|
In this issue:
- All's Fair in our Love of Sport?
- Praise for Some Guidance on Grounds for Revocation of Trade
- Marks for Non-Use
Bad Faith: the "sleeping provision" raises some interesting questions
- Patent "Parasites" Not Destroyed
All's Fair in our Love of Sport?
New Zealanders certainly have a love/hate relationship with the game of rugby union, which we sometimes treat more like war than sport. But when it came to the biggest international event in the rugby union calendar, the 2007 Rugby World Cup in France, it was the commercial value of the coverage on television which gave rise to a more interesting battle for many of us.
In New Zealand, Sky Television is a subscriber based broadcaster. It has over the last decade or so obtained the exclusive rights to broadcast the majority of the major sporting events, with a major focus on the Super12/14 rugby and Tri-nations series. For the 2007 Rugby World Cup, though, the free-to-air broadcaster TV3 won the exclusive rights to broadcast the event.
Aware that there may be some debate over acceptable industry practice in this field and that the extent of news and other coverage by competing networks would continue to be an issue for the Rugby World Cup and other sporting events, the major New Zealand broadcasters entered a "News Access Agreement" in July 2007. This agreement governs the use of footage from major sporting events, explicitly including the Rugby World Cup, in bona fide news programmes for which hard news is the main feature. Sports magazine shows are specifically excluded.
The News Access Agreement limits use of footage by non-rights holders to no more than three news programmes per day per channel, not exceeding two minutes per programme, with a gap of at least three hours between such programmes on the channel. This varies slightly for dedicated news channels.
Importantly, the News Access Agreement provides that it does not apply to or limit fair use rights relating to use of footage in programmes not covered by the agreement, such as sports magazine shows.
New Zealand does not have a general "fair use" doctrine as in the United States. Instead, all of the exceptions to copyright protection, or permitted uses, are set out in more specific provisions of the Copyright Act 1994. The "fair dealing" exceptions cover research or private study, criticism or review, and reporting current events. The relevant reporting current events exception appears in disarmingly simple wording:
S42(2): Fair dealing with a work for the purposes of reporting current events by means of a sound recording, film, broadcast or cable programme does not infringe copyright in the work.
No maximum amount or proportion of copying is prescribed in order to qualify as fair dealing. The exception is general in nature, and involves a weighing of relevant interests.
TV3 invested considerably in the raised profile it saw as flowing from the increased viewership it predicted from its coverage of the Rugby World Cup. It had agreed not to air advertisements during the coverage of the games themselves, so saw its magazine style programmes as its primary source of revenue. Sky competed directly for the audience for such shows.
TV3 put other broadcasters on notice that it would take steps to defend its exclusivity if necessary. Sky responded by asserting that it would be relying on its fair dealing rights.
From the beginning of the Rugby World Cup, Sky used TV3 footage in a number of different programme formats and across a number of channels. TV3 sought an interim injunction to stop the bulk of this use.
Winkelmann J in the High Court approached the fair dealing defence in a two tier way. First, considered objectively, is the ‘use’ part of news coverage, or has it crossed the line into more general entertainment? She acknowledged that use in a specialist news programme would fall within the ambit of reporting current events.
Her Honour rejected a submission that, if footage is current and newsworthy, and of short duration, it does not matter that the footage sits within a programme which is not hard news or sports news. She held that the purpose for which footage is being used should be determined by reference to the content of the programme and hence the context in which the material is used.
She made the following distinction: a sports news programme entertains its viewers by presenting up-to-date reporting of current events in the world of sports; a sports magazine programme may use current events as the point of embarkation for reporting matters other than the results of matches, indeed sometimes matters only tangentially connected to the result of the matches.
On this basis, she held that a number of the programmes at issue, The Cup, The Crowd Goes Wild, and Reunion were magazine style and failed to satisfy the (section 42(2)) threshold requirement that the use be for the purpose of reporting current events.
The second question was whether Sky's use in the news or magazine style cases might be fair dealing.
Winkelmann J observed, however, that in less clear cases the factors relevant to the current events threshold purpose issue, and to the issue of whether a dealing is fair may be so indistinguishable or so connected that the matter may need to be considered in a composite way. That is, the closer the purpose is to the boundaries of reporting current events, the less likely that the fair dealing defence will apply.
Whether a dealing is fair is a question of degree and impression. The degree to which the use competes with the copyright owner's exploitation of the work is a very important, or even the key, consideration. The extent and manner of the use is also relevant, as is whether it is reasonably necessary to refer to the copyright material to report the current events. Motive can be relevant, but it is accepted that competing media businesses desire to win viewers or readership and generate a profit.
Winkelmann J considered that it was necessary to look at the totality of Sky's use, and compared this case to the BBC v BSkyB case in England, which related to coverage of football matches during a World Cup. While the lengths of excerpts were similar, BSkyB's use was limited to sports news programmes and was infrequent.
She found that, through the number of programmes and the rate of their repetition, Sky was achieving an intensive level of broadcasting of TV3 sourced footage. Indeed, at times of significant match activity, the longest gap between screening was 25 minutes as a result of regular repetition of Sky's 365 Headlines format, and considerably shorter on occasions when all of the other programmes were added in. This intensity of use would tend to coincide with the intensity of viewer interest. Sky's multi-channel format also meant footage on Sky would be more accessible than footage on TV3 for large periods of the day.
Consequently, Sky's repetition of the coverage would erode to at least some extent TV3's position as the exclusive broadcaster of the Rugby World Cup. Winkelmann J held, for interim injunction purposes, that TV3 had a strong case that Sky's use of TV3 footage did not amount to fair dealing. The balance of convenience and overall justice also favoured the granting of the injunction.
The form of injunction to be granted was not easy to formulate. Winkelmann J appeared to be influenced by the fact that the other major broadcaster, TVNZ, was abiding by the News Access Agreement. The form of injunction largely followed the rules in that agreement, with some refinement to address Sky's multi-channel offering.
Lastly, Her Honour observed that, while the extent of permitted use under the terms of the injunction may well exceed what is fair dealing, she had to weigh the fact that her decision was made on an urgent basis and could be final in effect because of the short duration of the tournament.
In a small jurisdiction such as New Zealand, we often have to rely on interim injunction decisions to provide guidance on difficult areas of the law, particularly where even the best and responsible efforts of industry players have failed to be definitive.
The stakes were high and time short. Despite those pressures, Winkelmann J's performance in this decision outshone that of New Zealand's All Blacks in the quarter final at Cardiff.
Praise for Some Guidance on Grounds for Revocation of Trade Marks for Non-Use
Goodman Fielder produces a range of popular mayonnaise and salad dressings under the PRAISE brand in Australia. In looking into whether to bring its PRAISE products to New Zealand, Goodman Fielder identified two potential obstacles – trade mark registrations owned by Unilever for PRAISE (word) covering margarine, and by Heinz Wattie's for PRAISE (logo) covering mayonnaise. However, neither mark appeared to be currently in use.
Goodman Fielder filed applications to revoke the two trade mark registrations on the basis of non-use, and, in both cases, was successful in establishing that the trade marks had not been used for the requisite period of three years. In her decisions, the Assistant Commissioner has provided some guidance on the application of sections 66(1)(a) and 66(1)(b) of the Trade Marks Act 2002 which set out the grounds for revoking a trade mark registration on the basis of "non-use" and "suspended use".
Sections 66(1)(a) and 66(1)(b)
Section 66(1)(a) (the "non-use" ground for revocation) applies where a trade mark has not been used for a continuous period of three years or more following the actual date of registration (the date the mark is entered on the register) until one month before the filing date of the application for revocation.
Section 66(1)(b) (the "suspended use" ground) applies where a trade mark has been used since its actual date of registration, but such use has been "suspended" for a continuous uninterrupted period of three years or more.
It has generally been assumed that the non-use ground applies where a trade mark has never been used since the actual date of registration, and if a trade mark has been used at some point since registration but such use has ceased for a period of three years or more, the suspended use ground applies.
The decisions
In both revocation actions, Goodman Fielder pleaded section 66(1)(a) – that is, that the marks had not been used for a continuous period of three years or more following their actual date of registration. As part of their response, both trade mark owners argued that Goodman Fielder had pleaded the wrong provision.
In the first of the actions to come before the Assistant Commissioner, Unilever argued that section 66(1)(a) only applies where the trade mark has never been used at all, and that if there has been some use (as there had been in this case), section 66(1)(b) is the appropriate provision to plead.
The Assistant Commissioner agreed with Unilever that section 66(1)(a) contemplates a mark never having been used, but disagreed that this is the only situation covered by the provision. In the Assistant Commissioner's view, section 66(1)(a) could also cover the situation where a mark has been used, and it is not established that the ceasing in its use is temporary. In contrast, section 66(1)(b) contemplates that a mark has been used, that such use has ceased temporarily and that there is a genuine intention to resume use in the future.
In the second action, perhaps being aware of the Assistant Commissioner's earlier decision, Heinz Wattie's claimed that it had only temporarily ceased using its PRAISE trade mark for mayonnaise, and had future plans to resume using the mark. On this basis, Heinz Wattie's argued that section 66(1)(b) (the suspended use ground) should have been pleaded by Goodman Fielder rather than section 66(1)(a).
The Assistant Commissioner accepted that Heinz Wattie's intended to use its PRAISE mark in future, but held that an open-ended intention to resume use of a mark does not constitute suspending use of the trade mark within the meaning of section 66(1)(b). Section 66(1)(b) requires a concrete intention (as established, for example, by resolutions, business plans or internal or external publicity material) to use the mark again at a definite time. The intention to resume use needs to be more definite than an intention not to abandon the mark.
Guidance
It seems then, that section 66(1)(a) is the appropriate provision to plead even where a mark has been used and this use ceases, unless the mark's use has ceased and then started again, or there is a demonstrable concrete intention to use the mark again at a definite time, in which case the section 66(1)(b) "suspended use" ground would apply.
A more logical distinction still seems to be "never used" for section 66(1)(a) and "used but use ceased" for section 66(1)(b). However, until the Act is amended or judicial guidance provided on this point, the Assistant Commissioner has recommended that if there is a possibility that a mark has been used, applicants for revocation should apply to revoke under both grounds. This seems sensible as it may not become apparent whether a mark has been used at all, or whether use has ceased permanently or temporarily until after the owner of the mark has filed its evidence.
Bad Faith: the "sleeping provision" raises some interesting questions
In Neumann v Sons of the Desert, S.L. section 17(2) of the Trade Marks Act 2002 was put under the spot light when the Court considered whether an application for registration of a trade mark had been made in bad faith.
The case concerned New Zealand Trade Mark Application No 704235 a mark incorporating a cartoon of a seated boy, accompanied by the words "El Niño Tarifa". Sons of the Desert, S.L.- a Spanish company - filed its application for the mark in November 2003. Neumann subsequently filed an opposition to registration on the grounds that the application for registration of the trade mark was made in bad faith due to the fact that the applicant (a company of which Mr Galdeano was the sole director and shareholder) was not the owner of the trade mark.
The "circumstances"
Neumann's evidence in support of his opposition was that the mark had been devised by three men (including himself and Mr Galdeano) who had incorporated a company with the aim of marketing casual wear and clothing under various trade marks (including the "El Niño Tarifa"/ seated boy device). Neumann asserted that there was an oral agreement between the men, (who were later joined by a fourth man (the "Spanish Four")), that the trade marks of the business would be jointly owned by all of them, in all countries of the world. When two of the members left, their interests in the trade marks were assigned to Neumann and Mr Galdeano, making them co-owners. Neumann also argued that as Mr Galdeano was the sole director and shareholder of the applicant company, his knowledge of co-ownership of the trade mark could be imputed to the company.
Mr Galdeano argued that he was the sole creator and owner of the cartoon of the seated boy which was an essential feature of the trade mark and that meant that he was entitled to register the trade mark in New Zealand. He went on to say that any agreement between Neumann and himself related to trade marks in Spain and the European Union only – and therefore he was entitled to register the "El Niño Tarifa"/seated boy device in New Zealand.
The Reasoning
The case was originally heard before the Assistant Commissioner who held that there was no evidence of any agreement between Neumann and Mr Galdeano that they were co-owners of the "El Niño Tarifa"/seated boy device and the opposition therefore failed on this point.
Neumann then appealed to the High Court, where leave was sought and granted for further evidence to be adduced by Neumann. Neumann produced affidavits from the remaining two men from the original Spanish Four. These affidavits confirmed that there was an oral agreement between the Spanish Four that trade marks of the business would be jointly owned by all of them, in all countries of the world. Documentation was also provided in support which showed that there had been assignments of their interests to Neumann and Mr Galdeano.
Andrews J accepted this evidence and found that Neumann and Mr Galdeano were co-owners of the "El Niño Tarifa"/seated boy device.
In determining the "bad faith" point, Andrews J held that this may be demonstrated by evidence of conduct falling short of reasonable standards of commercial behaviour. He went on to say that a "combined test" (of subjective and objective elements) should be applied to determine whether an application for registration has been made in bad faith:
The Court must decide whether the knowledge of the applicant (a subjective element) was such that its decision to apply for registration would be regarded as being in bad faith by persons adopting proper standards (an objective element).
In applying this test, the Court must take into account whether the application has been made in bad faith in all the circumstances. The Court held that the relevant circumstances were (as established by the Neumann's evidence and the affidavits filed in support from two of the original Spanish Four):
That Mr Galdeano and Neumann were co-owners of the "El Niño Tarifa"/ seated boy device;
That they had agreed to be co-owners of the "El Niño Tarifa"/ seated boy device in respect of any new trade mark application filed in any territory of the world;
That Mr Galdeano controls the company Sons of the Desert S.L.. and his knowledge could be imputed to it
That the application for the "El Niño Tarifa"/ seated boy device in New Zealand had been made without the knowledge of Neumann; and
Registration would have the effect of depriving Neumann of registration in New Zealand.
Andrews J applied this test and considered that in all the relevant circumstances the applicant's conduct fell short of reasonable standards of commercial behaviour and that the application was made in bad faith.
The Discussion
The term "bad faith" is not defined in the Act and this ground for non-registration has not previously existed in this form in earlier Acts. The IPONZ Practice Guidelines suggest that allegations of bad faith will generally only arise where "it seems very likely that the applicant is not the owner of the trade mark that is the subject of the application" or where a mark is well-known and "there is no apparent relationship between the applicant and the known owner of the mark".
The principles and tests laid out in Neumann will therefore be useful to have in mind when considering an opposition on the grounds of bad faith or indeed how to deal with an allegation of bad faith should it be made against you in the future.
The case also raises some interesting questions about evidence and the application of the "combined test" in determining bad faith. What weight should be given to evidence when cross-examination is not available to test the validity of that evidence?
The High Court in Neumann felt able to make its decision based solely on affidavit evidence filed at the original hearing before the Assistant Commissioner (where evidence was filed by both Neumann and Mr Galdeano) and on the further evidence filed by Neumann in the High Court. No evidence was filed in reply and in fact the respondent chose not to be represented at the High Court hearing at all. Neumann and his supporters were not cross examined and the evidence seemed to be simply to be taken at face value without further enquiry by the Court. The evidence was in turn heavily relied on by Andrews J in reaching his decision that the application had been made in bad faith. This may be something that the Courts will need to address when allegations of bad faith are made in the future.
Remedies Corner:
Patent "Parasites" Not Destroyed
The courts will not grant an interim injunction when a patent holder has licensed its composition for royalties and by that made its damages for patent infringement quantifiable. A recent High Court decision confirms this.
The claim
In Ancare v Bayer, Ancare had applied for an interim injunction regarding what it claimed was Bayer's unlicensed use of its patented formulation for a remedy that destroys parasites in livestock.
The judgment described the licence dispute as coming down to a claim by Ancare that a licence did not exist for Bayer's use of the patent because an agreement was never finalised in a document and signed by both parties.
Meanwhile Bayer admitted that it was using Ancare's patented formula but argued that Ancare had licensed its use in an agreement that became binding from 9 February 2007. Alternatively, Bayer argued that Ancare's patent was invalid because it lacked the required "inventiveness".
Ancare applied for an interim injunction to stop Bayer from making what it claimed would be further unlicensed infringements of its patent while the parties were awaiting the full trial to determine the licence dispute.
The resulting judgment will be of interest to parties to interim injunction applications when there is evidence that the patentee has been willing to accept a royalty payment for its use.
The test for granting an interim injunction
The High Court first confirmed that patent holders seeking an interim injunction are subject to the same test as plaintiffs in any other type of intellectual property case.
That test requires a court hearing an interim injunction application to decide where the "balance of convenience" lies in the particular case. Wild J said this assessment was better described as requiring a court to determine which course "carries the least risk of ultimate injustice".
The Court stated that the issue of whether the "balance of convenience" favours granting an injunction requires a "two way consideration".
First, if damages will adequately compensate the plaintiff and the defendant is good for any damages that might be awarded, then no interim injunction should normally be granted.
Secondly, if damages will not adequately compensate the plaintiff then the court may grant an interim injunction. However, before it does so the Court should usually be satisfied that damages would adequately compensate the defendant if an injunction was granted against it, but the defendant was subsequently successful at trial.
Using this two-part consideration, the Judge dismissed Ancare's application. He considered that damages will adequately compensate Ancare if the trial Judge holds that Bayer had infringed Ancare's patent. Further, he considered that damages would not adequately compensate Bayer and, more importantly, Bayer's co-defendant distribution outlets, if the trial Judge finds in Bayer's favour.
Licensing agreements: the 'key feature'
Importantly, the Court considered that the "key feature" of the case was that Ancare had licensed (clearly on a non-exclusive basis) Novartis and Bomac under royalty agreements, thus rendering damages payable by an infringer reasonably quantifiable. Moreover, Ancare had also indicated that it would license Bayer, presumably on similar terms, if Bayer did not continue its (lower) pricing.
Although Ancare argued that there were other elements to the licences which made quantification difficult, the Court considered that Ancare must have ascribed a value to those other elements. Consequently, this was not a case where the patentee had reserved to itself, in the words of the seminal New Zealand case of Monsanto v Stauffer, "the right to enjoy the whole advantage accruing during the term of the patent".
The Judge said that the "royalties fix, or at least give a fairly accurate indication of, the worth of the use of the patented composition. Second, the licensing removes any element of damage by 'an invader'… of a market the patentee has monopolised for itself".
The Court also rejected Ancare's argument that Bayer's substantial undercutting on price would do permanent damage to the overall value of the market. The Court did not accept that recovery to higher price levels would be impossible for Ancare and its licensees if Bayer was ordered to cease further marketing of its cheaper formulation.
|
