Scintilla – a flash, a spark, an iota. Shorthand for creativity and an indicator of inventiveness under Australian law.

Friday, April 24, 2015

Representations as to future profit – a fine balancing act

By Nadia Guadagno, Senior Associate, and Catherine Francis, Law Graduate

Franchisors making representations regarding profitability has been flavour of the month in the courts. Recently, a cleaning company franchisor, South East Melbourne Cleaning, was ordered to pay a hefty penalty of $500,000 for unconscionable conduct and making false and misleading representations about earnings to its franchisees. Bank of Queensland (BOQ) franchisees, on the other hand, were unsuccessful in their claims that the bank had made misleading and deceptive statements about future profitability. Let's take a quick look at each case to understand the contrasting results.

Tuesday, April 21, 2015

Court to feuding franchisor: Take down that blog post!

By Adrian Chang, Lawyer

The recent Madden v Seafolly appeal sent a very clear warning to business owners about spruiking their own businesses or taking down the competition through their personal social media accounts: that sort of thing can get you in trouble under the Australian Consumer Law's section 18 prohibition against misleading and deceptive conduct.

Even though Ms Madden was speaking her mind to friends on Facebook, the circumstances linked her comments to her business interests in a Seafolly competitor. So that case was quite clearly 'in trade or commerce'.

Thursday, April 16, 2015

Federal Court prescribes harsh medicine to discount chemist

By Claire McMahon, Lawyer

The Federal Court has dismissed claims made by owners of Chemist Warehouse outlet stores of misleading and deceptive conduct and trade mark infringement, instead ordering that their trade mark is invalid for lack of distinctiveness and therefore should be cancelled from the Register.

Prevention is better than cure

To avoid suffering a similar fate as the owners of Chemist Warehouse outlet stores, traders should note that:

  • long-term, widespread use of a trade mark will not necessarily 'cure' a claim of invalidity if the mark is not inherently adapted to distinguish;
  • the use of bright colours is a common marketing ploy used by discount stores and so cannot be claimed by one particular outlet to be theirs alone to use, unless the colours are claimed as part of a valid trade mark;
  • if you want to use a descriptive phrase in a trade mark, consider also filing an application for a composite mark (ie combining the phrase with devices, shapes, sounds, scents and / or colour elements) to avoid a finding that your mark is not inherently adapted to distinguish.

Tuesday, April 14, 2015

I am, you are, we are … entitled to appropriate compensation

By Kaelah Ford, Lawyer

I Am Australian is one of the most recognisable Australian songs of all time. Co-written by Bruce Woodley of The Seekers, the song has long been a staple of major Australian sporting events, including the Sydney Olympics. According to a survey of the general public in New South Wales and Victoria, when just a short segment of the song was played, 97 per cent of the general public and 100 per cent of 4 to 12 year olds said that they recognised the song.

Recently, the song has again found itself in the spotlight when the Commonwealth Government commissioned the creation of a recording of the song that was used without the appropriate licence on a video that was played at citizenship ceremonies. The Copyright Tribunal has ordered that the Government pay $150,000 to the copyright owner for its use of the song – some 50 times more than the Government originally paid for the licence to perform and broadcast the song! Music licensing can be a complicated business. Here's what happened.


In December 2008, the Department of Immigration and Border Protection commissioned the production of an 'Australian citizenship video montage' for use in citizenship ceremonies. The Commonwealth paid $2,954.20 for certain licences through APRA AMCOS (the organisation that collects royalties for music owners that are derived from the use of a song's composition and lyrics, as distinct from the actual recording of a song) to use I Am Australian. However, those licences did not include the 'synchronisation right' in the song, which her Honour summarised as 'the right to reproduce and use the lyrics on the sound-track to a cinematograph film or other audio visual presentation'. In fact, APRA AMCOS did not have the right to grant a licence for such use in the first place.

Wednesday, April 8, 2015

Dallas Buyers Club v iiNet: a real cliffhanger

By Richard Sawyer, Lawyer

A Federal Court order will require several Australian internet service providers (ISPs) to hand over some of their account holders' details to Dallas Buyers Club LLC (Dallas), the owner of the copyright in the 2013 film Dallas Buyers Club. The details will be used by Dallas to attempt to identify end-users who have illegally downloaded the film. The decision to grant the order has already been described as landmark in the area of online piracy by several media outlets. However, other impending developments in the law may limit the long-term impact of the decision.


In October 2014, Dallas applied to the Federal Court for an order requiring iiNet (and some other Australian ISPs) to disclose the identities of some of their customers. Dallas filed evidence that it claimed proves that it had identified the IP addresses of people who illegally shared the film in 2014.  iiNet refused to hand over its customers' details unless ordered to do so by a court and opposed the making of the order. For more detail, you can see our two previous blog posts on this matter here and here.

The decision

Federal Court Justice Nye Perram handed down a judgment yesterday indicating that he will grant the order for preliminary discovery. Justice Perram was satisfed that Dallas has a 'real case' against some of the ISPs' customers for copyright infringement. Furthermore, he held that Dallas could not identify those customers independently and that the ISPs could help to identify them.

Tuesday, April 7, 2015

High Court to rule on low dose patent

By David Stewart, Associate

While a drug dispute concerning one of Australia's major sports has been hogging all the headlines of late, another much more lucrative (and interesting, at least from Scintilla's perspective) one has been playing out in the courts between AstraZeneca and several generic companies over AstraZeneca's cholesterol-lowering drug, rosuvastatin (brand name: CRESTOR).

As we previously reported, the first two rounds were won by the generic companies, with AstraZeneca's low dose patent for rosuvastatin being found invalid at both first instance and on appeal. However, in mid-March the High Court granted AstraZeneca special leave to appeal two aspects of the Full Federal Court's decision. 

IP issues in the final Harper Report

By David Stewart, Associate

The final version of the Harper Report was released last week.

The Report is the product of a significant review of Australia's competition laws and policy, and makes many recommendations that could have significant ramifications for competition law in Australia.

Thursday, April 2, 2015

Is there copyright in a signal?

By Annie Zheng, Lawyer

Not every subject matter should be presumed to be susceptible to copyright protection, even those which may have significant market value, as the recent case of Seven Network Ltd v Commissioner of Taxation [2014] FCA 1411 illustrates. There, the Federal Court determined that the signals which transmitted pictures and sounds live from the Olympic Games, as opposed to a recording of such images and sounds, do not constitute a 'cinematograph film' in which copyright subsists.


Seven contracted with, and made a series of payments to, the International Olympic Committee (the IOC), based in Switzerland, for the right to use audio-visual signals (the ITVR signal) in connection with its live television broadcasts in Australia of the 2004, 2006 and 2008 Olympic Games. The ITVR signal constituted signals which transmitted pictures and sounds from the Olympic Games from the host broadcaster, IOC, to licensees such as Seven.

The Commissioner of Taxation argued that 10 per cent of the total payment (the payment amount) made by Seven should be withheld to account for IOC's liability for withholding tax, as IOC was not an Australian resident for tax purposes. 

Seven's obligation to withhold the payment amount depended on whether the payment amount could be classified as a 'royalty' within the meaning of the double tax treaty between Australia and Switzerland. The payment amount would be considered a royalty if it was paid in consideration for the use of, or right to use, 'copyright or other like property right' under article 12(3) of the Swiss Treaty.

The key question considered by Justice Bennett was whether the ITVR signal could be characterised as a 'cinematograph film' under the Copyright Act 1968 (Cth) in which copyright subsists. If so, the payment amount would be considered a royalty.

Cinematograph film?

Under the Act, a cinematograph film is the aggregate of the visual images embodied in an article or thing, so as to be capable of being shown as a moving picture by the use of that article or thing, or capable of being embodied in another article or thing by the use of which it can be so shown.

Sounds or visual images are considered to be 'embodied' in an article or thing if they are capable, with or without the aid of another device, of being reproduced from the article or thing.

The Commissioner argued that visual and sound data packets, representing the aggregate of visual images and sounds captured by a camera, were transmitted in the ITVR signal as a data stream, so that the relevant embodiment was the data stream.

Justice Bennett did not accept this characterisation. Although visual images and sounds were produced from the ITVR Signal by transmitting the signal through a cable and converting the signal by use of a receiving device (eg a television), the actual transmission of the ITVR signal occurred in the form of raw binary data – that is, electromotive forces with no physical form. The images and sounds could not be reproduced from the ITVR signal itself. At no point during the process of transmitting the ITVR signal was any picture, image or sound stored in any permanent form in the ITVR signal. It was only with the use of a receiving device that the aggregate of visual images could be produced.

Justice Bennett considered the ITVR signal to be 'more in the nature of a fleeting use of a medium of communication' than an aggregate of sounds and visual images. Therefore, there was no embodiment of visual images or sounds in the data stream.

Relevance of a 'broadcast'

The Commissioner also argued that a cinematograph film came into existence when the visual sounds and images embodied by the ITVR signal was broadcast to the public.

First, under the Act, a 'broadcast' requires a communication to the public delivered by a broadcasting service within the meaning of the Broadcasting Services Act 1992 (Cth).While copyright attaches to the television broadcasts that were transmitted by Seven, which was the relevant broadcasting service, the transmission of the ITVR signal by the IOC is not a 'broadcast' protected by copyright for the purposes of the Copyright Act. 

In any event, the Commissioner's argument is contrary to the agreed facts between the parties as no cinematograph film is embodied in the transmission over the air or via cable to each receiver.

Key lessons

It is clear from this decision that in order for something to constitute a 'cinematograph film' under the Act, it must constitute an aggregate of sounds and visual images, be of a sufficiently permanent form so as to be capable of being shown as a moving picture, be reproducible and be embodied in an article or thing.

Where the subject matter in question is a data stream transmitting signals in raw binary form, it is only after conversion of that data by a receiving device that a cinematograph film comes into existence.

This decision raises important questions for copyright enforcement and contracts. Take an example where an unauthorised person re-transmits a live video stream from a live video streaming service (assuming that the unauthorised person does not store the data such that a cinematograph film is created – and if it is, who owns the copyright therein?!) – that person may not be held to copy a cinematograph film because there is no underlying copyrightable subject matter: no aggregate of visual images or sounds can be said to be stored within the signal transmitting the live stream at any time.

By contrast, a downloadable video file recording of exactly the same content would be considered a cinematograph film because there is an embodiment of the data in permanent and reproducible form stored in the downloaded file. The unauthorised person would infringe copyright in that cinematograph film by transmitting it to the ultimate viewer.

Rights holders must carefully investigate what exactly has been taken by an alleged infringer and how it may have been taken, as there may be valuable 'properties', like the ITVR signal, which may not protected by copyright even if they have been illicitly intercepted (although there may be other actions available, depending on the circumstances).

The Commissioner of Taxation has recently sought to appeal this decision, so it will be interesting to see whether Justice Bennett characterisation is upheld by the Full Federal Court.