Does Protox come from the Botox people?

by legal | May 31, 2023 | Uncategorized |

Botox is the well-known injectable product used to freeze facial features for between 3 to 6 months to give a smoother and more youthful appearance.  As it is injected, it is administered by health professionals.

Protox is a cream that is self-administered and is designed to temporarily reduce the appearance of wrinkles.

Do you think Protox comes from the same people that make Botox?  (Just sit on your answer in your own mind, like a “pick a card trick” with a magician).

That is the central test for trademark infringement.  Is one mark substantially identical with, or deceptively similar to, a registered mark?

The High Court has held that use of “Protox” was not deceptively similar to the registered mark “Botox”.[1]  The High Court’s reasoning was:

• The two words were similar, the only difference between them was one started with “pr” and the other with “b”.  But the Court did not believe this would not cause confusion in consumers’ minds between the marks or the underlying products (with aural and visual similarities just one part of the inquiry);[2] and
• Do the similarities imply an association so that consumers wonder whether they come from the same source?  The court decided no, there was no real risk of confusion as the marks are sufficiently distinctive.  This was reinforced by Protox being used in association with its brand name (“Freezeframe”) on its packaging and no evidence of actual confusion.[3]

The reputation of the mark allegedly infringed is not relevant to deceptive similarity, it is simply based upon what marks have been registered.[4]  So Botox’s high reputation was simply not relevant.

The outcome could have been different if Botox had been able to obtain and tender to the Court evidence of actual confusion amongst consumers.

It is worth noting that Protox was the product name, not the brand name of the trader who sold the cream product (their brand being Freezframe).

The key takeaway for me out of this decision is that the Court is crediting consumers with a strong degree of intelligence and discernment.  Freezeframe is not the first competitor that uses a similar name, perhaps cheekily, perhaps underhandedly, that has sought to use a similar name to the market leader to perhaps ride on the market leader’s coattails who has strong reputation and consumer recognition.  The Court in a way is recognising this trend and believe that consumers would be aware of it and wouldn’t believe the two products come from the same source.

Was that the conclusion you came to in your own mind?  (If not, then you are in the same boat as the judges in the lower Federal Court, but the High Court is the highest court of the land.)

Starting a company – how many shares?

by legal | Jan 12, 2023 | Uncategorized |

Small proprietary companies are the most common form of company used to operate a business in Australia.  Such companies have shares on issue.  When starting a business, the business will need a certain amount of money to get going (start up capital).  The founder or founders can put this money in either as share capital or some as share capital and some as a loan, possibly with no interest accruing or at a commercial rate.  Usually, this decision is taken with input from the business’ accountant.  Typically, most companies are started with just a nominal amount of share capital.  Often just one, two or a hundred shares are issued.

Is there an ideal number of shares to issue when starting a company?

Perhaps it may not seem important at the time, as there may only be one or two founders, so it can almost be any number (for two founders, who are 50/50, it just needs to be an even number).

In my experience, companies introduce new investors as shareholders or a company with a number of shareholders (akin to an incorporated partnership), shareholders come and go.

To give yourself flexibility going forward, I believe an ideal number of shares to start with is 60 (or a multiple of 60, such as 120).  60 is divisible by all of 1, 2, 3, 4, 5 and 6.  So if a company starts with one shareholder who is issued 60 shares and later the founder wants to introduce 4 new investors, the founder can transfer 12 shares to each new investor (such that each person holds 12 shares).

Other good numbers of shares are:

• 420 (divisible by 1 to 6, and also 7);
• 840 (divisible by 1 to 7, and also 8);
• 2,520 (divisible by 1 to 8, and also (9 and 10).

If a company has more than one shareholder then a shareholders’ agreement is recommended, to govern such matters as:

• What decisions need unanimous approval;
• What happens if the directors can’t agree; how is a deadlock broken; and
• What is a fair process if one person wants to exit, or a majority want to sell the whole enterprise?

Launch of the 2nd ed: “Fashion Law: The Complete Guide”

by legal | Nov 9, 2022 | Uncategorized |

The 2nd edition of my book “Fashion Law: The Complete Guide” is now available. A complete update from the 1st edition published five years ago and including new content including:

– landmark High Court case on works of “artistic craftsmanship”;

– landmark High Court case on the difference between employees and contractors;

– an extended grace period to apply for design registration;

– liberalised parallel importation laws; and

– about influencers, personal guarantees and insolvency.

Buy it at: https://www.wordzworth.com/sales/authorbooks.aspx?ISBN=9780645407402

Director Identification Numbers

by legal | Nov 7, 2022 | Uncategorized |

Australia has introduced a rule that every person who acts as a director of an Australian company must be verified as a real person.  EVERY person who acts as a director, whether an Australian resident or living overseas, must obtain a director identification number by the Australian Business Registry Services.

This must be done by no later than 30 November 2022.

To apply, go to: www.abrs.gov.au (Welcome to Australian Business Registry Services | Australian Business Registry Services (ABRS)).  There is a link to apply form that site.  You will need a scan of your passport.

You could have your accountant or lawyer do this for you, but it is relatively simple to apply.  Also, it is probably better that less people have a copy of your passport in this day and age of identity theft and hacking.

Contracting for Services – Pitfalls

by legal | Sep 26, 2022 | Uncategorized |

Contracting for Services – Pitfalls

Businesses will commonly need to engage the services or others to obtain the benefit of their expertise.  Ideally, that is best done on the businesses’ own template contract, with terms that benefit itself.  For example, if the business is engaging a creative person, a key required outcome is that the business obtains the desired intellectual property rights (and preferably ownership) to what is created (otherwise, for example, the creative will retain copyright).

Some service providers present their own contract.  Often, this will be ok, particularly if the contract is to be performed over the short term and with a very specific outcome/deliverable.  However, such contracts should nonetheless be reviewed, both commercially and legally.

Where I have recently seen businesses run into trouble is for longer term service contracts with a more amorphous outcome.  Such as engaging a service provider to run your SEO over time.  SEO, to me, is like a hidden black box: who knows what goes on in there and outcomes are hard to judge (unless obviously successful).

The risk is if you become dissatisfied with the service provider’s performance, but perhaps can’t point to a breach, you will still be contractually liable for the fee payable for the entire term of the contract even if you purport to terminate it.  So they get paid for doing nothing!  For example, a two year SEO contract for a fixed monthly fee, if it isn’t working after 6 months you are still up for 18 months’ worth of fees.

Problem terms of such contracts include:

• No warranties about the quality of the services provided;
• No KPIs, no promised outcomes and no deadlines (not promised in the contract anyway, regardless of what you were promised verbally);
• An entire agreement clause, meaning if it isn’t written in the contract it doesn’t count;
• A fixed minimum fee payable every month;
• For a fixed minimum period, often one to three years;
• Automatic renewal for another period unless one party notifies the other they want out, usually with notice required well before expiry of the current term;
• No right to terminate without cause;
• A limitation of liability in favour of the service provider, but no reciprocal limitation for the benefit of the business; and
• The business provides an indemnity to the service provider, but this is not reciprocated.

To minimise your risks in this regard, in descending order of preference:

1. Contract based on your own template contractor’s agreement; or
2. Thoroughly review their contract with support from a commercial lawyer; or
3. Insert one clause, to minimise the loss: “Notwithstanding any other term of this Agreement, the Customer may at any time terminate this Agreement without cause and without penalty on one month’s written notice to the other party and payment after that period of all fees due and accrued up to the end of that notice period (but no fees payable thereafter)”.  (This may need slight adaptation for each contract e.g. is the business called “Customer”, “Client” or “Company”?)