Issue 49 • June 2021 Australian innovators big winners under Patent Box scheme announced in Federal Budget NFTs – the vapourware of Blockchain technology? POF recognised as a leading firm in MIP IP Stars Awards 2021 The best method of clearing a path for generic market entry Patents | Trade Marks | Designs | IP Research | Legal Services Welcome In this edition of Inspire, James Burnley examines the increasing reliance on the ground of best method by generic pharmaceuticals seeking to invalidate patents and enable market entry for their products. Defending a best method attack can present significant challenges to a patentee and if successful can result in a patent being found invalid in its entirety. While new applications of technology like blockchain can generate plenty of interest, as Melissa Wingard explains it pays to step back and understand the legal rights and obligations which can arise. The excitement of acquiring a shiny new NFT might quickly be quelled once you realise the limitations of the rights you have acquired, or that the work you thought you had purchased has disappeared completely because a website no longer exists. For many innovators, the commercialisation of a new technology will involve working with third parties. However, as Peter Wassouf discusses by reference to the decision in Key Logic v Sun Wizard, in the race to meet commercial objectives it is important to maintain appropriate confidentiality with respect to the disclosure of new developments in order to maximise the value of the intellectual property derived from them. Also in this edition, David Longmuir explains the recently announced Patent Box scheme targeted at the medical and biotechnology sector, Malcolm Bell reports on some alternative approaches to seeking security for costs in legal proceedings, Russell Waters explores the pitfalls of adopting trade marks which have a descriptive character, and we say congratulations to our new principals. Adrian Crooks, Principal BEng(Civil)(Hons) LLB LLM FIPTA adrian.crooks@pof.com.au POF recognised as a leading firm in MIP IP Stars Awards 2021 Inspire June 2021 We are delighted that POF has been recognised as a top Australian IP firm in the MIP IP Stars Awards for 2021, achieving the following awards: 2 > ‘Trans-Tasman IP Firm of the Year’; > ‘Trademark (Patent & Trademark Attorney Firms) Firm of the Year’; and > the Australia ‘Impact Case of the Year award’ for our work in Meat and Livestock Australia v Branhaven. We have also achieved a Tier 1 ranking for Trade Mark and Patent Prosecution. In addition, POF Principals Michael O’Donnell, Russell Waters, Edwin Patterson, Alyssa Telfer and Ross McFarlane, and Special Counsel Saskia Jahn, were all named as IP Stars for their fantastic work in the last year. MIP is a highly regarded directory for intellectual property firms and practitioners around the world. Winners are selected based on extensive reviews of supplied case material, as well as feedback obtained from our clients and trusted associates. These achievements are a reflection of our professionals’ calibre of work and commitment in providing exceptional client service. “At Phillips Ormonde Fitzpatrick we are focused on building a team of great people who do great work for our clients. Genuine interest in our clients and how to best use IP to deliver successful business outcomes is at the heart of everything we do. Awards such as these are a nice pat-on- the-back for the efforts of our people.” Ross McFarlane, Managing Principal Phillips Ormonde Fitzpatrick promotes two new Principals Marine Guillou Danielle Burns Marine specialises in anti-counterfeiting programs, customs proceedings and training, and advising clients on trade mark prosecution. Marine has built the largest anti-counterfeiting practice in Australia. Prior to moving to Australia and joining POF, Marine was notably in-house lawyer for the French anti- counterfeiting Group, Union Des Fabricants (Unifab), and worked as an anti-counterfeiting area Manager with Société Bic. Marine has participated in working groups such as Interpol Intellectual Property Crime Action Group and Global Anti-Counterfeiting Group. Danielle has extensive experience as a scientist and as a patent attorney with expertise in patent strategy, protection and enforcement in the Biotech sector. She has a strong understanding of global patent and regulatory exclusivities (including data and market exclusivities) and has facilitated entry of several biopharmaceuticals (including antibodies and antisense molecules), diagnostics, cellular therapeutics, and agricultural products (including transgenic plants) to market. Danielle has a diverse client base – working with several local and overseas biotech companies, including small to medium entities, big pharmaceutical and generics/biosimilar companies as well as academic institutions to strategically protect their intellectual property and facilitate market entry. “These two promotions reflect our confidence in the future of Phillips Ormonde Fitzpatrick coming out of the COVID-19 pandemic, and continue our development of client-focused talent within the firm. Marine and Dani are both dynamic professionals, and they are a testament to our strong and diverse pipeline of future leaders. We value their outstanding practice management, cross-firm teamwork and professional excellence. I look forward to their contribution to the ongoing success of our firm” Ross McFarlane, Managing Principal Inspire June 2021 We are excited to announce that Marine Guillou and Danielle Burns have been promoted to Principals of the firm, effective 1 July 2021. 3 Dr Annabella Newton Alexis Keating elected Councillor of shortlisted in Lawyers The Institute of Patent Weekly 30 Under 30 and Trade Mark We are delighted to announce that Associate, Alexis Keating, Attorneys of Australia POF has been shortlisted as a finalist Inspire June 2021 We’re very pleased to announce that POF Senior Associate, Dr Annabella Newton, has been elected to the role of Councillor within The Institute of Patent and Trade Mark Attorneys (IPTA) of Australia. 4 The results of the election were announced at the IPTA Annual Conference in Darwin, which took place from 26 to 28 May 2021. Annabella has extensive in-house experience as a patent attorney, as well as many years’ research experience having worked in academia, industry and for CSIRO. She has always been involved in the wider scientific community, and is a strong advocate for diversity and inclusion within the STEMM sector and the patent attorney profession. We’re looking forward to what Annabella will bring to the council in this new role. Congratulations Bella! in the Lawyers Weekly 30 Under 30 2021 for Intellectual Property. The finalist list features over 280 high-achieving legal professionals across 30 submission-based categories. The Lawyers Weekly 30 Under 30 recognises and rewards the young rising stars within the legal industry aged 30 and under who excel in their chosen field and display key leadership qualities such as dedication, professionalism and eagerness to grow both themselves and their firm. Alexis provides advice across the full scope of IP rights, with a particular focus on trade marks and brand protection. She has consistently displayed excellence in her work which has been recognised in other awards, such as the IPTA Trade Mark prize in 2020. Australian innovators big winners under Patent Box scheme announced in the Federal Budget Under the federal budget handed down on in May, the government will launch a patent box scheme targeted at the medical and biotechnology sector. Under the patent box, income derived from eligible patents will be taxed at a concessional rate of 17%, a reduction of 8% for SMEs and 13% for large businesses. At this stage, the scheme will apply to income derived from Australian-owned and developed medical and biotechnology patents applied for after Tuesday’s budget announcement. The Treasurer, Mr Frydenberg stated: “Under the patent box, income earned from new patents that have been developed in Australia will be taxed at a concessional 17 per cent rate — almost half the rate that applies to large companies.” The aim of the patent box is to encourage businesses to retain or locate the development, manufacture and exploitation of patents locally. The Federal Government budget papers stating that the requirement for Australian development will “encourage additional investment and hiring in research and development activity and encourage companies to develop and apply their innovations in Australia.” Precise details are yet to be announced, but it is understood that the reduced tax rate is only applicable to that income derived directly from eligible patents, possibly excluding income derived from manufacturing or branding. The proportion of income included will also be affected by how much of the research and development is undertaken in Australia. While the scheme clearly applies to companies located in Australia holding an eligible patent, it is unclear how the scheme will apply to patents held by companies located elsewhere, but where an Australian based company has an exclusive licence to exploit the patent or has real and substantial rights to the patentable technology in the territory. It is also unclear at this stage whether the scheme will include income to the Australian based company derived from related overseas patents where an eligible patent is held in Australia. The government has indicated that it will follow the OECD’s guidelines on patent boxes to ensure the patent box meets internationally accepted standards and that it will engage in consultation with industry before the July 2022 launch in relation to the detailed design. The government will also consider whether a patent box would be an effective way of supporting the clean energy sector. Patent Box schemes are already in place in many European countries and the innovation sector has advocated for a similar scheme in Australia for many years on the basis that it is vital to attract companies to invest and maintain that investment in Australia. The 2021-22 budget announcement looks to be a strong recognition by the government on the importance of science and technology innovation to drive Australia’s economic recovery, post-COVID and beyond. In other positive developments for the Australian innovation community, the Budget also includes a $124.1 million investment in Artificial Intelligence (AI) over the next six years. This investment includes a National Artificial Intelligence Centre led by Phillips Ormonde Fitzpatrick client CSIRO’s Data 61 and $35.7 million for emerging aviation technologies, including drones. Under the patent box, income earned from new patents developed in Australia will be taxed at almost half the rate that applies to large companies. Phillips Ormonde Fitzpatrick can assist and support clients wishing to take part in the government consultation on the patent box scheme once open, in particular, to ensure that the ownership and eligibility requirements of the scheme properly reflect the Australian innovation sector. Businesses wishing to keep informed or get involved in the consultation process are encouraged to contact: Alyssa Telfer Principal, MedTech alyssa.telfer@pof.com.au Mark Wickham Principal, Biotechnology mark.wickham@pof.com.au Scott Whitmore Principal, Biotechnology scott.whitmore@pof.com.au David Longmuir Principal, Enforcement david.longmuir@pof.com.au David Longmuir | Principal BSc(Hons) LLB(Hons) LLM FIPTA david.longmuir@pof.com.au Inspire June 2021 The scheme, to be launched from 1 July 2022, should further encourage the commercialisation of medical and biotech innovations in Australia. 5 NFTs – the vapourware of Blockchain technology? What do Beeple, Jack Dorsey, Cryptokitties, Grimes, and William Shatner have in common? They’ve all made money, and in some cases headlines, by selling NFTs. The internet has been buzzing about NFTs for some time now – but even if you’ve heard of them, you may still find yourself asking “What is an NFT?” and “Why are they so popular?” Inspire June 2021 So, what is an NFT? 6 An NFT is a non-fungible digital token that uses the same blockchain technology as many cryptocurrencies. Using the blockchain ledger, NFTs can be identified and tracked. Typically, cryptocurrency tokens such as bitcoin on the blockchain ledger are fungible assets, they can be readily interchanged for something else – for example, one bitcoin can be exchanged for another. Legal tender, such as bank notes, are a fungible asset as a $100 note can be exchanged for two $50 notes or five $20 notes. NFTs however are unique and cannot be exchanged, much like a one of a kind painting. Marc Chagall’s “Paris through the Window” is non fungible because it is one of a kind. The painting can be copied and photographed but there will only ever be one original “Paris through the Window”. NFTs use blockchain technology to give themselves a digital uniqueness, the originality and scarcity of which makes them a collectible item. In theory, when you buy an NFT you acquire a token which contains the digital artwork or music file, along with the signature of the artist and a history of all transactions associated with that digital artwork or music file. As we will see, there are some limits to the technology that make the purchase of an NFT less clear. But what are you really buying? There are two aspects to the purchase of an NFT to consider, one how is the digital asset associated with the NFT stored and two, whether you acquire any rights, including the intellectual property in the underlying digital work. Dealing with the technological aspects first, purchasing an NFT gives you a token which contains meta data and a link to a website where the digital work is stored, not the digital work itself. Despite NFTs being blockchain technology, NFTs associated with digital files like artworks or music are generally not stored ‘on-chain’ due to the prohibitive cost and time of replicating files across all users in the blockchain. Therefore, buyers are provided with a link to the web address where the digital work can be found. Using the painting analogy, NFT’s have been described as providing the directions to the gallery in which the artwork is on display, rather than providing the artwork itself. The main issue with this method of storage is that webpages can become defunct if someone fails to pay the hosting fees, there are other issues with the network, a hard drive fails or the owner of the domain redirects the link to something other than the digital asset. Given the technological limitations the whole system relies heavily on trust. Further, when you buy an NFT you don’t acquire ownership of the underlying work or the rights associated with it. You are paying to own the unique token and not the content that the token is associated with. From a copyright perspective that means the artist who created the work will continue to be the copyright owner, and have certain exclusive rights to control the use of the work. In order for the copyright in the underlying asset to be assigned it would require a signed agreement between the parties to the effect that the copyright owner is assigning their intellectual property rights to the buyer of the NFT. In the absence of such assignment, all of the underlying intellectual property rights will continue to be owned by the artist or copyright owner. It would seem somewhat foolish, at least to this lawyer, to outlay significant amounts of money on NFTs without an agreement with the seller that sets out: 1. What the buyer can, and can’t do, with the underlying digital asset, including in relation to the intellectual property rights and commercialising the work; 2. If the licence is for a fixed term, what happens upon the expiration of that term particularly where the licence permits for derivative works to be created or products created incorporating the work; 3. Who is responsible for the maintenance, security and protection of any webpage or URL where the digital art is stored, including, but not limited to, the hardware and payment of any fees associated with the webpage; 4. Liability and indemnity provisions to allocate risk between the buyer and the seller; and 5. Representations and warranties as to the ownership of the underlying work, noting that the risk of fraud is rife with NFTs. NFTs give us an insight into the direction that the digital economy may be headed and provide new business models for artists to exploit their intellectual property. Licenses are a critical part of everyday business for many organisations, artists and creatives. There have been a few attempts at NFT licenses including one by Dapper Labs, the creators of CryptoKitties, however these licenses largely deal with intellectual property issues by trying to balance the rights between the copyright owner and the licensee, rather than the risks associated with the potentially ephemeral nature of the storage. It can be challenging to document all the necessary rights, responsibilities and obligations in any copyright license agreement – even where the subject matter is generally understood, let alone when you have a digital work stored ‘off-chain’. Whilst NFTs may have some issues that need to be addressed, they should be considered as more than merely a passing fad. NFTs give us an insight into the direction that the digital economy may be headed and provide new business models for artists to exploit their intellectual property. Whilst the technology isn’t quite there yet, NFTs provide the possibility that in the future intellectual property owners could use the blockchain ledger technology, smart contracting and carefully drafted agreements to have greater control over how their creative works are used and to benefit financially from such use. Inspire June 2021 Should NFTs come with contracts, smart or otherwise? 7 Melissa Wingard | Special Counsel BA(Eng&Hist) LLB(Hons) GradDipLegPrac GradDipAppFin&Inv MCyberSecOps melissa.wingard@pof.com.au Implied confidence saves distinctiveness of design Inspire June 2021 In Justice Greenwood’s recent decision 1 in Key Logic v Sun Wizard, we remarkably see the application of s 68(6) of the Designs Act (the Act) for the first time, as well as a consideration of circumstances which gave rise to an obligation of confidence through email communication. As Sun-Wizard had requested Australian Design Registration examination and argued revocation, AU332890 (the design) was filed on His Honour explained that 24 September 2010 and certified on Sun-Wizard bore the burden of 13 January 2012. The design relates satisfying the Court that the design to a bollard having a solar-powered was not registrable. At paragraph light source mounted on top. The design was originally filed in the name [42], Justice Greenwood stated that the owner of the design, Key Logic, of Exlites Pty Ltd (Exlites) and was transferred to Key Logic by assignment. bore the onus of demonstrating the obligation of confidence arose On 16 February 2015, Sun-Wizard between the sender and the filed a request for re-examination recipients of the contentious emails. of the design. Sun-Wizard Regarding whether an obligation contended that emails pre-dating of confidence arose in respect of 24 September 2010 were sent by the email correspondence between employees of Exlites to a network Exlites and the group of certified of certified installers, and that these installers receiving the emails, the emails were a publication of the Court’s analysis is of particular design, thus rendering it not new interest as an explicit confidentiality or distinctive. Sun-Wizard further agreement did not exist. The argued that the registration was emails did contain a pro-forma not sufficiently distinctive confidentiality footer. However, in light of earlier superseded Justice Greenwood considered this models of the design. As a result footer to be insufficient on its own of re-examination based on the to impart an obligation of confidence new material provided by Sun-Wizard, the design was revoked. on an intended recipient of an email. Key Logic lodged an appeal to the Federal Court under s 68(6) of the Act against the decision of the delegate. Reversing the decision to revoke the design, the Court found it to be new and distinctive, and that the circumstances in which the emails Maintaining appropriate were sent gave rise to an obligation confidentiality over new of confidence on the recipients. technology developments At paragraphs [38] and [39] can be crucial to of the Court’s decision, Justice maximising the value Greenwood dealt with the of intellectual property question of onus. Rather, Justice Greenwood found it determinative that the emails were sent to a closed and limited group of certified installers who were provided with benefits and advantages through their membership. Justice Greenwood considered the information contained in the emails to be inherently confidential, as it addressed features of the product still under development and the information was put to the cohort in order to obtain their opinions. Ultimately His Honour found that the emails were provided to recipients in their capacity as members of a select private network, solely for the purposes of that network, and not for public use, therefore giving rise to an obligation of confidence. Maintaining appropriate confidentiality over new technology developments can be crucial to maximising the value of intellectual property derived from them. In circumstances where some degree of disclosure to third parties is necessary, confidentiality can be protected through use of confidentiality agreements, the importance of which can be seen in the above example. Had such agreements been in place between Exlites and its certified installer network, the need to file an appeal with the Federal Court of Australia may have been avoided. derived from them. 8 Peter Wassouf | Associate B.Eng (Mech) (Hons), B.Bus JD MIPLaw peter.wassouf@pof.com.au 1 Key Logic Pty Ltd v Sun-Wizard Holding Pty Ltd [2021] FCA 208 (12 March 2021) Seeking security in uncertain times If they do succeed, they will generally be awarded a significant proportion of their legal costs. However, if the applicant is a foreign resident, recovery of costs can be difficult. Consequently, a respondent will usually look to have a foreign applicant provide security for costs and do so early in the case. The Federal Court has recently handed down its decision in C.M.E. Blasting & Mining Equipment v Rock Tool Refurbishment Solutions 1 in relation to security for costs in a patent dispute, where the applicant is a Canadian based mining equipment company. As far as the legal principles are concerned, the Court confirmed that it has an “effectively unlimited or confined” discretion to order security, which involves an exercise in risk management. As regards to quantum, the Court will usually take a broad brush approach, which “embodies to a considerable extent reliance upon the ‘ feel of the case’ after considering relevant factors”. At the time that the security for costs application was heard, the case had almost reached the end of the pleadings stage. Rock Tool had, by then, incurred some AU$197,000 in legal fees and estimated that it would likely incur another AU$350,000 to AU$450,000 in fees up to the completion of evidence. They sought security be provided to cover that point in the proceedings in the amount of US$250,000 (equivalent to about AU$355,000), on the basis that party/party costs are generally about 65% of total costs. CME resisted the security application, on two bases. Firstly, it had provided its Australian lawyers with US$180,000, and given what it said were irrevocable instructions to only release those funds to meet a costs order. Secondly, CME claimed it had product inventory in Australia worth several hundreds of thousands of dollars, which could be called upon to satisfy a costs order. The Court was not persuaded that either basis was adequate protection for Rock Tool. The Court accepted their submission that so called ‘irrevocable’ instructions are not necessarily watertight and that reliance on such instructions can lead to its own litigation, and in the process incur further legal costs. The Court also considered that CME’s inventory, which consisted of equipment and replacement parts, was too uncertain a resource. In those circumstances the Court indicated that it was appropriate to order security be provided. CME then submitted that the amount of the security should be set by reference to the cost of enforcing a costs order in Canada, where they were resident. This type of approach had been taken in some earlier cases by the Federal Court. In considering whether this was the correct approach the Court looked at two factors. Firstly, whether there was reciprocal enforcement of judgements legislation in the two jurisdictions – Australia and Ontario, Canada. Secondly, whether there was evidence that CME was reputable and financially substantial. There is no reciprocal enforcement of judgments legislation in Australia and Ontario. Although that was not in itself fatal, as Rock Tool could still sue at common law, it would be an inconvenient and convoluted process. In those circumstances the Court needed to ensure Rock Tool would not be subject to any unacceptable disadvantage by reason of CME’s foreign residence. The Court took guidance from an earlier decision in Maxim’s Caterers, where the judge had ultimately looked to the considerations of justice underlying the discretion to award security for costs. In so doing, the judge looked at evidence as to the existence and location of assets, and the ease or otherwise of enforcing a judgment in the place where the assets were located. In this case there was no evidence as to CME’s assets and liabilities, the location of its assets, and how difficult or easy it may be to enforce a judgment against them. The Court accepted that CME was a sizeable company with international trading relationships, but the evidence before the Court did not go beyond that. In those circumstances the Court ordered CME to post security to the tune of US$220,000. This represents a slightly more conservative figure than the US$250,000 sought by Rock Tool, which represented 65% of the lower range of its estimated costs to the end of evidence. The security was to be provided by payment to the CME’s solicitors’ trust account, but in contrast to the irrevocable authority sought to be relied upon by CME, was subject to an order of the Court. Although security was ultimately ordered along fairly conventional lines, the case is perhaps most interesting in its consideration of potential alternatives to the traditional approach of simply providing security to the expected costs of the proceeding, where the applicant is a foreign entity. Inspire June 2021 Parties being sued often do not have much choice in the matter. Unless they are prepared to surrender, they will defend themselves in the belief, or hope, that they will ultimately be successful. 9 Malcolm Bell | Principal BSc(Hons) LLB LLM FIPTA MRACI malcolm.bell@pof.com.au C.M.E. Blasting & Mining Equipment Ltd v Rock Tool Refurbishment Solutions Pty Ltd [2021] FCA 160 (2 March 2021) 1 “I’m just ducking out to the Corner!” ‘The Corner’, whether a corner store or a corner hotel, is a typical Australian idiom referring to a designated business’s locale, usually one that is close to a person’s home or place of business. Hotels, in particular, are often situated on corners, allowing easy construction of two separate entrances which historically was required under state licensing laws. The Corner Hotel Inspire June 2021 A hotel in Richmond, Melbourne, bordered on three sides by Swan Street, Stewart Street and Botherambo Street – and thus being on two corners – has been known for years as ‘Corner Hotel’ or ‘The Corner Hotel’. Corner Hotel has a live music area accommodating about 800 patrons, which has showcased many famous Australian and international artists. These performances were not free, but were ticketed events. The owner of the hotel, Swancom Pty Ltd, registered CORNER HOTEL, CORNER and THE CORNER as trade marks, covering class 41 entertainment services, and class 43 restaurant and bar services. They also registered CORNER PRESENTS only for entertainment services. 10 The Jazz Corner Various companies within the Ubertas Group were responsible for the operation of a hotel (the Jazz Corner Hotel), café (the Jazz Corner Café) and live music venue (Bird’s Basement) in Melbourne situated near, but not on, the corner of William and Latrobe Streets. The Executive Chairman of the Ubertas Group, Albert Dadon, is a businessman and jazz musician, who has performed at the New York jazz club – ‘Birdland’, named after jazz great, Charlie ‘Bird’ Parker. Mr Dadon formed a business relationship with Gianni Valenti, the owner of Birdland, which refers to the William Street jazz club ‘Bird’s Basement’ as ‘our Sister Club Down Under’ on the Birdland website. Mr Dadon also wanted to establish a hotel with a jazz theme to attract the sort of patrons who would enjoy performances at Bird’s Basement. He selected JAZZ CORNER HOTEL as a name for the hotel: ‘JAZZ’ because of the jazz-themed decor of the hotel, and ‘CORNER’ to refer to the situation of the business at or near a corner, and because this suggested a business that was friendly, accessible and familiar, like a corner store. The name also associated the hotel with the Birdland club which refers to itself as the ‘Jazz Corner of the World’. After an application for JAZZ CORNER HOTEL was rejected, partially on lack of distinctiveness and partially on Swancom’s prior CORNER HOTEL registration, a further application by Ubertas Operations was successful in registering JAZZ CORNER for accommodation services in class 43. Jazz Corner Hotel Pty Ltd (JCHPL), Bird’s Basement Pty Ltd (BBPL), and Saint Thomas Pty Ltd used the registered trade marks THE JAZZ CORNER HOTEL Logo, JAZZ CORNER and THE JAZZ CORNER CAFÉ Logo under license from Ubertas Operations Pty Ltd, another company within the Ubertas Group. Each of the marks was registered in relation to class 43 services. They also used the unregistered marks (THE) JAZZ CORNER OF MELBOURNE and (THE) JAZZ CORNER OF THE WORLD. 1 The Proceeding Swancom commenced an infringement action 1 against three companies in the Ubertas Group. Swancom also sought cancellation of Ubertas Operations’ marks on the basis that they could have been opposed as being substantially identical to the earlier Swancom marks. JCHPL counterclaimed, seeking cancellation of Swancom’s registrations for class 41 services on the bases that the marks were not capable of distinguishing and that use by Swancom was likely to deceive or confuse. The evidence showed that JCHPL principally used the JAZZ CORNER marks in relation to accommodation services, but also promoted accommodation and entertainment packages featuring performances at Bird’s Basement. Its website included links to the Bird’s Basement website, and its social media pages heavily promoted upcoming performances at Bird’s Basement as an adjunct to staying at the hotel. This, combined with the physical location of the hotel in the same building as the jazz club, and the complementary nature of offering café and jazz club services in addition to hotel services, resulted in a finding that JCHPL had used JAZZ CORNER HOTEL and JAZZ CORNER OF MELBOURNE as trade marks in relation to live music services provided at Bird’s Basement. BBPL was also found to have used JAZZ CORNER OF MELBOURNE as a trade mark for live music services. Swancom Pty Ltd v The Jazz Corner Hotel Pty Ltd (No. 2) [2021] FCA 328 On the question of deceptive similarity, Swancom argued that the striking feature of all the marks is the word ‘corner’, on the basis that this word is distinctive in the context of live music services. The respondents contended that the words ‘corner’ and ‘ hotel’ are ordinary descriptive words in common use in the hotel and hospitality industries. Swancom also alleged that ‘ jazz’ was merely descriptive, whilst the respondents argued that it was more memorable than ‘corner’ or ‘ hotel’, even if it described a style of music. The court found that the words ‘corner hotel’ had a recognised meaning to hotel patrons, and accordingly they were to be given less weight when assessing deceptive similarity. Whilst the recognised meaning was not in relation to live music services, the public would know that there are many businesses in the hospitality industry that use the word ‘corner’. ‘Jazz’, on the other hand, was not as commonly used, so that it had prominence over ‘corner hotel’ in the JAZZ CORNER HOTEL mark. The court found that the impressions or ideas of the respective marks were distinct from each other, and that the likelihood of confusion between the marks was remote, so that the marks were not deceptively similar. The court’s finding that the public would know that there are many businesses in the hospitality industry that use the word ‘corner’, whilst finding that ‘ jazz’ is not commonly used is perhaps surprising, given the number of jazz clubs and cafés that appear on the ASIC company and business name register. It is possible that there was no evidence of these jazz venues before the court, although the numerous ‘corner hotels’ throughout Australia were in evidence. Nevertheless, this appears to have been a critical factor in deciding that the marks were not deceptively similar. On the cross claim, the evidence showed that Swancom and its predecessors had used the marks CORNER HOTEL and CORNER PRESENTS in relation to relevant class 41 services. The court found that the Corner Hotel had a strong reputation as a venue for professional live music performances. However, the court also found that there were a number of other ‘corner’ hotels in Australia and that ‘corner’ was commonly used in connection with hotels as a descriptive term. It was also noted that many hotels provided live music, but whilst some provided such entertainment free of charge to attract custom for food and beverages, others provided live music venues where patrons must purchase tickets to attend the performance. The court dismissed the cross claim in relation to the marks CORNER HOTEL and CORNER PRESENTS, since strong evidence of use established that these marks were distinctive of live music services despite potential descriptiveness issues. However, in relation to the CORNER and THE CORNER marks, the court allowed further submissions as to whether those registrations should be amended in relation to the claimed class 41 services, or a condition should be entered on the registration to preserve the freedom of hotels, cafés, and other venues that may provide free live music to use the word ‘corner’ in their trading name. This decision reinforces the importance of choosing a mark that is inherently capable of distinguishing goods or services. Whilst marks with some descriptiveness may be registered, particularly with sufficient evidence of use, the registration may be less effective in preventing use of a similar mark by a third party, since descriptive elements may be given less weight when assessing the similarity of marks with the same descriptive element. As the crossclaim highlights, trade mark owners also need be wary of claiming goods or services too broadly. Whilst CORNER HOTEL and CORNER PRESENTS were limited to services pertaining to live music performances, the marks CORNER and THE CORNER included live music services, but were not limited to those services, leaving an avenue for the cross-claimants to seek restriction of those registrations. Inspire June 2021 This decision reinforces the importance of choosing a mark that is inherently capable of distinguishing goods or services. 11 Russell Waters | Principal BSc LLB FIPTA russell.waters@pof.com.au The best method of clearing a path for generic market entry A recent interlocutory decision 1 of Justice Beach has considered various ways to accelerate litigation through use of strike out motions, summary dismissal and expedited trial. Inspire June 2021 The decision also provides important guidance on the Court’s approach to the increasingly potent ground of best method as a means of attacking patents and some insights for pharmaceuticals on ‘clearing the way for generic pharmaceutical market entry’. 12 The Dispute Celgene is the patentee of the term extended Australian patent 715779 (‘779) and several related method of treatment patents. In order to clear the way for the future launch of their generic pharmaceutical products, Juno Pharmaceuticals Pty Ltd and Natco Pharma Limited (Juno) brought a revocation action against relevant ‘compound’ claims of the ‘779 patent on the grounds of failure to disclose the best method, lack of inventive step and false suggestion. Celgene cross-claimed for infringement. This decision follows a number of interlocutory applications filed by the parties, most relevantly an application by Celgene for summary dismissal of Juno’s invalidity attack concerning the alleged failure to disclose the best method and false suggestion. Although Celgene was unsuccessful, the decision provides some useful information on how the Courts will assess a best method attack and the court’s willingness to expedite proceedings. The Patent The ‘compound’ claims of ‘779 relate to a Markush formula, and one of the 18,000 compounds in their scope is the pharmaceutical ‘lenalidomide’. This patent also contains claims to methods of reducing undesirable levels of tumor necrosis factor-α (TNFα). TNFα is a cell signalling protein implicated in mediating many physiological conditions. The ‘779 patent had been successfully extended by the maximum five year term open to users of the Australian patent system who have encountered a delay in obtaining regulatory approval. 1 Juno Pharmaceuticals Pty Ltd v Celgene Corporation [2021] FCA 236 Regulatory Hurdles In order to fast track regulatory approval by piggybacking on an innovator’s clinical trial data, a generic must show that their competing product is ‘bioequivalent’ and declare that that their product does not infringe any existing patents. This is a key driver for generics seeking to clear the way for launch. On the flip side, an innovator’s motivation to stave off generic entry is explained by the fact that the first generic registration of a given pharmaceutical triggers a price reduction by the PBS and of course, a loss of market share. Clearing the Way by Patent Revocation– Australia’s “Best Method” of Invalidation? A specification in Australia must “… disclose the best method known to the applicant of performing the invention 4 ” Although, long a requirement under Australian patent law, an invalidity attack for failure to disclose the best method has been gaining momentum in recent times, particularly amongst generic and biosimilar companies because of its potential to render whole patents invalid 5 . The Characterisation of “the Invention” is Key An assessment of whether a specification discloses the best method necessarily involves ascertaining what ‘the invention’ is, a process which goes beyond simply looking at the claims. In this instance, the parties’ competing claim constructions and how those constructions related to characterising the “boundaries and content of the invention” was key 6 . Juno asserted the invention could be characterised as non-polypeptide compounds that, when administered In order to fast track regulatory approval by piggybacking on an innovator’s clinical trial data, a generic must show that their competing product is ‘bioequivalent’ decrease TNFα levels 7 , such that the best method requirement could only be met by a disclosure of which of the compounds were known to ‘most effectively’ decrease levels of TNFα. Celgene asserted that the invention resided in a newly discovered class of non-polypeptide compounds, one of which is lenalidomide and that the ‘best method’ is satisfied by the specification and knowledge of the skilled person of how to make it 8 . A n exception is that methods of making pharmaceuticals by recombinant technologies are eligible for term extension. 3 Australian Patents Act 1990 (Cth) s 78 4 IBID s 40 (2)(aa) 5 See for example: Les Laboratoires Servier v Apotex Pty Ltd [2016]; 247 FCR 61 Gilead Sciences Pty Ltd v Idenix Pharmaceuticals LLC [2016]117 IPR 252; Idenix Pharmaceuticals LLC v Gilead Sciences Pty Ltd [2017] 134 IPR 1 Bluescope Steel Ltd v Dongkuk Steel Mill Co Ltd (No 2) [2019] 152 IPR 195; and Pfizer Overseas Pharmaceuticals v Eli Lilly and Company [2005] 225 ALR 416. 6 Juno Pharmaceuticals Pty Ltd v Celgene Corporation [2021] FCA 236 paragraphs [25], [80], [85] 7 Ibid [30] 8 Juno Pharmaceuticals Pty Ltd v Celgene Corporation [2021] FCA 236 paragraphs [32]-[33] 9 Cuthbert A (2003). The Oxford Companion to the Body. Oxford University Press. p. 682. doi:10.1093/acref/9780198524038.001.0001. ISBN 9780198524038 10 Australian Patent number AU 715779 C page 6, line 2 11 Juno Pharmaceuticals Pty Ltd v Celgene Corporation [2021] FCA 236 paragraphs [51]-[52] Clearly, establishing the best method of making a pharmaceutical that bears more than a passing resemblance to infamous drug thalidomide, which has been made en mass since the 1950s, is a less arduous a task than having to show which compound was known to the patentee to be the most active 9 . There is some tension in Celgene’s position in that although no features of the compound claims relate to TNFα activity, the ‘promise’ statements in the ‘799 patent do suggest that this is the ultimate aim of the invention 10 . At this juncture at least, Celgene’s position seems to be the stronger one - his Honour stating it was strongly arguable that the claims are directed to the ‘compounds simpliciter’, and agreeing that no integers of the claims related to the reduction of levels of TNFα. Although Juno’s position may be based on a problematic construction of the invention 11 , the decision is yet another reminder that the best method requirement is a uniquely onerous one in Australia. It requires keen attention when asserting and defending rights and may be burdensome for patent owners and lead to onerous discovery obligations. Expedited outcome Notably, although Juno was unsuccessful in its own application to strike out parts of the cross-claim for infringement, it was successful in seeking an expedited trial of the invalidity challenge in order to clear the way for its launch if ultimately successful. The trial is to be set down in August of this year, with his Honour to deliver judgment within a month. The decision provides a good indication that the court is increasingly willing to expedite proceedings launched by generic pharmaceuticals to ‘clear the way’. 2 Inspire June 2021 In Australia, only claims to pharmaceuticals themselves can have their term extended - the extension regime does not apply to most methods relating to, or uses of pharmaceutical compounds 2 . A corollary of this is that during the extended term, a patentee’s rights reside in the pharmaceutical compound claims, and thus Juno’s invalidity action was limited to those claims of the ‘779 patent 3 . 13 Dr James Burnley | Associate MSci, PhD MIPLaw james.burnley@pof.com.au 14 Contact us info@pof.com.au Melbourne Level 16 333 Collins St Melbourne 3000 +61 3 9614 1944 Sydney Suite 15.02, Level 15 4-6 Bligh Street Sydney 2000 +61 2 9285 2900 Adelaide Level 3 74 Pirie Street Adelaide 5000 +61 8 8232 5199 Geelong Building NP, ManuFutures Deakin University 75 Pigdons Road Waurn Ponds VIC 3216 +61 3 9614 1944