Category: Intellectual Property

Sydney’s favourite gelato shop, Gelato Messina, recently found itself in a sticky and not-so-sweet trade mark dispute.  Last week Gelato Messina created the ‘Gaytime’ flavour as a tribute to both the Sydney Gay and Lesbian Mardi Gras and everybody’s favourite childhood ice-cream (in case you were hungry wondering, the flavour consisted of layers of caramel and milk gelato with chocolate coated biscuit bits).

But alas, this ice-cream made Unilever scream, presumably because Unilever did not like Gelato Messina’s use of their ‘Gaytime’ trade mark.

Gelato Messina was shown the cold shoulder and told in no uncertain terms to cease and desist from using the ‘Gaytime’ name. No doubt hoping all their troubles would just melt away, Gelato Messina promptly changed the sweet treat’s name to ‘the flavour formerly known as Gaytime’.

The situation, however, remained frosty. Unilever demanded that Gelato Messina change the name again, setting a 5pm deadline. Harnessing the power of social media, Gelato Messina appealed to its loyal fans on Facebook to rename the ice-cream.

Just in a lick of time, a gelato fan came up with the final name, which aptly sums up this trade mark dispute – UNILEAVE US ALONE.

Brands with a registered trade mark are entitled to protect their rights, and if Gelato Messina had not changed their flavour’s name, they may have found themselves involved in legal proceedings. However, from a PR perspective, brands may wish to take a more chilled approach to trade mark infringement. Asserting strict legal rights might not always be the best course of action to take.

Author’s note: some gelato sampling research was conducted during the writing of this blog post.

In the recent case of Seafolly Pty Ltd v Madden [2012] FCA 1346 (29 November 2012), the Federal Court found Leah Madden, principal designer of Australian swimwear label White Sands, liable for misleading and deceptive conduct and false representations under sections 52 and 53(a) of the Trade Practices Act 1974 (now sections 18 and 29 of the Australian Consumer Law in Schedule 2 of the Competition and Consumer Act 2010) for making statements on Facebook and in emails suggesting that Seafolly had ripped off her designs.

Background

After seeing a photo of Seafolly swimwear in a magazine, which she initially believed was her own creation, Ms Madden posted various comments on her personal Facebook page and the White Sands Facebook page implying that Seafolly had copied her swimwear designs, such as:

• “Seriously, almost an entire line-line ripoff of my Shipwrecked collection.”
• “Ripping off is always going to happen, but sending in a dummy ‘buyer’ to get photos is super sneaky!”

Ms Madden also posted to her personal Facebook page an album comparing eight photos of her garments alongside photos of Seafolly swimwear under the heading “The most sincere form of flattery?” Ms Madden then emailed a number of fashion and news publications replicating the Facebook album followed by the comment “Is it just us, or has Seafolly taken a little to [sic] much ‘inspiration’ from White Sands?”

Once Seafolly became aware of Ms Madden’s claims as a result of the media interest and issued press releases denying her claims, Ms Madden took some of her Facebook posts down but continued to post comments on the White Sands Facebook page, such as “White Sands Australia says: “bullies be gone and take your bully tactics with you! We tiny little fledgling designers will not be taken advantage of!”

Claims

Seafolly sued Ms Madden on the following grounds:

• misleading and deceptive conduct and false representations;
• injurious falsehood; and
• copyright infringement.

Ms Madden cross-claimed against Seafolly, for alleging in its press releases that her statements had been made with the malicious intent of damaging Seafolly, on the following grounds:

• defamation; and
• misleading and deceptive conduct.

Misleading and deceptive conduct / false representations

In light of the evidence that the Seafolly swimwear generally predated those of White Sands, the Federal Court determined that:

• Seafolly did not copy the White Sands swimwear;
• the Seafolly swimwear were original designs created by employees of Seafolly without reference to the White Sands swimwear; and
• Seafolly did not use underhanded means to obtain photos of the White Sands swimwear and did not create the Seafolly swimwear using such photos.

The Federal Court rejected Ms Madden’s argument that her allegations were merely expressions of opinion and not statements of fact as, when read in context, her language conveyed that copying had in fact occurred. Even if her allegations could be understood as opinions, the Federal Court considered that she had been reckless in forming them. Ms Madden should have adopted a cautious approach as her allegations were made against a competitor and could potentially harm Seafolly’s reputation.

The Federal Court also rejected Ms Madden’s argument that her conduct was not ‘in trade or commerce’ as she had sought to influence the attitudes of customers and potential customers of Seafolly, a trade competitor, rather than merely provide commentary on industry matters.

The Federal Court accordingly found that Ms Madden had engaged in misleading and deceptive conduct and that she had made false representations as to the particular ‘style and model’ of the Seafolly swimwear. Ms Madden’s cross-claim for misleading and deceptive conduct failed as Seafolly’s allegations in its press releases that Ms Madden had sought to maliciously injure Seafolly were found to be true and not apt to mislead.

Injurious falsehood

While Seafolly could establish the first three elements of the tort – a false statement of or concerning Seafolly’s goods or business, publication of that statement by Ms Madden to a third person, and malice on the part of Ms Madden – Seafolly could not establish the final element of proof of actual damage suffered as a result of the statement. Seafolly’s claim for injurious falsehood consequently failed as Seafolly did not provide adequate pecuniary, as opposed to reputational, loss suffered by it as a consequence of Ms Madden’s allegations.

Seafolly were unable to sue for defamation as it is a company with ten or more employees. The Federal Court noted that this case illustrates the difficulty confronted by such companies when their commercial reputations are called into question.

Copyright infringement

Seafolly also failed in its claim for copyright infringement as the owner of copyright in the Seafolly swimwear photos at time of publication by Ms Madden was the photographer, not Seafolly. Although the photographer subsequently assigned copyright in the photos to Seafolly and the right to sue for past infringements, Seafolly did not adduce any evidence to demonstrate that the photographer, as opposed to Seafolly, had suffered any damage as a result of the publication of the photos.

Defamation

While the Federal Court found that Seafolly conveyed defamatory imputations of Ms Madden by asserting in its press releases that she had acted in a malicious way in order to harm Seafolly’s commercial interests, the Federal Court upheld Seafolly’s defences of:

• justification, on the basis that Seafolly’s statements were substantially true given Ms Madden had acted maliciously with reckless indifference; and
• qualified privilege, on the basis that Seafolly’s response was commensurate with the serious allegations made against it by Ms Madden.

As a result Ms Madden’s cross-claim for defamation failed.

Orders

The Federal Court ordered that Ms Madden:

• pay:
  • Seafolly limited damages of $25,000 (for reputational damage only, as Seafolly could not establish any economic loss as there was no downturn in Seafolly’s sales and profitability); and
  • Seafolly’s costs; and
• be restrained from:
  • reproducing or authorising the reproduction of the Seafolly photos without Seafolly’s consent; and
  • making, or aiding, abetting, counseling or procuring the making of, similar statements, representations or claims to third parties.

Regarding the award of limited damages only, the Federal Court noted that the Facebook postings were accessible to a relatively small number of ‘friends’ for less than two days, however the email to the media outlets had the potential to be widely published. Despite this, the email did not actually generate significant publicity in the mainstream press.

Key take-outs

This case serves as a warning to those who publicly shame brands on social media. It is important for brands to:

• not be reckless in their commentary on industry matters and ensure they ascertain, or take reasonable steps to ascertain, the truth of such commentary before posting it to social media;
• proceed with caution where such commentary relates to, or has the potential to harm, the trade or reputation of a competitor;
• monitor their social media pages for posts that are potentially misleading or defamatory or may infringe copyright;
• determine whether to treat, tolerate or take down these posts as soon as reasonably possible;
• upload house rules to their social media pages clearly defining the standards of behaviour that users of the page must abide by;
• implement company policy stipulating that their employees must not post anything to their personal social media pages that appear to be made ‘on behalf of’ the brand unless expressly authorised by the company; and
• if in doubt, seek legal advice early before the issue escalates.

They were short, stout and furry-toed, and their bones were discovered on the Indonesian island of Flores in 2003. Their full name is Homo floresiensis, or Flores Man, but you might know them better as hobbits.

However, with the new film ‘The Hobbit’ now hitting cinemas, a recent incident in New Zealand has provided a warning to all those who refer to this extinct species as ‘hobbits’.

Dr Brett Alloway, of Victoria University, organized a free public lecture about Homo floresiensis alongside the two archaeologists who discovered the species, Professor Mike Morwood and Thomas Sutikna. The lecture, titled ‘The Other Hobbit’, was scheduled to coincide with the release of the movie ‘The Hobbit’.

Dr Alloway sought permission to use the lecture title from the Saul Zaentz Company/Middle-Earth Enterprises, which owns certain rights in The Hobbit. A law firm acting for the company banned Dr Alloway from calling his lecture ‘The Other Hobbit’, noting that ‘it is not possible for our client to allow generic use of the trade mark ‘Hobbit.’

A disappointed Dr Alloway changed the name of his lecture to the less catchy ‘A newly discovered species of Little People – unraveling the legend behind Homo floresiensis.’

Although Dr Alloway did not choose to fight the Saul Zaentz Company, it is arguable that Dr Alloway’s lecture title was not a breach of trade mark law. Under both Australian and New Zealand trade mark legislation (see section 120 of the Trade Marks Act 1995 (Cth) and section 89 of the Trade Marks Act 2002 (New Zealand)), to infringe a registered mark, a person must use the sign (in this case the word ‘hobbit’) as a trade mark. Dr Alloway may have been able to argue that his use of the word ‘hobbit’ was merely descriptive, and that the lecture title was therefore not infringing the Saul Zaentz Company’s trade mark. The more descriptive the registered trade mark, the more likely a defence of this kind may be available.

It appears that the Saul Zaentz Company is actively enforcing its trade mark to prevent the word ‘hobbit’ from becoming generic. Genericide is the process by which a trade mark which was originally distinctive becomes the colloquial or generic description for, or synonymous with, a particular category of goods and services. If a trade mark becomes known as the generic name for goods or services, it will cease to be recognized as a trade mark. Many well-known trade marks have passed into common language, such as Thermos and Escalator.

To maintain the distinctiveness of a trade mark, brands should:

• ensure ownership and registration notices are used where appropriate (E.G. ™ or ®);
• develop a style manual which sets out how the trade mark should be used;
• develop a detailed strategy for use of the mark and a proactive approach to enforcing such use;
• maintain control over all third party licences and provide detailed obligations regarding use of the mark under licence; and
• monitor and act against all unauthorized use.

It may be difficult for the Saul Zaentz Company to protect its rights in the word ‘hobbit’ in the long term, as the word ‘hobbit’ is already part of our English speaking vocabulary, being defined in the Oxford English Dictionary as ‘a member of an imaginary race similar to humans, of small size and with hairy feet, in stories by J. R. R. Tolkien’, and is frequently used in the written press and in scientific literature to describe Homo floresiensis.

Are you considering using Pinterest as part of your company’s social media strategy?

Does your Pinterest board pin someone else’s photographs?

If so, you are probably interested to know the potential dangers and liabilities of using the site.

The person who takes a photograph usually becomes the owner and has copyright over that photo. A person who publishes or reproduces the work and communicates it to the public without permission infringes the copyright. So arguably (there have been no cases on this issue so far) if you’re taking someone else’s images and putting them up on your board, you’re infringing their copyright!

So what if your company is only posting pictures that belong to them – are you liability free?

Potentially not. On 6 April 2012 Pinterest updated its Terms of Service. These stated that Pinterest may be used for “personal, non-commercial use” and its Acceptable Use Policy includes a list of prohibited activities, including using “the Service for any commercial purpose or the benefit of any third party…” Yet despite this, Pinterest’s Terms of Service allows a person to open an account on behalf of a company and moreover it does not appear to be shutting down branded commercial pages already existing on the site.

So step carefully and keep an eye out for developments that no doubt Pinterest will make on its Terms of Service!

The Federal Court of Australia has awarded Aboriginal activist artist, Richard Bell, damages of $147,000 against New York filmmaker Tanya Steele. This decision marks the first time that damages have been awarded where a third party had content removed from the internet without justification.

Background

Richard Bell paid Tanya Steele to assist him in making the film “The Blackfella’s Guide to New York” in 2010 while he was an artist in residence in New York City.

A film trailer for the film was provided by Richard Bell to Milani Gallery in Brisbane. Josh Milani of Milani Gallery posted the video online using the file sharing service Vimeo.

Tanya Steele claimed copyright in the video and demanded that the Vimeo website remove the trailer, claiming copyright infringement. This was done.

In response to Tanya Steele’s threats, Josh Milani did not display the footage on the Internet, postponed a showing of Richard Bell’s artworks, and delayed the sale of a catalogue of Richard Bell’s artworks that included a still from the trailer.

Richard Bell sued Tanya Steele in Australia, claiming that he owned copyright in the film and seeking damages for the losses he suffered due to Tanya Steele’s threats including losses due to the lost opportunity to promote and sell his artworks at an opportunistic time and a loss of artistic credibility and integrity.

Decision

The Federal Court said:

            “It is clear the client made groundless threats against both the applicant and his agent, Mr Milani”,

and that it was appropriate to make orders for damages in the amount sought by the applicant.

Orders were made declaring Richard Bell the owner of the copyright in the footage and declaring Tanya Steele’s threats unjustifiable pursuant to section 202(1) of the Copyright Act.

Richard Bell was awarded $147,000 in damages for the lost sales of paintings and catalogues that he suffered as a result of Tanya Steele’s threats.  He was also awarded lump sum costs totaling $22,224 against Tanya Steele.

Impact of Decision

This decision makes clear the importance of ensuring that any claims of copyright infringement are correct and justifiable.

If you request that a file sharing or social media site take down an image or video on the grounds of copyright infringement, make sure that you are the owner of the copyright and have proof of your ownership, otherwise it could be actionable.