Pipers Bulletin 2020-10
China’s Revised Patent Law Passed
On 17th October 2020 the Standing Committee of China’s 13th National People’s Congress (NPC) approved the Draft Amendments to China’s patent law. The amendments will take effect from 1st June 2021.
The passing of the amendments follows the NPC seeking public feedback on draft amendments as previously briefed. The changes of most interest to foreign applicants are:
- Allowing damages to be multiply increased up to 5 times the determined actual amount in the case of wilful infringement, in addition to increasing the maximum statutory damages available;
- Reducing the burden of proof by allowing the People’s Court to order the alleged infringer to provide relevant accounts and associated information;
- Increasing the period in which a copy of the priority document needs to be supplied from 3-months after filing to 16-months from the priority date;
- Supplementing the exceptions to novelty defeating disclosures with a 6-month grace period for disclosures made for public interest purposes during a national emergency or extraordinary situation;
- Allowing for the possibility of patent term extensions on the basis of unreasonable delays in prosecution where the patent only achieves grant more than 4-years after filing and 3-years after requesting examination;
- Allowing for the possibility of patent term extension on the basis of obtaining regulatory approval for pharmaceuticals, with the maximum extension being the lesser of an extra 5-years or 14-years from market entry;
- Increasing the Statute of Limitations period for bringing a lawsuit from 2-years to 3-years from when the patentee knew or should have known of the infringement and the infringer;
- Introducing an open licence system, whereby if the patentee declares that their patent can be licenced by anyone the SIPO reduces or eliminates renewal fees. (New Zealand had similar ‘licences of right’ provisions under the Patents Act 1953, but it is not provided for under the Patents Act 2013;
- Increasing the term for designs from 10-years from the filing date to 15-years from the filing date – it is notable that this would satisfy a key requirement for China to join the Hague Agreement;
- Allowing partial designs – which are already allowed for in major jurisdictions such as the EU, US, UK, Canada, Singapore, Japan and South Korea.
- Trade Marks
Supreme Court Decision Strongly Encourages Searching Before Filing
In International Consolidated Business Pty Ltd v SC Johnson & Sons Ltd 2020 NZSC 110 the Supreme Court partially overturned the Court of Appeal judgment, but still upheld the Court of Appeal’s conclusion that SC Johnson’s mark can proceed to registration.
Three-days before applying to revoke International Consolidated’s ZIPLOC registration for plastic bags and cling wrap on the basis of non-use SC Johnson applied to register ZIPLOC for essentially the same goods on 19th April 2013. The ensuing litigation between the parties has reached the Supreme Court via a series of differing decisions – see here for more background. A critical element of the ensuing litigation was the Assistant Commissioner’s decision to revoke International Consolidated’s registration with effect from 22nd April 2013. Although SC Johnson’s revocation application included a non-specific invitation to revoke the registration from a date earlier than the revocation application date, as allowed under section 68(2)(b), the Assistant Commissioner only addressed that issue in a subsequent decision in which International Consolidated opposed SC Johnson’s application. In that subsequent decision the Assistant Commissioner held that in order to revoke a registration from a date earlier than the revocation application date the onus is on an applicant for back-dated revocation to request revocation from a specific date. That finding seems unduly harsh given that under section 68(2)(b) the Commissioner (or the Court) can revoke from an earlier date if satisfied that the grounds for revocation existed at an earlier date. The asserted justification for not exercising that inherent discretion was that the owner may have been able to prove use from an earlier date. However, given that the provision was effectively pled, the owner was on notice to additionally provide earlier evidence of use and knew that the date of SC Johnson’s application would be a relevant earlier date. Instead, the Assistant Commissioner held that the short period between the trade mark application and revocation application dates qualified as a special circumstance that allowed the application to proceed to registration.
Given that background, the key issues between the parties was whether SC Johnson’s application could proceed to registration given it was applied for when International Consolidated was still the owner of the ZIPLOC mark and whether special circumstances allow such registration. The Court of Appeal held that the date of revocation has no bearing on the date that an identical application can be filed in the name of another party. It noted that when the Trade Marks Act 2002 was being formulated and introduced there was no evidence that it was the intention of the legislature to prohibit the long-established practice of filing applications for registration in anticipation of and conditional upon a successful application for removal for non-use. As such, where prior use is not being relied upon, it is the date of being entered on the register (registered) that is important for determining the right to ownership, not the date of application. In arriving at that conclusion the Court of Appeal rejected the proposition, adopted in cases before both the UK Trade Mark Registry and the Singapore Court of Appeal, that an application for revocation must have an effective date prior to the date of an application for registration of a conflicting mark in order for the application for registration to proceed to registration.
The Supreme Court noted that the revocation provisions under the Trade Marks Act 2002 differed from those under the Trade Marks Act 1953 in that revocation took effect from the date of the revocation application (or earlier), whereas under the 1953 Act revocation took effect from the revocation decision date. The Supreme Court held that this difference does not unsettle the Court of Appeal’s holding that the state of the register is to be assessed as at the date of entry onto the register not the date of application, but differed from the Court of Appeal in holding that the date of application still has relevance.
Agreeing with the UK Trade Mark Registry and the Singapore Court of Appeal cases, the Supreme Court noted that a registered trade mark remains enforceable until the date at which it ceases to have effect and so the date of application is still of relevance since registration takes effect from the date of the application for registration. Hence, on the facts, there would in effect be two identical marks on the register at the same time in the names of different proprietors – which is contrary to section 25(1), unless the overriding provisions of section 26 apply. In order to avoid the effect of section 25(1) without the assistance of section 26 the new applicant can either file the non-use application before filing their own application or have the non-use application back-dated to a date prior to their application. The Supreme Court acknowledged that many trade mark applicants do not realise there is a prior relevant mark until it is cited against their mark, but considered that the searching facilities should be utilised prior to filing to reduce that risk.
However, while International Consolidated’s mark still had effect when SC Johnson’s mark was filed, it was not able to prevent registration of SC Johnson’s mark on account of the unchallenged finding that special circumstances applied. In the absence of qualifying prior use, the mere fact of registration is insufficient to prevent such subsequent registration, since if it could section 26 would have no application. The Supreme Court also noted that holding otherwise would make ineffective provisions such as sections 93, which provide a defence to infringement where an identical or similar registered trade mark is used, or section 96 which allows a continuously prior used identical or similar unregistered mark to be registered or used without infringing.
Regulatory Ban on Product Held Insufficient Basis for Non-Use of Trade Mark
In InterAg v Bayer Intellectual Property GmbH 2020 NZIPOTM 21 the Assistant Commissioner revoked a trade mark after finding that a ban on the use of a product did not constitute special circumstances sufficient for justifying the non-use of a registered trade mark that was used in relation to a product that contained the banned product.
InterAg have two registrations for CIDIROL in class 5, the first covering pharmaceuticals and the second covering veterinary products including fertility enhancers for animals. Both parties agree that there has been no use of the CIDIROL trade mark since 2007, when the New Zealand Food Safety Authority introduced a ban on oestrogen products for animals producing food intended for human consumption in response to an EU Directive that included provisions that banned the importation of such food products. InterAg quickly substituted another hormone for use in it controlled internal drug release (CIDR) product, but decided not to use the same trade mark due to concerns over consumer confusion or reluctance
Bayer commenced the non-use revocation application after the CIDIROL registrations were cited against its application for CIDEROL in relation to veterinary preparations. InterAg sought to retain its registration by relying on subsection 66(2) of the Trade Marks Act 2002, which provides that a trade mark may not be revoked for its non-use if its non-use is due to special circumstances that are outside the control of the owner.
Both parties agree that the ban on oestrogen products for animals producing food intended for human consumption is outside the control of InterAg. However, Bayer argued that it is nonetheless not a special circumstance on the bases that: regulatory intervention is part of the veterinary environment; the ban does not extend to animals that do not produce food intended for human consumption; InterAg’s decision not to use the same trade mark for the substituted formulation was voluntary; fertility enhancers are specialized products that require input from veterinarians and so confusion is unlikely. InterAg argued that: it had not abandoned the mark and would resume use of it if the ban is lifted; the ban is a special circumstance as it is not usual or ordinary and is in line with Article 19 of the TRIPs Agreement which recognises import restrictions or other government requirements as a valid reason for non-use; and that there are business and public interest reasons for not using the same trade mark for its substitute product.
The Assistant Commissioner noted from a review of New Zealand precedential cases on subsection 66(2) that the existence of special circumstances turns on the particular facts of each case. It was further noted that the zone of monopoly can be significant and that registration should rarely be maintained in the absence of use and that it is only in sufficiently special cases that justice requires departing from the usual rule. It was noted from the Supreme Court case Crocodile International Pte Ltd v Lacoste  NZSC 14 that the traditional justifications for trade mark protection diminish in the absence of use and that the Supreme Court endorsed the following statement by the Judge in the UK case Laboratoire de la Mer Trade Marks  FSR 51 (Ch) at [19(a)]:
There is an obvious strong public interest in unused trade marks not being retained on the registers of national trade mark offices. They simply clog up the register and constitute a pointless hazard or obstacle for later traders who are trying actually to trade with the same or similar marks. They are abandoned vessels in the shipping lanes of trade.
The Assistant Commissioner was not swayed by InterAg’s appeal to public interest in defence of its marks, holding that there is no public interest in protecting unused marks on a speculative assessment of future confusion. Regarding InterAg’s appeal to Article 19 of the TRIPs Agreement the Assistant Commissioner considered that it only applied to delay or interruption, whereas the ban effectively has a permanent effect.
The Assistant Commissioner noted that at the level of dictionary definition that the ban qualifies as special as it is out of the ordinary, peculiar or abnormal. However, given the policy considerations, the Assistant Commissioner held that dictionary definitions are not adequate for finding the appropriate threshold for ‘special’ in the context of the non-use provisions of the trade mark legislation.
The Assistant Commissioner noted that there is no realistic possibility of the ban being lifted, but considered that the ban is not a sufficient cause for the non-use of the marks. While it decided not to do so, InterAg had the option of continuing to use the mark for its substitute product, and allay its concerns about consumer confusion by appropriately educating the relevant public. The onus was on InterAg to substantiate on the balance of probabilities that consumer confusion is the on-going basis for its non-use, but there was a lack of evidence in this regard. It was noted that the product is specialized in nature and its purchase is not made on impulse but rather is generally made in consultation with a veterinarian, and was not sold individually as it was only available as a component of the CIDR device. As such, the Assistant Commissioner found that consumer confusion would be unlikely and that by the earliest point in the non-use period asserted by Bayer could not provide a justifiable basis for the non-use.
Time Waits for No Man … or CAT
In Tigercat International Inc v Caterpillar Inc 2020 NZIPOTM 18 the Assistant Commissioner denied Caterpillar’s request to halt a second proceeding involving an identical mark covering the same and some additional class 7 goods primarily due to the potential relevance of their different filing dates and the consequent absence of issue estoppel.
Both parties design and manufacture heavy machinery and both have continuously used their marks thereon in New Zealand for significant periods of time. Tigercat filed two applications for TIGERCAT in class 7, the first in October 2015 and the second, for an expanded range of forestry machines, in June 2017 – being after the first application had been opposed by Caterpillar. Caterpillar subsequently also opposed the second application, with both oppositions being on the basis of Caterpillar’s use of and registrations for CAT and device marks in which CAT is a significant or predominant feature.
In March 2018 Tigercat was allowed to amend its first counterstatement to include the plea of honest concurrent use, which then meant that its counterstatements in both oppositions were the same. In April 2018 both parties jointly applied to halt the second proceeding for 6-months to save costs on account of the counterstatements being identical, and IPONZ granted that request. At the end of that 6-month period the first proceeding had not been concluded, yet only Caterpillar sought to further extend the halt to the second proceeding. IPONZ ultimately declined the request on the basis that each proceeding must be considered and determined on its own merit.
Caterpillar sought a hearing on the issue and in addition to arguing that the duplication of proceedings would be a waste of resources and not in the public interest, also claimed that at the conclusion of the first proceedings the second proceeding will be estopped on the basis of issue estoppel. Tigercat argued that the later filing date and the widened specification in the second application meant that the oppositions are materially different and so the proceedings are not duplicative and the first proceeding does not create issue estoppel for the second proceeding.
The Assistant Commissioner agreed with Tigercat, finding that the different filing dates means that the evidence (regarding honest concurrent use, reputation and third party use of CAT trade marks) needs to be directed to different time periods and that the relevance of such evidence is best assessed in the substantive opposition. In line with that finding of lack of identity of issues, the Assistant Commissioner also agreed that the first proceedings will not issue estop the second proceedings.