Pause Before You Threaten Legal Action for Stolen Intellectual Property

Pause Before You Threaten Legal Action for Stolen Intellectual Property

Pause Before You Threaten Legal Action for Stolen Intellectual Property

Stop and Pause: being too quick to assert your Intellectual Property rights could land you in hot water

Do you think that someone is using your work in an illegal way? Stop and pause before you threaten them with legal action, as accusing someone of infringing your intellectual property rights may leave you in the firing line.

Law exists in Australia to protect people from making dubious claims in relation to patents, designs, copyright and trademarks. This extends to sending cease-and-desist letters, sending circulars and advertisements.

The idea behind this legislation is to stop rights holders from misusing their position.

For example, it may be easy to scare off a competitors by having lawyers draft a cease-and-desist that the competitor cannot afford to investigate, even if your competitor has not technically infringed your intellectual property.

A 2016 case of CQMS Pty Limited v Bradken Resources Pty Limited shows that if you wrongly allege infringement, the person you complained about may bring a claim against you.

In that case, CQMS alleged that Bradken had infringed a number of their patents. Their lawyers sent out a letter of demand, setting out the basis for their claim. The letter of demand was “fairly standard” and of the kind often sent by patent attorneys. When Bradken did not comply with their request, CQMS then pursued the claim in court.

CQMS lost the case and was then counter-sued by Bradken, who asserted that they had been the victim of an “unjustified threat”. The fact that CQMS had lost the case was evidence of the “unjustified threat”. It did not matter that CQMS firmly believed that they had a good case against Bradken and were prepared to follow it through in court.

Likewise, the 2016 case of Stone & Wood Group Pty Ltd v Intellectual Property Development Corporation Pty Ltd should serve as a warning to be careful. What you may think infringes intellectual property rights may not in fact, do so.

In that case, craft beer brewers Stone & Wood had a beer called “Handcrafted Stone & Wood Pacific Ale” and they alleged that competitor craft brewers Elixir had infringed their intellectual property rights by calling their beer “Thunder Road Pacific” and “Pacific Ale”.

Unfortunately, when filing court proceedings Stone & Wood claimed for passing off and contraventions of Australian Consumer Law, but did not include a claim for trade mark infringement in their original claim. Stone & Wood only added a claim for trade mark infringement after Elixir counter-claimed for groundless threats of legal proceedings for trade mark infringement resulting from the letters between lawyers before the claim was filed.  

The court found for Elixir, and said that the reactive amendment to Stone & Wood’s claim adding trade mark infringement only after Elixir made a claim fro groundless threats, served to support Elixir’s case.

These examples should deter you from firing off “cease and desist” letters without a careful strategy.

As it has not always been clear what a groundless claim or unjustified threat could be, in 2017 the UK Parliament passed the Intellectual Property (Unjustified Threats) Act to clarify the meaning. If a reasonable person believes that a communication contains a threat of legal proceedings to protect a registered trade mark as the result of an act done, that will constitute a threat of infringement proceedings. 

That threat will not be actionable if an infringement has occurred. Letters asking a person to cease and desist infringing behaviour will not be actionable if they identify the owner’s rights and do not threaten legal proceedings. 

At this stage, reform is not proposed in Australia.

What if someone is infringing your IP?

In light of the pitfalls noted in this article, what should you do if you think that someone is infringing your intellectual property?

1. Stop and pause

Take a deep breath before firing off any emails or letters to the other party.

Do not presume that just because your competitor is using similar words, colours or phrases that they are automatically infringing your intellectual property.

Do not send any kind of “cease and desist” communication unless you are genuinely intending to proceed with, and substantiate, the claim in court. Be aware that in some cases, if you fail in court, that is enough to establish an “unjustified threat”.

2. Check it out

Check what intellectual property rights you do have. Do you have all your designs, patents and trademarks registered? Are your claims valid in the country that you are asserting them? Just because you have rights in one country, does not mean you have rights in another.

Engage a lawyer who works in the area of intellectual property you seek to protect, if you are unsure about what rights you have.

3. Play if safe

If you believe that someone is close to infringing your intellectual property, there are some things you can do. You are allowed to notify another party that intellectual property in a particular design, patent or trademark exists.

We recommend getting a lawyer to look over any correspondence you intend to send, as there are scales of what is considered a threat.

What if you receive a cease and desist letter?

1. Don’t panic

Being on the other end of a cease and desist letter can be frightening, especially if the other party is speaking about pursing a claim in court.

Remember, these letters are not a summons to court.

Take a deep breath and take time to properly assess what is being asked of you. Don’t rush to pull down all your advertising material or respond with a knee-jerk reaction.

Letters from lawyers in your country should be taken seriously, but there are a variety of options available.

2. Read the letter

Read their communication with care to find out exactly what the other party asking you to do.

Are they talking about trademarks? Copyright? Or other contractual matters? Are they asking you to remove certain material? Or are they just asking for information?

Do they want a response by a certain date? Do they want you to remove the whole part of something, or just make minor changes?

3. Speak to a lawyer about whether a valid claim exists

Intellectual property law can be complicated, with varying degrees of permitted use.

Using similar colours and phrases will not automatically infringe someone’s intellectual property rights.

4. Do nothing

Unfortunately, operating in the public arena opens you up to allowing anyone to contact you. Some people like to act aggressively with the intent to intimidate you or disrupt your business practices. In a case like that you might simply respond that you disagree with their position, or not respond at all. 

Be careful if you choose not to respond to a letter, particularly if it is from a lawyer within your country. If there is a chance you are infringing someone’s intellectual property rights then you could be at risk of further proceedings. 

If there is a chance the claim is valid – address it immediately and do not hide it at the bottom of you to-do-list in the hope that it will go away. In most cases, it usually does not!

5. Comply

After reading the letter and seeking advice, it may be that you decide to comply. This will probably be the easiest and most cost effective solution.

However, you should consider the consequences of doing so. Will you have to change your whole business strategy? Will it cost a lot to make the required changes?

How can Onyx Legal help you?

We can help you assess the risk of action you want to take in response to a threat of action claiming your infringement, or if you want to issue a letter notifying another party of their infringement. 

Once we have properly assessed your position, we can work with you to develop and appropriate strategy to move forward in the way that best suits your position.

Is it OK to Use Trade Marks in Adwords, Keywords and Metatags?

Is it OK to Use Trade Marks in Adwords, Keywords and Metatags?

Is it OK to Use Trade Marks in Adwords, Keywords and Metatags?

Trade marks can be used in hidden text 

In March 2016 Her Honour Justice Katzmann made it very clear that using a competitor’s trade mark in the unseen back end of your online advertising accounts is not a breach of trade mark law, nor is it misleading or deceptive. Veda Advantage Ltd v Malouf Group Enterprises Pty Ltd [2016] FCA 255.

Credit reporting company Veda Advantage (now Equifax) registered a string of trade marks including the name ‘Veda’.

Malouf Group Enterprises used 86 variations of the Veda trade marks in its online advertising to attract customers to its credit repair services. Most of Malouf’s advertising limited the use of the Veda trade marks to keywords selected in the back end of its Google Adwords campaigns.

Veda sued, relying on three main causes of action:

  1. Trade mark infringement within the meaning of s120 of the Trade Marks Act
  2. Misleading and deceptive conduct in contravention of s18 of the Australian Consumer Law
  3. Making false and misleading representations in contravention of s29(1)(h) of the Australian Consumer Law

Malouf was found to be innocent of any infringement or contravention where the keywords that resulted in the ads used Veda trade marks, and the ads themselves did not. We’ll get to why in a minute.

There were two other categories of ads. The first were ads that used the word “Veda” as a description, such as “Fix Your Veda File Now”, and the third potentially drew a link between Veda and Malouf’s business, showing the words “The Veda Report Centre”. Only the last category was a breach.

When is a trade mark, not a trade mark?

When it isn’t being used as a trade mark, and ‘use’ is quite specific.

In a clearly reasoned judgement, Her Honour stepped through the relevant law to conclude that:

When selecting keywords and including them in an Adwords campaign, the advertiser is not using those words to distinguish the goods or services from goods or services of another trader. The advertiser is using those keywords to identify internet users who might have an interest in the product or service.

All Adwords account users have the ability to use the same keywords at the same time, which adds weight to the argument that those keywords are not being used as trade marks.

Where the keywords used are “invisible and inaudible, indeed imperceptible, to consumers” their use cannot be as a trade mark to distinguish goods or services.

Where trade marks are used in a way that is merely descriptive of services, like “fix my Veda file”, that is not use as a trade mark.

In response to Veda’s argument that the use “in physical or other relation to the services” (from section 7 of the Act) did not have to be visible to the consumer, Her Honour responded “I doubt very much whether the Parliament had in mind a metaphysical relationship, no matter how expansive the concept of use was intended to be.”

YOU CAN’T INFRINGE TRADE MARKS IN METATAGS EITHER

In endorsing a decision of Complete Technology Integrations Pty Ltd v Green Energy Management Solutions Pty Ltd Her Honour agreed that metatags were:

  • invisible to the ordinary internet user
  • used by search engines to direct a user to a website
  • once arriving on the website, it would be obvious to the user whether or not the trade mark had any relation to the business of that website
  • as the metatag would only be discernible after reaching the website, and may have nothing to do with the website content, it couldn’t be used in that context as a badge of origin for the website services

INTERNET USE IN THE 21st CENTURY

Whilst previous cases found that the display of search results from one advertiser as a result of input of a competitors trade were likely to be misleading or deceptive, the Veda case thankfully catches up to the real world, accepting that internet users:

  • know the difference between Ads and organic search results
  • habitually scroll past the Ads in favour of organic search results
  • know advertisers are responsible for add content
  • know organic results are generated by website content
  • don’t expect companies placing Ads and companies with organic search results to be the same
  • actually look at URLs and understand which companies they are likely to be associated with

NOT MISLEADING IF THERE IS NO REPRESENTATION TO A CONSUMER

In looking at whether the display of advertising content without trade marks in search results was misleading and deceptive, the first question turned on whether or not a representation had been made.

Her Honour found that the choice of a keyword was a representation by the advertiser to Google, not to a consumer, and so can’t be misleading, particularly in the case where it isn’t even visible to the consumer.

Where Veda was used as a description in the Ad copy, Her Honour found that it was unlikely for internet users to be misled when the associated URL did not also contain the word Veda.

On the other hand, the ads containing the words “The Veda Report Centre” where found to be likely to misled or deceive the public due to their authoritative air.

GOOGLE’S RESPONSE?

Google had its own run in with the ACCC in 2012 over Adwords. The ACCC said that Google was participating in misleading and deceptive conduct by displaying sponsored links where the advertiser did not have a right to use trade marks which generated those sponsored links. One of the examples in that case was an ad for STA Travel that was displayed after entering the search terms “Harvey Travel” and “Harvey World Travel”.

Google was finally absolved of any wrongdoing in 2013 when the High Court unanimously decided that the words used to generate sponsored links were the responsibility of the advertisers and not Google. This placed Google in the same position as traditional advertisers like television, radio and print.

The Court decided that reasonable internet users were capable of telling the difference between ads and organic search results and would understand that Google itself wasn’t making any representations by displaying the ads.

In that case Google was able to demonstrate that when it had notice of a possible misrepresentation occurring if a particular keyword was used, it could stop an account holder from using that keyword. It might be for this reason that there has been a block on the use of a large number of trade marks in competitive advertising through Google Adwords.

How can Onyx Legal help you?

If you are concerned that someone is infringing your trade mark, or you have received a nasty letter saying that you are infringing someone else’s trade mark rights, let us know. 

We can help prepare a notice to another person letting them know they are infringing and asking them to stop it, or help you response to that type of letter. 

We can also help you assess whether any letter you receive is a legitimate risk to you or your business, or not. Claims from overseas are not always legitimate.

How to Deal with Threatening Legal Letters

How to Deal with Threatening Legal Letters

How to Deal with Threatening Legal Letters

Want to know how to handle nasty legal demands?

I’m on the road in between meetings today and just thought I’d share a story with you. I was speaking to a friend earlier and they said, “Oh, that’s such a great story. More people should know it.” So I thought I’d share it with you today.

We had a client who received one of those nasty letters of demand in the mail saying, “You’re in breach of our trade mark. Hand over your domain name, hand over your website. If you don’t do it in 24 hours or seven days or something ridiculous, then we’re going to take you to court and see you for a whole bunch of money.

Now the client came to us and said, “Can you represent me in court proceedings?” I responded, “Hey, let’s stop and look at this in the moment and see if that is your only option.

Court is not the only option

When we looked at the value in the client’s business, it was not in the trade mark. This is a client who had been selling a product that they imported from the UK and the company in the UK had registered the trade mark in the UK. There was a competing company in the US and they had registered the trade mark in the US. The American company came to Australia. They registered the trade mark in Australia. They waited a couple of years and then they wrote this nasty letter to our client saying, “You’re in breach of our trademark.” Our client had been trading in Australia before they started trading in Australia.

There are a whole lot of legal, technical arguments involved. We could’ve gone to court. We could have argued prior use and all sorts of things, but court proceedings take time and cost money. So the prospect of our client going to court was just not attractive. We were looking at maybe three years, $150,000 and no guarantee of a favourable result. We would have a result one way or the other, but we couldn’t guarantee it would help our client.

Looking at the business and knowing that the revenue wasn’t in the trade mark, we spoke to the supplier in the UK. They were happy to re-brand or they were already in the process of re-branding some of their products. So they said, “Okay, what we’ll do is we will assist you in re-branding.” They registered a domain name with the new brand. They registered the new brand as a trade mark here in Australia. Our client put together a 90 day plan, or at least we helped our client put together a 90 day plan to re-brand their business and to shift everything across to the new brand.

Because it was a 90 day plan and we made some promises to the American company about the process we were going to go through, they gave us that time because 90 days is a hell of a lot better than going through court, and there are certain requirements and rules around proper negotiation and all that sort of thing and trying to reach a commercial resolution. So the American company just had to wait.

Is there a better strategy?

In that 90 days, our client shifted his entire business onto the new brand. Now the value was in his database, so through a series of communications with the database, the whole database was shifted across to the new brand.

Our client did have to spend money on re-branding and shifting that database across, but he didn’t lose any revenue and most importantly didn’t lose any business. So once that process was complete, our client had a new website up. He had the entire database marketing to them and was changing them over to the new brand. We’ve got an agreement with the American company to say that we could sell out the end of the branded supply and not stock any new supply with that trade mark.

In the end, the American company bought our client’s domain name. Now, the reason behind that was the domain name was .com which means it can be used internationally, so my client still had the right to use that domain name in jurisdictions other than where there was a registered trade mark, or where he had permission. So he could still use it in the UK where they had the mark registered or his supplier had the registered trade mark and was happy for him to use it. In order for the American company to get hold of that domain, they had to buy it.

Instead of three years and $150,000 in court with no certain result, what we did is introduced a strategy enabling our client to re-brand in 90 days, shift his business across, not lose any money, and because the domain name was bought, his legal fees were effectively halved. So great, great result for the client, and just a really good example of the fact that there are options. Our client walked away with a stronger business and a protected brand.

  • Don’t think just because you get a letter of demand that you have no choice but to go to court.
  • Don’t think that you might not have an argument because there’s a whole lot of technical issues involved in legal cases, and sometimes it’s not all against you and sometimes there’s not all in your favour.
  • There are options and it’s worth investigating what those options are before you go and get started. 

How can Onyx Legal help you?

We’re interested in strategies that support you and your business to grow and get stronger. If you receive a nasty letter of demand and want help in figuring out how to respond, contact us to help you map the way forward.

Should you Register a Trade Mark?

Should you Register a Trade Mark?

Should you Register a Trade Mark?

Knowing When to Register a Trade Mark 

I’ve just been at a Angel Investor and Entrepreneur breakfast. One of the things we were talking about this morning was branding and looking at how to use your branding and how you might leverage your business and change the direction of your business in the future. So, whether or not you actually want to register trade marks now, what trade marks are worth registering? All of those sorts of questions came up.

One of the considerations that you can give before making a decision to register a trade mark or not is:

Where is the value in my business?

So, if the value is in the trade mark, then it’s worth registering. If the value is in some other aspect of the business, maybe you want to invest your money more in that first before you register a trade mark. Just something to think about.

Also, remember that not all things are capable of being registered as trade marks.

General descriptions and place names can’t be registered. We had a client once who said, “Hey, I want to register this trademark and it’s just been rejected by the trademark office. Can you tell me why?” The reason their application was rejected was because they wanted to register something like “Auto Sales, Brisbane“. It’s too generic. There’s no way you’re going to get that registered as a trade mark, because too many people in the same industry need to be able to use those words in that kind of order.

So just remember that not everything is capable of being registered as a trade mark and trade mark registration, although important, may not be your top priority right now.

How can Onyx Legal help you?

We can help you get your trade mark registered. We will help you identify the right classes and descriptions to protect your business and manage the process until your registration certificate comes through.

AU$ Trademark Fees Have Changed

AU$ Trademark Fees Have Changed

AU$ Trademark Fees Have Changed

IP Australia Fees for Applying to Register a Trade Mark? 

A few quick things you should know before making an application for a trade mark:

  • Registration has local affect (Australia) only, unless you specifically make and pay for an international application
  • The cost of international applications vary depending upon the countries you want to cover
  • Generic or commonly used words and phrases are unlikely to achieve registration
  • The assessment process takes six to twelve months and, if successful, is backdated to the date of your application
  • There are 45 classes of registration and each class attracts a fee

Until October 2016 you had to pay both an application fee when you lodged your application and a registration fee six to twelve months later once it was accepted.

For applications made after 10 October 2016, you pay a higher application fee, but no additional registration fee, so overall its cheaper! Just a bigger up front cost than previously.

In 2020 your IP Australia trade mark application fees are either:

– $250 per mark applied for, per class applied for if you use IP Australia preset descriptions, or

– $330 per mark, per class if you use your own unique descriptions 

Example: You have one brand name you want to register for printed material, clothing and the delivery of entertainment online. That covers at least three separate classes. If you use preset descriptions from IP Australia, your fee to IP Australia for that one brand will be $750. If you use your own descriptions, your fee will be $990. Your legal fees are separate. 

If you’re not sure whether you are ready, or even need to register a trade mark at this stage, check out our guest article in ProBlogger “How (and When) to Register a Trademark Without Hiccups” where we take you through a 5 step process –

Step 1: Is your brand capable of trade mark protection?
Step 2: Does your brand have value?
Step 3: Is there anyone else out there using your brand, or likely to?
Step 4: Is there any other form of protection in place?
Step 5: Is now the right time?

How can Onyx Legal help you?

We can help you apply for trade mark registration in Australia, object to someone else’s application, respond to an objection, or respond to an adverse examination report.

To get started, we will need from you – your trade mark, any image marks you wish to register and a description of the products or services you wish to have covered by the mark. Your description can include products and services you expect to develop during the next three years.