The imperfect science
of IP licensing
Licensing of intellectual property can be an imprecise art. It is sometimes
assumed that there is a standard position when it comes to licensing, making
each licence a merely administrative action. However, as we have seen
from recent cases, drafting licence agreements is not always so simple.

It is important to recognise that
intellectual property licensing
requires a detailed understanding
of both intellectual property law
and also contract law. In the event
of a dispute, the courts turn to
the application of contract law to
determine what the parties intended
by the language used in addition
to considering the context of the
relevant intellectual property law.

It’s easy to assume that the parties
are all on the same page when it
comes to their rights and obligations
under an agreement, which they
generally are – until they aren’t.

Whilst the facts in each case will
differ, several common themes have
arisen in recent court decisions.

Inspire July 2022
Don’t leave it to chance –
if something is important,
include it in the agreement
10 In Chevron Global Energy v Ampol
Australia Petroleum 1 the court
considered whether the failure by
Ampol to remove the ‘Caltex Red’
from the fascia of its service stations
was a breach of the Trade Mark
Licence Agreement (TMLA) in place
between the parties.

Ampol had for some time been
operating service stations in
Australia using the Caltex trade
mark and brand under licence from
Chevron. Chevron terminated the
TMLA, and under the agreed work
out period Ampol was required
to discontinue all use of the trade
marks, and to remove ”any and all
signage and/or element” bearing any
of the Caltex trade marks from the
service stations. Ampol removed
the Caltex trade marks but did not
change the service station canopy
fascia’s from the ‘Caltex Red’
colour. Chevron argued that this
was a breach of the TMLA as the
1 2
‘Caltex Red’ canopy fascia was part
of the signage, and therefore needed
to be removed. Ampol denied it
was a breach and argued that the
requirement to remove the trade
marks and signage did not extend
to repainting the fascia which was
not signage. Ampol claimed that
where the trade mark was on a sign,
the sign would be removed, and
where the trade mark was on some
other element, then the trade mark
alone was to be removed from the
element such that the requirement
was to remove the trade mark from
the fascia, not repaint the fascia as
well. Ampol argued that Chevron’s
construction of the clauses in the
TMLA went well beyond what the
parties intended.

Justice O’Callaghan agreed with
Ampol, noting that to construe the
obligations under the TMLA as
requiring Ampol to repaint the red
coloured fascia some other colour
would mean that Chevron had rights
in the ‘Caltex Red’ colour, which it
did not have and had not licensed
to Ampol. O’Callaghan J noted:
“ in my view, such an outcome is at
odds with commercial sense, and if
such an uncommercial and unlikely
outcome had been intended, it
would sure have been made clear.”
Consider the bigger picture
over a longer term
When drafting licence
agreements, the focus
is often on what the
licensee wants to do
with the intellectual
property, but where the
rights being licensed
are nonexclusive
in nature, or only
exclusive in a narrow
field, it’s important to
think about what the
Chevron Global Energy Inc v Ampol Australia Petroleum Pty Ltd [2021] FCA 617
State Street Global Advisors Trust Company v Maurice Blackburn Pty Ltd [2022] FCAFC 57
licensee would be happy with the
licensor doing with its retained rights.

In State Street Global Advisors v
Maurice Blackburn 2 the Full Federal
Court considered whether Maurice
Blackburn had infringed copyright
and tortiously interfered with the
contractual relations between
State Street Global Advisors
(SSGA) and artist Kristin Visbal by
commissioning a replica of the
‘Fearless Girl’ statue.

Under the Master Agreement
between SSGA and Ms Visbal, SSGA
had a worldwide, exclusive licence to
create, use, display and distribute the
statue and two-dimensional copies of
it, in connection with gender diversity
issues in corporate governance, the
financial services sector, and itself
and the products and services SSGA
offered. The artist retained all the
residual rights outside of the exclusive
licence to SSGA, including the right
to use the artwork in connection with
gender diversity goals.

SSGA argued that use of the
‘Fearless Girl’ statue by Maurice
Blackburn in relation to their
workplace gender equality
campaign was copyright
infringement because
gender



able to use the Bega trade marks on
Products being ‘Cheese Products,
butter and any other products
agreed by the parties from time
to time’. ‘Cheese Products’ were
defined to mean natural and
processed cheddar cheese, string
cheese and any other cheese which
the parties agreed in writing should
be included. At the time the TMLA
was entered into the only products
being manufactured were natural
and processed cheddar cheese
and Bega did not manufacture any
other types of cheese. The Court
noted that “neither party gave any
consideration to the application of
Bega’s trade marks to any products
other than cheese and dairy
products” and that given the narrow
nature of the products defined in the
agreement, Bega was free to use its
name in relation to goods like peanut
butter. With hindsight, it would have been
advantageous in such a long-
term agreement, for the parties to
consider possible business evolution
and expansion of products
and include clauses
addressing those
situations in
the TMLA.

The narrow drafting of the definition of
products along with the fact that
the additional products could only
be included by agreement of the
parties meant that the Court could
not construed the application of
the TMLA in the broad fashion that
Fonterra was hoping for.

Conclusion Intellectual property licensing is
critical to business success but if
not drafted properly can lead to
unintended outcomes and costly
mistakes. There is benefit in
thinking through a range of possible
eventualities and working with
experienced licensing lawyers to
ensure that your licenses capture
the parties’ true intentions and take
into account future business growth
and development.

It’s easy to assume
that the parties are all
on the same page when
it comes to their rights
and obligations under
an agreement, which
they generally are –
until they aren’t.

Inspire July 2022
diversity was covered by their
exclusive licence. The Court did not
agree, finding that a gender equality
campaign was not the same as
“gender diversity issues in corporate
governance (or the financial services
sector)”. If SSGA was intended to
have rights in relation to broader
gender diversity goals, then the
licence granted by the Master
Agreement would have reflected
that. In this case using the words “ in
connection with” did not operate to
expand the scope of SSGA’s licence.

Ensuring that a licence agreement
accurately captures what rights the
parties have is paramount, because
the Courts will not step in to provide
rights that a party does not have.

As Justice Beach pointed out in
this case, there was “considerable
disparity between what [SSGA]
paid for and what it now asserts it
is entitled to protect. But Australian
statute law and tort law cannot fill
that gap.”
These issues are not limited to
copyright, with similar questions
raised in the context of trade
mark licensing in Fonterra v Bega
Cheese 3 . The Victorian Supreme
Court had to determine whether a
TMLA prevented Bega from using
the Bega trade mark on peanut
butter, vegemite, cheese and cream
cheese spreads as Fonterra
argued. Fonterra and Bega
had entered into a 25
year TMLA for
Fonterra to be
11 Melissa Wingard | Special Counsel
BA(Eng&Hist) LLB(Hons) GradDipLegPrac
GradDipAppFin&Inv MCyberSecOps
3 Fonterra Brands (Australia) Pty Ltd v Bega Cheese Ltd [2021] VSC 75
melissa.wingard@pof.com.au