Intellectual Property «

Keeping Secrets in Times of Weak Law

December 12, 2011

By Tiffany Wong, Oscar O’Bryan and Jake Goldenfein

Keeping anything secret seems like a challenge in today’s radically altered media landscape. Digitisation has abolished the cost of reproduction and networked environments expose information to actors with the capacity to leak, steal or vandalise for whatever purpose motivating them. Law hardly seems to have a role in a space where technological know-how trumps not only the regulation of secrets but also the digital architectures that protect them. But does that mean that law should retreat from regulating information, or rather, is it a time for redoubled analysis of law’s relationship to information and perhaps an open mind when looking at options for reform. Rather than harsher penalties and more vigorous enforcement, do we need more transformative approaches for dealing with the reality of our age of communicative abundance?

This year’s CMCL conference, ‘Keeping Secrets in Times of Weak Law’ answers the call for a critique of law’s role in keeping secrets and the institutions that determine when secrets should remain so.

Jake Goldenfein presented on the different forms of WikiLeaks and how its latest iteration of publishing uncensored and unredacted documents without institutional (mainstream media) oversight may be the only mode of transgression that can fulfil its ideological mission. Dan Hunter, Julian Thomas and Alana Maurushat constituted the Cybersecurity Panel, discussing the relationship between states, secrets and law. The session was chaired by David Lindsey. Philip Williams, David Brennan and Susan McMaster made up the Trade and Commercial Secrecy Panel, chaired by Beth Webster, discussing the economic arguments in the trade off between incentives to produce and incentives to enjoy information. And the Privacy Panel, chaired by Jason Bosland, included Megan Richardson, Michael Rivette, Michael Gawenda and the Honourable Michael Kirby, who discussed Lenah Game Meats – 10 years on, and the possibility of a statutory cause of action for privacy in Australia.

Cybersecurity

Dan Hunter, director of the Institute for Information Law and Policy at New York Law School, gave the Cybersecurity keynote, asking some pertinent questions about secrecy and security in the age of the Internet. In particular, why WikiLeaks was such a lightening rod for criticism and whether ‘control’ is the correct paradigm to inform the policies behind regulating secrecy.

The debate over WikiLeaks set the context for Hunter’s presentation. In asking why WikiLeaks, especially its release of unredacted cables was so derided by the institutions related to the rule of law (journalists, lawyers etc) Hunter critiqued those institutions for being unable to see the reality of today’s communications infrastructure and practices. Instead, Hunter claimed, those institutions rely on an ethic of control that propelled the ratcheting up of copyright laws since the Internet became publicly available 20 years ago, as well as informed the news media’s derision of WikiLeaks publishing without their oversight.

Hunter suggested that WikiLeaks may be a precursor for a change in policy regarding government secrecy and disclosure and asked what modern day information policies and practices should look like given the Internet and technologies like WikiLeaks. Regarding copyright, Hunter claimed control was not what creators sought and regarding secrets, Hunter alluded to substantial evidence suggesting administrators over-protect information in ways that are profoundly undemocratic. Now that we live with the idea of radical transparency as something we cannot really do anything about, Hunter claims we have to craft a policy that gives up on our misguided concerns about control despite the new dangers that may provoke.

Respondent, Julian Thomas, director of The Swinburne Institute for Social Research, discussed the extent to which the Internet has decentralised, diffused or democratised secrecy– and where WikiLeaks fits into this new equilibrium. Thomas claimed that the Internet has made states both less and more able to control information, where networks of freedom and networks of control lay alongside each other. WikiLeaks operates in this new networked society, claims Thomas, according to the model described by William Dutton as the 5^th estate emerging from the network of networks. While sharing some features of the traditional press, the 4^th estate, Thomas claimed this 5^th estate is more than simply a supplemental ‘new’ media but operates in a space, where institutional and amateur expression are side by side, as are networks of freedom and networks of control exist within what Manuel Castells describes as the space of flows (not a space of places) where people find knowledge outside of institutional sources.

Alana Maurashat, director of UNSWS’s Cyberlaw and Policy Centre, discussed the regulation of hacking worldwide, noting her consultancy to the Canadian government to assist in crafting a reasonable policy in the field of ethical hacking. She saw WikiLeaks’ legacy as going beyond subsequent movements like Anonymous and Occupy, but rather depicted WikiLeaks as the leader, or image, of a whole system of e-government and e-revolutions, often coordinated by groups that have been considerably empowered by today’s technological conditions.

Trade and Commercial Secrecy

Beth Webster opened the panel by contextualising the importance of trade secrecy to Australian innovators, referring to the Australian Bureau of Statistics’ most recent innovation survey. This survey highlighted that 40 per cent of Australian businesses were innovation-active during the 12-month reference period and the most popular method of intellectual property (‘IP’) protection by these businesses was a secrecy or confidentiality agreement.

Keynote, Philip Williams (Chairman of Frontier Economics) offered an economist’s perspective on trade secrecy by posing the key economic problem arising from the protection of trade secrets: the trade-off between two incentives — the optimal incentives to produce information and the optimal incentives to enjoy information. Economics has been able to articulate this problem, but has struggled to offer guidance for its resolution.

To illustrate this problem, Williams presented a simple economic model: a person spends a year of pain (‘Period 1’) to enjoy a year of gain (‘Period 2’). The person may justify the pain by producing an asset, such as information, at the end of Period 1. Enjoyment of that information in Period 2 constitutes the gain. The person will only bear the pain in Period 1 if they believe that they will likely enjoy the information in Period 2. Thus the person will likely seek legal or extra-legal protection of the information from appropriation.

Williams noted, however, that the trade secrecy context raised three complications to this model. First, the creation of an asset does not draw a clear distinction between the two periods of activity — investment and enjoyment — since the asset will likely grow in value during Period 1. Secondly, the asset may generate benefits for its creator through trade, whether or not the creation process has completed. Thirdly, if the asset is information (a classic public good) difficulties arise with respect to trade. In particular, a purchaser must know the information to determine its value — a problem also known as Arrow’s fundamental paradox of information.

Williams applied this model to the facts of Maggbury v Hafele (2001) 210 CLR 181 (‘Maggbury’), a High Court case in which the law dealt with the trade-off between the incentives to produce and enjoy an asset. Williams noted the economic inefficiency of restraining the use of information after that information had entered the public domain. He suggested that restitutionary damages would have been a more efficient remedy by allowing Maggbury to recover the benefit of its investment and by allowing the use of publicly available information. The key challenge in calculating the quantum, however, would be to determine the duration of Hafele’s head start, which Hafele gained by first access to the information.

The first commentator, David Brennan, engaged in a fuller discussion of remedies for breach of confidence. He highlighted the remedial uncertainties arising from the equitable jurisdiction of breach of confidence — remedies were at the court’s discretion, and equity provided weak guidance on the assessment of quantum.

In noting these problems with equitable remedies, Brennan argued injunctive relief would serve little purpose, given the defendant’s destruction of confidentiality; an account of profits could involve accounting problems since the significant intermingling of the defendant’s resources with the information; and equitable compensation, calculated on a counterfactual basis, might be dismissed by courts as too imprecise a measure of damages.

Brennan concluded by making suggestions for law reform. To strengthen legal protection of confidential information and to deter the wrongful disclosure of such information, he submitted that an all-proceeds remedy would be preferable to injunctive relief where there was a breach of confidence which was: (a) in bad faith; (b) the wrongdoer benefited from the breach in an ascertainable and proximate manner; (c) the secrecy of the information has been destroyed by the breach; and (d) there was no market-based objective measure of harm. Depending on the nature of the party’s breach and benefit, the appropriate remedy should be a constructive trust, and/or an account of profits without allowance for the wrongdoer’s contributions.

The second commentator, Susan McMaster (Senior Legal Counsel with CSIRO), provided the practical perspective of IP creators, including those who received and commercialised confidential information. Drawing from her experience with CSIRO, McMaster acknowledged both the importance of trade secrecy in the private sector and the effectiveness of sharing knowledge to achieve impact from research results.

Secrecy, McMaster claimed, is crucial to the patent application process since patent registration hinges on the first-to-file system and the development of patentable subject matter through research and experimentation takes a long time. Further, secrecy is required for the commercialisation of public scientific research as investors are incentivised by the exclusive rights created by patent registration.

McMaster raised three key issues concerning the management of confidentiality agreements. First, it may be unclear whether certain information is confidential. Secondly, non-disclosure agreements must be drafted and used to enforce confidentiality, rather than to constitute a mere formality before commercial engagement. Thirdly, a research organisation and its employees must refrain from receiving confidential information from third parties or entering into third-party confidentiality agreements if doing so would place the organisation at a commercial disadvantage.

Privacy

The final panel of the day, chaired by the CMCL’s Jason Bosland, considered the past, present and future of privacy protection under Australian law. The four speakers brought a wealth of academic, professional, industry and personal experience to panel, making for a discussion that was informative, candid and enjoyable.

The first speaker, Professor Megan Richardson framed the panel discussion around the future direction of privacy law in Australia – does Australia need a statutory cause of action for invasion of privacy, or should the common law protecting privacy interests (breach of confidence, defamation) be left to develop on its own? She noted the ‘careful silence’ of the federal government on the issue, only recently broken by the publication in September 2011 of an issues paper recommending the introduction of a statutory cause of action – a reaction, perhaps, to the resurgence of interest in the ever-expanding News of the World phone-hacking scandal.

Richardson dealt at length with the judicial reasoning in ABC v Lenah Game Meats as to whether the common law alone can protect (individual) privacy interests sufficiently, referring to Gleeson CJ’s discussion and approval of Hellewell v Chief Constable of Derbyshire as an example of the successful utilisation of the doctrine of breach of confidence to protect privacy. On the other hand however, Richardson noted the imperfections of the common law process, requiring plaintiffs to endure the ‘agonising’ process of adversarial litigation to have their interests recognised. She cited the Campbell, Mosley and Giller cases as pertinent examples of this. Richardson suggested that a statutory cause of action could make a positive difference if it were well-framed.

The second speaker was Michael Rivette, barrister at Chancery Chambers, who along with having successfully argued the privacy issues in the Giller v Procopets appeal, also maintains numerous professional and commercial interests in the media and communications sector. Rivette spoke of the continuing influence of the ABC v Lenah Game Meats case upon the development of the law of privacy, both in Australia and overseas. He suggested that the Victorian authority of Giller actually afforded greater privacy protection through breach of confidence than exists under the common law in both the UK and New Zealand. While he acknowledged the potential benefit of a statutory cause of action, Rivette highlighted the drawn-out nature of the law reform process, and said that in the mean time, ‘we have to do what we can with what we have’.

The third speaker was Michael Gawenda, whose perspective on the issues was coloured by his extensive experience as a career journalist and author. Gawenda noted that ‘journalists are in the business of invading people’s privacy’ on the basis of public interest, however he was clear that this end did not always justify the means (this can be contrasted with recent remarks by former News of the World journalist Paul McMullen). In particular he was critical of the idea that the apparent consent of a journalist’s subject to an invasion of privacy might legitimise or validate that invasion. In concluding, Gawenda was sceptical about the ability of the legal system to deal comprehensively with privacy issues, suggesting that perhaps the regulation (formal and informal) and culture of the media industries needed to change as well.

The final speaker was the Honourable Michael Kirby AC CMG. Kirby suggested that a consideration of privacy law should begin with the question: ‘Why do we want privacy?’ – framing the answer in terms of the ability to have control over our personal lives, arguing that personal privacy is important to our ‘fullness’ and ‘flourishing’ as human beings. In this sense, Kirby was of the European perspective that personal privacy is a human right which should be protected by the law. After highlighting the imperfections of the various options canvassed in the recent issues paper – do nothing, expand the role of the Press Council, rely upon the courts to develop the common law, et cetera – he came to the conclusion that the best way forward for privacy protection in Australia is the creation of a statutory cause of action for invasion of privacy.

The session highlighted the numerous stake-holders in the ongoing development of privacy law – the media, the legal profession, celebrities, ‘normal’ people – each with their own perspectives, concerns, and objectives. The task for the Australian law is to consider and balance all of these things in continuing to move towards a more coherent law of privacy.

Tiffany Wong is an LLB/BMus candidate at the University of Melbourne.

Oscar O’Bryan is holds an LLB from the Melbourne Law School.

Jake Goldenfein is a PhD candidate at the Melbourne Law School.

Leave a Comment » | breach of confidence, Copyright, damages, defamation, Intellectual Property, Internet Law, Media law, piracy, Uncategorized, wikileaks | Tagged: breach of confidence, CMCL, commercial secrecy, cybersecurity, IPRIA, keeping secrets, Oscar O'Bryan, privacy, tiffany wong, trade secrets, Wikileaks | Permalink
Posted by clarissaterry

The success and failure of Steve Jobs

December 12, 2011

A review of Walter Isaacson, Steve Jobs: The Exclusive Biography, Little, Brown, London 2011.

By Julian Thomas

Malcolm Gladwell’s recent New Yorker piece (14 November 2011) offers a familiar, contrarian view of Steve Jobs’ career and significance. The key theme is drawn from Walter Isaacson’s extraordinary new biography: the dazzling successes of Jobs, together with his signal failures as a technology entrepreneur, were not the result of great vision or technical genius. Instead, Jobs’ significance lies elsewhere. He was an adept appropriator of other people’s ideas. He unfailingly recognized failure in other people and things. He had a perfectionist love of “closed systems” — that is, he could not relinquish control over the uses and applications to which Apple’s devices might be put. So the machines that Jobs introduced and helped invent – the computers, phones, tablets, and music players – embodied both his strengths and weaknesses; they were and are distinguished by being both brilliantly designed and obstinately difficult to adapt, extend, or modify.

The last three decades of computer history, and the debates that have raged over innovation and control in the technology business, are the background to Isaacson’s book. In a sense he has written, almost inadvertently, a biography of a certain kind of intellectual property. The foreground narrative is a rich new source of Jobs folklore, and this is what occupies Gladwell, and presumably many other readers. Some, maybe most, of these new stories confirm the nightmarish picture of Jobs’ manic, profligate pursuit of technical innovation. Again and again, Isaacson’s protagonist drives himself and others to extraordinary lengths by his oppressive, relentless, contemptuous, and sometimes ridiculous perfectionism. Towards the end of the book, Jobs’ expresses his disappointment in President Barack Obama, whom he thinks is reluctant to offend people. “Not a problem I ever had”. In Gladwell’s version, Jobs’ real significance is as a flawed example of a specific kind of technology developer and marketer. He is the archetypal ‘tinkerer’, not an original inventor, but an improver and tweaker of other people’s ideas. His skills are ‘editorial’, not inventive; his products are derivative, their development driven not by an original vision on Jobs’ part, but by his caustic, unerring grasp of the weaknesses of his competitors. Nothing Jobs did, in this account of things, was entirely new. The Mac’s great original selling points, its graphical user interface and bitmapped screen, were borrowed from technology developed by Xerox. The first versions of tablet computers were produced elsewhere, as were smartphones and music players.

Jobs’ tale, then, is about adaptation and appropriation, and these attributes, for Gladwell, turn out to be the essence of economic progress. Far more than the breakthroughs of visionary inventors, it was the work of engineers and technology entrepreneurs in taking ideas from elsewhere and improving them that powered the industrial revolution in Britain through the nineteenth century. As a tinkerer in this vein, Jobs achieved great things. But his tinkering has an unusual characteristic: his perfectionism, which was necessary to his success, also led him to jealously refuse others the freedom to adapt and modify that he enjoyed. He was a tinkerer who perversely created obstacles to the tinkering of others, whether amateur users, or firms wanting to make products that would work with his. He resisted suggestions that the early Apple computers should include more (or any) expansion ports for third party add-ons; he struggled with the idea and consequences of licensing operating systems at Apple and NeXT; he tied the iPod to the iTunes store, and would not allow other music stores access to the device. And now, in the case of the newer iPhone and iPad, the development and distribution of third part applications is strictly controlled through the App Store. At the same time, Jobs is enraged when others copy his ideas: he sues when Microsoft copies the Mac’s “look and feel”; he goes ballistic when Google launches the mobile operating system Android, which he believes steals ideas from the iPhone.

So in Gladwell’s account, Jobs was an innovator who lacked the modesty and self-awareness to understand his own role and achievement. He was a ‘tweaker’ (no dishonor in that) who imagined himself a visionary. Famous from early on for his “reality distortion field,” he deceived himself, and became an innovator who stood in the way of innovation. Other contemporary commentators on technology have taken this theme further: Jonathan Zittrain’s The Future of the Internet (And How to Stop It) presents the iPhone as the ultimate ‘tethered device’, designed to ensure Apple’s control over users’ applications and content. For Zittrain, the iPhone is a salutary contrast to the ‘open’ architecture of the classic PC, which, for all its faults, could be far more readily adapted and modified by users and third party businesses. Here we find an old line of argument, that “openness” (and the associated goodness of “open source”) is the real recipe for innovation and inexpensive distribution. In the case of computing, it’s hard to argue with: even deep within the iPhone, there is POSIX, and elements of BSD Unix. The striking thing is that the closed iPhone has itself sparked an amazing wave of innovation. Whole new kinds of software, including locational media and games, educational, creative and social software, have been developed, and are readily and cheaply available for Apple’s devices. The good thing for everyone is that all this new software is now also spreading to a host of other phones and tablets, including the freely licensed (if not precisely open source) Android machines.

Isaacson’s book participates fully in the “closed system” narrative. But it also presents the elements of a more complex and interesting picture, of someone who did possess an unusual intuition for the design of useful machines; and of someone who modified his business strategies as his career progressed. Jobs did want control, and more of it than many of his customers would like, but he also realized he had to make the iPod compatible with Windows machines, and he opened the iPhone to third party developers after originally resisting the idea. He obviously hated Android, but he knew also that Apple had to compete with it. If he was a tweaker, he was (to use a metaphor that would not usually be applied to a Californian) in the Shane Warne league. But I’m not sure that tweaking aptly describes what Jobs did. It should not be difficult to acknowledge that he, together with many others, created novel things, even if they did so on the basis of the work many others had done: after all, that is usually the way. Some of this creating certainly involved adapting, or ‘editing’, but it also required acts of imagination. Gladwell’s generally precise language is vague when he describes Apple’s famous appropriation of the graphical user interface from Xerox: he says Jobs “borrowed the characteristic features of the Macintosh — the mouse and the icons on the screen” — from the engineers at Xerox PARC”. Whatever that sentence means, in fact Apple successfully and almost completely transformed both the mouse and graphics: the machines it produced in the following years were clearly major advances on Xerox’s Star.

Anyone interested in contemporary debates over innovation and intellectual property will have their own reading of Isaacson’s book, and their own sense of the stakes in Steve Jobs’ daring adventures. Some of the most interesting elements of the story concern the way Jobs re-organised Apple around his characteristically ambitious and romantic idea of connecting the humanities with technology. In a couple of presentations he used the image of an imaginary intersection between two streets: ‘liberal arts’ and ‘technology’. Design and engineering were to be deeply connected in the conception of new products, even if that meant that everything was more difficult, more protracted, more risky, and more expensive. Sometimes in his career Jobs overcooked the aesthetics, but Apple’s results in the end justified the effort. Like much else in Jobs’ story, ideas and aspirations of this kind help us think again about the assumptions we make about computers and their places in our lives, about the relations between technical and creative innovation, the unexpected places we find novelty, and the persistent question of who owns what.

Julian Thomas is Director of the Swinburne Institute for Social Research

Leave a Comment » | economics, Intellectual Property, Internet, Patent, Uncategorized | Tagged: Apple, innovation, Intellectual Property, IP, Julian Thomas, Steve Jobs, Steve Jobs Biography, Walter Issacson | Permalink
Posted by clarissaterry

The Return of Duff Beer – Only This Time it’s ‘Legendary’

November 4, 2011

By Amanda Scardamaglia

Fifteen years after South Australian Brewing and Lion Nathan Australia had their plans to sell Duff beer thwarted by the Federal Court, German brewer Eschweger Klosterbrauerei is selling its ‘Legendary Duff Beer’ in Australia.

Available at a most independent bottle shops and online, the German Pilsner, was first launched in Europe, where it has been sold for a number of years. The brewer’s website boasts its Duff Beer was awarded the DLG Medal in 2011 (an award given by Germany’s independent drinks and food testing society). It was also recognised as a bestseller in 2010 and one of Germany’s most successful new products.

Although the German brewer has registered its red label bearing the word ‘Duff’ as a trade mark in the EU, the application has been opposed, presumably by Twentieth Century Fox, Matt Groening and his production company, as the product is not licensed or authorised by the producers of The Simpsons television series, in which the beer featured. A search of ATMOSS indicates that the company has not sought to register the trade mark in Australia.

So how, if at all, is this Duff beer different from the product marketed by South Australian Brewing and Lion Nathan Australia in the 1990s? And more importantly, will the Legendary Duff Beer suffer the same fate as its predecessor, at least in Australia?

The Nature of the Potential Claim

Trade mark lawyers and students will recall the proceedings brought by Twentieth Century Fox and Matt Groening Productions against two local Australian brewers who had marketed its own brand of ‘Duff’ beer. In a claim for passing off and a breach of section 52 and 53 of the Trade Practices Act 1974 (Cth) (now section 18 and section 29 of Schedule 2 of the Competition and Consumer Act 2010 (Cth), the producers of The Simpsons sought to prevent the breweries from promoting or dealing with any product using the same or similar get-up and incorporating the name Duff Beer, as depicted in the television series. The producers also asked that the breweries be restrained from using the name Duff or any deceptively similar name in relation to beverages, and from representing that their Duff beer was the product of the producers, or that it had the sponsorship or approval of the producers.

The producers succeeded on all grounds of their claim, with the Court granting an injunction preventing the breweries from continuing to sell their Duff branded products, while all existing stock was pulled from store shelves and destroyed. The rest is part of The Simpsons’ folklore, with the already sold Duff beer becoming prized collector items. Indeed since the product was pulled from sale, some cases of the beer have fetched thousands of dollars in online auctions.

It is likely the producers would have the same claim against the German brewer Eschweger Klosterbrauerei and/or its local distributor/s. That is, a claim in passing off in the nature of character merchandising and also for a breach of section 18 (and section 29) of Schedule 2 of the Competition and Consumer Act 2010 (Cth).

Drawing on the Court’s interpretation and application of the law with respect to character merchandising in the 1996 proceeding, it is hard to see how a court, if faced with making a determination with respect to Legendary Duff Beer, could come to a different result.

(a) Reputation and Secondary Meaning

The word ‘Duff’ was conceived by Matt Groening in 1989 for use as the name of a fictionalised beer to feature in The Simpsons. As Homer’s drink of choice, Duff Beer is commonly depicted and referenced in the television series. Indeed, one whole episode of The Simpsons was devoted to the theme of Duff Beer, which was titled ‘Duffless’.

While Duff Beer is occasionally depicted as bottled beer in the television series, it is most prominently depicted as canned beer. The basic colours used are red, black, white and yellow, with the name Duff featured on the front of the can, in haphazard cartoon font.

In Groening’s affidavit evidence in the 1996 proceeding, he said that Duff Beer was intended to be one of several secondary characters and products that would play a continuing and essential part of the program. Interestingly, Groening said that he came up with the name Duff as a parody of the other one syllable American beers, like ‘Budd’ and Blitz.’

In light of this evidence, the Court in the South Australian Brewing case determined that the word ‘Duff’ had acquired a powerful secondary meaning, which the tort of passing off would protect. The fact that the case did not concern a fictional character but a make believe product was irrelevant. So in finding that Duff Beer had derived a distinctive character, the Court famously extended the principles which apply to character images or titles to the name of a fictional product. Clearly, the producers can rely on this finding as the basis upon which to make a claim against the use of the word Duff by the German brewer.

(b) Misrepresentation or Association

In the 1996 decision, the Court held that the use of the word Duff by the Australian brewers would induce customers into believing that the product had a connection or association with The Simpsons program. The Court came to this conclusion having regard to the fact that the respondents’ ‘… intention was to “sail as close as possible to the wind” in order to “cash in” on the reputation of “The Simpsons” without stepping over the line of passing off or deceit.’ So, rather than require evidence of consumer confusion, Tamberlin J found that mere association, which would arouse and recall connotations of fun, irreverence and parody which surrounded The Simpsons, was enough to satisfy the cause of action. In particular he stated:

‘The name “Duff” will induce customers into believing that the product has a connection or association with “The Simpsons” program, when in fact it has no connection whatsoever. The fact is there is not and never has been any association between the applicants and the respondents. The implicit representation, in my view, is that the name “Duff Beer” produced by the breweries, is an embodiment of the fictional beer which features in the series. In reality, the product is a beer, which is manufactured in Australia by companies without any commercial or other association with the producers of the series.

…

…the deliberate creation by the breweries of an association by use of the name “Duff” between the breweries’ beer can with “The Simpsons” program, in circumstances where there is no association and indeed, where such an association is contrary to the express policy of the producers, amounts to misleading and deceptive conduct. There is no necessity to demonstrate that the viewer or consumer must think in specific terms of permission or allowance in order to constitute deceptive conduct. The intentional use of the name “Duff Beer” which produces the false association is sufficient …’

Whether a court would find the same in a claim involving the Legendary Duff Beer is slightly more contentious, given there are a number of differences between the Legendary Duff Beer and the beer produced by the local Australian breweries, and in turn, the Duff Beer featured in The Simpsons.

Firstly and most obviously, the Legendary Duff Beer is sold in bottles and not cans, whereas previously noted, Duff Beer is normally depicted as canned beer in the television program. Whether this detracts from the possibility that consumers would think there is some association is questionable – the word Duff remains the most prominent aspect of the packaging on the German beer.

The prominent use of red, black and white on the Legendary Duff Beer is somewhat different to the get-up of the can featured in the television series, as it does not feature the colour yellow. Even so, the German brewer has used a similar haphazard cartoon font for the words ‘Duff Beer’.

The other significant difference here is the German Brewer’s use of the word ‘Legendary’. Does this sufficiently distinguish the German beer from any association with The Simpsons or does the term further embolden the association with the television program?

It is more probably the latter case. This is because it seems unlikely that the addition of the word ‘Legendary’ would sufficiently distinguish the goods from The Simpsons or that it would operate as a disclaimer so as to dispel any perceived association with The Simpsons and the German brewer. Consider here what the Court had to say about whether the use of a disclaimer bearing the words ‘unauthorised’ would be sufficient in the later proceeding, when Tamberlin J was considering the scope of relief:

‘It is too simplistic an approach to suggest that the word “unauthorised”, coupled with the other forms of proposed disclaimer, must dispel any association with “The Simpsons”. … Moreover, given the evidence that “The Simpsons” program makes a point of “sending up” in a comic manner, other advertisers and advertisements, and given the irreverent nature of the content of the series, it is by no means beyond reasonable argument that the disclaimers would reinforce, rather than negate or diminish, any association with the series.’

Another important factor relates to the question of merchandising. The Simpson’s television series is highly merchandised. Much of this licensed merchandise relates specifically to Duff Beer, with the range including t-shirts and caps depicting the fictional beer. Tamberlin J took this into account in ultimately holding that the extent of existing merchandising would make it more likely that the public would think that The Simpsons had sanctioned the beer produced by the Australian breweries. The consequence of this was significant from the producers’ perspective in terms of the potential damage to The Simpsons brand – particularly as the producers had consistently refused to licence merchandise with respect to alcohol and tobacco products because of the series’ popularity with children. This is a policy the producers have maintained to this day. Thus, one would expect that, for this reason, the Legendary Duff Beer is of particular concern to Twentieth Century Fox and Matt Groening Productions.

Conclusion

It seems remarkable that, notwithstanding Australia’s recent history with Duff beer and the well publicised Federal Court decision, another company would enter the Australian market with an unauthorised Duff labelled beer. Expect to see more on this in the near future, particularly once the EU trade mark opposition claim is resolved. In the meantime, it might be worth grabbing a case of the Legendary Duff Beer and secure your potential collector’s item now.

Amanda Scardamaglia is a Lecturer in Law and Swinburne University and a PhD candidate at the Melbourne Law School.

(return to the top of this edition)

Leave a Comment » | Uncategorized, passing off, Trade Mark, Intellectual Property | Tagged: passing off, Trade Mark, Amanda Scardamaglia, duff, duff beer, legendary duff beer, eschweger klosterbrauerei, the simpsons | Permalink
Posted by pseudogold

Genes, Patents, Divisive Debate

August 26, 2011

By Dr Chris Dent

The recent discussion around the patenting of genetic materials is remarkable for its stridency. Witness, for example, the current Senate Committee review of the Patent Amendment (Human Genes and Biological Materials) Bill 2010. This post is not to add another voice that speaks the “truth” of a particular position but it is a step back to consider a key principle that constrains the nature and content of other participants.

My perspective is that the debate invites passionate responses because it is sited at the junction of four different (and competing) bodies of knowledge and/or practices:

patent law;
the science of genes;
- the nature of entities that seek to commercialise advances in the sciences; and
the politics of public health.

Taken together, these different bodies mean that the debate is (necessarily) incomplete.

Patent law

This is not the place for a detailed exploration of patent law. It is sufficient to say that the system started over 400 years ago in a time without significant state infrastructure or a scientific world view that privileged rigorous experimentation (outside the alchemists and their alembics). Since then, the system has adapted to multiple new technologies, different understandings of economics and varied forms of governance. As a result, it is now a complex beast that has highly technical understandings of what is “novel” and “inventive” (both of which are tested against the “prior art” but what constitutes the prior art for each test is different). The law has been developed, in part by the legislature, in part by the courts (to fill the gaps left by Parliament), and in part by the patent office (to fill gaps not yet considered judicially). It is itself, a regulatory technology aimed at encouraging innovation – there is no should about it. There are just rules.

But, some will say, the patenting of genetic material is against these rules, that a genetic invention is not “an artificially created state of affairs”. The problem here is that there is no statement of Australian law saying this. Until an appellate court (to respect the doctrine of precedent) or the Parliament says otherwise, these patents may be granted – whether they are valid depends on a court ruling. It may be stretching it to apply the maxim nulla poena sine lege, but without clarity that such patents are invalid, innovators in the area of gene science are equally allowed to seek a patent for a development with industrial application that has not been forbidden.

Science of genes

Of the four bodies of knowledge, this is the one I know least about. It is, however, central to issue of the patentability of genetic materials. I am not even going to attempt a summary of it. I will, however, assert that it takes years of university training to be an expert in the area – in the same way it takes years of training to understand the nuances of patent law. Even a judge ruling on a dispute over a patent over genetic material does not, despite the best efforts of the professors who act as witnesses, become expert in the science generally – though she or he may have a good grasp of the specifics of the invention in question.

Nature of organisations

Not all organisations that seek to commercialise innovations are profit-driven companies. Those that are have a focus on providing a return on the investment of the owners of the firm. Two issues arise from this. First, it is these entities that the rationale for patents is aimed at. Patents, under current economic theories, are to encourage investment in research and development. Other types of organisations also have a role in the development of genetic innovation, like small start-ups and universities. Neither of these are beholden to shareholders; however, it is not clear that either are immune from a desire to gain patents – in order to gain future funding or for profile purposes. The second matter of importance is that it takes skill to successfully run a company (whether it be research intensive or not) – skills that have developed over years in business. For someone outside business to dictate how to make a profit in a competitive industry is as disrespectful as to accuse a geneticist of not understanding the science of genes.

Politics of public health

The politics of public health relates to the way in which the debate occurs in practice. People and organisations (including government agencies) express an opinion, sometimes backed up by evidence sometimes not, in the public domain – talk-back radio, newspapers, in response to government publication and in Senate Committee hearings. The debate is not a free-for-all; there are (often unspoken) rules and forums of engagement. The debate is also coloured by party political affiliations and economic policy perspectives (including higher education funding and costs of healthcare borne by taxpayers). As with the other three bodies of knowledge, the development of policy by those internal, and external, to the government is a matter of learnt practices – to acknowledge, and accommodate, the interests of diverse stakeholders is not a straightforward task.

My perspective

A key feature of the debate is the dominance of binaries. Much of the discussion focuses on, for example, patent protection versus competition; consumers versus companies; or simply right versus wrong. The approach of this post appears to add another: those within/trained by a particular body of knowledge versus those outside that discourse. The additional binary, however, offers an acknowledgment, and explanation, of the incompleteness of the debate.

The additional binary encapsulates and explains the others as each of these discourses has its own central “truth” that guides the actions of its members. The exclusionary nature of these bodies of knowledge produces an awareness of the “other” – those who remain uninitiated and outside the discourse. That is, the difference in truths and language means that there is a limited capacity for communication with those outside each body of knowledge – an outsider cannot easily comprehend the intricacies of patent law or the science of genes; they can understand it in broad terms (so the communication does not fail totally), but not enough to allow full communication.

In short, the limited understanding across discursive boundaries may be seen in terms of incompleteness or “failure” – there can never be complete, or total, communication. Unless all participants are schooled, to the same extent, in all aspects of the debate, there will always be a degree of miscommunication. Tied to this is that the purposes of the participants differ: the motives of a geneticist are different, for example, than those of a lawyer. The differences in constitutive actions renders problematic the pursuit of complete understanding. This acknowledgement that the debate is (necessarily) incomplete should not be seen as a negative. That there is no resolution itself acknowledges the ongoing processes of governance.

The acknowledgement that the debate is, and will be, incomplete does not mean progress will not be made. There is, after all, no such thing as the “perfect” law; there is, as a consequence, law reform. Of course, progress in this context is a contingent term – what represents progress for one side may be seen as a backward step for the other. Nonetheless, the more communication that acknowledges issues of communication (and this may include the use of empirical research to demonstrate or discount a discourse-bound assertion) the greater the potential for shared fragments of understanding. The competing motivations and practices of the different bodies of knowledge problematises the possibility of total understanding – the efforts that go to shared knowledge and practices offer common ground and a reduction in the issues of translation across discourses.

Chris Dent is a senior research fellow at the Intellectual Property Research Institute of Australia at the Melbourne Law School

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For an example of recent discussion on gene patenting see Fortnightly Review author David Brennan’s recent piece in The Conversation.

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The UK Government on its Digital Opportunity

August 26, 2011

By Sarah Lux

Earlier this year, the Fortnightly Review reported on the Hargreaves Review and its recommendations for the reform of UK intellectual property law. The UK Government has now released its official response, announcing that it accepts all of the Review’s recommendations and aims to implement measures by the end of this Parliament to ‘realise the Review’s vision and deliver real value to the UK economy, and to the creators and users of Intellectual Property’.

Importance of Evidence

The Review emphasised the need for IP policy to be grounded in clear economic evidence of the impact of regulatory mechanisms on competition and innovation. Professor Hargreaves identified two main areas of concern: the lack of high-quality evidence to support some intellectual property measures and an overabundance of lobbying by private interest groups.

The Response begins with a set of promises geared towards ensuring that UK IP policy is informed by better evidence. In relation to the first concern, the Response notes that the Government has ‘begun an ambitious programme of economic research with partners’, referring readers to an outline of its proposed research. The outline includes plans to:

assess possible economic effects of congestion in the trade mark register;
study the economic value of public domain works;
develop an approach for measuring IP enforcement costs against the effects on rights owners, consumers and the wider economy;
link all IP rights to business performance measures;
assess the economic cost of invalid patents;
assess the volume of orphan works and their impact on creators and users; and
develop a methodology for research into economic and social impacts of copyright exceptions.

In relation to the second concern, the Response states that the Government will give limited weight in IP policy-making to evidence that is insufficiently open and transparent, and will make it clear when it is doing so.

However, the Response also states that perfect evidence is an ideal, and that in making IP policy it is sometimes necessary to ‘guess and get on with it’. Accordingly, while the Government will aim to be guided by ‘emerging evidence’, it will continue to prioritise ‘rapid progress’ towards an improved IP system.

Digital Copyright Exchange

The response to Professor Hargreaves’ proposed Digital Copyright Exchange (DCE) is that a DCE ‘has the potential to offer a more efficient marketplace for owners and purchasers of rights’ and that it could contribute up to £2.2 billion per year to the UK economy by 2020. The Government will therefore commission a ‘champion’ of the DCE to undertake preliminary steps towards its creation. The DCE champion will report back on progress at the end of 2011.

However, the Response implies that the Government will give less weight to the DCE than was envisaged by Professor Hargreaves. Hargreaves recommended that a work which cannot be found after a diligent search of the DCE should be regarded as an orphan work and automatically licensed for use. The Government, on the other hand, regards DCE searches as only ‘a valuable first step’ in searching for the owner of a work, and notes the need for other diligent searches before a work can properly be treated as an orphan. The Government takes the view that compulsory participation in the DCE would be contrary to the Berne Convention.

Orphan Works

The Government intends to make proposals at the end of the year for an orphan works scheme incorporating the safeguards discussed above.

Copyright Exceptions

The Response agrees that greater exceptions to copyright are required in theUK. The Government intends to make proposals at the end of the year for ‘a substantial opening up of theUK’s copyright exceptions regime’. This will include proposals for:

a limited private copying exception;
a widened non-commercial research exception (which should cover text and data-mining to the extent permissible under EU law);
a widened library archiving exception; and
a new exception for parody.

The Response adds that there is a need for wider exceptions at the EU level, since theUK’s scope for action on exceptions is limited. The Government will therefore ‘aim to secure further flexibilities’ at EU level.

Enforcement

Among other measures to improve enforcement, the Government intends to introduce a small claims track in the Patents County Court for cases with £5,000 or less at issue, for use in copyright, design and possibly trade mark cases, to increase access to enforcement by small and medium enterprises.

Patents, Designs and Trade Marks

These areas of intellectual property law received little focus in the Review, which dealt mainly with theUKcopyright regime. However, the Review did make some recommendations on patents and designs.

On patents, the Government undertakes to:

resist extensions of patents into sectors which are currently excluded, in the absence of clear evidence that this is necessary;
provide for work-sharing with other patent offices in order to address backlogs; and
investigate the scale and prevalence of issues with patent thickets as well as potential solutions.

On designs, the Response notes that the IPO has commissioned research on the relative levels of design registration in theUKcompared toFranceandGermanyand on whether theUK’s lower level of registration has impacts on the competitiveness of theUK. It also noted that designs might be included in the DCE or its equivalent.

International Policy and Crime Strategy

Alongside the Response, the Government has released The UK’s International Strategy for Intellectual Property, which outlines the role the UK envisages for itself in working towards an efficient, well-functioning international IP system, and The UK IP Crime Strategy 2011, which discusses the ways in which the UK will continue to enforce IP law domestically.

Conclusion

The Government’s response to the Hargreaves Review was one of resounding acceptance, at least at the level of principle. Despite the long road towards implementation that no doubt lies ahead of these Recommendations, the Government’s positive response increases the likelihood that the principles underpinning the Review, and its key findings, will be considered closely in the upcoming review of Australian copyright.

Sarah Lux is an intellectual property lawyer at Allens Arthur Robinson and an Adjunct Lecturer at the University of New South Wales.

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Could plain tobacco packaging laws ground a non-violation complaint under the Australia-US FTA?

July 29, 2011

By David Brennan

In the debate surrounding the Commonwealth’s proposed plain tobacco packaging laws an aspect of Australia’s international intellectual property obligations, aside from those set out in World Trade Organization (WTO) rules, has not been addressed. That aspect is the possibility of a non‐violation complaint by the US against Australia under the Australia-US Free Trade Agreement (FTA).

A non‐violation complaint occurs when, because of the application of a measure which in itself does not violate a minimum standard set by a trade agreement, the measure nevertheless causes the nullification or impairment of a benefit that a party reasonably expects should arise from the agreement.

In this instance a minimum standard article found in Chapter Seventeen of the FTA – Intellectual Property Rights – requires that parties confer upon trade mark owners certain exclusive rights in relation to their marks. The article reads in part that ‘[e]ach Party shall provide that the owner of a registered mark shall have the exclusive right to prevent all third parties not having the owner’s consent from using in the course of trade identical or similar signs.’

This minimum standard is not violated by plain packaging laws if one accepts the logic that the standard merely requires the creation of a negative right (a right to exclude), and that plain packaging laws are not inconsistent with that requirement. This is because, under that logic, the laws simply deny affected trade mark owners a positive entitlement to themselves use certain of their registered trade marks in typical ways, but does not remove their right to prevent third parties from using those trade marks. This is a key point made by Mark Davison, a plain packaging enthusiast, in arguing that such laws do not violate WTO rules.

However a dispute settlement article in Chapter 21 of the FTA raises the minimum standard in an important way, by creating the possibility of a non-violation complaint. It states that ‘except as otherwise provided in this Agreement or as the Parties otherwise agree’ the dispute settlement regime of the FTA applies when a Party considers that ‘a benefit the Party could reasonably have expected to accrue to it under … [Chapter Seventeen – Intellectual Property Rights] is being nullified or impaired as a result of a measure that is not inconsistent with this Agreement.’

This creates the possibility of a non‐violation complaint by the US against Australia on the basis that plain packaging laws deny a reasonably expected benefit to US trade mark owners. In this respect the US might also argue the plain packaging measure should be considered in conjunction with another measure: State and Territory law banning of the display of tobacco products at point of retail sale. Together, the measures might be argued to cause heightened impairment or nullification of a reasonably expected benefit to US tobacco trade mark owners.

How would the US identify a reasonably expected benefit, arising from the FTA minimum standard of requiring a right in owners to prevent others from using their marks in trade? It might be identified as the benefit described by Frank Schechter in his 1927 Harvard Law Review article, “The Rational Basis of Trademark Protection”. Schechter there explained: ‘The fact that through his trademark the manufacturer or importer may reach over the shoulder of the retailer and across the latter’s counter straight to the consumer cannot be over-emphasized, for therein lies the key to any effective scheme of trademark protection. To describe a trademark merely as a symbol of good will, without recognizing in it an agency for the actual creation and perpetuation of good will, ignores the most potent aspect of the nature of a trademark and that phase most in need of protection.’

Importantly, a non-violation complaint assumes that the measure in issue is not inconsistent with the FTA. That is to say such a complaint could be made even with the US accepting the argument that a measure denying an owner use of its mark does not violate a FTA minimum standard guaranteeing the trade mark owner a right to exclude others from using its mark.

In relation to ‘except as otherwise provided in this Agreement’ in the FTA dispute settlement article, it should be pointed out that exceptions for measures such as those ‘necessary to protect human, animal or plant life or health’ are not expressly incorporated to apply to Chapter Seventeen – Intellectual Property Rights. However, the FTA dispute settlement article recognizes that the parties may ‘otherwise agree’ in relation to a measure such as the plain packaging mandate. Unlike the position under bilateral investment treaties, private parties cannot bring a complaint under the FTA, only the countries party to the agreement are competent to take action. Would the US bring a non-violation FTA complaint against Australia about the plain packaging laws? Of course I do not know. Recently the US Food and Drug Administration (FDA) has prescribed (commencing in September 2012) the types of graphic health warnings on tobacco packaging that Australia adopted long ago. These must appear on the top 50 percent of both the front and rear panels of each cigarette package distributed in the US, however the FDA regulations do not mandate plain labelling for the remaining branded portion of the package. At the same time seven US peak commerce bodies – including the US Chamber of Commerce – have expressed joint opposition to Australia’s proposed plain packaging laws, while at the same time recognizing Australia’s right to regulate more fundamental control over the supply of tobacco products.

I conclude with a couple of riders.

Non‐violation complaints are regarded by many (albeit not the US) as being ill‐suited to intellectual property minimum trade standards; this controversy has been responsible for the moratorium on such complaints under WTO rules.

While I am an intellectual property enthusiast, I am personally opposed to the tobacco trade. I favour the suggestion made last year to ban the supply of tobacco to individuals born in or after the year 2000.

David Brennan in an Associate Professor at the Melbourne Law School

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A reply to the sentiment that copyright infringement not resulting in lost sales is benign

June 16, 2011

By Assoc. Prof. David Brennan

A view is held (in both expert and non-expert circles) that unless an infringement of copyright causes proven lost sales, that infringement should not be actionable. Under the logic of this view, to award damages for infringements that do not cause proven lost sales would be vindicating intellectual property rights without triggering incentive effects.

In relation to the damages award in the now famous Larrikin v EMI litigation (comprising a notional usage price of 5% of APRA׀AMCOS royalties paid to the infringers) two of our economists Beth Webster and Paul Jensen have supplied this critique of the law – emphasis in the original:

The sales of ‘Kookaburra’ were not affected in any way shape or form by the success of ‘Down Under’. Quite simply, Larrikin should not be due any damages at all.

It is worthwhile to think more about (in law and economics) the creation of property rights – including those rights’ remedial scope – for copyright subject matter. A fine vehicle to do this is infringing file-sharing.

Research undertaken at the University of Ballarat in April 2010 reveals something of the global extent of infringing file-sharing. The University’s Internet Commerce Security Laboratory (ICSL) – which is funded by the State Government of Victoria, IBM, Westpac, the Australian Federal Police and the University – was commissioned by Village Roadshow to measure the volume and nature of BitTorrent file-sharing global traffic. It estimated that 97.9% of files made available encoding non-pornographic content were clearly not authorised by the copyright owner. Under the BitTorrent system the term ‘seeders’ refers to people who have completed their download and then make the file available for others to download. That is to say, a seeder is a person who is making that content available online to the public. The ICSL produced a list of what was estimated to be the top 100 seeded files as at April 2010. The top 10 in that list were:

1. The Incredible Hulk[2008]DvDrip-aXXo97065494792.4447: 1,112,628

2. Indiana Jones And The Kingdom Of The Crystal Skull[2008]-aXXo: 1,029,695

3. College[2008]DvDrip-aXXo339166021846.017: 509,576

4. Sherlock Holmes (2009) DVDSCR XviD-MAX: 479,655

5. Avatar (2009) PROPER TS XviD-MAX889790305026.795: 332,665

6. Meet Dave[2008]DvDrip-aXXo: 311,894

7. Lady GaGa – The Fame Monster 2CDRip 2009 [Cov+2CD][Bubanee]: 308,117

8. The Andromeda Strain[2008]DvDrip-aXXo: 284,221

9. Shutter Island (2010) R5 DVDRip XviD-MAX851029283088.936: 282,628

10. 2012 (2009) R5 DVDRip XviD-MAX883775626338.402: 277,043

With this list it should be pointed out that a title like Avatar reappeared twice again in the top 100 list under different file names – i.e. Avatar 2009 DVDScr H264 AAC-SecretMyth (Kingdom-Release) 94,781 seeders and Avatar TS XviD-IMAGiNE(No Rars) 82,977 seeders.

It is commonly considered that unless an infringing file-sharer, but for infringing, would have paid for the relevant content then there is no harm to the copyright owner arising from the infringement. Consider these three published readers’ comments to Asher Moses’s essay-style article ‘Piracy – are we being conned?’ (Fairfax Media, 22 March 2011)

Why would they assume that an unpaid download is a lost sale? Kale – Sydney
The figures are obviously predicated on the presumption that each illegal download would convert into a legitimate purchase, which is a palpably fatuous assumption to make. The ghost of common sense - My bedroom
So are they counting every movie i have downlaoded then as lost revenue? cos i have a surpirse for you, you never were gong to get the money in the first place! [sic] Danny – Melbourne

The commonality of this sentiment is so pervasive that a survey-based analysis of direct loss to the film industry conducted in Australia by IPSOS Media CT and Oxford Economics for the Australian Federation Against Copyright Theft (AFACT) made explicit allowance for it. Deducted from ranks of loss-causing Australian infringers were those who would never have paid to watch the film. That is someone like Danny above. Danny might have unlawfully downloaded Avatar using BitTorrent, but never would have paid to obtain a copy. The AFACT-commissioned survey estimated that 23% of Australian infringers were in Danny’s boat, and so a 23% deduction was made in arriving at the final figure of $575m direct loss to the film industry for the 12 months Nov 2009-Sept 2010.

Is it correct, as our economists Beth and Paul say, that infringement not causing proven lost sales should yield zero damages? Or is it correct, as the Fairfax readers imply, that an infringing download not substituting for an actual purchase should be removed in the calculation of owner harm? And is it therefore correct to make that 23% deduction? Or, to put it another way, is infringement not resulting in a proven material loss benign?

In economic analysis of copyright law as it applies to (say) the film industry, copyright is justifiable to the extent that it provides an effective promise to film producers and creators that if investment and risk is undertaken to make a film, some of the value that film generates is capable of market appropriation through the conferral of property rights. Avatar is a good case-in-point. Would it have been created without the promise of copyright? It is difficult to imagine this type of content being produced through non-market means such as philanthropy or public funding. Market demand stimulates such content’s creation. In copyright, property rights in creative expression are deployed as an instrumental device to permit that market demand to induce productive endeavour. This is the incentive effect of intellectual property. It does not mean that those property rights per se generate economic value – the film could be an unmitigated box-office flop. Rather, the rights simply provide a way for a film copyright owner to capture some of the market demand for its film.

Given that copyright in economic theory is a promise of appropriability what, in private law, does that promise mean by taking the form of a property right? Property as an owner’s right to exclude forges a special norm which governs relations between the owner of the property and users of the property. When relations are governed by a property norm violation by a user means that the owner receives less than the owner deserves, and that the user obtains more than the user deserves. Restitution scholarship regards this as an ‘expense’ to the owner mirroring a ‘gain’ to the user. The expense and the gain are de jure rather than de facto concepts. This restitutionary idea has been applied in intellectual property cases since as long ago as the 1867 patents decision of Penn v Jack where Page Wood VC assessed damages by asking: ‘What would have been the condition of the Plaintiff if the Defendants had acted properly, instead of acting improperly. That condition, if it can be ascertained, will, I apprehend, be the proper measure.’ Here, ‘acted properly’ meant to have paid a reasonable usage price for the use of the intellectual property.

Subsequent UK, US and Australian authority has assessed the lower-end quantum of monetary relief in copyright and patent cases to be the reasonable price for the use of the IP regardless of whether the particular defendant user would have agreed to pay. Indeed this approach is seen in the Larrikin v EMI case itself, where evidence was before the court that a lead member of Men at Work would have resisted paying anything for use of the Kookaburra copyright. But why should at least usage price damages be paid in the Larrikin v EMI litigation, and indeed by people such as Danny in the unlikely event that they are sued for downloading Avatar? For instrumental reasons society has promised the conferral of copyright property. That promise is one of appropriability which entails a particular norm governing relations between owners and users. Failure to at least award usage price damages (or recognise a legal entitlement to such a usage price) represents breach of that promise. It does so by creating the perverse situation of rewarding users who infringe rather than act lawfully. Moreover, why should anyone pay for the enjoyment of Avatar if the law accepts as benign the consumption of ‘you never were gong to get the money in the first place’ Danny?

Stripped away, the point made by the above economists and the Fairfax readers seems to resolve to a more fundamental matter of property delineation. The infringements of the 23% of users identified in the AFACT-commissioned survey should be removed from the copyright promise. That is, removed from the definition of property rights in copyright. Arguably, it presents us with this stunning new conception: copyright is the legal entitlement to exclude the whole world from the exercise of certain defined rights – except those people who would never have paid for the exercise of those rights.

David Brennan is an Associate Professor at the Melbourne Law School

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Digital Opportunity: the Hargreaves Review of UK Intellectual Property and Growth

June 16, 2011

By Sarah Lux

Last month, Professor Ian Hargreaves of Cardiff University released the much-anticipated Hargreaves Review, officially entitled Digital Opportunity, A Review of Intellectual Property and Growth. This independent report on the state of the UK’s intellectual property regime and its impact on economic development was commissioned in November 2010 by Prime Minister David Cameron. It was a response to the perceived risk that the UK intellectual property framework may not be succeeding in promoting innovation and growth in the national economy. Professor Hargreaves was tasked with answering what he calls the “exam question” set by the Prime Minister: “Could it be true that laws designed more than three centuries ago with the express purpose of creating economic incentives for innovation by protecting creators’ rights are today obstructing innovation and economic growth?” The short answer, Hargreaves says, is resoundingly yes.

Copyright to adapt to the digital environment

UK copyright law does not fare especially well in the report card given by Professor Hargreaves. The Review finds that the copyright framework in the UK is failing to keep up with the emergence of digital communications technologies that involve routine copying of text, images and data. In particular, Hargreaves is concerned by the possibility that copyright law hurts the growing online services economy. He warns that legal rules designed to deal with the needs and rights of artists and authors should not be allowed to unduly restrict emerging business sectors completely removed from the creative industries.

Hargreaves’ predominant suggestion for bringing UK copyright law into the 21st century is the creation of the world’s first Digital Copyright Exchange (DCE), a central platform for copyright licensing. Participation in this national clearinghouse should, according to Hargreaves, be “genuinely voluntary”, but motivated by “a range of incentives and disincentives” provided by the government. The Review does not suggest that the UK government should itself create the DCE, due to Hargreaves’ view that this would cause “a nightmare of IT procurement followed by the birth of a white elephant.” Rather, Hargreaves’ recommendation is that government put its weight behind assisting parties interested in creating the exchange, and strongly encouraging rightsholder participation. The Review suggests that a central platform for automatic licensing is inevitable even if the issue is left entirely to the market to resolve, and recommends that the UK government take the opportunity to get involved in a leadership capacity rather than waiting for a strong market player or group of players to “impose their own rules.”

Orphan works

The Review describes the problem of orphan works as “the starkest failure of the copyright framework.” Under Hargreaves’ recommended model for dealing with the issue, works would be automatically licensed for use if no author was found after a ”diligent search” of the DCE (prompting some scepticism as to the “genuinely voluntary” nature of participation). Any fees paid would be held by the relevant collecting society until the owner was identified or a reasonable period of time passed, at which point the money would be used “for social or cultural purposes, or perhaps as a contribution to the running costs of the Digital Copyright Exchange.”

Exceptions to copyright infringement

In his announcement of the Review in 2010, Prime Minister Cameron stated that the founders of Google felt they could never have started their company in Britain because the copyright laws are “not as friendly” to innovation. In particular, Google praised the “breathing space” provided by the fair use provisions in the US and suggested that this facilitated their entrepreneurial activity. The Review notes that most submissions from UK business were “implacably hostile” to the idea of adopting a fair use exception in the UK on the basis that this would cause disruptive legal uncertainty, cause increases in costly litigation and create confusion for buyers and sellers of copyright goods. The Review rejects the idea of a wholesale adoption of US-style fair use doctrines, arguing this would not be legally viable. However, Hargreaves takes the view that the UK can enjoy many of the benefits of the American exception by adopting other exceptions already permitted under EU law (such as those for format-shifting, parody, non-commercial research and library archiving). In addition, the Review recommends that the UK government should lobby at EU level for a new exception for “non-consumptive” use, being use enabled by technology that does not directly trade on the creative and expressive purpose of the work in question (for example certain uses in data mining and search engine indexing).

Importance of evidence

A recurring motif throughout the report is the need for IP policy to be grounded in economic evidence of the impact of regulatory mechanisms on competition and innovation. Hargreaves notes that to date, empirical data on the impact of IP (particularly with regard to the relationship between copyright and creative innovation) has come predominantly from private parties and lobbyists, and has not been subjected to independent analysis. The Review emphasises at several points the importance of grounding law and policy in fact rather than spin. Hargreaves does, however, note the practical difficulties associated with collecting such empirical data. This is especially the case in the context of unregistered copyright and designs and in areas such as biosciences and computing, which involve new markets and technologies with characteristics that can be hard to measure.

Clarification of copyright law

Another theme in the Review is the need to clarify copyright law for those affected by it, particularly small companies. Recommended measures include provision of greater access to low cost legal and commercial IP advice and the empowerment of the UK Intellectual Property Office to publish formal opinions clarifying copyright law.

Enforcement

The Review notes the importance of enforcement but warns against reliance on ever-tougher enforcement mechanisms to solve the problem of copyright infringement. Rather, Hargreaves recommends a multi-faceted approach to infringement, which involves the modernisation of copyright law, better education about copyright issues and the creation of open and competitive markets in licensed digital content.

Patents, designs and trade marks

Although the Review focuses heavily on copyright law, Hargreaves strongly recommends, as a matter of ”highest immediate priority,” that the UK should increase its focus on its international IP interests by pressing for a unified EU patent court and EU patent system. The Review identifies patent office backlogs and the emergence of patent thickets as potential barriers to innovation, particularly for small enterprises. To clear and prevent backlogs, the review recommends increased international collaboration between patent offices. To deal with the problem of thickets, Hargreaves recommends the UK work with its international partners to create disincentives for the maintenance of lower value patents.

Designs were not included in the Terms of Reference for the Review, a fact about which Hargreaves expresses surprise. The Review states that designs are an important branch of the creative economy that have been neglected in the UK, recommending an evidence-based assessment of the relationship between designs and innovation. No specific recommendations are made in respect of trade marks, which are largely absent from the Review.

Relevance to Australia

The Review is, in essence, an exposition of principle rather than a detailed roadmap for reform. Professor Hargreaves acknowledges from the outset that he has “focused upon the main issues, at the risk of ignoring important points of detail.” Major recommendations, such as the creation of the DCE, will require substantial legal, governmental and commercial analysis and consideration before they have a real shot at faring better than those Gowers recommendations that have remained in the “too hard” basket since 2006.

However, the Review provides a useful high-level analysis of IP law, policy and industry attitudes in the UK, particularly in the copyright context. It emphasises decisions that need to be made by governments as to how intellectual property frameworks might be utilised to promote economic development in an increasingly networked world. The increasing necessity for international cooperation, while not a new concept, is nicely underlined in the Review and is as relevant in Australia as it is in the UK. And Hargreaves’ emphasis on the importance of economic evidence comes at a time when Australian consumers, like their overseas counterparts, are feeling restless under the restrictions of copyright law and are demanding better evidence of the economic impacts of music and film piracy, among other types of infringement.

This report on the UK intellectual property landscape does not directly touch on Australian law or policy. However, at the level of principle, there can be no doubt that Hargreaves’ findings will be considered closely by those charged with the review of Australian copyright.

Sarah Lux is a lawyer at Allens Arthur Robinson and a sessional lecturer at the University of New South Wales.

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Twitter Undoes UK Super Injunctions

June 2, 2011

By Katy Barnett

The law is generally unsuccessful when its ability to prevent the flow of information is pushed to the limit. As I’ve described in an earlier post, the Spycatcher case is a primary example: the more the British government attempted to prevent Peter Wright from publishing his book on MI5, the more publicity they gave it. And the English government met very little sympathy from courts in other jurisdictions when it attempted to suppress Spycatcher in Australia, New Zealand and Hong Kong, even though those jurisdictions were former colonial outposts.

The latest iteration of this particular battle has occurred on Twitter in the UK. A user named @InjunctionSuper set up an account which made a number of allegations against a variety of celebrities. Among other allegations, a prominent footballer (later outed as Manchester United’s Ryan Giggs) was accused of having an affair with a reality television star (an injunction preventing publication of allegations had been awarded by Eady J in CTB v News Group Ltd [2011] EWHC 1232 in April); an actor was said to have used the services of a prostitute named Helen Wood; and it was alleged that Jeremy Clarkson had an injunction preventing the publication or mention of intimate photographs of himself with Jemima Khan.

All these people were said to have had “super injunctions” which prevent not only publication of the details of the allegations and the identity of those concerned, but even prevent people and media outlets from reporting on the existence of the injunction itself. Importantly, to breach the injunction, or to knowingly assist in or permit a breach of the injunction, constitutes contempt of court. People who breach such injunctions may be imprisoned, fined or have their assets seized. In the event, some of the celebrities in question did not have “super injunctions”, but merely anonymity injunctions (which prevent disclosure of confidential information and the identity of one or both of the parties, but do not prevent discussion of their existence).

Ironically, the story broke when Khan responded to the tweet, vehemently denying it:

Only minutes after the claims were published on Sunday, 37-year-old Mrs Khan denied having an affair with Clarkson, saying the allegation was ‘untrue and upsetting’.

‘OMG – Rumour that I have a super injunction preventing publication of “intimate” photos of me and Jeremy Clarkson. NOT TRUE!’ she tweeted.

A minute later she added: ‘I have no super injunction and I had dinner with Jeremy and his wife last night. Twitter, Stop!’

She added: ‘The proof that I haven’t got a super injunction is that the papers have printed my name (and no one else’s – for fear of being sued).’

The socialite received supportive text messages from both Clarkson and his wife Francie after the allegations emerged.

Clarkson used humour to dismiss the claims. In a text to Mrs Khan he said: ‘It’s odd. I’m sure I’d remember if any photos of us existed.’

Khan is correct: the media showed no compunction in mentioning her name, whereas it has been cautious about mentioning other people.

Of course, “super injunctions” and anonymised injunctions are very expensive to obtain, and as media lawyer Mark Stephens commented to The Independent: ‘It’s the beginning of the end. Even a rather thick footballer is going to think twice before handing £100,000 to a greedy lawyer if the greedy lawyer can’t guarantee that it will actually stay secret.” The Daily Mail reported that Giggs had spent £150,000 on lawyers to keep the details of his affair secret, but paradoxically, the greater his efforts to keep the affair secret, the more publicity it received (a clear instance of the ‘Streisand effect‘ at work yet again). As publicist Max Clifford noted in the Mail article linked above, Giggs might have been better off not to resort to the law at all. He is now alleged to have started proceedings against Twitter and “persons unknown”, using the initials ‘CTB’. This rather nice graph at the Guardian shows how mentions of Giggs’ name spiked on Twitter on 20 May once his proceedings against Twitter were announced:

Could those who mention Giggs’ name in the UK be the subject of legal proceedings? It is estimated that about 30,000 Twitter users have breached injunctions by tweeting the identities of various people covered by those injunctions. It has also been reported that the Attorney-General is considering whether to prosecute a journalist for breaching a privacy order involving a different footballer. Meanwhile, a Scots newspaper published details about Giggs, arguing that English law did not extend to Scotland, although — despite the recent success of the SNP in elections — this would seem doubtful.

With impeccable timing, the Master of the Rolls of the UK Court of Appeal, recently released report about “super injunctions”. In summary, the Committee concluded:

The principle of open justice is a fundamental constitutional principle which should only be derogated from where “strictly necessary in order to secure the proper administration of justice”;
There is a difference between super injunctions (which restrain a person from publishing confidential and private information about the claimant where the very existence of the injunction may not be disclosed) and anonymised injunctions (which merely restrain a person from publishing confidential and private information about the claimant where the names of either or both of the parties to the proceedings are not stated);
Since Terry v Persons Unknown [2010] 1 FCR 659, as far as the Committee is aware, only two known super-injunctions have been granted to protect information said to be private or confidential;
‘As they incorporate derogations from the principle of open justice, super-injunctions and anonymised injunctions can only be granted when they are strictly necessary. They cannot be granted so as to become in practice permanent. Where super-injunctions and anonymised injunctions are granted they should be kept under review by the court’ and they should have clear return dates (pursuant to Terry);
In the recent past, super-injunctions and anonymised injunctions have also sometimes been more widely used than is strictly necessary by UK courts; and
A new procedure should be developed which allows the media to be informed of such injunctions in advance, although there may be times when this is not appropriate.

Interestingly, the Committee did not consider new media or the difficulties associated with controlling it in any detail. One of the key questions is whether such orders can effectively be enforced against entities such as Google and Twitter. Giggs’ case may represent a testing ground in this regard. Another difficulty is that many users are anonymous, making it difficult to find out who they are. Further, it is difficult to restrain publications outside the jurisdiction (as the Spycatcher cases showed in an earlier era).

As was noted in The Independent, the anonymised injunctions which Twitter users breached are only those involving the alleged sexual indiscretions of celebrities. Recently, UK Twitter users have been banned from identifying a brain-damaged woman whose mother wishes to remove life-support, but no one has breached this order. Since 2000, with the enactment of Article 8 of the ECHR (protecting privacy) into UK law, there has been an expanding use of breach of confidence in the UK to restrain breaches of privacy (see Campbell v Mirror Groups Newspapers Ltd and Douglas v Hello! (No. 3)). Perhaps the public are reacting by reasserting the sentiments of Lord Denning in Woodward v Hutchins, a case dealing with unsavoury allegations in the Daily Mirror newspaper about the private life of Tom Jones and other pop stars. Denning LJ said:

If a group of this kind seek publicity which is to their advantage, it seems to me that they cannot complain if a servant or employee of theirs afterwards discloses the truth about them. If the image which they fostered was not a true image, it is in the public interest that it should be corrected … In this case the balance comes down in favour of the truth being told, even if it should involve some breach of confidential information. As there should be ‘truth in advertising’, so there should be truth in publicity. The public should not be misled.

Celebrities seek publicity in the press in exchange for public adulation, but audiences often want a more “true” picture than the highly managed images the celebrities want to project. Perhaps this is why Twitterers are particularly wont to breach injunctions relating to celebrity privacy. Perhaps they dislike hypocrisy (self-presented “family man” turns out to be a serial philanderer etc). Or perhaps it’s simply the Streisand effect writ large – the very fact that the information is prohibited is what makes it attractive and interesting to people.

Ken Parish at Club Troppo has a good summary of the legal and practical issues involved with these kind of cases:

My own view is that there is a distinct difference between the “public interest and stuff that is interesting to the public” (as Richard Ackland succinctly phrases it) from a privacy viewpoint, so that privacy should be protected by the law where the public’s interest in knowing stuff is overwhelmingly prurient. Where that is the case I don’t see that the public interest in freedom of speech has much force, irrespective of the degree of fame of the subject of salacious information. The fact that a person is famous does not mean they forfeit all moral claim to personal privacy in my view.

On the other hand, the “outing” of Ryan Giggs suggests that, whatever we might think as individuals about whether a right to privacy should exist, the borderless and almost universal nature of the Internet means that a court in any given country is unlikely to be able effectively or for very long to prevent disclosure of information about the identity of a person about whom salacious rumours are circulating. In one sense I suppose that’s not very different from the social situation in western societies before the urbanisation of the 18th and 19th centuries. Most people lived in villages and knew everyone else’s business anyway. Rights to privacy in that sense are just an artefact of a short period of history when the practical anonymity conferred by large urban agglomerations of people had not yet been rendered ineffective by Wikileaks, Twitter, blogs and Facebook and the underlying Internet architecture that makes it almost impossible for the courts of a single country to keep information confidential.

Like Ken, I feel that we do not have a right to prurient information about celebrities: but whether the law can actually control the dissemination of such information in the present climate is quite another question.

Katy Barnett is a Lecturer at the University of Melbourne Law School

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Posted by clarissaterry

Fordham IP Conference 2011, New York City

June 2, 2011

By Vicki Huang

The Fordham IP conference – “Learn, Debate, Have Fun” – was held on 28 – 29^th April 2011 in New York City. The conference attracted many academics, practitioners, government officials, and members of the judiciary from Europe, the USA and of course Australasia. This combination triggered a lot of informed debate and it was refreshing to hear input from all sides of contentious issues including views from the bench.

Many of the sessions have been covered by our friends at IPKAT here, here, here, here, here and here. In addition to those sessions, the Fortnightly Review was lucky to attend several specific sessions on copyright and trade mark law and highlights are outlined below.

In a session on “US Copyright Developments”, Thomas Kjellberg updated the audience on copyright cases against “suburban” downloaders where damages peaked at over $1 million dollars. These cases such as Capital Records v Thomas Rassett have sparked a debate as to whether such awards violate due process. Kjellberg also discussed the case of Penguin v American Buddha. In that case, American Buddha (a religious not-for-profit), posted ebooks on its website. One of the issues for the court was locating the site of the injury. Was it in New York (home of the plaintiff), or Arizona (the site of the uploader) or Texas (the site of the server)? The court held that because the location of the infringer may be remote, it would not be fair to use the infringer’s location as the locus of harm. Therefore, even though there was no downloading evidence in New York, that was not to say there was “no injury” in New York. Rather the test should assess the intent of the infringer.

In a session on “EU and US Initial Interest Confusion in Trade Mark Law”, The Hon. Mr Justice Arnold discussed the development of the doctrine and its actionability under Article 9(1)(b). He went on to discuss several cases including the recent case of Och-Ziff Management Europe Ltd. Daniel Glazer discussed US developments with a focus on the expansion of the doctrine to the internet, where trademarks are used in domain names or in meta tags or keywords. The panel discussed the fine line between confusion and diversion and the fact that US courts are really trying to protect senior mark good will and against unfair competition. The panel debated what was permissible and indeed healthy free riding. They also debated the merits of using the initial interest confusion doctrine to police domain names. The panel agreed that in the current era, consumers are used to deceitful metatags and more wary of commercialised hyperlinks so confusion is a lot less likely. Professor Anne Bartow argued that one can no longer assume that consumers are unsophisticated. She went on to query whether the law should remedy a situation where there is confusion that is cured before the point of sale.

In a session discussing dilution Law in the European Union & the United States, Trevor Cook (Bird and Bird) began with a discussion of the EU’s approach. He noted the over-intellectualisation of simple legal tests which was a common complaint in several other panels. Professor Marshall Leaffer discussed US developments in dilution and the case of Visa v JSL Corp. In that case, Professor Leafer argued that the question of likelihood of confusion – which is a question of fact – was approached in a fast and loose manner. He also said that the case highlighted that the evidence required to prove a dilution case was very unclear. A European speaker helpfully reminded the audience that reconciling EU and US policy and legal approaches was not simple as there is no unfair competition law in the UK and some other EU states.

The well-attended sunrise seminar on “Rule of Law on the Internet: Feasible or Fantasy”, started with views from Richard Cotton of NBC Universal Media. He stated that the question was not “whether” we should have a rule of law on the internet, but rather “when” and “how”. He discussed a fundamental problem being one of attitude, with many downloaders thinking that “if it’s so easy to pirate, it can’t be wrong”. Piracy is moving from being treated as a nuisance, to a problem that the FBI and homeland security are now enforcing against.

In terms of legitimizing tools, he discussed the development of ancillary markets and goods such as Netflix, and Xbox live which are robust and legitimate markets that rely on internet streaming technologies. In his view, encouragement of these delivery models will give illegal downloaders a legitimate alternative. However, he emphasised that the challenge will be to create a culture that will accept copyright piracy as a wrong and likened this to being a parent training a recalcitrant child.

Justice Peter Charleton commented that the EU has compulsory anonymity on internet. And that a cultural problem was that anti-globalism is a big movement so that theft from “anonymous capitalist” was thought to be ok. The panel agreed that IP theft was like drug addiction where demand generates supply.

In the session, “Enforcement Issues Including New Government Initiatives”, Stevan Mitchell (the ESA) and Peter Fowler (USPTO Enforcement) discussed the extent of the enforcement problem. Twenty five per cent of all internet traffic globally involves unauthorized distribution of copyright files. One assessment had 43 illegal downloading websites register 146 million hits per day. Bottom line is that there is a huge appetite for TV and film downloading. Peter Fowler emphasised the need for cultural change akin to the shift that led to seatbelt wearing. He also discussed the US “Operation in our Sites” which had been seizing domain names of illegal download sites. He emphasized that the academic debate over whether creative adaptations should be free was moot as copyright infringement is illegal and a crime. For enforcement officers there was no debate. He also highlighted a shift in counterfeiting. Counterfeiters are now trying to make higher profits by making goods as close as possible to the real luxury item and selling goods on deceptive websites at matching prices (as opposed to a severely discounted price that would indicate a “fake”) in order the maximise profits.

Other paths of enforcement include cooperative agreements between registries to seize domain names. Importantly it is also to target 3^rd party providers eg agents for service and paypal. If money supply can be cut off, then enforcement agencies will try to do so.

In the session “Trademark Law: Smell and Look-a-likes: a Comparative Analysis” Anna Carboni presented an update on smell and look alike cases including the controversial L’Oreal v Bellure case. Carboni highlighted the fact that the British Brands study showed the customers can be easily confused by look alike packaging. The panel including Robert Burrell pointed out that surveys used in the British Brands study and other surveys used to support a senior mark owner are flawed due to the prevalence of leading questions. On another point, Jane Ginsburg re-emphasised that “lured” does not mean confused. Consumers learn for example, that supermarket shelves are stocked with similar looking house brands. The Hon. Justice Robin Jacobs agreed saying that judges shop and are also aware of brand generics. The question should be whether reasonable customers are likely to be confused and whether the company intended to confuse consumers. Justice Jacobs observed that brand owners are now scared to sue “home brands” which are put out by supermarkets because supermarkets may retaliate and not stock the senior brand.

In the session “Adwords: a Comparative Analysis” Professor Marshall Leaffer discussed the proposition that after the case of Rescue.com, selling trademarks as keywords is “use in commerce” and subject to the Lanham Act. Professor Barton Beebe discussed the increase in consumer sophistication and that the legal question had moved on from “use” to “likelihood of confusion” and in the future will be preoccupied with predicting levels of consumer sophistication.

Prof. Dr. Peter Ruess presented a convincing case for protection of well-known brands. Interestingly calling it naïve to use the phrase “comparative advertising” in cases that were clearly “bait and switch”. The panel seemed divided on the line between “genuine” comparative advertising and the misappropriation of goodwill. Ruess argued that using the goodwill of a senior mark to lure a customer is not comparative advertising and is not in the public interest. Professor Beebe argued that encouraging free competition is in the public interest. The panel seemed divided between recognising the property rights of high investing brand owners and free competition.

Overall this was a fascinating and informative conference. The program and list of speakers can be found here. Proceedings of the conference will also be published in an upcoming volume.

Vicki Huang is a Research Associate with IPRIA and a Lecturer at Deakin Law School

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Leave a Comment » | Copyright, counterfeit, Intellectual Property, Internet Law, piracy, Trade Mark, Uncategorized | Tagged: Copyright, dilution, Fordham IP conference, initial interest confusion, trademarks, Vicki Huang | Permalink
Posted by clarissaterry

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