A number of License/Copyright Agreements between the parties authorised the founder of the opponent to translate each book into English, and granted him worldwide rights to publish and market the translated books.  In 2004 the opponent also obtained a “Warranty of Authorisation” from the then-legal owner of the registered “RINGING CEDARS” trade marks in Russia, which stated that the Russian owner did not claim any proprietary right to the phrase “ringing cedars” in the English language, and authorised the opponent’s founder to make use of the phrase for either personal or commercial purposes.

The opponent based its opposition on the grounds that the use of THE RINGING CEDARS OF RUSSIA by Megre would be likely to deceive or cause confusion due to the opponent’s prior use of RINGING CEDARS in New Zealand (s 17(1)(a)).  The opponent also submitted that the application was made in bad faith (s 17(2)) and that the applicant was not the rightful owner of THE RINGING CEDARS OF RUSSIA (s 32(1)).

The opposition failed on all grounds, with the Assistant Commissioner noting that the opponent’s use of the RINGING CEDARS mark in New Zealand had been exclusively in relation to the applicant’s series of books.  The Assistant Commissioner held that RINGING CEDARS formed part of the content of each text for which the applicant is the sole copyright owner.  Therefore, the use of RINGING CEDARS by the opponent was held to be effectively use of that mark, by the opponent, on behalf of the applicant.

The Assistant Commissioner also noted that the opponent always marketed its books as “The Ringing Cedars Series by Vladimir Megre”.  Therefore, the opponent’s actions merely educated the public to recognize RINGING CEDARS as the badge of origin for the applicant’s series of books.

The Warranty of Authorisation was not considered relevant to the opposition because it did not bind third parties or their intellectual property. This highlights the importance of ensuring that all licenses concerning intellectual property are drafted carefully.

In seeking to diminish the significance of this factor, Apotex relied upon the recent Full Court decision in Smith & Nephew Pty Ltd v Wake Forest University Health Sciences [2009] FCAFC 142 (reported here), in which the Court held that:

it would be an error in considering whether the grant of an interlocutory injunction, in the context of an infringement claim, where the validity of the patent is in issue, to impose on a person who seeks to launch an alleged infringing product, an obligation to ‘clear the way’ by revoking the patent. Equally, the fact that a new entrant is prepared to take the risk of being restrained with its eyes wide open, should not be elevated beyond being a factor in the assessment of the many factors relevant to whether to grant an injunction.

Jessup J considered that taking this factor into account as a discretionary consideration was in the circumstances appropriate, concluding that:

[t]he respondent chose to refrain from challenging the validity of the patent in suit for what I consider to be essentially tactical reasons. To expect it to live with the consequences of that choice does not, I consider, amount to the imposition of a requirement that it “clear the way”.

Accordingly, while not to be elevated above the many factors to be considered in assessing the balance of convenience, a deliberate tactical decision not to challenge the validity of a patent prior to entering the market is likely to weigh in favour of the grant of an interlocutory injunction. Given that the grant of a patent is a prima facie indication of its validity, it is unsurprising that a party who considers its conduct shall not infringe because the patent is bad should be restrained from the allegedly infringing conduct until such time as its case for invalidity is made out.

Before any of the grounds of invalidity raised by Bausch & Lomb could be considered, it was first necessary to satisfy the “gateway” requirements of section 234(2)(e) of the Trade Marks Act due to the mark having been registered in Part A of the register under the 1955 Act. Accordingly, Bausch & Lomb need to show that the trade mark did not distinguish the goods of Alcon from those of other traders.

In support of its contention that the trade mark did not distinguish the goods of Alcon, Bausch & Lomb sought to rely on a number of publications showing use of the letters BSS in relation to balanced salt solutions. However, Foster J upheld objections by Alcon to the admissibility of many publications on the basis that they were published overseas. His Honour considered that:

it is a long bow for the Court to draw to find that use in the relevant trade in Australia can be established by the availability here of journals, dictionaries and textbooks published overseas which, to some extent, may have been read or looked at by persons participating in that trade.

As to those articles published in Australia, Foster J concluded that:

when used in those articles, the letters “BSS” were almost always being used by the authors as an editorial abbreviation for “balanced salt solution”. This does not prove lack of distinctiveness. The letters “BSS” never appear on their own in those journal articles without a prior reference to “balanced salt solution”. The contents of the journal articles are, at best, neutral on the question of whether the letters “BSS” were used descriptively by December 2006. If anything, they tend to suggest that those letters were not used in that way at that time. This is because, in every case, it was necessary to refer to the product by its full name (“balanced salt solution”) before the acronym “bss” could sensibly be deployed.

Accordingly, Bausch & Lomb failed to satisfy the “gateway” requirements of section 234(2)(e), resulting in failure of its validity challenge. Foster J nevertheless went on to consider the grounds of invalidity raised finding that none of those grounds were made out. In particular, his Honour considered that the letters BSS were not used as a descriptive acronym for “balanced salt solution” at the priority date and that the letters were at that time adapted to distinguish the goods of Alcon. Further, the trade mark had not since that time become a generic description of the goods in respect of which it was registered, namely a balanced salt solution.

In relation to Alcon’s claim of infringement, Foster J found that despite the Bausch & Lomb product bearing the trade marks BAUSCH & LOMB and AQSIA, the letters BSS were nevertheless being used as a trade mark rather than merely descriptively, noting that “[i]f all that was being done was to describe the contents of the bottle, the full expression “balanced salt solution” would have done nicely.” Perhaps more controversially, his Honour also consider that a factor relevant to whether Bausch & Lomb was using the letters as a trade mark was that ”[t]he letters “BSS” have brand significance in the relevant trade in Australia. They are known to be the applicant’s trade mark. The applicant has a reputation in the product identified by reference to the mark”. This seems to suggest a presumption that use of a well known sign is use as a trade mark rather than descriptive use.

Bomac opposed the granting of the extension request and sought a hearing.  At the Hearing the Patentee argued that the New Zealand Patents Act and Regulations make it clear that an application for revocation under section 42 must be filed with 12 months of the sealing of the patent and, according to regulation 104, shall (not “may”) include a Statement of Case.  They also argued that Regulation 168 has no application in these circumstances because the timeframe for filing the information required under regulation 104(1) is governed by section 42 of the Act rather than by the regulations.

The question to be determined was whether Regulation 168 permitted the Commissioner of Patents to extend the time for Merial to file its Statement of Case under Regulation 104.  Following the High Court decision in Ancare New Zealand Limited v Ciba-Geigy New Zealand Limited, AP55/95, 6 June 1996 the Assistant Commissioner considered the views expressed by Elias J.  In that decision her Honour Justice Elias noted that the answer to this question turned on whether the limitation of time for filing that statement of case is derived from the regulations or whether it is imposed by statute.  Her Honour considered the following questions.

(a)    Whether the time limit is imposed by statute only i.e. whether the “application” required by s 42 includes the statement of the case.  If so then the time limit imposed by the section applies and the power under Regulation 168 cannot be used to waive it; and
(b)    Whether Regulation 104(1) imposes a time limit at all upon which Regulation 168 can be used.

In dealing with the second question first, Elias J held that the reference in Regulation 104(1) to the need for an application to be “accompanied by” a statement imposed a time limit that was within the ambit of the extension provisions provided for in Regulation 168.

In respect of the first question her Honour held that a construction whereby the application for revocation of a patent is only “made” under section 42 by filing the Patents Form 45 and the statement of case would be inconsistent with the clear statutory scheme provided for under the Act.  Her Honour reached this view for the following reasons.

1. Section 42 does not provide any definition of “application”.  This section simply provides that any person interested may “apply” and that if such an application is made the Commissioner will notify the patentee.
2. The specification of the procedure and the prescription of form required for an action for revocation under section 42 is left to the Regulations under the “regulation making” power and not the Patents Act.
3. The language of Regulation 104(1) makes it clear that two different documents are required.  First the application is made in form 45 and accompanied not only by a copy of the application, but by the statement (in duplicate).

Following this decision in Ancare [supra] Assistant Commissioner Popplewell concluded that Bomac’s arguments must be rejected.  The section 42 requirement of “the application” is complied with by filing the form prescribed by the regulations i.e. form 45 only and the provisions of Regulation 168 can be used to extend the time to file a Statement of Case.  That is the need for a statement and time for its filing was governed by the Patent Regulations and not the Act and as such within the provisions of Regulation 168.

The Assistant Commissioner took solace from the wider scheme of the statute and Elias J’s statements on page 9 of the High Court judgment where he noted that “if the statute intended to prescribe the content of the statement and require its simultaneous filing as part of the application, it could have said so as it has done in the analogous provisions at section 9(2).  Similarly, if Regulation 168 was not intended to apply to Regulation 104(1), it could have been excluded along with other regulations specifically excluded.”

In considering this decision it is important to note that while the New Zealand Intellectual Property Office (“IPONZ”) has strict Guidelines in place to regulate proceedings before the Office, it appears that the public interest to ensure that a hearing officer is in possession of all the information and evidence necessary to make a properly considered decision is paramount.  On this basis it is likely that the party seeking further time will be given some latitude if it can demonstrate that there is a serious opposition on foot and that it has been acting diligently to meet the regulated deadline.

The Court disagreed that the second invention was a replacement for the first invention.  Allsop P considered that a “replacement” did not broadly mean any commercial alternative. Rather, in this context “replace” properly meant something that replaces the claims of the patent covering the first invention, in the sense that the replacement encompasses the claims of the first invention and thereby takes the place of or substitutes for them: a new product or process with one or more further integers in addition to the relevant claims would be a replacement.  In reaching the same conclusion as Allsop P, Handley AJA also interpreted “replacement” by reference to the claims of the patent covering the first invention.  His Honour reasoned that a replacement meant a new product or process which omitted one of the essential integers of a claim in the patent for the first invention, or one which added a new essential integer to a relevant claim, to give a better result.  As the second invention was not part of the claims of the first invention and only used some of the integers of those claims, the second invention was not found to be a “replacement”.

This case provides a good illustration of how an ordinary word used in a contract (in this case, the word “replace”) may be construed more narrowly by a Court than one of its broad ordinary meanings, in light of the context of the contract.  The case also highlights the need to precisely identify the nature of any future improvements which are the subject of an assignment.

On appeal, Vawdrey challenged the finding of infringement on the basis that the instructions to modify its design did not provide the requisite causal connection between the copyright work and the Vawdrey design because those instructions conveyed the idea of that work, rather than the expression of that idea. Moore and Bennett JJ noted that:

In circumstances where the objective similarities between the Vawdrey Engineering Drawings and the Subsequent Krueger Drawings were sufficiently great (as was the case) and Vawdrey had the opportunity to gain access to the latter drawings (as was the case), Vawdrey bore the onus of establishing how they created the Vawdrey Engineering Drawings and that this had not occurred as a result of copying … Vawdrey elected to give a false account (on her Honour’s findings) of how the various Vawdrey drawings developed. It would have been open to them to have given an honest account which may have had a bearing on whether the same conclusion would be reached. But they did not.

Accordingly, the necessary causal connection was held to be present. Discussing the same issue, Lindgren J expressed a preference for the view that:

access to the copyright work, is but one way of proving causal link and need not be present if the causal link is established without it.

The fact that the causal link was made via instructions from Camerons to Vawdrey, rather than direct access to the work by Vawdrey was therefore not relevant.

Vawdrey also challenged the finding that the trailers themselves were an infringement of the copyright in the drawings produced by Krueger. This challenge was also dismissed, with Moore and Bennett JJ stating:

the infringing drawings, the Vawdrey Engineering Drawings, were, on the evidence, drawn to illustrate what the completed trailers would look like at least from one important perspective, namely looking at the side of the trailer from (what is readily apparent) ground level. If the Vawdrey Engineering Drawings were themselves infringing copies of the Subsequent Krueger Drawings with the requisite degree of resemblance, then it is not a large step to deduce that the completed trailers would likewise exhibit the requisite degree of resemblance to the perspective illustrated in the drawings… the fact that from other perspectives (for example from the rear or from above) it is probable there is no real resemblance to the original work does not deny the existence of sufficient resemblance to establish reproduction of the original work in a three-dimensional form.

Other grounds of appeal raised by Vawdrey including in relation to its defence of innocent infringement and a challenge to the causal connection between the infringement and the damage said to have been caused to Krueger were also unsuccessful.

Various dictionary entries for the word “Kiwi” were put forward the most recent being the Macquarie Dictionary which included a definition of Kiwi as a colloquial term meaning of or relating to New Zealand. Lacheteau had argued that such an entry should not be given significant weight as the Macquarie was written to demonstrate “how Australian English is used”. However, this point was picked up by the Hearing Officer as reflecting the changing nature of English language in Australia and the fact that its usage has become more causal over time. In the case of KIWI CUVEE, the Hearing Officer found that “colloquial and colourful language are more readily used in Australia now that they were 20 years ago and I think that…”Kiwi” is readily susceptible to informal descriptive use, here, in relation to New Zealand wine.”

Noting that a connotation under section 43 “need not be the primary connotation, or the only connotation, so long as the end result is that, on balance, a significant risk of deception or confusion arises”, the Hearing Officer referred to observation of Finn J CA Henschke & Co v Rosemount Estates Pty Ltd (1999) 47 IPR 63 that there are two broad categories of wine consumers, involved and uninvolved.

Accordingly to the Hearing Officer, to the uninvolved consumer, the trade mark KIWI CUVEE will “look” like a wine label and such a consumer is less likely to assume that (colloquial or otherwise) use of Kiwi is as a description of the origin of the wine. However, more involved or knowledgeable consumers are likely to ask for a wine by reference to a region or country of origin and it these consumers who may be confused by aural usage, on wines lists or other circumstances where brief descriptions are used. Although such an error would most likely be discovered before the wine was purchased, the Hearing Officer stated that the confusion or deception with which section 43 is concerned need not be permanent, nor need it persist up to the point of sale.

Accordingly, the Hearing Officer was satisfied that there was a real and significant risk that confusion will arise through use of the trade mark KIWI CUVEE and therefore that New Zealand Winegrowers has established a ground of opposition under section 43.