by legal | Sep 23, 2019 | Uncategorized
Most businesses trade with the benefit of a corporate structure. The key benefit is that a company is a separate entity and the liability of the shareholders is limited to their capital contribution (typically a nominal amount). That is, if the underlying business fails then the debts remain those of the company, not the directors or shareholders (exceptions for failure to pay super, PAYG, etc).
In theory, that sounds almost too good to be true! The reality is a little different.
by legal | Jul 17, 2019 | Uncategorized
Wow, a higher court makes a commercially sensible decision, even in the face of technical legal arguments (and overturns the lower court’s decision)! There is the principle in trademark law of “use it or lose it”. If a mark is simply languishing on the trademark register, an alert opportunist may apply for the same mark and seek to have the earlier mark de-registered on the grounds of non-use. If the mark has simply not been used for 3 years, then the opportunist is likely to be successful. That is a sensible policy position to adopt. If a mark is not being used, let another trader have a crack. This position holds even if historically the first trader built up over a long period of time significant goodwill in the mark if it hasn’t been used for at least 3 years. The person who is registered as the owner of the mark must be the person who is using the mark to avoid a non-use application. Once again, a simple and uncontroversial proposition. But what of corporate groups? Some groups are deliberately structured so that there are separate operating entities from the entity that holds the trademarks. Operating entities, being the entities that sell products or offer services, carry the risk of commercial failure. If that unfortunately occurs, this may not cause the group as a whole to fail and the valuable trademarks are insulated from this risk. That is sound risk planning. But, within that sound planning, does use by the operating entity constitute use by the separate trademark owner? Or can an opportunist seek to de-register the...
by legal | Jun 24, 2019 | Uncategorized
An off the cliff risk of 3PL Risk of trading on Credit Any trader who supplies product on credit and has been in business for a decent length of time will know the pain of a customer going bankrupt and the consequent inability to be paid for products delivered (and typically the loss of that stock). The bigger the customer, the bigger the pain. A very large customer going bankrupt can even put the ongoing viability of the trader at risk. Terms of Trade and retention of title clauses Traditionally traders have sought to cover this risk by means of a retention of title clause in their terms of trade. Upon bankruptcy of the customer, the trader could seek to enforce the clause and recover its goods (or so much of it as had not been on-sold during the normal course of the customer’s business) to reduce the pain incurred. PPSA That position was complicated in Australia during 2009 by the introduction of the Personal Property Securities Act (PPSA). Unless the security interest created by the retention of title clause was registered under the PPSA then the retention of title clause in effect became unenforceable. Under the PPSA, the old adage of “possession is 9/10ths of the law” became the law of the Australian land. The trader needs to register its interest (and quickly after being created) under the PPSA so that its interest took priority relative to other creditors and so was in effect unenforceable. Warehousing function and 3PL Under a traditional business model, a trader would operate its own warehousing function and when its customers placed an...
by legal | May 30, 2019 | Uncategorized
Copyright – ownership of key designs Many businesses will have key copyright works that are central to their operations. Perhaps the most central is a logo that identifies their brand or is otherwise a key part of their business. Think the Nike swoosh logo or the coca-cola stylised name. A very large amount of these business’ marketing expenditure and brand awareness are built around these key pieces of intellectual property. It is critical that the business owns, and can demonstrate that it owns, copyright in these logos. The key logos may also get registered as trademarks, but at the beginning, if they are an original artistic work, then copyright will subsist first. Initially, the copyright in any artistic work will be owned by the artist/designer who created the work. If an employee creates the copyright work in the usual course of their duties, then the employer automatically becomes the owner of the copyright (Copyright Act s35(6)). For employees who create copyright, it is prudent to have a term in their employment contract recognising this too. The business should track which employees created what copyright and when. If this is a common part of their business, such as a fashion brand, then it is recommended that a register of copyright be maintained. However, if a business engages an outsider person, a contractor, to create the artistic work, copyright is not automatically transferred to the business. That sounds counter-intuitive, because that is what the outside person is being engaged, and paid, to do. But to transfer copyright a written assignment is required.[1] It is therefore critical that whenever a business engages...
by legal | Mar 11, 2019 | Uncategorized
Copyright in fabrics A recent Federal Court case examined the breach of copyright in fabric designs (in the case, the design being applied to quilt covers and pillow cases). The Dempsey Group Pty Ltd (“Dempsey”), originally designed three unique fabric patterns, and hence owned copyright in those patterns. Dempsey sold these products under its Morgan & Finch brand. Spotlight used the same supplier in China as Dempsey and was shown samples of the designs owned by Dempsey. Spotlight then used the Dempsey fabrics to create similarly designed and competitive products. The three original Dempsey designs and the three copies by Spotlight are set out in Annexure D (towards the end) of the court judgement (http://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2018/2018fca2016). Once viewed, the original products and the Spotlight versions are certainly not identical, and there are significant differences. The Court nonetheless found that Spotlight’s products breached Dempsey’s copyright in its fabric designs as Spotlight copied a substantial part of it. About one of the products, the Court reasoned: “There are differences of detail, colouring and design between the products but, in my opinion, the KOO Jarvis product reproduces a substantial part of the Rimona artistic work. As Dodds-Streeton J observed in Seafolly at [345], it is unnecessary that the two works bear an overall resemblance to each other nor is it appropriate to dissect the copyright work piecemeal and focus on the differences. If similarities are identified, the question is the qualitative significance of such similarities. Reproduction does not strictly require a complete and accurate correspondence to a “substantial part” of the work. The artistic quality of the Rimona work consists of the colour,...
