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16 July 2019Intellectual Property: IntroductionIntellectual property Legal rights that may be asserted with respect to products of the human intellect (e. copyright, patents, trademarks) - Can have cultural or financial value - Cultural value example- Shakespeare - Things protected by patents are th...

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16 July 2019

Intellectual Property: Introduction Intellectual property Legal rights that may be asserted with respect to products of the human intellect (e.g. copyright, patents, trademarks) - Can have cultural or financial value - Cultural value example- Shakespeare - Things protected by patents are thought to have more financial value. - There are some things which have both and can be protected by IP. Harry Potter is a good example. Harry Potter is protected by copyright and the actual name is protected by trademark. Due to cultural or economic value, we protect things and grant to the creator exclusive control. May not be full control, it depends on the IP. Granting control over how the thing can be used. Match the type of IP Swivel chair- Industrial Design but can also be a patent Pride and Prejudice book- Copyright Google Logo- Registered Trademark Lightbulb- Patent Chemical Formula in Coca Cola- Breach of Confidence Copyright (Copyright Act 1994) Protects different types of works Drawings, music and books Gives creator protection against those who copy the work without permission. There is a limitation- copyright only lasts for a limited amount of time. It will last only 50 years after the creator’s death (most of the time). “Public Domain”  usually means not protected by copyright or copyright expired. When copyright expires, you can make a copy of it. Don’t need permission from the estate. Registered Trade Mark (Trade Marks Act 2002) Trademarks usually identify the source of the products. The source means the person responsible for the product or service Trademark can be a word or image or even a colour. Patent (Patents Act 2013) Usually about invented products Usually can’t patent a book or music Can have a patent protecting a process – example of this is dry-cleaning processes Can protect the process for a maximum of 20 years Patents are usually protecting useful things- this is a statutory requirement

Breach of Confidence Formula for coke syrup is known as a trade secret or confidential information If you break promise of confidentiality you could be in breach. Can patent the formula or keep it secret as a trade secret. Have to put in detail what exactly the chemical formula is. Then would get a certain number of years (in NZ 20 years). If you are relying on keeping it a secret, you can keep it secret for eternity. The problem with trade secrets is that someone could come up with the same formula and if you genuinely came up with the same formula you can use this and sell it. Something physical (like microchip) is better to patent. Not just about the law, need to think of the business side of things Industrial Design (Designs Act 1953) Usually about the look and appearance of the product. Sometimes can have patent registration and design registration. Different forms of IP in one thing- Coke Can example Logo can be a registered trademark and the words Chemical Formula in the coca cola protected by a breach of confidence Copyright can also protect the logo and the specific design of the logo The process can also be protected as well In NZ there is registered design for the shape of the coke bottle. This is on the basis that the coke bottle is slightly different than other bottles. Intellectual Property Office of New Zealand (IPONZ) Can registered patents, designs and trademarks but cannot register copyright.

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Trade Marks Definition for registered trade marks in Trade Marks Act 2002 S5(1): Trade mark- means any sign capable of(i) Being represented graphically; and (ii) Distinguishing the goods or services of one person from those of another person. Identifying the symbol with the particular association or company. s 5(1): sign includes— (a) a brand, colour, device, heading, label, letter, name, numeral, shape, signature, smell, sound, taste, ticket, or word; and (b) any combination of signs Trade marks can be used as brands as good or services. Can help to choose between brands and differentiate between the two products.

Functions of trade marks  to indicate origin/source  to denote quality  to aid product differentiation  to advertise Types of trade marks 1. Unregistered trade marks 2. Registered trade marks

Unregistered Trade Marks Unregistered trade marks cannot be protected under the Trade MARKS Act 2002 (s99) There are several ways to protect them. One way is through the Fair Trading Act 1986, which is more about consumer protection. Can also use common law tort of passing off. Elements of Passing Off In Erven Warnink BV v J Townend & Sons (Hull) Ltd [1979] AC 731 (HL), Lord Diplock (at 742) described 5 characteristics. In this case there are two judges describing 5 different characteristics of the tort. In the same judgment, Lord Fraser (at 755-756) described 5 requirements phrased differently to Lord Diplock’s. In Reckitt & Colman Products Ltd v Borden Inc [1990] 1 WLR 491 (HL), Lord Oliver (at 499) described 3 elements. For the purposes of this course, we can simplify the elements of passing off as follows. 3 [simplified] elements of passing off: 1. Plaintiff owns goodwill in relation to its goods/services (and the goodwill is associated with the mark, e.g. the name, logo, etc.); 2. Defendant made a misrepresentation that defendant’s goods/services are connected to the plaintiff’s, which is likely to confuse or deceive the public; and 3. Defendant’s misrepresentation damaged or is likely to damage plaintiff’s goodwill. This tort is not a property right in the mark or shape. It is the property right in the goodwill/business reputation that the product has with respect to the products. Passing off cases can be inconsistent, very fact-specific and indirect Jif lemon Case Features such as designs, colours and shapes that go into products labelling- “Get up” Lemon juice in the lemon shaped containers. The plaintiff started selling this in the 1950s and the defendant sold this under a different name in lemon shaped containers.

In that case, the plaintiff won under the tort and upheld that all requirements met. Defendants could not continue to sell products in the packaging as it was too similar. The reason the trade mark was not registered as it was too descriptive of the product. If it is too descriptive of the product, it cannot be registered as a trade mark. If it is too descriptive, it will block traders from using things that maybe quite common. If your mark or sign is too descriptive, cannot have it protected as a trade mark.

Goodwill (element 1) Plaintiff owns goodwill in relation to its goods/services (and the goodwill is associated with the mark, e.g. the name, logo, etc). What is goodwill? IRC v Muller & Co’s Margarine Ltd [1901] AC 217 (HL) at 223-224: “What is goodwill? It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start. The goodwill of a business must emanate from a particular centre or source. However widely extended or diffused its influence may be, goodwill is worth nothing unless it has power of attraction sufficient to bring customers home to the source from which it emanates. Goodwill is composed of a variety of elements. It differs in its composition in different trades and in different businesses in the same trade. One element may preponderate here and another element there.”

(As this is a tax case, not an intellectual property case, it is not necessary to know the facts or holding.) The idea that whatever the mark, does it serve as something that attracts customers? Professor Stephen Todd has described goodwill as “a concept akin to, but wider than, reputation since it denotes also some activity, or at least recognition, in the marketplace”. 1 Goodwill can be limited Goodwill can be localized. Geographical limits: Goodwill can be limited to a particular city: Taylor Bros Ltd v Taylors Group Ltd (1988) 2 TCLR 447 (CA) In UK, the SC said you must have customers within UK to establish goodwill in England. Must have customers in the jurisdiction. In NZ, courts have been willing to accept that there doesn’t have to be NZ consumers to have goodwill. If plaintiffs have goodwill in AUS, that may be sufficient to have goodwill in NZ. The limits of this are not certain however. NZ courts will be more flexible.

1 Stephen Todd “Interference with Intellectual Property” in Stephen Todd (ed), Todd on Torts (8th ed, Thomson Reuters New Zealand, Wellington, 2019) 747 at 756.

Other examples in the recommended reading (you need not read the cases cited): Paul Sumpter, Intellectual Property Law: Principles in Practice (3rd ed, CCH New Zealand, Auckland, 2017) at 408. Time Limits: Goodwill can die with business, but there is no specific time after which goodwill does not survive. There can be an end to goodwill. At the time the defendant started the misrepresentation, did the plaintiff have goodwill is what the court will ask. There is some English commentary which says if you clearly abandon business, goodwill dies at that point. Assignment When you hand over IP to another owner, so now they have the copyright. This usually happens when business changes hands. When someone dies Goodwill can also be inherited Goodwill can be shared- ‘extended’ passing off ‘Extended’ passing off – “the name is usually descriptive (often of a region) and, multiple traders may enjoy the benefits of the goodwill provided they come within the class.’  Multiple traders that share goodwill  If it does not fit into this definition, then it is classic and not extended. Could be with respect to, for instance: Recipe / ingredients / manner of manufacture (‘Advocaat’ drink): Erven Warnink BV v J Townend & Sons (Hull) Ltd [1979] AC 731 (HL) - In this case there was a drink and plaintiffs were businesses in UK. For several years they imported and sold this Dutch drink in the UK. There was spirits, sugar and other things - The Dutch GOVT had statutory requirements on this drink. This was what the plaintiffs were importing. - The defendant was also ac UK business but what they did was make a cheaper version of the drink with different ingredients. They sold it under the same name and sold a different version in the UK. - The plaintiffs won and HOL said they had shown requirements of the tort. The entire group that imported drink had shared goodwill but virtue of the name. the reputation was strong for the drink among people who knew and the cheaper version was said to damage the goodwill of the plaintiffs.

Geographic connection: Wineworths Group Ltd v Comite Interprofessionnel du Vin de Champagne [1992] 2 NZLR 327 (CA)

[Note also that the Geographical Indications (Wine and Spirits) Registration Act 2006 came into force in 2017. The IPONZ description of this type of IP is here.] - The location could be where product being manufactured and where ingredients come from. - This case involved the word champagne - The defendants were importing in NZ sparkling wine which said ‘Australian Champagne’ - French champagne producers brought this case to court and they won. Court said that the producers of the champagne from the area in France had shared goodwill in NZ and the attractive force that brings in consumers. Because of the shared goodwill they could not have the wording. Quality: Chocosuisse Union des Fabricant Suisses de Chocolat v Cadbury Ltd [1999] RPC 826 (CA) - Swiss chocolate makers won against Cadbury - On the box, it never says Swiss Chocolate, but still they won under the tort. - They phrase Swiss Challet meant it was made in Switzerland. - When it comes to the second step of misrepresentation, a number of the general public must be confused. - The UK public identifies the idea of Swiss chocolate with decent chocolate. - The misrepresentation was that it was not an equivalent level of good quality chocolate. Descriptive marks (for ‘classic’ passing off) (doesn’t fit within broad definition) When you have a mark descriptive of actual product, there may not be sufficient goodwill. If you have a descriptive mark and it is a classic situation, the question is, has the mark gained a secondary meaning? Whether the consumers have now understood the mark to identify the source (secondary meaning). If descriptive mark but has not gained secondary meaning, then will not be sufficient goodwill. Sufficient goodwill: Hills Flooring Ltd v Carpet Corner Ltd HC Auckland A289/83, 3 May 1983 - Plaintiff’s business trading name was carpet corner - They were in a corner location for 15 years but then shifted to a new location. - The question is whether the mark is too descriptive? - They continued to use the name even after locating. - The defendant registered the name ‘carpet corner’ as their official NZ company registered name. - Plaintiff sued and won a passing off action. They could not use that name - The court said they had a consistent use of the name and they also plaintiff. However, many more of the consumers had heard of the place ‘carpet corner’ and this was enough that they heard of the name carpet corner. Even though descriptive, they had sufficient goodwill to win the action. s Tui Foods Ltd v New Zealand Milk Corp Ltd [1997] 2 NZLR 214 (HC) - Passing off for defendant to use yellow coloured milk bottle tops.

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The colour yellow did not match the industry standard. They said the yellow is not industry standard and is more distinguishing the product. They said this was a branding choice and was not as descriptive.

No sufficient goodwill: DB Breweries Ltd v Lion Nathan Ltd (2007) 12 TCLR 25 (HC) - This was about beer or ale - Plaintiff’s drink was ‘Monteith’s Summer Ale’ - And defendant’s was ‘Mac’s Summer Dance’ - Because too descriptive the plaintiff did not have sufficient goodwill and lost the case. Couldn’t identify the source. - The trade mark registry also refused to register the trade mark as they said it was too generic - In this case, the plaintiffs had not shown that there was enough secondary meaning which indicated the source. Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1988] 1 NZLR 16 (CA) - The purported mark was a checked pattern, but at the time a lot of companies used this. - Said it had not identified the source and could not acquire secondary meaning. Goodwill of human individuals There is a goodwill issue here. Evidence of goodwill How do you prove goodwill and attractive force? Sales information is one thing, consumer surveys. Can also show traders in the same field.

Misrepresentation (element 2) Defendant made a misrepresentation that defendant’s goods/services are connected to the plaintiff’s, which is likely to confuse or deceive the public. Will usually be an implied confusion. This potential confusion is the source of the goods or services. No requirement to show that the defendant intended to create the confusion, it is the effect that matters. Examples: Erven Warnink BV v J Townend & Sons (Hull) Ltd [1979] AC 731 (HL) - Misrepresentation was not that the drink came from the Netherlands, it was that it had the same ingredients Spalding v Gamage (1915) 32 RPC 273 (HL) - About footballs and the plaintiff sold the plaintiff’s discarded footballs - Defendant got a hold of these from plaintiff and sold them as good quality. It was clear that these were manufactured by the plaintiff.

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Here the false suggestion was of superior quality and no deception as to the direct source, but as to the quality. The plaintiff won the passing off action won the basis of misrepresenting the quality of the product

United Biscuits (UK) Ltd v Asda Stores Ltd [1997] RPC 513 - Plaintiff made penguin brand biscuits and defendant made puffin brand - Puffin was cheaper and the court said this was similar packaging - The plaintiff won the case and court said the likelihood of consumer confusion was that some consumers could think that the same manufacturer produced both brands. Irvine v Talksport Ltd [2003] EWCA Civ 423, [2003] 1 WLR 1576 - Misrepresentation with respect to endorsement - There was a radio station and there was a brochure. They had a picture of the plaintiff who was a formula 1 driver. - The radio station got a hold of a picture of him holding a mobile phone. They replaced the mobile phone with a radio which has their logo on it. - They used this on their brochures. - Plaintiff was in the process of endorsing products. They used this pic without paying him - Plaintiff won. The court said there was sufficient goodwill in his name and image as a celebrity - CA said no copyright issue here. - Court said the picture misrepresented that he had a sponsorship deal with the station. - Example of misrepresentation used as false endorsement Fenty v Arcadia Group Brands Ltd [2015] EWCA Civ 3, [2015] 1 WLR 3291 - This case is about human goodwill - Misrepresentation with respect to endorsement - Topshop in the UK used Rhianna’s photo without permission and put it on a top - The question was whether she could win under the tort. - Court said Rhianna’s fans would likely believe that she had approved or endorsed the T-Shirts as she previously did so with clothing. This type of product fans would believe she endorsed. There were also previous connections between Rhianna and Topshop. - Goodwill must be associated with the mark – mark would be the picture of Rhianna. - In English law, there is no right to stop people using your picture. But because Rhianna had goodwill here associated with her photo. - Passing off for human photos is not something who are non-celebrities can use.

Levi Strauss & Co v Kimbyr Investments Ltd [1994] 1 NZLR 332 (HC)

(Useful for the idea of post-sale confusion. Read only the facts and the section on passing off at 379-381)  American Jean company Levi had particular type of tab on their jeans. K also had jeans and they had coloured tabs on the back pocket too. Levi did not like this.  Levi won. They also won on registered trademarks too.  With respect to misrepresentation, the court said it was not so much that consumers would be confused when buying the jeans, it is more when the jeans had been sold, not at the point of sale.  If you see it when it is worn or second hand sale- post sale confusion. This was said to count as misrepresentation. Doesn’t have to be at point of sale. Evidence of (likely) confusion Evidence of actual confusion not needed How many consumers need to be misrepresented? Irvine- A not insignificant section of the market (thus, significant individuals in market) Fenty- substantial no. of consumers

Damages (Element 3) Defendant’s misrepresentation damaged or is likely to damage plaintiff’s goodwill. Taylor Bros Ltd v Taylors Group Ltd (1988) 2 TCLR 447 (CA):  Two companies in Wellington. One used the name ‘Taylors’ as dry cleaning. Defendant using ‘Taylors’ for linen line and ‘Fosters’ for dry cleaning.  CA upheld injunction that lower court said they could enjoin the use of Taylors for services involving garment in Wellington???  Court said there were numerous instances of confusion. Individuals thought companies were connected in some way.  The court said if you made a note saying ‘we are not connected with the plaintiff’ it would be an unhappy imputation. They didn’t explain why but didn’t like this idea. However, in some cases, such a disclaimer could work. Potential types of damages actionable in passing off include:1. Diversion of trade o Diversion of customers. o Damage has to be in relation to plaintiff’s goodwill. 2. Reputational loss o Often also termed ‘poisoning the plaintiff’s goodwill’ o How much potential loss 3. Dilution o Damage by association o The goodwill is seen as belonging to more than just the plaintiff. o Their positive goodwill is divided between plaintiff and defendant

Example of dilution as main form of damage (and also lost sales):

Levi Strauss & Co v Kimbyr Investments Ltd [1994] 1 NZLR 332 (HC) (Read only facts and the section on passing off at 379-381) o Dilution o Lost sales was an additional form of damages....