A Piece of Humble Pie - Design of Apple Pie Not Registrable, Says US Court of Appeals

What is more enjoyable than a case involving food and an intellectual property law? This writer for one will freely admit his love of both, and any case that presents a scenario mixing the two is a delight. Many recent cases have touched on the design of various food items, including the recent Kit Kat litigation in the UK (discussed more here) and in the CJEU (discussed more here), and as manufacturers and makers of edible goods compete for marketshare, the shape of these items can become quite valuable and important. One still has to distinguish this from recipes (discussed more here), and while they are much less likely to be protectable, shapes are a different matter altogether. With that said, could you protect the shape of a dish, specifically a pie? The Court of Appeals in the US aimed to answer this question only late last month.

The case of Sweet Sweet Desserts, Inc. v Chudleigh's Ltd dealt with a design of a single-serving apple pie, meaning a whole pie meant for one person in a neat, convenient package. This particular food item was the creation of Scott Chudleigh, the owner of an apple farm and bakery in Ontario, Canada. It consisted of a ball-like shape, with upward facing, spiralling petals that overlap each other, encasing the apple pie filling within. He subsequently filed for a trademark in 2005 (US trademark 2262208, which includes an illustration of the design). The pies where distributed to various companies for resale, including a discussion with Applebee's in the US for the sale of the item in their restaurants, but the negotiations fell through. In 2010 Applebee's approached Sweet Sweet Desserts to create a single-serving apple pie, much akin to the idea conjured by Mr Chudleigh, who developed an "apple pocket" with a pie-like bottom and an overlapping spiral top design, leaving a gap in the top (subjectively quite similar to Chudleigh's apple pie design).  After launch Mr Chudleigh noticed, through online advertising, the similarities of the two designs, and took Sweet Sweet Desserts to court over trademark and trade dress infringement.

Little Jimmy's "floor pie" was received with less enthusiasm

The first issue dealt with by Justice Shwartz was whether Chudleigh's design was merely functional, and thus not registrable as a trademark. 15 USC section 1125(a) prohibits the use of any marks that would deceive a consumer as to the origin of goods or services, potentially including the aforementioned design, provided the design is not only functional and thus not a designation of such an origin. Justice Shwartz further set out that "...in general terms, a product feature is functional, and cannot serve as a trademark, if it is essential to the use or purpose of the article or if it affects the cost or quality of the article". Even if a feature were deemed to not be functional, a court can still find against the owner should the mark put competitors "...at a significant non-reputation-related disadvantage", therefore potentially restricting competition in the field (i.e. if a design or shape of a mark is essential or near-essential to the creation or presentation of certain types of goods).

What the Court found was that the design was indeed functional, as "...the shape of the dough is essential to the purpose of an effective single-serving fruit pie, and affects its cost and quality". Arguably this is correct, since the folding of the dough in order to seal the filling into the pie does just that, and does not, at least for the most part, act as purely decorative, clearly designating an origin for those particular pies. Mr Chudleigh admitted to this fact somewhat, stating that the use of the dough in that particular shape was designed to save on cost and to fill a particular market need for single-serving pies. Additionally, the number of 'petals' in the pies would be predominantly as a functional aspect, giving the best results for holding in the filling and baking, again enforcing a lack of decorative purpose and pure functionality. The Court therefore determined the design to be functional, and revoked Mr Chudleigh's registration.

The final claim dealt with by the court was Sweet Sweet Desserts' claim for tortious interference with their relationship with Applebee's through Mr Chudleigh's assertion of his alleged rights (being very similar to groundless threats in the UK). Justice Shwartz quickly ruled against this claim, determining that Mr Chudleigh's cease-and-desist letter, sent to Applebee's after his discovery of the Sweet Sweet Desserts' apple pie, since the letter was an "...objectively plausible effort to enforce rights" and not a sham to extract a settlement from the parties prior to a full case. Even though he failed in the case at hand, losing his rights in the design, does not take away from his legitimate belief at the time as to the existence of these rights. The Court ultimately allowed the application for summary judgment for both parties.

The case, albeit not ground-breaking in any way, is a curious predicament for the law, especially considering the uncertain world of food-related trademarks and rights. This writer would fully agree with the Court, since the design of the pie was purely functional, and any decorative or indicative purposes were either incidental or minor in the grand scheme of things. It is unclear whether Mr Chudleigh could have succeeded in a claim for passing off in the UK, and this writer sure does have his doubts as to this, but the idea would seem to be a novel one as a hypothetical.

Source: JDSupra

Parallel Infringement - Parallel Importation of Rebranded Cigars Okay, Says Australian Full Federal Court

Tobacco packaging has been a popular topic in the last couple of years, including on this very blog (articles on which can be found here, here and here), particularly in the remit of plain packaging. Whether you dislike the initiative or support it, one can still appreciate the sentiment behind it. What the legislation has done is caused severe issues for products like cigarettes that heavily rely on these distinctive markings to indicate their own brand and distinguish its features from the rest. In Australia the law has been in effect since 2011 under the Tobacco Plain Packaging Act 2011, which means all tobacco products must conform to the requirements of the law in their packaging. With that said, could one repackage purchased tobacco products and subsequently resell them in Australia? The Full Federal Court took this question on after an appeal from the Federal Court whose decision was handed down in late 2015.

The case of Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd dealt with the sale of tobacco products in Australia, specifically cigars manufactured by STG Eersel. The company, in relation to the sale of these goods, also holds several trademarks for cigar brands, including Café Créme (No. 761892), Henri Wintermans (No. 179680) and La Paz (No. 643779). The cigars were manufactured in Belgium, Holland and Indonesia, using packaging incorporating the aforementioned marks. The same cigars are packaged differently for the Australian market in order to conform to the plain packaging legislation mentioned above, which is done abroad similarly to the branded products. Trojan is an importer and supplier of cigars and other tobacco products, supplying, among other items, STG's cigars to the Australian market from overseas, repackaging them to conform to the same legislation. At first instance, Chief Justice Allsop saw that Trojan had not infringed STG's trademarks by repackaging their branded products; however, the decision was appealed by STG.

The Full Federal Court firstly sought to establish was whether the trademarks mentioned above had been infringed by Trojan through their parallel importation, i.e. were STG's marks used "as a trade mark" under section 120 of the Trade Marks Act 1995 and if section 123 (allowing for the use of a trademark if the mark has been applied to the goods prior to or with the consent of the rightsholder) of the same Act applied to those uses.

Lewis now doubted the legitimacy of his cigarettes

What constitutes use "as a trade mark" was initially set out by the Court as "...[a] use of the mark as a “badge of origin” in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods". This use still has to be assessed within its context, including how the marks are used, as "...not every use of a mark which is identical with or deceptively similar to a registered trade mark infringes the right of property which the proprietor of the mark possesses in virtue of the registration".

The Court concluded that "...a person who, in the course of trade, imports and sells goods to which a registered mark was applied by its owner at the time of manufacture will have used the mark as a trade mark". Their conclusion relies heavily on the impact of parallel importation on the original manufacturer, and the existence of section 123, which, if this were not the case, would be largely redundant. This position follows previous Federal Court case law quite well, even with the existence of foreign cases accepting the opposite position.

As the Court had determined that the importation of the branded goods was indeed a use of the marks, they moved onto the question of whether the use amounted to an authorized use under section 123 of the Act. The section is engaged when, in the past or prior to the use under section 120, the rightsholder (or someone authorized by them) has applied the mark onto the packaging of the goods, which are subsequently sold onward by the third-party (i.e. used "as a trade mark" as discussed above). What seems to remain key here is the reapplication of the mark onto the new packaging by Trojan, which, according to the Court, should be covered by the section through a much wider interpretation of it. Ultimately what the Court concluded was that Trojan were protected under section 123 and did not infringe STG's trade marks.

Finally, the Court did briefly discuss issues surrounding a passing off claim and Australian consumer protection laws, and deemed that Trojan had not passed the repackaged cigars off as STG's, nor had they been in breach of any consumer legislation in their repackaging efforts (specifically deceive or mislead consumers).

The case is a very interesting illustration of the possible perils of parallel importation, and shows the differences in the approaches in the UK and Australia (and, to some extent, the EU). As the world and trade have become more and more global, parallel importation will be a bigger issue for the future. Even so, the Full Federal Court's approach is very sensible, considering the packaging environment that exists in the country for tobacco products. It is unclear whether the decision will be appealed to the High Court, but this writer thinks, after two successive losses, STG might have to just accept defeat.

Source: IP Whiteboard

One, Not the Other - Misuse of Confidential Information is Not (Necessarily) Copyright Infringement

Many areas of IP infringement often intersect, with one aspect potentially leading to the next. It can be difficult to distinguish these separate acts, and even harder to judge for one to have been committed and not the other. This separation, however, can be a crucial aspect of protecting both parties' interests, even if it could logically (in its non-legal definition) make sense to bundle the acts together. A recent case was dealt with by the Federal Court of Australia that touched on the intersection of breach of confidentiality and copyright infringement, tackling the aforementioned separation head on.

The case of TICA Default Tenancy Control Pty Ltd v Datakatch Pty Ltd dealt with the provisions of services relating to background checks for prospective tenants, conducted by TICA, showing any defaults on previous leases and other tenancy applications they might have made. This is conducted via the company's website for an annual fee, or, for non-corporate entities, possibly on a one-off fee as well. What the case mainly concerned were the databases and the software that underpinned the service. Former employees, Anthony Nounnis, Reginald Joshua and Nathan Portelli, after leaving the company under varying circumstances, set up their own company called Datakatch Pty Ltd. After its incorporation, it came to light that the company might have copied the database and software used from TICA, who subsequently took them to court over breach of confidence and copyright infringement.

Copying software is nothing like the Matrix, Adam realized

The first question addressed by the Federal Court was whether the TICA system was indeed taken by the respondents in the matter. Justice Perram extensively discussed the circumstances and pleadings surrounding the case, additionally focusing on the similarities and dissimilarities of the source code and the stylesheets for each system. There were two things to note, which were highlighted by the judge. Mr Joshua and Mr Nounnis were deemed to have accessed the TICA website using some clients' login details, specifically for the purpose of assisting in the design of the Datakatch website. This included accessing the HTML code, which was subsequently modified heavily in its use in Datakatch's system. Even with access to the website they still were deemed to have not accessed and copied the source code, due to the circumstantial nature of the evidence put forth on this point. Justice Perram determined that the only aspect that was directly copied was the HTML code.

The judge then moved onto the question of copyright infringement, prior to dealing with the issue of a breach of confidentiality. This would be assessed, as many would be aware, as whether there was a substantial copying of the materials by Datakatch or not. A further layer was added in the decision in CA Inc v ISI Pty Limited, where the substantiality of any copying of computer software would be assessed looking at the "...taking into account the importance of function" of the software and its code. Justice Perram quickly concluded that the copyright in the work had not been infringed as "[t]he amount of code copied is trivial from a quantitative point of view" and no functional analysis was done. Although unnecessary after a finding on non-infringement, the judge still looked at the ownership aspect of the copyright issue, i.e. whether TICA owned the copyright in the works allegedly copied. He concluded that they did own the copyright in the works.

Justice Perram finally took on the issue of breach  of confidence against the defendants, who, as stated above, had clearly used usernames and passwords to access confidential information on TICA's systems, which were deemed to have the necessary protectable quality of confidentiality in them. After some discussion, the judge concluded that only Mr Nnounis had breached confidentiality, although only under section 183 of the Corporations Act 2001 (which prevents officers of a company to use information acquired through their position for their own personal gain). He additionally imposed an injunction against Datakatch over the use of the usernames and passwords, as Mr Joshua is a shareholder and director of the company.

The case shows clearly the distinction between intellectual property rights and confidential information, and how an infringement of one right does not necessarily automatically bring about an infringement of the other. Although not by any means a landmark case, this writer still found it interesting, and wonders where the case would've gone had the claimants argued their case differently (and admittedly, better, by the looks of the comments made by the judge).

Source: Davies Collison Cave

A Torrential Result - No Requirement to Censor Torrent Search Results, Says Paris Court

Just the mention of 'torrent' files can send shivers down the spines of rightsholders and their legal representatives. Often synonymous with online copyright infringement, the BitTorrent protocol is actually a very legitimate way to send and receive files without having specific hosting facilities to do so, saving on costs and often bandwidth. In a nutshell, the protocol allows for an individual or entity to download a file from several sources, taking only pieces and ultimately compiling them into one completely copied file. Even though entirely legitimate, the protocol has been used by file sharers for some time, allowing for the efficient and fast downloading of illegal files from the Internet, often utilizing websites such as The Pirate Bay (or any other search engine, for that matter) to find the torrent files linking to the illegal content. With this availability so ubiquitous, could rightsholders censor search results on search engines to prevent copyright infringement?

While there are no official translations of the case available, this writer has used machine translation for the purposes of providing quotations, and any translations should be regarded as unofficial and (possibly) not fully accurate.

Two recent cases in France aimed to deal with this issue head-on, where the French music producers' association, Syndicat national de l’édition phonographique (SNEP), took both Google and Microsoft (the decisions are only available in French) to court. Under Article L336-2 of the Code of Intellectual Property, a court can, upon application, force an intermediary to take all appropriate measures to prevent or stop such infringement, including, potentially, allowing and/or facilitating (through search results) access to torrent files.

Dealing with the case against Google, the Parisian Court found that, although Google France had no direct control over search results (ultimately controlled by its American patent company, Google Inc.), it still "...develops a commercial activity, which ensures funding for services offered free to users and participates operation the search engine business". They could not therefore, be exonerated from the claim brought by SNEP.

Leading the charge against Internet censors

The Court then moved onto discussing the admissibility of the claim, they quickly dismissed SNEP's claim due to a lack of ability to represent the parties in question (the artists named were Kendji Girac, Shy’m, and Christopher Willem). This was largely due to the SNEP's role as an enforcement provider for a select segment of the audio entertainment industry, and would not therefore qualify as a 'professional defense body' per Article L336-2. The Court ultimately rejected the case against Google, not forcing the search provider to censor the results containing torrent files to infringing files.

In a similar case, Microsoft faced a challenge in relation to its Bing search engine, which also provided access to results containing infringing music files from the aforementioned artists.The Parisian Court would not exonerate the company on similar grounds as Google's subsidiary, as the companies were tightly woven into the business of providing the search facilities.

The Court further rejected an assertion that Microsoft would be acting as a subsidiary by not blocking access to the infringing content, as Article L336-2 imposes no duty on companies to prevent access to infringing content. Although asserted by SNEP, Microsoft had not failed to comply with their notification procedure in Article 6-l-5 of the Law of Confidence in the Digital Economy, as the Court deemed that any action under Article L336-2 would be a separate action from the notification procedure. Ultimately, the Court rejected SNEP's entire case, as the censoring of all pages containing torrent links to infringing materials (concerning the artists in question now and in the future), would be "...general surveillance measure[s] and could cause the blocking of legitimate sites", even under the guise of protecting legitimate interests. They also added that the measures would be ineffective, and are not necessary, as the search facilities is seldom used to search for the artists in question with the term "torrent", which is quite easy to circumvent if needed.

Although this writer knows very little about French law, the cases seem quite interesting, especially in the context of the wider Internet. Allowing for the blocking of specific terms and the term "torrent" in a much broader scale would clearly impact the Internet experience many of us enjoy, be the use legitimate or not. The Parisian Court seems to have made a decision stemming from pragmatism and a deeper understanding of the Internet. While rightsholders would be dissatisfied with the decision, one can appreciate the balance that has to be struck when it comes to more overarching censorship measures.

Source: Ars Technica