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Wednesday 27 April 2011

Convergence Review Framing Paper – April 2011

Louise McElvogue, has been appointed as the 3rd member of the Convergence Review Committee (joining Glen Borham (Chair) and Malcolm Long).  Louise has worked in the United Kingdom including launch of ‘SeeSaw[1]  a video-on-demand (VOD) platform operated by Arqiva, which acquiring the remnants of Project ‘Kangaroo’ (the defunct broadband TV joint-venture from BBC Worldwide, ITV & Channel 4).  Louise previously worked on the launch of ‘4oD’, the Channel 4 (UK) VOD platform.[2] Louise McElvogue adds expertise in delivery of content on broadband systems which is a welcome addition as VOD and IPTV platforms have the potential to add the diversity and competition to the Australian media environment.

My blog of 12 April 2011 provided a review of the process of the Convergence Review 2011– the medium and the message.  The ‘Framing Paper’,[3] issued on 28 April 2011, is a step in the review process leading to the ‘Issues Paper” in June and hearings by the committee in July 2011.

Timeframe of Convergence Review
Framing paper submissions close:
10 June 2011
Emerging Issues paper released:
June 2011
Hearings:
July 2011
Detailed discussion papers:
August 2011
Final report:
March 2012

The ‘Framing Paper’ sets out the committee’s thinking on principles that should guide media and communications regulation in Australia, so as to provide a ‘starting point’ to indentify the objectives of the convergence review.  The principles identified in the Framing paper cover diversity and competition of media sources, a focus on Australian content, an acknowledgment of the importance of reflecting community standards in the delivery of content and addressing the interests of Australians as ‘consumers’ of content delivered on convergent media and the public interest in the allocation of spectrum by which important communication services operate:  The principles stated in the Framing Paper’ are:

DIVERSITY & COMPETITION

Principle 1: Australians should have access to a diversity of voices, views and information

Principle 2: The communications and media market should be innovative and competitive, while still ensuring outcomes in the interest of the Australian public


Local and Australian content

Principle 3: Australians should have access to Australian content that reflects and contributes to the development of national and cultural identity
Principle 4: Australians should have access to news and information of relevance to their local community


Community standards

Principle 5: Communications and media services available to Australians should reflect community standards and the views and expectations of the Australian public


Consumer and citizen rights

Principle 6: Australians should have access to the broadest range of content across platforms and services as possible

Principle 7: Service providers should provide the maximum transparency for consumers in how their service is delivered


Spectrum allocation

Principle 8: The government should seek to maximise the overall public benefit derived from the use of spectrum assigned for the delivery of media content and communications services

Having stated these principles the committee invites comment on the appropriateness of the principle as a starting point for the review, as well as asking for submissions on whether there are other principles that a relevant to the convergence review and inviting submissions as to what policy issues do the principles raise in relation to the evolving media and communications environment.[4]


The Convergence Review avoids the controversial topic of sporting rights; by coincidence the release of the Framing Paper occurred on the same day as press speculation that Australian Football League (AFL) television rights from 2012 to 2016 will be licensed to Fox Sports, Channel Seven and Telstra for A$1 billion.[5]

I will repeat a paragraph of my previous blog on the Terms of Reference of the Convergence Review: The Committee will address what are potentially contentious areas of regulation of audiovisual services.  The existing free-to-air and pay television services are facing new TV-like services such as IPTV, internet TV and video on demand, all of which emerging services compete with traditional free-to-air and pay TV services for viewers.  The treatment of advertising controls, programming classification and Australian content obligations that are directed to “the development of national and cultural identity” are likely to see the existing players arguing for positions that achieve a ‘level’ regulatory playing field across the different media technologies that can deliver TV or TV-like services.[6]  Both existing media players and emerging players will be focused on arguing for what they see as a conducive competitive environment for each play or industry sector.[7]

Further information is available at the DBCDE website http://www.dbcde.gov.au/digital_economy/convergence_review#submissions

 

Twitter @DBCDEgov


Review secretariat - Tel: 02 6271 1255

convergence@dbcde.gov.au


[1] http://www.seesaw.com/
[2] http://www.channel4.com/programmes/4od
[3] http://www.dbcde.gov.au/digital_economy/convergence_review
[4] Framing Paper, page 19.
[5] Caroline Wilson, AFL's billion dollar baby looms, Sydney Morning Herald, 28 April 20110: http://www.smh.com.au/afl/afl-news/afls-billion-dollar-baby-looms-20110428-1dxly.html#ixzz1Kn8zN55o
[6]  The Terms of Reference in paragraph 5 b. refer to “ensuring the ongoing production and distribution of local and Australian content that reflects and contributes to the development of national and cultural identity” http://www.dbcde.gov.au/digital_economy/convergence_review/convergence_review_terms_of_reference
[7] The Terms of Reference in paragraph 5 a. refer to “the development and maintenance of a diverse, innovative, efficient and effective communications and media market that operates within an appropriately competitive environment and in the best interest of the Australian public” http://www.dbcde.gov.au/digital_economy/convergence_review/convergence_review_terms_of_reference

Tuesday 12 April 2011

Use or fair use of trademarks on the web - territorial allocations of trade marks & the Treaty of Tordesillas (1494)

International Hair Cosmetics Group Pty Ltd v International Hair Cosmetics Limited [2011] FCA 339 (8 April 2011) 


As a publishing forum the world wide web creates the potential for trade mark uses to come into conflict with territorial based allocation of trade marks. By the Treaty of Tordesillas (1494) Spain and Portugal divided the new world by a fixed meridian, Justice Logan references this treaty and describes the parties to the deed of settlement as dividing the world of the AFFINAGE trade mark – although litigation over web use of the mark soon followed.

In IHC AU v IHC UK, Logan J considered whether the respondent used trade marks, including the AFFINAGE trade mark “as a sign” on a website and whether the use of the mark was directed at Australian.  Logan J described the scope of the problem posed by trade marks on the internet as being to reconcile the “irrelevance of physical geography in cyberspace” with the “limits of jurisdictional competence in the protection under domestic law of local intellectual property rights”’.[1] In determining that the respondent’s website was targeted towards Australia Logan J applied a narrow test that is directed to identifying whether there is ‘use’ of a trade mark. I would argue that other jurisdictions, in applying a ‘fairness of use’ test, are closer to reconciling conflicting uses of trade marks on the web.

The parties to the litigation are firms that were previously related, but had separated their business dealings in hair care products.  The litigants, (with the names abbreviated to IHC AU and IHC UK), had in the past, agreed a territory allocation in which the IHC AU owned the marks in Australia and IHC UK owned the marks in the United Kingdom.  No sales of hair care products had occurred, indeed, the website that was the subject of the litigation did not offer any e-commerce facility.  The argument focused on whether there was use of the trade mark ‘as a sign’ in relation to “marketing …in Australia”. 

In 2010 the firms were in litigation with each other and came to an agreement to settle the court proceedings, which agreement became a consent order of the court (the “consent order”).  IHC UK agreed that it would not use certain trade marks, including AFFINAGE, “as a sign in connection with the importation, marketing, sale or manufacture in Australia of hair care products including hair colours and dyes.” (underlining added for emphasis).

This factual background resulted in Logan J having to consider the difference between interpreting and applying the consent order and what would be the analysis if the court had been obliged to consider the applicable test as to an infringement of a trade mark under s. 120 Trade Marks Act 1995 (Cth); that section would have require the court to determine whether the trade mark concerned had been “used in Australia”. [2]

Logan J was of the opinion that in order to reconcile the global reach of the world wide web and the territory based application of trade mark law requires an approach that “finds a use of the nominated words in connection with “marketing” in Australia if the words as so used are downloaded in Australia and there is evidence that the use was specifically intended to be made in, or directed or targeted at Australia.”[3]  In applying this test to the specific facts of this case, Logan J identified that on the home page of the website of IHC UK a “country box” could be accessed which gave an option of Australia. By clicking an arrow associated with the Australia option a page was loaded that promoted two trademarked products of IHC UK (the A.S.P. & KITOKO brands).  By selecting the “Profile” tab on that page another page was loaded that provided under the heading “Company Profile”, the following statement appeared:

In 1996 [IHC UK] conceived, created and lunched the premium hair care brand AFFINAGE. Originated as a line of hair colour, the AFFINAGE brand grew rapidly to include [reference to other types of product]... Now we are introducing our exciting new hair care brand, ASP, to the Australian and Asian markets. Having already signed distribution agreements with a number of companies we look forward to fantastic success in 2011.

In relation to the question as to whether the use was specifically intended to be directed at Australia was, on the facts, determined by “the operation of the “Australia” option in the drop down box leading to the conclusion that the website being patently a means of marketing that is directed to Australia.”[4]  While this finding resulted in orders directing IHC UK to change the web site, however Longan J accepted that the same conclusions as to the use of the mark being directed to Australia could not be reached in relation to Facebook and Twitter links displayed on the home page.

Whether or not it is accepted Logan J applied the correct test, what can be taken from this case is that where firms agree a territorial allocation as to the use of trade markets attention should be directed to describing the nature of activities that firm made do online that reference trade marks so that what are permitted online marketing activities are identified with precision.

As the factual background of the case is focused on the wording of the consent order, it may be that the effect of this decision is more limited as the more likely web use scenario for trade marks will involve the direct application of the s. 120 test of infringement of a trade mark. 

In the operation of the < www.affinage.com> website, IHC UK are now subject to restrictive orders as to references on that site to Australia, including the removal of Australia from the list of countries able to be displayed and selected in the country box on the website; and the removal of any link to any website marketing or promoting hair care products including hair colours and dyes for sale within Australia.

These orders would inhibit the development of a web-based marketing campaign that references IHC UK’s involvement with the AFFINAGE brand, so as to leveraged the goodwill in that brand to promote other IHC UK brands in Australia – but them one can presume that is an outcome that IHC AU would consider as assisting it in maintaining market share in products sold in Australia under the AFFINAGE brand.

The question I would pose is whether the analysis should go on to consider whether
ITC UK made a ‘fair use’ of the marks it was entitled to use outside Australia?

 It is to be acknowledged that the dispute over the use of the AFFINAGE mark arises in a specific context that is focused on the interpretation of the consent orders.   Notwithstanding these factual differences, I would argue that better approach is to incorporate into the analysis the question posed by Jacob J in Euromarket Designs, Inc v Peters, who stated that “[t]he right question, I think, is to ask whether a reasonable trader would regard the use concerned as “in the course of trade in relation to goods””.[5]

The U.S. courts appear to be moving to applying a test that considers a fair use of marks when used on the web.[6]   In the post 12 months the European Court of Justice (ECJ)  has addressed different facets of the use of trade marks as search engine ‘keyword’ triggers for advertising in an internet referencing service (such as the Google AdWords service) .  Starting with the Google France decision the ECJ has held that while the selection of trade marks for keyword advertising is a use ‘in the course of trade’; however trade mark infringement under the European Trade Mark Directive requires establishing detriment to the functions of trade markets to indicate origin or in their advertising function.[7] 

This approach to assessing whether there is a ‘fair use’ of a mark is further advanced in the opinion provided by Advocate General Jääskinen to the ECJ in the Interflora case.[8]  This is another keyword advertising dispute in which Jääskinen argues the test as to whether or not there is ‘free riding’ on a trade mark should be determined by a test of the ‘fairness of use’, which considers whether there is due cause for using the competitor’s trade mark.

With a ‘fair use’ test the degree to which a trade mark appearing on the web conflicts to the functions of a mark to indicate origin of products or to advertise products will be assessed so as to determine whether there is in reality conflict with trade mark protection under domestic law.


UPDATE: This decision is subject to an appeal, (proceeding number QUD85 of 2011), with a stay of judgment ordered on 13 May 2011.


[1] International Hair Cosmetics Group Pty Ltd v International Hair Cosmetics Limited [2011] FCA 339 [57].
[2] Ward Group Pty Ltd v Brodie & Stone plc [2005] FCA 471; (2005) 143 FCR 479 [43] per Merkel J.
[3] Ibid.[59].
[4] Ibid.[61-62].
[5] Euromarket Designs, Inc v Peters [2001] FSR 288; [2000] EWHC Ch. 179. EDI is a US chain store that did not trade in the UK but held a class 21 Trade Mark for “Crate & Barrel” for domestic and garden items. The Defendant ran a shop in Eire called Crate & Barrel and also did not trade in the UK. EDI claimed that an advertisement in a magazine published in the UK and a web site on which the “Crate & Barrel” mark appeared, were in breach of its TM.
[6] See Tiffany (NJ) Inc. v. eBay Inc, 600 F.3d 93(2d Cir. 2010) held eBay’s use of the TMs were a “protected, nominated fair use of the marks”. Rosetta Stone Ltd v Google, Inc, 1:09-cv-00736-GBL-TCB (E.D. Va. August 3, 2010), on appeal to the 4th Circuit. The district court granted Google summary judgment on the issue as to the likelihood of consumer confusion being attributable to keyword advertising. The court held that “no reasonable trier of fact could find that Google's practice of auctioning Rosetta Stone's trademarks as keyword triggers to third party advertisers creates a likelihood of confusion as to the source and origin of Rosetta Stone's products.”
[7] Google France SARL v Louis Vuitton Malletier SA [2010] EUECJ C-236/08 held that use of a sign selected as a keyword for an internet referencing service is a used ‘in the course of trade’ [51-52]; however the TM owner cannot oppose that use of the sign, if that use is not liable to cause detriment to any of the functions of that mark  [76]. That is, either the ‘function of indicating origin’ [77] or the ‘function of advertising’ [98]. 
[8] Interflora and Others (Intellectual property) EUECJ C-323/09 (Opinion of Advocate General Niilo Jääskinen, 24 March 2011).

Wednesday 6 April 2011

The diagnosis & treatment of allergies to ACCC legal action over FaceBook posting by ‘fans’ of a company

Allergy Pathway operates clinics for the diagnosis and treatment of allergies.  In 2009 the Australian Competition and Consumer Commission (ACCC), as competition regulator, formed the opinion that the way in which Allergy Pathway promoted its services in traditional media and on the web breached the Trade Practices Act 1974 (Cth) in the following ways: Allergy Pathway engaged in misleading or deceptive conduct (s 52); falsely represent that services are of a particular standard or quality (s 53(aa)); represent that services have benefits they do not have (s 53(c)); and engage in conduct that is liable to mislead the public (s 55A).

Justice Finkelstein in the Federal Court, accepted the claims of the ACCC and ordered Allergy Pathway to carry out corrective advertisement, including on “all websites which are owned, operated, controlled or maintained by or on behalf ofAllergy Pathway;[1] in addition a trade practices compliance training program was ordered to be implemented by the company. The matter should have ended there but for a later social media marketing campaign that included a YouTube video uploaded by the company, which was linked to FaceBook and Twitter posting by Allergy Pathway.

This marketing campaign ended up with the company facing contempt of court proceedings for breach of the 2009 orders.  The outcome was that fines of $7,500 were imposed (the ACCC was asking for $10,000).

The YouTube video, FaceBook posting and Twittering by the company seem an uncomplicated claim, however part of the ACCC’s claim against the company was the posting by ‘fans’ on the Facebook wall and Twitter messages was the responsibility of Allergy Pathway and was part of the company’s contempt of the court orders.

In a February 2011 judgment Finkelstein J. describes the ACCC’s allegation as being that the contempt of the 2009 orders was made up of publications that were grouped into several categories: ‘(1) statements and links to statements posted by Allergy Pathway on its website and Facebook and Twitter pages and in a video posted on YouTube and embedded on its Facebook and Twitter pages; (2) testimonials written by clients and posted by Allergy Pathway on its website and Facebook and Twitter pages; (3) testimonials written and posted by clients on Allergy Pathway’s Facebook “wall”; and (4) Allergy Pathway’s responses to queries posted by members of the public on its Facebook wall.”[2]

Allergy Pathway conceded that most of the statements in categories (1), (2) and (4), breach the 2009 orders. The category (3) statements were the subject of argument before Finkelstein J. as to whether statements posted on the respondent’s Facebook and Twitter pages by others constitutes publication by Allergy Pathway. To restate part of the 2009 orders the company undertook not make or publish or cause to be made or be published, in any internet website[3] statements (set out in the judgment) that had been determined to breach the Trade Practices Act.

To determine whether the social media campaign was caught by this 2009 undertaking, Finkelstein J. considered cases from defamation law in order to focus on the meaning of the words “publish” and “make”.  There are pre-internet cases on posting on walls of the golf club premises in England and the walls of lavatories in Texas bars, which put the responsibility on the person in charge of the premises to remove defamatory material, after it has been brought to their attention. I cover these cases in a 1997 article on defamation on the internet.[4]

Since that time there have been a number of internet cases that confirm, with regard to defamation law, that the person in charge of a ‘virtual’ wall has responsibilities to remove defamatory material, after it has been brought to their attention.  Finkelstein J. commented that that Allergy Pathway had conceded that it “knew that persons had published testimonials on its Twitter and Facebook pages and that it took no steps to have them removed. I infer that one reason Allergy Pathway did not remove the testimonials was that it wanted to take the benefit of the praise for its services. Another possible reason is that Allergy Pathway thought the testimonials added legitimacy to its business.”[5] Applying the line of reasoning from the defamation cases Finkelstein J. concluded that Allergy Pathway became the publisher of the testimonials and “accepted responsibility for the publications when it knew of the publications and decided not to remove them”. [6]

The end result of the social networking campaign for the company was that it had to pay the fines, the full legal costs of the ACCC (on an indemnity basis) and carry out further corrective advertising on the front counter of its clinics, its website and Twitter and Facebook pages. Allergy Pathway was also required to send a letter (electronically or otherwise) to all of its customers explaining what has occurred.

What can be taken from this case is that for whatever media is being used – is that first you have to get the message compliant with Federal trade practices legislation[7] and the fair trading legislation of the States or Territories; the second take out from the case is the social media campaign has to be actively managed.

Any virtual ‘wall’ that customers can post to, must be edited to keep it on message and avoid statements that the ACCC or state or territory fair trading departments may jump on.  Not all praise from customers is good news; such as if it acts to mislead other customers or potential customers (in way prohibited by trade practices and fair trading legislation). 

If any messages act to misrepresent the products or services or otherwise are misleading or deceptive messages; then if they remain for a significant time on the virtual ‘walls’ set up as part of any social media campaign, the company responsible for setting up and managing the virtual ‘walls’ will be accepted as taking responsibility for the publishing of the misleading messages – which can have consequences as described above.


[1] ACCC v Allergy Pathway Pty Ltd [2009] FCA 960 (27 August 2009)
[2] ACCC v Allergy Pathway Pty Ltd (No 2) [2011] FCA 74 (10 February 2011) [8].
[3] ACCC v Allergy Pathway Pty Ltd [2009] FCA 960 (underlining added for emphasis).
[4] Morris Averill, ‘Defamation – The Internet & the World-Wide Web’, published inInternet Law Anthology ‘, Prospect Publishing (1997).
[5] ACCC v Allergy Pathway Pty Ltd (No 2) [2011] FCA 74 [32].
[6] Ibid. [33].
[7] The Trade Pactices Act 1974 (Cth) has been superceded by the Competition and Consumer Act 2010 (Cth) but the obligations remain the same.

Tuesday 5 April 2011

review of the process of the Convergence Review 2011

The Federal government’s Convergence Review is getting underway.  The review does not involve a review of the National Broadband Network (NBN) legislation or the implementation of the NBN business plan to roll out the nation-wide high speed broadband network; with the support of the independent members the NBN legislation passing through the Federal parliament at the end of March so that political controversy is over;[1]  at least for a short time until the renewed public attention of the NBN when the termination of the construction tender hit the headlines this week.[2]


The Convergence Review also avoids the controversial topic of sporting rights – as the anti-siphoning list for sports was reviewed in 2010 to determine which AFL or NRL games get broadcast on free-to-air television and which games the pay TV platforms can bid for exclusive transmission rights.[3]  The terms of reference also narrow the scope of the review to delivery media and content issues and not to the regulatory environment for data and voice telephone services.[4]

The Federal government has directed to Australian Law Reform Commission (ALRC) to review the National Classification System to address emerging technologies.[5]  So that the Convergence Review is likely to pick up the ALRC recommendations as to the content of audience classifications for material, with the Review limited to covering the ‘take down’ notice procedures of Schedule 7 of the Broadcasting Services Act 1992 (Cth), which provides a scheme for dealing with prohibited content on the internet.  That was controversial at the time the ‘take down’ notice procedures were being developed, although the Internet Service Providers (ISPs) seem content with the  ‘light-touch’ approach to regulating prohibited content that exists in the current’ take-down’ notice system. 


Senator Stephen Conroy, the minister responsible for the Department of Broadband, Communications and the Digital Economy (DBCDE) has appointed two members of the Convergence Review Committee (Glen Boreham as chairman and Malcolm Long).  A third member is to be appointed - my guess is someone with extensive experience with telecommunications and/or cable television systems.

The members of the Committee have expertise that covers computers & IT, broadcast regulation & content creation; with Glen Boreham being the former managing director of IBM Australia and current chairman of Screen Australia; and Malcolm Long having experience in broadcast regulation at the Australian Communications and Media Authority and experience of subscription television channel management as well as content creation at the Australian Film Television and Radio School.

The Convergence Review Terms of Reference direct the Committee to review the operation of media and communications regulation in Australia so as to advise on the effectiveness of the regulatory regime in the convergent era. The Committee are to consider the operation of the Broadcasting Services Act 1992, the Radiocommunications Act 1992 and the Telecommunications Act 1997, particularly as they relate to the regulation of content and converging content delivery platforms.[6]

The process of convergence is recognised as an ongoing process that impacts on the operators of the ‘pipelines’ through which data is delivered and the suppliers of the data (the ‘content’ being delivered via the pipelines) and the consumers of the content. The Convergence Review is directed to the regulatory environment for all forms of digital content including internet content delivered to consumers via broadband and wireless and delivery to all forms of digital devices including computers, internet enable television sets, mobile phones and other hand held digital devices.

The convergence of different communication technologies results in what were separate delivery systems for Internet, telephone calls and audiovisual programming being delivered on common telecommunications networks designed to carry any form of digital data. This triple play service is evolving into the so-called quadruple play service that integrates mobile phones and WiFi devices.  The Convergence Review is asked to determining “how best to manage the provision of media and communications services in this new environment.”[7]

The Committee will address what are potentially contentious areas of regulation of audiovisual services.  The existing free-to-air and pay television services are facing new TV-like services such as IPTV, internet TV and video on demand, all of which emerging services compete with traditional free-to-air and pay TV services for viewers.  The treatment of advertising controls, programming classification and Australian content obligations that are directed to “the development of national and cultural identity” are likely to see the existing players arguing for positions that achieve a ‘level’ regulatory playing field across the different media technologies that can deliver TV or TV-like services.[8]

Both existing media players and emerging players will be focused on arguing for what they see as a conducive competitive environment for each play or industry sector.[9]

Hard on the heels of getting the NBN legislation through the parliament the Federal government have given advance notice of the release of a National Digital Economy Strategy, which is intended to enable Australia firms to leverage the National Broadband Network (NBN) infrastructure so that Australia will become a world leading digital economy by 2020. The National Digital Economy Strategy is to be released at the end of May 2011.[10]

The DBCDE Convergence Background Paper (2010) describes the opportunities that brave new world of a convergent environment that will emerge with the continuing switch to digital-only television and the future rollout of the National Broadband Network.[11]


The Convergence Review formally commenced on 2 March 2011 with the opportunity for public submissions to be delivered the Committee in 2011.

Further information is available at the DBCDE website http://www.dbcde.gov.au/digital_economy/convergence_review#submissions

 

Twitter @DBCDEgov


Review secretariat - Tel: 02 6271 1255

convergence@dbcde.gov.au



[1] The National Broadband Network Companies Bill 2010 and the Telecommunications Legislation Amendments (National Broadband Network Measures—Access Arrangements) Bill 2011 were by House of Representatives and the Senate on 28 March 2011. Media Release 28 March 2011 http://www.minister.dbcde.gov.au/media/media_releases/2011/152

[8]  The Terms of Reference in paragraph 5 b. refer to “ensuring the ongoing production and distribution of local and Australian content that reflects and contributes to the development of national and cultural identity” http://www.dbcde.gov.au/digital_economy/convergence_review/convergence_review_terms_of_reference

[9] The Terms of Reference in paragraph 5 a. refer to “the development and maintenance of a diverse, innovative, efficient and effective communications and media market that operates within an appropriately competitive environment and in the best interest of the Australian public” http://www.dbcde.gov.au/digital_economy/convergence_review/convergence_review_terms_of_reference