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Colin Golvan

Law Articles & Essays

Managing IP Disputes

Scope of rights

managing ip disputes cadbury dairy milk

Cadbury Dairy Milk

A key starting point in managing IP disputes is an understanding of the scope and limitations of IP protection – having regard to the available term of a right, the ambit of any monopoly and the defences which might be available.

A brief survey of some recent IP cases shows the breadth of the range of IP disputes and the way in which Courts are dealing with contemporary rights management issues.

In Telstra Corporation Ltd v. Phone Directories Company Pty Ltd [2010] FCA 44 and [2010] FCAFC 149, the Federal Court considered the issue of a claim of copyright protection in data bases generated by a computer, and held that such works were not protectable given they were not created by human authorship.

In Cadbury Schweppes Pty Ltd v. Darrell Lea Chocolate Shops Pty Ltd (No. 8) [2008] FCA 470 and Telstra Corporation Ltd. v. Phone Directories Company Australia Pty Ltd [2015] FCAFC 156, the Federal Court considered and rejected passing off and trade practices claims in colours – purple in Cadbury and yellow in Telstra. A similar case on colour and get-up was also rejected, involving the well-known Chemist Warehouse get-up - Verrocchi v. Direct Chemist Outlet Pty Ltd [2015] FCA 234.

The High Court has also rejected claims of patent protection in a gene sequence - D’Arcy v. Myriad Genetics Inc [2015] HCA 35.

The cases illustrate parties engaged in significant contests concerning the ambit of IP laws, but with Courts opting for narrow rather than expansive views.


IP cases require an initial judgment about claims of ownership of rights.

Generally rights are owned by the author or inventor, unless the relevant work was created pursuant to a contract of employment.

The ownership of rights may be transferred under contract, but absent express contractual provisions, the question of authorship, in the case of copyright, or inventorship, in the case of patents, might be vexed and become controversial. Then there is the necessity, if rights are owned by a third party, to ensure that rights are properly transferred prior to the making of any assertion of breach of rights.

It is important in approaching the contracting of rights by way of licence or assignment to first assess what rights exist which might be available for licensing or assignment. It may be necessary to undertake a review of the chain of title to be certain that claimed rights in fact exist. IP rights, in the nature of patent, trade mark copyright and design rights, are statutory and there are statutory pre-requisites for ownership – such as the requirement of authorship and originality (as that term is understood in copyright, ie. not copied). Patents, trade marks and designs have registration systems, with there being requirements for registration which are supervised (at least to an extent) by IP Australia. The grant of registration provides no assurance of validity, which may be contested. There are opportunities for administrative challenges to registration by opposition hearings conducted by IP Australia, with those decisions subject to appeal (by way of a “de novo” hearing) in the Federal Court or Federal Circuit Court. There is a process for review on grounds of procedural unfairness to the Commonwealth Administrative Appeals Tribunal.

In addition to the statutory rights mentioned above, claims of reputations in trade marks, whether registered or not, may be made under the tort of passing off or pursuant to the provisions of the Australian Consumer Law. Trade secrets may also be protected under the tort of breach of confidence.

In the case of works made under commission, the general rule is that the IP rights remain with the creator of a work and will not be owned by the commissioning party in the absence of an assignment of rights. Section 196 of the Copyright Act has the formal requirement of assignments only being legally effective if they are in writing and signed by the assignor.

Generally, licensing agreements (where rights remain in the ownership of the party granting the licence) have a number of key parameters – involving the terms for usage, the time for usage and the issue of territory. There is very little guidance in IP statutes for the requirements of a licence. In copyright, there are express provisions dealing with the requirements of an exclusive licence in s. 10, requiring such licences to be in writing and authorising the doing of a copyright act to the exclusion of all others. An exclusive licensee in copyright has standing to commence proceedings and seek interlocutory relief, but will need to join the owner of copyright in seeking final relief. In trade marks, an authorised user of a trade mark may bring an infringement proceeding pursuant to the provisions of s. 26 of the Trade Marks Act (Cth) 1995. Section 8 sets out the formal requirements for an “authorised user”.


The management of IP disputes often occurs against a backdrop of novel and technically complex issues, which requires lawyers to be ready to see new and often untested ways in which rights might be claimed (or defended).

Invariably, in the running of IP cases, this requires a particular sensitivity to the requirements of the evidence to be adduced– and most notably technical evidence.

Most IP cases of substance involve issues of expert evidence, which will often concern subject matter beyond the technical experience of the lawyers in the case. Other than regard for the rules of evidence and special rules concerning the preparation of independent expert evidence (note the Practice Note for Expert Evidence in the Federal Court Rules), particular regard will need to be had to the communication of the detail in the expert’s report so that it is meaningful and useful in what is ostensibly (to the expert’s eye) a “lay audience”. This will ultimately be a matter for the expert. The preferred course is for the expert to prepare his/her report in their own words. The key role of the legal advisers is the preparation of a properly considered letter of instructions. All instructions of substance should be given in writing and must be directed to identifying the key issues to be resolved in an expert report. It is also imperative that the legal advisers ensure the independence of the expert.

It is also important that an expert witness is fully conversant with the issues concerning the giving of evidence in Court, aware of the potential for vigorous challenge in cross-examination and the need to maintain true independence at all times. It is not the role of the expert to become an advocate in the proceeding.

In most cases, in the interests of eliminating unnecessary controversies, Courts will direct that experts meet and clarify areas of agreement or disagreement in a joint expert report prior to trial. These sessions are conducted in the absence of legal advisers, who should play no role in promoting or discouraging agreement.

It follows that the experts for both parties will likely be required to give their evidence in what is colloquially referred to as the “hot tub” – that is, they are sworn in together, and then will be expected to respond to each other’s answers to questions from counsel as well as the judge. The judge in these settings can be expected to play a more active role than would otherwise be the case with conventional cross-examination.


Proceedings will be commenced with pleadings. An initial question will be to determine whether a proceeding should be commenced utilising the Fast Track process in the Federal Court, which is especially geared to enabling cases likely to run for less than five days, and which are not complex, to be brought on for trial and determination expeditiously. The Fast Track has its own special rules (by way of a Practice Note in the Federal Court Rules), requiring, for example, a more complete statement of the claims being made than might otherwise be the case with standard pleadings. It also has very limited scope for discovery of documents.

In contemporary litigation practice, whether Fast Track or not, the ambit for discovery has been very much narrowed. Parties are usually required to outline their evidence without recourse to discovery, with any discovery required for trial to be reviewed once the documents sought to be relied upon are produced in the written evidence of the parties. This is not to remove the entitlement for limited discovery before evidence, but such requests will need to be tightly framed. The same principle will apply to any requests for further particulars.

Given the constraints on seeking discovery in an on-going proceeding, attention will need to be given to whether a potential plaintiff knows enough about the conduct of the potential defendant, whether by documents in its possession or by other knowledge, to properly commence a proceeding. If further documents are required before a proper basis can be established whether to commence an action or not, the potential plaintiff should consider an application for preliminary discovery.


The key challenge in preparation is the proper identification of the issues to be resolved in the dispute. This challenge is first confronted in the drafting of pleadings, which of course will present the “four walls” of a dispute. There is a need to ensure that claims later made by way of submissions are consistent with and permitted by the pleadings.

This is the ultimate challenge for instructors in giving proper instructions to counsel to ensure an appropriately considered approach is taken to identifying the issues in the brief to counsel and that only relevant documents (rather than every conceivable document) are provided.

There are typically not more than a limited number of key issues and documents which determine outcomes in litigation and the identification of these issues and documents at the earliest stage will substantially aid preparation and very likely the outcome of a dispute (and, of course, greatly assist in the cost management of disputes).

Predicting outcomes in cases is of course perilous but rigorous attention to the issues for determination will expose strengths and weaknesses.

By way of discouraging ideas that outcomes are clear, there are many examples of trial judgments being overturned on appeal and then the High Court overturning Courts of Appeal, as is well illustrated by the Part IV Trade Practices case of Melway Publishing Pty Ltd v. Robert Hicks Pty Ltd (2001) 178 ALR 253. Melway ultimately prevailed in the High Court though it lost at trial and on appeal. Taking account of judgments for and against at all levels of the case, in the end six judges found for Melway and four against – it just so happened that four of the six judges in favor of Melway were sitting on the High Court.


While practitioners will of course need to work to the current state of the law, IP cases have a further dimension requiring the vigilance of practitioners, being significant legislative developments as well as refinements emerging from the case law.

IP laws can have important political and economic implications, which mean that changes in the law, and discussions about changes, are ever present. This is well illustrated by the recent debate about whether to change the current highly structured fair dealing defence to copyright infringement to the much more open-ended fair use defence as adopted in the United States. These moves are particularly being promoted by large-scale users of copyright (ie., key media interests) which wish to avoid the need to seek and obtain licenses for limited uses of copyright.

In the patents sphere, the crucial issue of what constitutes an invention has come under scrutiny in the High Court’s decision in D’Arcy v. Myriad Genetics Inc (referred to above) to the effect that the discovery of a genetic sequence which indicated a propensity for breast cancer was held not to be “a manner of manufacture” (as required under s. 18 (1)(a) of the Patents Act (Cth) 1990) and thus could not be patented. Rather it was considered to be a discovery of a function of the body, and not an invention.


The management of IP cases requires careful regard to not only the state of the law but where the law should (or should not) be heading.

A creative and sometimes lateral approach is suggested but one which pays particular attention to the age-old litigation chestnut of the importance in preparation of the clear and carefully considered identification of the issues to be resolved.