding was considered in-keeping with several other rights that historically have been recognised as relationship property. Consequently, copyright works created during the marriage are subject to the Property (Relationships) Act. While the skill that enabled the production of the works may have preceded the marriage, it is when the work was created that matters as copyright protects the expression not the skill or idea behind it. The possession of a skill prior to a relationship, whether or not that skill can create a copyright work (or other intangible asset), does not make the use of that skill during the relationship exempt from the Property (Relationships) Act.

The equal sharing presumption of that Act may only be displaced in extraordinary circumstances that make equal sharing repugnant to justice. The Judge considered equal sharing would not be repugnant to justice given the length of their marriage and that the possibility of an artist competing with their own works is a consequence that does not justify declining to transfer copyright. The Judge held that the equal sharing presumption of the Act means the paintings created during the relationship are to be shared equally by value rather than quantity. If the parties could not agree on a valuation, then independent expert opinion would be required. In referring the matter back to the Family Court the Judge noted that the Family Court has the discretion to vest some, none or all of the works in one party, with an adjustment to the division of the proceeds of sale of the family home in order to obtain overall equality of division.

About the Firm

Pipers IP
Address 1st Floor, Imagetext House, 3 Owens Road, Epsom, Auckland 1023, New Zealand
Tel 64-9-919 9450
Fax 64-9-919 9454
Email patents@piperpat.com
Link www.piperpat.com

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