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Trademarks 2017: Discussion

Who’s Who Legal brings together Tim Golder at Allens and Julia Anne Matheson at Finnegan Henderson Farabow Garrett & Dunner to discuss recent developments in the field of trademarks, the increasing demand for global services and growing concerns over online trademark infringement. 

Discussion 2

 

 

 

 

 

 

 

What have been the most significant developments in trademark law in your jurisdiction over the past year?

Tim Golder: A decision issued by the Full Federal Court in 2016 has finally settled what constitutes authorised use of a trademark in Australia.

Previously, it was considered that, provided the trademark licence allowed for the licensor to exercise quality control, use of the trademark by the licensee would constitute authorised use of the trademark regardless of whether or not the licensor actually exercised quality control. However, the bar has now been raised by virtue of the decision in Lodestar Anstalt v Campari America LLC [2016] FCAFC 92.

Wild Geese Wines Pty Ltd (WGW) owned two trademark registrations: WILD GEESE WINES and WILD GEESE. In settlement of a dispute and by means of assignment and merger, the registrations were assigned to Campari America LLC, but licensed back to WGW in respect of wine sales in Australia. The terms of the trademark licence included control provisions which were not at all demanding on the licensee.

Lodestar Anstalt had sought removal of the WILD GEESE registrations for non-use, and Campari had sought to rely on use of the trademarks by WGW to defeat the non-use removal applications. Therefore, the question for the court was whether WGW’s use of the trademarks was authorised by Campari such as to constitute an authorised use of the trademark under section 8 of the Trade Marks Act 1995 (Cth).

The Court said the trademark must continue to indicate a connection in trade with the registered owner and held that it was not sufficient that the trademark licence included control provisions. Instead, it is necessary to review the conduct of the parties to establish whether actual quality control had been exercised by the licensor. In the present case, there was no evidence of any exercise of quality control by Campari; therefore, the use of the marks by WGW was not an authorised use sufficient to defeat the non-use removal applications. The Court further indicated that the quality control provisions in the licence were merely “token”, such that compliance with these would be insufficient.

This decision is important for trademark owners who license the use of their trademarks in Australia. It is important to review the control provisions of any existing licence, or to insert control provisions when renewing the licence. Most importantly, trademark owners need to be vigilant in exercising quality control to ensure that they can rely on the licensee’s use as an authorised use of the trademark.

Julia Anne Matheson: There have been multiple developments over the past year in the US from numerous tribunals including the Supreme Court, district courts, and the Trademark Trial and Appeal Board (TTAB), the judicial arm of the US Patent and Trademark Office. Some of those developments include the following.

On 15 January 2017, the TTAB implemented new Rules aimed at streamlining ex parte appeal and inter partes proceedings, including those involving trademark oppositions, cancellations and concurrent-use proceedings. Among other things, the new Rules apply a rule of proportionality to the process of discovery designed to curb discovery abuse.

Contravening long-standing jurisprudence on the issue of “token use,” on 14 November 2016, the Federal Circuit held that a single sale of two hats over a five-year period was sufficient to meet the Lanham Act’s “use in commerce” requirement for trademark registration. Christian Faith Fellowship v Adidas AG, No. 2016-1296 (Fed. Cir. 14 November 2016). This decision will make it far easier for registrants with questionable use to defend against challenges of non-use/abandonment.

Like other Circuit Courts, in October 2016, the Ninth Circuit held that the Supreme Court’s decision in Octane Fitness, LLC v ICON Health & Fitness, Inc, which outlined the standard for finding a case “exceptional” in patent fee-shifting disputes, applies to Lanham Act cases as well. Under this standard, a district court must look to the “totality” of the case’s circumstances, including the party’s motivation, any frivolousness, or factual or legal unreasonableness, to determine whether the case qualifies as exceptional to warrant an award of attorney’s fees to the prevailing party (SunEarth, Inc v Sun Earth Solar Power, No. 13-17622, 15-16096 (9th Cir. 24 October 2016)).

In Trader Joe’s Company v Hallatt, No. 14-35035, the Ninth Circuit held that a US trademark holder can pursue a Lanham Act claim in the US against infringing activity that occurred primarily outside of the US (namely, in Canada) based upon the broad definition of “commerce”, the Lanham Act’s extraterritorial reach, and the clear injury to the US-based company as a result of the defendant’s actions (9th Cir. 26 August 2016).

In Belmora LLC v Bayer Consumer Care AG, No. 15-1335, the Fourth Circuit held that a foreign trademark owner who has not used his or her trademark in the US may nevertheless pursue a false association, false advertising, and trademark cancellation claim against the owner of a registration for the same mark in the United States, reasoning that it is the defendant’s, and not the plaintiff’s, use in commerce that creates the injury under the terms of section 43(a) of the Lanham Act (4th Cir. 27 October 2015).

Sources have noted a growing demand for a more global practice of trademark law as a result of the increasing internationalisation of brands. How has your firm/practice adapted to face this challenge?

Tim Golder: We have found that our clients expect more and more of us each year. To that end, we have always acknowledged the importance of having a strong network of trusted associates to assist us with our clients’ marks in overseas jurisdictions. However, the increased internationalisation of brands has made this more important than ever.

As more of our clients are developing international portfolios, we have determined that it is not enough that an associate be able to file and prosecute applications under our instructions. Instead, we have developed a network of trusted advisers who understand the risk and aggression profile of our clients, and take an active role in recommending actions in their jurisdiction which serve to advance our clients’ business objectives.

Julia Anne Matheson: Because we are accustomed to handling the portfolios of companies with a global reach, the increasing internationalisation of brands is something we’ve built the group around. We have a London office with dedicated trademark professionals with expertise before the EUIPO, the WIPO and the UK Intellectual Property Office and courts. We have long-standing experience with China-related infringement and counterfeiting issues and representing clients in successful campaigns to achieve well-known status in China and have an attorney with both Chinese and US law degrees, and significant experience developing, filing and executing enforcement strategies for Greater China who works closely with our US and European client teams to achieve consistent and favourable result for our clients. We have a deep bench of trademark professionals in-house and have developed and maintained close relationships and cooperate with top IP firms around the world.

Online trademark enforcement remains a top priority for many clients. How have you seen this type of infringement develop in your jurisdiction over the past year?

Tim Golder: As the market in Australia has increasingly moved away from bricks-and-mortar stores to an online market, online infringements have increased significantly. Most importantly, because of the low cost of setting up an online profile, infringers are not deterred by capital costs that they would otherwise face in introducing a bricks-and-mortar offering.

An interesting development in this context surrounds attempts by entities to redirect internet search enquiries of competitors so that the consumer is led to their website and not the website of the competitor. This involves various tactics such as meta-tags and the use of keywords in Google Adwords.

The decision in Veda Advantage Limited v Malouf Group Enterprises Pty Ltd [2016] FCA 255 accords with most of the decisions in the Australian Federal Court in relation to the use of trademarks as keywords in Google Adwords to display in “sponsored links”. Regarding the use of trademarks as keywords, the court found that: Veda was not using the keyword as a sign to distinguish the services from those of other traders – it was merely using the word to identify potential customers; keywords could be acquired by any person using the Google Adwords program; and the keywords were imperceptible to consumers, and hence, were not being used to denote the origin of the services; but the use of a trademark in a “sponsored link” may constitute use of the mark as a trademark, and hence, constitute trademark infringement.

Conversely, in Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd [2015] FCA 554, the Federal Court found that, notwithstanding that the trademark did not appear on the actual website, the use of the trademark as a meta-tag could still constitute trademark infringement.

In the Veda Advantage case the Court distinguished the Accor case on the basis that the Accor case dealt with meta-tags, rather than Google keywords. Such meta-tags (which appear in the source data) were considered visible to those consumers who “know how to find it”. Justice Katzmann in the Veda Advantage case also stated that she preferred a case that was inconsistent with the Accor case, which held that the meta-tags did not constitute trademark infringement.

The Accor decision was appealed, and disappointingly, in a decision that post-dates the Veda Advantage decision, the Full Court of the Federal Court has upheld the primary judge’s finding that the use of the trademark as a meta-tag constitutes use of the word as a trademark without conducting any detailed analysis in that regard (Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd [2017] FCAFC 56). One of the three judges in the Full Federal Court was Justice Katzmann, who had issued the judgment in the Veda Advantage case. Disappointingly, no reference was made to the Veda Advantage case. In our view, the Accor appeal decision is incorrect, but until such time as the issue is reconsidered by the Full Federal Court or overturned by the High Court, it represents the current position in Australia. So there seems to be a puzzling distinction between, on the one hand, Google Adwords which do not constitute trademark use and, on the other hand, meta-tags which (seemingly by virtue of them being visible in the source data for a website) constitute trademark use.

Julia Anne Matheson: We have likewise seen a significant increase in the number of litigations related to online infringement and counterfeiting. The ever-increasing number of generic top-level domains has created greater and more varied opportunities for cyber-squatters and infringers to improperly capitalise on the goodwill of well-known brands. Also, the number of websites that provide platforms for posted third-party content continues to expand. The ability to efficiently and effectively monitor these different platforms may vary, depending on their sophistication and how attuned they are to the needs of brand owners seeking to protect both their intellectual property and the public. Additionally, because different platforms, ISP hosts, and domain name registrars around the world respond to infringement notices with differing levels of responsiveness, infringers can often perpetuate fraud all while keeping their identities concealed. All of this has necessitated a larger budget devoted to regular global online brand monitoring and creative enforcement strategies. To that end, our trademark group includes an attorney which focuses exclusively on internet and cyber law issues, including online brand enforcement and Uniform Domain-Name Dispute Resolution Policy proceedings.

Respondents have spoken of an increase in work in relation to the protection of non-traditional trademarks. Is this something you have noticed in your jurisdiction, and is there a difference in the way that you approach this type of work in comparison with traditional trademarks? 

Tim Golder: Non-traditional trademarks are certainly available for registration in Australia. However, as with most jurisdictions, such trademarks remain very difficult to register and (if registered) to enforce.

Non-traditional trademarks are examined according to the same criteria as any other trademark in Australia. To secure acceptance for such marks, applicants must distinguish the claimed goods and services from the similar goods and services of other traders. In that regard, the test in Australia is whether other traders, being actuated only by proper motives, would think of the marks and wish to use them as a trademark in respect of their own similar goods and services.

As with any other trademark application, if the trademark is not inherently capable of distinguishing, it is possible to provide evidence of use of the trademark to demonstrate acquired distinctiveness. However, it is our experience that with regard to non-traditional trademarks, it is often difficult to demonstrate that the trademark itself is operating to denote the origin of the goods or services. Accordingly, we are yet to see a significant increase in the number of non-traditional trademarks registered in Australia.

Julia Anne Matheson: We have seen a significant uptick and expansion of the design patent practice in the last few years in the US. In particular, we have seen a greater interest in protection of designs in the US as well as many other countries, in an effort to build a strategic worldwide portfolio. Many of our clients are recognising and taking advantage of design patent protection to achieve the market exclusivity needed to establish the necessary acquired distinctiveness to achieve trademark protection for product configuration.

In the US, design patents protect the appearance of “an article of manufacture”. Trade dress and design patent protection can coexist when the shape of the product is ornamental (as opposed to functional) and also serves to distinguish the source of the goods to consumers. Whereas a design patent lasts for 15 years, trade dress protection can last indefinitely. Companies in the automotive, technology, and fashion industries are increasingly relying upon design patent protection as an additional and cost-effective tool to secure their valuable rights.

Litigating design patent cases presents unique challenges that significantly differ from utility patents and fall more in line with trademark product configuration and trade dress cases, where survey evidence and experts are key.

How would you describe the competition in the legal market in your jurisdiction at the moment?

Tim Golder: Over the past 12-18 months, the Australian IP landscape has changed dramatically as a result of the public listing of Australian IP firms on the Australian Stock Exchange. There are currently three companies that collectively hold nine Australian IP firms. Each of these companies hold two or more IP firms, which continue to operate as separate and competing firms.

This development raises potential concerns in relation to conflicts between: the firms’ duties to clients and shareholders; and between clients of different firms within the same operating group.

Accordingly, this may give rise to concerns in the event that disputes occur between parties represented by firms within the same company, as the firms may regard themselves as free to act for their respective clients in the dispute despite the fact that the firms share common ownership.

As one might imagine, this development has meant that a number of companies have elected to transfer their IP portfolios to independent firms.

Julia Anne Matheson: The US marketplace continues to be a highly competitive field occupied by firms ranging from small specialty firms to global general practice firms. The past decade has been characterised by numerous national and international firm mergers including the merger of IP boutiques into global general practice firms, and the increase in efforts by general practice firms to expand their IP resources and practice capabilities. Finnegan remains one of the largest global boutiques dedicated exclusively to the practice of intellectual property, Finnegan celebrating its 50th anniversary in 2016. It remains one of only a few firms able to offer the deep bench of a specialty practice together with the resources of a large firm.

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