Recently Frucor Beverages, the V Energy Drink maker, attempted to register the colour green (Pantone 376C) as a trade mark but the Coca-Cola Company had other ideas.

Section 17 of the Trade Marks Act 1995 (Cth) defines a trade mark as ‘a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade…’

Section 6 of the Trade Marks Act 1995 (Cth) defines a ‘sign’ broadly to include colour, sound or scent.

If Frucor Beverages had been successful in registering the colour green as a trade mark, they would have had the exclusive right to use that colour in the class of goods and services in which it was registered. This may have prevented other competitors such as the Coca-Cola Company from using the particular shade of green in its products.

In this case Frucor Beverages failed to establish that the green colour alone was recognised as its brand. Green was not the only colour it used to market the drinks, so the question was raised whether green represented the drink’s flavour or type as opposed to the brand.

There was also no evidence that the consumer exclusively associated the colour green with the product and there were also other similar products in the market using the colour green – such as a variant of the Coca Cola Company’s energy drink “Mother”. Survey evidence introduced by Frucor Beverages to argue its position was considered imprecise and inconclusive.

A feature of a trade mark capable of being registered is that it must distinguish the product from other products and services of its competitors. Generally, it is difficult to seek registration of a colour as a trade mark because it is difficult to establish that a certain colour is exclusively associated with a product.

However, it is not the first time that colour green has been caught in the midst of a legal battle. British Petroleum was embroiled in a legal battle for many years over the colour green against Woolworths. Another famous battle raged between Darrell Lea and Cadbury over the colour purple.[1] It is certainly possible to register a colour as a trade mark, which will undoubtedly provide many exclusive benefits to the trade mark holder, but it is not easy to do so.

[1] Cadbury Schweppes Pty Limited v Darrell Lea Chocolate Shops Pty Limited [2009] FCAFC 8.

Intellectual Property (IP) Valuations are often necessary when determining the value of a Company’s assets both in contested proceedings and in restructures.

However, sometimes valuers and experts fall into the trap of making errors that can result in a dispute as to the true value of the assets. Based on our experience and the existing case law, we have identified a few common pitfalls for parties to avoid when seeking such valuation:
i. Expertise — if there is a challenge to the validity of a patent requiring technical or scientific expertise, it is vital that the valuation considers such technical expertise.

Valuation of intellectual property does not necessarily require a special expertise to the valuation of a business. This is because value of intellectual property is closely linked to the value of the business in exploiting that intellectual property. However, where the value may depend on whether an invention is patentable or not, technical expertise would be vital.

ii. Failing to consider existing agreements — intellectual property cannot be valued purely on the basis of the value of technology. The value that can be derived from that technology is dependant on any licensing agreements or other agreements placing any restrictions on the manner or the level to which that particular intellectual property can be exploited.

iii. Method of Valuation — Intellectual property valuation experts are generally well-versed in the varying methods that can be employed to provide an appropriate valuation. Often in case of insolvency, liquidation value is where the lowest price that the asset can be sold for is calculated given the distressed situation of a company in liquidation. However, this may not be the appropriate method to use even in case of insolvency, if the value obtained by such method does not reflect a true and fair view of the asset’s worth.

The method valuation should be determined on a case by case with due regard to the purpose of the valuation and the business context in which the intellectual property is utilised. Using the incorrect methodology can be subject to challenge in the event of litigation.

iv. Failing to provide reasons — as in the case of any expert report, an expert report valuing intellectual property must provide reasons for any conclusions reached to withstand any scrutiny. Where conclusions or assumptions made in a report are not backed up by evidence or reasons arising from such evidence, the credibility of such a report can easily be challenged.

On 7 October 2015, the High Court of Australia released a decision in relation to the gene commonly known as the “breast cancer gene”.

In D’Arcy v Myriad Genetics Inc. [2014] FCAFC 115, the High Court held that the patent held by Myriad Genetics Inc for isolated nucleic acids coding for a mutant form of BRCA1 (the “breast cancer gene”) is not patentable.

What are isolated nucleic acids?

Nucleotides are subunits of DNA (deoxyribonucleic acid).

In DNA, there are four nucleotide bases that exist naturally:

• (i) Adenine;
• (ii) Guanine;
• (iii) Thymine; and
• (iv) Cytosine.

 

A particular sequence of these nucleotides forms a gene.

An alternation of this sequence of nucleotides is known as a mutation.

The mutant form of BRCA1 gene, which was the subject of the High Court decision, was known to make people vulnerable to breast cancer and ovarian cancer.

Isolated nucleic acids are those sequences of nucleotides from DNA (or RNA – ribonucleic acid), which are separated from the human cell.

What is a patentable invention?

The Full Federal Court decision found that the isolated nucleic acids were patentable.

The Full Federal Court identified the nucleic acids, once separated from the human body, was different to the naturally existing nucleic acids.

They reasoned that the nucleic acids when they naturally exist in cells carried out cellular functions, but once they are isolated, they served a different function.

It was also critical for the Full Federal Court decision that:

• the isolated nucleic acids created an “artificial state of affairs” that was different to its naturally existing role; and
• this “artificial state of affairs” created an economic benefit.

 

The High Court approached the decision differently.

The High Court noted that that a particular sequence of nucleotides contained “information”. This information is not “made” by human action.

The High Court said that the “manner of manufacture” as defined in the Statute of Monopolies required that an invention involve some form of “making” or something brought about by human action.

The High Court referred to the Full Federal Court’s characterisation as an “artificially created state of affairs” and said that this was the incorrect test to use. Even if the “artificially created state of affairs” test was applied:

• a mutation is a naturally occurring phenomenon; and
• it is not something “made”.

 

Where to from here?

The High Court decision is similar to the US Supreme Court decision in Association for Molecular Pathology v Myriad Genetics Inc., which similarly reasoned that the sequences of nucleotides exist in nature and is not modified by being isolated.

A potential negative consequence of the High Court decision could be a lack incentive to invest in research which can have a drastic impact on the biotechnology and biochemistry industry. However, thus far, the High Court decision has been fairly narrowly interpreted.

IP Australia’s Examination Practice released after this decision identifies that:

• Isolated naturally occurring nucleic acid molecules including DNA, RNA whether human or non-human, coding or non-coding are clearly not patentable.

• Other forms of nucleic acids (e.g. cDNA and synthetic nucleic acids) are excluded to the extent that they simply replicate the naturally existing genetic material. However, it is noted that “subject matter of this type may be patentable where the utility of the invention lies in genetic information that has been ‘made’.”

 

It appears that the High Court decision is currently being interpreted to exclude nucleic acids that are simply containing naturally existing information. Consequently, the impact of the decision on wider biotechnology and biochemistry research could be limited.

 

Interested in learning more about Intellectual Property?

Click our articles below to find out more:

How to file a patent in Australia

Stop telling everyone you own my patents!

Filing a design overseas

What is Copyright?

Copyright is one of the main intellectual property protections in Australia and is the most common and appropriate form of protection available for literary, musical and artistic work. It is automatic and it is free.

Other intellectual property protections include:

• Patents are used for inventions such as a device, a method, a substance or a process. Once granted, it has a time limit.
• Trade marks will distinguish your business from your competitors. It is a protection for a letter, number, word, phrase, sound, smell, shape, logo, picture and/or mode of packaging that you use to sell your product. And
• Confidentiality / trade secrets is an alternative to patenting your invention which requires you to simply keep it a secret. You use a strict confidentiality regime with employees, business associates, and manufacturers, to keep your process, product or ingredients from the public domain.

 

How it works

You have copyright protection the moment you create your artistic work, subject to it being original, properly documented and complying with relevant law. It is automatic in Australia and there is no requirement to register or apply for copyright protection.

This protection comes from the Copyright Act 1968 and gives you the exclusive right to the work, and to license others in regard to copying, performing or publishing the work in public. Such protection and rights differ for different kinds of literary or musical work.

It is important to note that copyright doesn’t protect you against independent creation of a similar work. Also note that there is no copyright in ideas or information.

Deterring potential infringers

A copyright notice on your artistic work is not necessary to give you copyright protection, however:

• it can be an effective deterrent to potential infringers of copyrights; and
• it can help prove your ownership of the copyright.

 

The Attorney General’s office provides the following wording as appropriate for use in copyright notices:

This work is copyright. Apart from any use permitted under the Copyright Act 1968, no part may be reproduced by any process, nor may any other exclusive right be exercised, without the permission of [name and address of copyright owner and the year in which the work was made].

Proving ownership of copyright

In most legal cases, the question of ownership of copyright is not in dispute. However when this occurs, you will need evidence to demonstrate that you created the work. You might ask people who were involved in or who knew about the creation of the work to support you, and you can use drafts and other records to show that the work is yours. It is therefore important that you keep drafts and records of all your work, and that you record dates and details of creation, etc.

Duration of copyright

Depending on the material, copyright for literary, dramatic, musical and artistic works generally lasts 70 years from the year of the author’s death or from the year of first publication after the author’s death.

Copyright for films and sound recordings lasts 70 years from their publication and for broadcasts, 70 years from the year in which they were made.

The internet and social media

Technology means that it is less common for authors to engage with a publisher to print a hard copy book or to publish an article in a controlled fashion. Literary works are posted on the internet all the time and are then “republished” (shared, re-tweeted) across the world.

Australia’s copyright protection still applies to these writings in Australia if they fulfil the basic requirements of copyright (being original). Generally the way in which you post means that you authorise the republication of your works (because you want the world at large to see it) however this does not diminish your copyright protection in Australia. The work should remain yours and not be credited to others. The copyright wording mentioned above will assist in crediting the work to you provided that it remains part of the shared content. You could create additional protection by including terms of use in the wording – for example, granting permission for your work to be shared but only if it is always credited to you.

Some countries have agreements with Australia regarding copyright protection but many others do not. To adequately protect your IP in another country you will need advice from IP professionals – either Australian professionals with international expertise, or engaging an IP professional in other countries.

A recent example – Dallas Buyers Club

Recent media attention to the illegal distribution of the Dallas Buyers Club film shows that the Federal Court of Australia is taking very seriously the rights of copyright owners in films. American companies alleging ownership of the copyright in this film have commenced proceedings for copyright infringement and may have a right to sue persons who used BitTorrent to illegally obtain the film. The Federal Court has ordered that six Internet Service Providers disclose the identity of over 4000 account holders where the movie has been downloaded to the account holder’s IP address without authorisation. The information will not necessarily identify the individuals who have illegally downloaded the film, but the American copyright holders are arguing at this stage that the accountholders may be able to help them identify the actual infringers.

Definitely a case to watch with interest.

Disclaimer: Please note that this article does not constitute legal advice and you cannot rely on this information as legal advice. This article is for the purposes of information only. If you wish to acquire legal advice, you must consult with a lawyer.

 

The recent April 2015 CommSec ‘State of the States’ quarterly report noted that the ACT ranks sixth in Australia in terms of its economy, however the state’s economic growth and output levels were 15.2 per cent higher than the decade average.

This is excellent news for people running a business in the ACT. Moreover, the ACT saw a 9.1 per cent increase in retail spending. This bodes well for SMEs worried about sales and consumer confidence levels.

“Looking forward, the future for the ACT economy is very positive – we are ranked third in terms of economic growth and we have the second lowest unemployment rate in the country”, said Chief Minister Andrew Barr in an interview with The Canberra Times on April 20.

Indeed, the ACT boasted the third-highest economic growth levels as well as housing finance figures compared to the rest of the states and territories. As for unemployment, the ACT ranks second-lowest in the country with a rate of 4.4 per cent. The low unemployment trend seems set to stay in place, but businesses should keep several legal concerns in mind when hiring new employees.

To help businesses in the ACT make the most of this economic growth, there are a few cost-effective and time saving legal tools available online. These eServices offer vast digital libraries of legal documents at the click of a mouse, including business law templates.

Although the ACT is currently the sixth-best performing economy in Australia, businesses can seek tailored and customised legal advice from expert commercial lawyers to devise strategies to improve performance. A variety of legal measures can boost profit margins, such as registering for a trademark or patent to protect intellectual property in a competitive market.

Overall, the report found that NSW has the best economic performance. Given the close proximity between the ACT and NSW, perhaps some domino effect economic activity can be enjoyed.

The decision to launch a business requires careful planning, research, financial management and sound legal advice.

Anthony K. Tjan wrote in the Harvard Business Review on March 23 that “great founders start businesses not to create a company but to solve a problem, to serve a calling, and to understand that they have a purpose that can actually make a meaningful difference”. Indeed, starting a business often stems from a passion and commitment to making a mark in the world.

However, to ensure this starting process is smart, smooth and strategic, consulting with expert commercial lawyers can significantly help.

Smart 

In the early stages of starting a business, even simple decisions such as choosing a name and logo can have legal repercussions if another business has registered the same intellectual property (IP). The smart thing to do is to use the correct legal channels to register trademarks, patents and copyrights.

Protecting intellectual assets cements the business brand, comprising its slogans, colours and other identifying or differentiating material. As a new business, establishing a unique and distinct brand is clever as it builds competitive advantage and champions unique selling points.

If the new business is introducing innovative products and services to the market, it is particularly important to legally safeguard these. Unfortunately, the Australian Bureau of Statistics found only 29.3 per cent of businesses protected their IP in 2013. Start a business shrewdly by securing IP rights early.

Smooth

Choosing the most beneficial business structure should be a priority in the early stages. In Australia, the four main structures are sole trader, partnership, trust and company. It can be difficult to identify which is best suited, particularly as each comes with different tax implications.

However, the decision can be very smooth if made in conjunction with tax advisory lawyers. They clarify how various taxes such as corporate tax, capital gains tax and income tax impact the business. They can also offer legal advice for managing taxes through consultation with accountants. The selection of a structure is thus made easier.

Strategic

Requesting customised and tailored legal advice specific to the business is the best strategy for success. Since legal advice covers a vast array of corporate needs, ranging from buying and selling assets to commercial disputes to attracting venture capital, seeking bespoke advice bolsters each strategy.

Developing the habit of consulting with lawyers for business matters early will help prolong the success of a business. Start strategically by scheduling an appointment with a law firm.

Business growth and profitability begins by starting strong. Good luck!

Entrepreneurs from all walks of life begin their journey with a bright idea.

Establishing a start-up takes courage and commitment, but no business strategy is complete without seeking legal advice.

The process can seem daunting, particularly when several legal documents need to be in order.

Rather than avoiding or delaying the completion of legal documentation necessary to establish your start-up, you can familiarise yourself with some of the key documents.

What are some of the legal documents needed for a start-up?

There are several documents needed, and each differs depending on your type of business and the relationship you wish to manage. For instance, backers and investors may require you to sign a loan agreement and personal guarantee deed.

For customers, there are legal documents which can help ensure your business complies with consumer rights while providing terms and conditions to manage malicious customers. These include, but are not limited to, terms and conditions for sale of goods, services agreements, and e-commerce terms and conditions.

My start-up has several founders. Is there legal documentation to protect our individual rights? 

Yes. Often a start-up begins with several founders, and these relationships need to be structured early to efficiently manage the business. A shareholders agreement and partnership agreement are two useful documents, depending on your business structure. Intellectual property is one of the most valuable assets for a start-up and therefore documentation such as an IP deed of agreement between all founders is crucial.

My start-up will soon need to hire employees. What legal documents are involved in this process?

There are strict rules and regulations on workplace law and they will often be in employees’ favour, not yours. Protect your rights as an employer using legal documents such as a deed of restraint and confidentiality, or independent contractor agreements. Develop efficient workplace policies which are well-thought out in advance of employing people, so that the foundation of your start-up is solid in case of future legal disputes.

Where can I get help? 

You can access customised legal packages for your start-up to complete such legal documents. Lawyers can offer expert guidance throughout this process to ensure your start-up is protected using the correct methods.

World Intellectual Property Day falls next month on April 26, and to celebrate we are sharing some tips on how to protect your business using trade marks.

If you are a start-up, you have dedicated yourself to the ingenious idea which sparked your business.

However, each year approximately 300,000 new small businesses have to cease operations, as noted by the Reserve Bank of Australia in their Small Business Finance Roundtable report.

With the momentous occasion of World Intellectual Property Day around the corner, now is an excellent time to avoid such failure by safeguarding your business with trade marks.

Why should you care about trade marks? 

Securing a trade mark is crucial for protecting your business assets and brand. Legally, your business name can only be considered your property if it has been registered as a trade mark. Similarly, any material which distinguishes your product should also be trade marked. Such material can be diverse, ranging from your logo and brand colours to your business slogan.

Without protecting these with a trade mark, other competitive businesses can copy your work or even register them as their own intellectual property (IP). This would be a big disadvantage, requiring you to extensively revise your current branding.

Moreover, simply registering your business name without applying for a trade mark is problematic because this does not allow you to stop others from using the same name. Only a trade mark gives you the legal right to do so.

Three tips to trade mark your business

1. It is essential to seek legal advice customised to your business needs to ensure your valuable ideas, products and branding are trade marked using the correct legal channels. Such customisation differs depending on the legal structure of your business. For instance, sole traders require different legal customisation to companies.
2. Since trade mark laws may change from state to state, schedule a meeting with an intellectual property lawyer so that your registration process aligns with ACT IP Laws as well as protects your business interests in other regions.
3. Often a business will need tailored IP licences to suit their needs. Lawyers can utilise their years of expertise to develop the best strategy specific to your business.

These tips can help cement your start-up’s success for years to come.

To sell your business quickly and smoothly, and for the highest possible price requires between 12 to 24 months of effort and planning to make the business “sale ready”.

Listed below are some of the key things you should have locked down before you sell your business to maximise its value and attractiveness to potential purchasers.

“Clean” Financial Position

You should have proper, up-to-date financial statements and tax returns. You should have a clear understanding of the loans and other financial commitments that will be discharged or transferred upon sale.

GST – going concern?

GST must be charged on the sale price unless the business is being sold as a “going concern”. This can be a surprisingly technical and difficult thing to determine, especially with commercial and rural property.

Key contracts – clients/ customers & suppliers

Your business may depend on a number of key contacts which may require them to be transferred if you sell your business. Your business is more valuable if these key contracts are locked down and in writing. You will need to manage the way in which you pass the benefit of these contracts to the buyer and you may need to get your client or supplier’s consent.

Business Assets

Your business is more valuable if you have a clear statement of assets that comprise the business and can prove you own them.

PPSR

Suppliers and customers may register their security interest in an asset or the business as a whole to protect themselves if the business is not able to pay money owed to them. You may be very surprised to discover that third parties believe they own, or have some entitlement to your business assets. This contested ownership needs to be resolved before the sale can proceed.

Commercial Lease Agreement

Most businesses are more valuable  – and more likely to be “going concerns” if they can continue trading in the same premises. This will require the landlord’s consent to a new or assigned lease. The sale will fall over if the landlord’s consent is not obtained.

Employees

The rights and obligations when dealing with employees can be complicated. Whether employees transfer, or simply have their employment terminated, employees either agree to transfer to the buyer or they can be terminated will most certainly affect the sale price.

Intellectual Property/ Trade Marks

Intellectual property is an important and valuable asset. The better you can prove and document your intellectual property rights, the more valuable  your business will be. If there is a key IP you want to retain, you will need to carefully identify and exclude it, perhaps even put in place licence arrangements so the new owner has the use, but not ownership, of your IP.

Tax implications

Tax can be one of the biggest expenses when you are selling a business and a substantial portion of your selling price may be taxed. There are various tax strategies and concessions available depending on the size and structure of the business. Small businesses may be eligible for various CGT concessions while larger corporations may restructure their companies.

Chamberlains can help you ensure all of these things are in place so that you are in the best position to obtain maximum return on your business sale. For more information and advice contact our Commercial Team.

As a business grows, they will need to take steps to protect their intellectual property (IP). However, with so many different facets to this legal area it is equally important to ensure that owners understand this opportunity.

To help, here are three of the most common types of IP for business owners to understand:

1) Patents

Securing a patent is an important process for any company that wants to protect their inventions. Patents can be used to secure any new invention, process or substance that is new or useful. With this process in place, you will have exclusive rights to commercialise this invention.

For small businesses whose competitive advantage rests on having unique products and services, having these patented will ensure competitors can’t copy these processes without your permission.

2) Trademarks

Trademarks are essential for a company to secure. Your business name, for example, can only be considered your legal property if it has been registered as a trademark. The same approach goes for any other material that distinguishes your product, such as branding and a logo.

Without this level of protection, other organisations will be able to copy your branding and company name, or even register them as their IP, forcing you to revise your current branding and processes.

3) Copyright

Any creative work that a business produces will be protected by copyright so, unlike a trademark or patent, there is no need to apply for copyright for a work. This means that any books, trade publications or written material such as testimonials will be protected and cannot be copied without your permission.

These three are by no means an exhaustive list and other forms of IP may be required. Either way, it is important to consult with a commercial lawyer in order to move this process forward.