The companies behind these products have used design to create valuable business assets and build their competitive advantage in the marketplace. They have also carefully protected these assets through a variety of intellectual property (IP) rights including registered designs.

What is a registered design?

A registered design is a form of intellectual property that protects the way a product looks. A design can cover both two-dimensional and three-dimensional visual features including a product’s shape, structure, pattern and decoration.

To be protected in Australia a registered design must be new. This means that it can’t be identical to any existing design used in Australia or published anywhere in the world. It must also be distinctive, which means that it can’t be substantially similar in overall impression to any existing design used in Australia or published anywhere in the world. Protection can last for up to 10 years.

Registered designs are different to other IP rights such as patents, which protect how a product works, and trade marks, which protect a product’s branding. Registered designs are all about appearance.

The Breville Smart Grill, the new Qantas Q bag tag and check-in kiosk and the Dyson Air Multiplier fan are all designs that are registered in Australia.

Why register a design?

In today’s marketplace businesses are increasingly realising that the products they develop must not only function well but look good too. Innovative product design often generates favourable press, customer interest and loyalty, and allows a company to command a price premium over competing products.

Unfortunately, good design also tends to attract copycat, me-too manufacturers who try to capitalise on visual innovation by manufacturing cheaper, lower quality imitations of design-driven products.

Design registration allows a business to protect the investment it has made in design and product development. It gives the owner the exclusive legal right to manufacture a design and thereby protect market share. It is an intangible business asset which can grow in value and be sold or licensed to generate revenue. Importantly, it can enable a business to take action against copycats for design infringement.

In some cases, a design may be automatically protected by copyright. However, copyright for certain three-dimensional products can be lost if they are manufactured on a larger scale. In any event, registered design protection is often preferable to relying on copyright as infringement tends to be easier to prove. The laws relating to the overlap between designs and copyright are complex and you should seek professional advice relating to your own particular circumstances.

Manufacturers of design-driven products across a variety of industries such as furniture, consumer appliances, homewares, electronics, cars, packaging, clothing, footwear and accessories can all benefit from registering their designs. The owner of a registered design is generally the designer or the designer’s employer.

When you are about to launch a new product, nothing is more depressing than having some little guy turn up at the reception desk and say I’d like to see the managing director please’. After some formal pleasantries he says, “I understand that you are about to launch a new product this week, but are you sure you own the trademark?” And then pulls out of his bag a rough-looking homemade product that sure as hell carries your brand name.

The next few words you can probably predict, in a most polite way he says, “It can be yours, of course, if you are prepared to part with US$150,000. Oh by the way, cash will be fine”. A series of telex’s later and sadly, at least for me, the little guy was right, he certainly owned the mark and incidentally a whole range of other trade marks of many high ranking multinational companies spread across the world.

This may not be common, but I fear technology has made it easier. It does happen and it happens not only to the small unsuspecting companies but also to the big guys who, of course, are a much more valuable catch.

In my case and, I suspect, in most cases it was just a matter of money, but it did cost, and it cost in many ways. The first step of course is the solicitors and the argy bargy between his brief and ours. What is different here is that you are in foreign country, all the solicitors know each other, you sadly are the outsider.

Weeks go by and finally an outcome between the solicitors is reached. How the final money was divvied up between the three is anybody’s bet. It cost too, in a delayed launch, lost sales and in reputation, the ‘trade’ was less than forgiving.

The other case was different as it really was just a try-on by a competitor to create doubt and confusion. I simply received a solicitor’s letter suggesting that my product possibly breached the patent of a local manufacturer. Again it resulted in some fairly expensive legal work, occupied my time and the time of my staff. It became known in the ‘trade’, and prompted questions from many who we relied on to drive the business through the distribution network. It was resolved but money was spent unnecessarily and a small amount of the dirt did stick.

The thing is competition in some parts of the world can be dirty. There are people, ‘ambulance chasers’, who grab trade marks for their country as soon they appear and others who will go to any length to disrupt your normal trading pattern. These two cases are relatively minor in the context of things and the outcomes were on the right side of the ledger. But they did cost time and money.

My recommendation to anybody is to do your homework first. In a recent article written by Kelly Allison from IP Australia she says, “Before embarking on an export strategy, businesses typically go through a series of crucial steps, obtaining credit, identifying desirable markets and estimating demand; but many fail to think about intellectual property (IP),” and from my experience Kelly is right.

She goes on to say that “during a recent survey conducted by IP Australia 41 percent of exporters did not address the topic of IP ownership and confidentiality with their employees, which is one area of risk that would be identified in an IP audit. Before you consider exporting, conducting an IP audit should be top of your list, in order to guard against copycats and protect your brands and profit”, a recommendation I fully endorse.

One place to start is to log in to Intellectual Property Explorer (www.intellectualpropertyexplorer.com) which is a free, fast and easy online tool to help identify and protect your IP assets. IP Australia also produces a range of Exporting Fact Sheets on major markets which are freely available on its website www.ipaustralia.gov.au.

Having worked in various parts of the world, nothing surprises me in terms of the range of copycat products seen on the supermarket shelves, how quickly top movies are available on DVD and how posters bearing photos taken here last week are on the streets in India, China or Indonesia today.

Doing your homework is mandatory, and so too is having the right legal team on your side if things do go wrong. Australian legal firms have relationships with many firms that operate in foreign markets, it really is in your best interest to make sure you get the right advice upfront and have the advisors in place for if and when you need them. Having people turn up at your reception with a demand or receiving letters from solicitors from places outside of Australia is no fun.

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Casella Wines Yellow Tail is the highest selling imported wine on the American market. It uses a distinctive Aboriginal stylised wallaby on its logo. The San Franciscan brand Little Roo’s yellow and black label features a leaping kangaroo carrying a joey in its pouch.

Casella managing director John Casella has accused the US group of “piggybacking” on the success of its brand in the US.

“This is not just about protecting our brand. We are trying to do the right thing by our customers. There is no reason for them to be confused.” The Wine Group has hit back by saying the Australian wallaby is not interchangeably referred to as a kangaroo. Casella is arguing the two marsupials would be indistinguishable to US customers.

Little Roo had been on the market in America for two years before Casella filed its lawsuit, chief executive of the Wine Group David Kent said. It sells at US$6 a bottle, a fraction lower than Yellow Tail. Kent said his company chose the kangaroo to convey a strong sense of place. “There’s been an American fascination with the joey, the baby kangaroo. It’s a totally different concept.”

Casella said he would like to solve the trade mark issue out of court. “At the end of the day nobody wants a fight. The wine industry has enough problems without having to deal with this sort of stuff.” But Kent claims The Wine Group had also hoped to settle this amicably. “We are always willing to accommodate a concrete legitimate concern. They have been unable to produce one.”

Casella is standing by his suit. He said Little Roo also copied the colouring, lettering and look of the Yellow Tail label. The two marsupials are both leaping off the ground and facing the same way.

Did you know: registration of your business or company name in Australia does not protect that name from copying by others. A trade mark registration is recommended to protect your brand which can be a name, logo, slogan (and other intellectual property).

The first step is to obtain protection in Australia where a trade mark can be registered in one or more of 45 different classes (categories) of goods and services. Registration in the correct class is essential. A trade mark attorney who deals with trade marks on a daily basis can assist with obtaining the widest possible protection within each class of goods and services.

The trade mark registration process in Australia takes around seven months from start to finish and getting your application underway ASAP is the best option, as once your trade mark is filed any subsequent applications for a brand the same or similar should be rejected by the Australian Trade Mark Office.

Once registration is achieved in Australia, International trade mark registration is next.

Each country has its own practice and procedures required to obtain a trade mark registration. A Madrid Protocol international trade mark application can save thousands and is intended to be an efficient and cost effective way to gain International trademark protection in a number of countries with a single application.

The Madrid Protocol is an international trade mark agreement that allows the registration of a trade mark (which is already filed in Australia) in the over 70 countries who are a member to the agreement.

To proceed with a Madrid Protocol trade mark application it must be based on an existing Australian trade mark. The application is lodged to an international bureau who administers all Madrid Protocol applications and your trade mark is then sent to each separate country for examination and hopefully registration!

The time required to complete an international trade mark can differ significantly. If the correct procedures are not followed the application can be held up by many months until all filing deficiencies are rectified. A trade mark attorney will ensure that all requirements are met and the application will proceed without delay.

MacMillan Trade Marks is a well established Australian company which specialises in this area and offers fast and low cost trade mark services in Australia and internationally. We provide a free trade mark kit and will assist in the protection of your brand in Australia and internationally.

—Tom Rinder is a trade marks attorney with MacMillan Trade Marks (www.macmillantrademarks.com.au)

Fortunately, now more than ever Australian businesses are looking to break out of the straitjacket of a small domestic market and taking Australia’s successful franchise business model to the world.

Why are franchises so popular in India? Think of McDonald’s, Gloria Jeans, Dominos and Just Cuts, all of which operate as franchise businesses in India and all those other services industries that involve the use by one business of another’s branding, image, goods and importantly business systems for running a business.

Legal considerations for franchising

Franchises are legally independent businesses where in return for the use of the franchiser’s business model and, commonly, ongoing training and support, the franchisee pays a fee to the franchiser. The fee could be a lump sum entry fee and/or an ongoing royalty. The royalty is usually calculated as a percentage of gross turnover or some other measure of the franchisee’s success.

The contract between the franchiser and franchisee can be as simple or as complex as the parties agree and as consistent with local laws. While the franchisee is conducting their own independent business, so as to protect the franchiser’s brand and rights in their business model the contract will commonly also provide some level of supervision or right to review the performance of the franchisee in conducting their business.

Why franchise?

Franchising as a method of business operation is one of the fastest growing sectors of many economies as diverse as Australia, the United States, Singapore and India.

There are many good reasons for a business to be to be successful if a franchise model is adopted:

• Generally less capital is required to establish the business.
• Proven method of business operation.
• Use of existing brand names and reputation save time in establishing market recognition without the expense and risk of direct investment by the entrepreneur.
• Attraction to the entrepreneurial spirit where people feel the need to feel ownership while still providing the franchisee with support to run their own business.
• Large geographical areas such as Europe, United States, Australia and India can be serviced without the need for expensive distribution systems.
• Franchisers can harness local knowledge especially where the market is large and fragmented as in India.

In addition to the above, foreign businesses are not permitted direct investment in retail in India. Opening a franchise is the one sure way around that prohibition.

Franchisers should, however, be aware not to make some of the more common mistakes when entering a market such as India. There are some non-negotiable conditions that should be satisfied before any business expands into India or indeed any other country.

Expanding an immature business

The local business must have all of the following:

• Proven mature business system that is capable of being replicated elsewhere with only minor refinements.
• Strong cash flow in the home territory.
• Senior management that is capable and available to concentrate on the new territory.

Insufficient research

Before offering a franchise in the Indian market, the business should have:

• Consulted local Australian experts with experience in franchising internationally.
• Consulted with Australian lawyers experienced with franchising in India to facilitate your entry into the Indian market.
• Developed an overall plan to expand internationally.
• Developed an understanding of the Indian market especially local customs. For example McDonald’s in India, instead of making the world famous beef-laden Big Mac that would offend the predominantly Hindu local culture, developed the Maharaja Mac based on chicken.
• Decided on the legal form of franchise and protection of the intellectual property rights of the franchisor. For example, is it better to have a master franchisee for the whole of India (the most commonly adopted international model); one or more master franchises for different areas of India where these sub-master franchisees effectively sub franchise the operation of the franchise business; or separate franchisees in different areas of India.

Looking at Just Cuts as an example, in opening in India it decided the best method was a master franchise model and chose Gitanjali Lifestyle Group as their master franchisee. Whether a master franchise or local franchises is the better model, the ability to choose the best person to operate the franchise business is essential.

A mechanism exists under the Patent Cooperation Treaty (PCT), administered by the World Intellectual Property Organisation (WIPO), whereby applicants can make international patent applications, however this merely simplifies the process to make national applications in each PCT member state (of which there are over 125) and protects the applicant’s rights to a national application for a limited power of time.

Similarly with trade marks, international registrations can be made via the Madrid Protocol (to which there are currently 84 member states, but of Latin American countries, only Cuba is a member state) and the Paris Convention (to which there are over 100 members), however there is no mechanism in place that provides international ‘blanket’ patent/trademark protection.

Significant benefits arise from these international treaties/conventions, however many applicants and/or patent/trade mark owners misunderstand their international IP rights. Depending on the status of any patent/trademark application with IP Australia, further applications can leverage off those IP Australia applications courtesy of these treaties/conventions.

All Australian businesses that currently operate, or intend to operate, in the Latin American market should review their current IP rights in relation to the region.

IP applications in Latin America

National applications need to be made in each individual country in Latin America and in some countries, for instance Brazil, the process can take a minimum of three years until final registration. In general, however, the process takes approximately two years from application until final registration, presuming that no objections are raised by the authorities or the public.

All applications need to be filed in Spanish, except Brazil, which requires that the IP Rights in Latin America application is filed in Portuguese, and those translations need to be certified.

The applicant may choose to have a local representative in that country of application, and that relationship will need to be evidenced in the form of a power of attorney from the applicant to the agent.

Just like those applications in Australia, the application will need to include designs and/or drawings (in the case of patents), logos, descriptions of those goods/services in which it seeks to protect its trademark and so forth.

Applications are reasonably straightforward, however the authorities can take a hard line on accepting some trade marks in the event of the prior registration of a same and/or similar trade mark, and even in some cases where the chances of there arising confusion in the market are minimal. Any objection raised by the authorities, can be appealed by the applicant.

Practical Tips

It is common to see Australians come to Latin America and market their product and/or service, for example through various trade shows, set up, trade and then realise they have no protection, or even worse are in infringement of a third party’s IP rights.

Before setting up, ensure your IP rights are protected and check whether you can use your IP. This can be achieved by conducting quick and inexpensive searches.

From a business perspective, we have found that clients that have had their IP in order send a good message to the marketplace as they are strategically and effectively able to transact with their buyers, especially in the case where the buyer is a large multinational, which in some cases require that you are the owner of the IP rights prior to entering into a purchase contract.

In most Latin countries, the rule of law is adhered to and strictly enforced, regardless of whether or not you are a foreigner, so protection of one of your business’ most valuable asset is a worthwhile cause.

—Harris Gomez is the managing principal of Latin American specialists, the Harris Gomez Group (hgomezgroup.com)

The Madrid Protocol is a system designed to simplify the protection trade marks internationally. Providing the trade mark owner resides in a member country, they can protect their trade mark in several member countries at once by filing an application directly with their own national or regional trade mark office; in Australia, that office is IP Australia.

Tom Rinder, a trade marks attorney at MacMillan Trademarks explains: “For an international business, the Protocol means that a single trade mark application can be undertaken to register a company brand—name or logo or slogan or other—throughout a large part of the world.” Additionally, other Protocol countries can be added after international registration. Each member country still examines the application according to its own laws, and if the trade mark needs to be renewed or any changes recorded, this can also be done in a single request. Rinder notes: “The registration of a trade mark should be undertaken in every country where the business brand will be used, sold or licensed. Typically the Protocol works best where a number of countries are included in the application.”

There are several advantages of the Madrid system for trade mark owners:

• The ease of filing: Rather than filing applications in several countries, in different languages and paying several different fees, international registration can be achieved with one application, in language and with only one set of fees to pay.
• The ease of renewal: One payment, every ten years to the International Bureau of WIPO
• Ease of alteration: A change of name or address is easily recorded with all member states by means of one form.
• Quicker processing: The time period for overseas trade mark offices to issue a provisional refusal of the mark is limited to 12 or 18 months.

Administered by the International Bureau of the World Intellectual Property Organisation (WIPO) in Geneva, the Madrid system for the registration of marks was established in 1891 and operates via two treaties, the Madrid Agreement Concerning the International Registration of Marks (1891) and more recently, the Madrid Protocol, which came into force on April 1, 1996. The two treaties together provide an international system for the registration of trade marks, with the aim of making protection easier and simpler to achieve and manage. Both are open for membership to any state that is a party to the Paris Convention for the Protection of Industrial Property. In addition, the Madrid Protocol is open to an intergovernmental organisation such as the European Union, if the organisation satisfies certain criteria.

Note, however, that Australia is a signatory only to the Protocol, meaning that an Australian business would typically only file an international trade mark under the Madrid Protocol, not the Madrid Agreement.

The treaties are parallel and independent, but in 2008 new rules allowed that states previously bound by both the Agreement and the Protocol, will now only be bound by the provisions of the Protocol, the more recent and flexible of the two treaties. Also in 2008, the Madrid System became fully trilingual, meaning applications can be filed in English, French or Spanish.

While also historically significant, the Madrid Protocol is more influential now than ever, with the number of member countries increasing. In 2008, WIPO received a record 42,075 applications for the international registration of trade marks, reporting a 5.3 percent growth rate.

Who uses the Madrid Protocol?

In 2008, WIPO reported that applicants from Germany topped the list of filers for the 16th consecutive year, followed by France, USA, and the European Community. WIPO director general Francis Gurry said: “Even in economically difficult times, businesses continue to recognise that a trade mark is a smart investment in a company’s reputation and long-term sustainability.”

Businesses looking to sell their products overseas are advised to protect their investment with international trade mark registration. It is a cost effective way to protect your name, brand, product, and reputation overseas, and hence, is a critical step for exporters. Registering trade marks provides the exclusive legal right to use, license or sell the goods and/or services for which it is registered. Protection of intellectual property and product or corporate branding are both vital when you’re launching a new product or into a new territory.

As shocking as that may sound, even a natural person has no absolute right to use their own name in business. Attaching your name to a product in trade may in certain circumstances causes deception. This is clear and reinforced by such cases as Bradmill Industries Ltd v B & S Products where Bradmill, a substantial and well known textile manufacturer, was successful in restraining B&S from marketing textile products under the name ‘Bart-Mills’ despite the owners of B&S being Mr Bart and his son. The court took the view that the use of the family name in this instance would cause confusion among consumers.

Merely because a name is registered is no defence to a claim of passing off or an action under Section 52 of the Trade Practices Act for ‘misleading and deceptive’ conduct. As noted by Young J in Wallace v Baulkam Hills Smash Repairs (1995): “The purpose of the (business names legislation) is not to create property in a name, but to record for the public protection the identity of the person using the name…” The same applies to domain names.

A domain name or URL (uniform resource locator) is simply an internet address. The name and address being governed by a set of protocols between the various bodies that manage the internet. Internationally domain names are regulated by a US-based not-for-profit corporation called the Internet Corporation for Assigned Names and Numbers (ICANN).

Each domain name contains a generic top level domain that indicates the type of activity engaged in by the domain name owner e.g. ‘.com’ or ‘.org’ etc. It may also contain a country code, e.g. ‘.au’ that indicates Australia.

ICANN licenses domain name registers in various countries, which in turn licences registries such as AusRegistry to maintain a database of names ending in ‘.au’ which in turn accredit various registrars who are authorised to make registrations of domain names on behalf of applicants, in effect selling the domain names.

Is cybersquatting a crime?

Cybersquatting is where a domain name is registered in the name of a person or organisation that has no intention of using it. The registrant merely wishes to occupy the domain name to stop others from using it. Frequently, this is in the context of the cybersquatter in turn seeking to sell the domain name.

In the 2003 case of CSR Ltd v Resource Capital Australia Pty Limited, Justice Hill suggested that cybersquatting could be described in “probably less flattering names that could be used that might suggest the conduct verges on the criminal”.

In many cases it is simply cheaper to pay the asking price and buy the domain name from the cybersquatter than to go to the trouble and expense of seeking the deregistration of the domain registrant following arbitration by an accredited arbitration organisation including the World Intellectual Property Organisation (WIPO).

In the United States, the Anticybersquatting Consumer Protection Act 1999 permits an action by trade mark owners against cybersquatters who register, traffic in or use confusingly similar domain names with a “bad faith to profit”. There is no similar legislation in Australia.

From an Australian perspective it is not always the case that it is cheaper or easier to resolve these disputes by arbitration. Especially if the complainant must first show that the domain name is “identical or confusingly similar” to the trade mark and that the registrant of the domain name “has been registered and is being used in bad faith”.

In the 2003 CSR case, the court restrained the use of domain names including terms such as ‘CSR’ and ‘CSR Sugar’ by a company that had no obvious connection or interest in these names. In the United Kingdom, in the case of British Telecommunications plc v One in a Million (1998), the court described the domain names secured by a cybersquatter as “instruments of fraud” stating that the use of the domain names with associations to “British Telecom” and “Marks & Spencer” were done “with the purpose of appropriating the (plaintiffs) property, their goodwill, and with an intention of threatening dishonest use”.

Where there is genuine confusion caused by the cybersquatter between the domain name and a trade mark, consideration should be given to taking proceedings to restrain the cybersquatter from using the domain name.

Trade marks and exclusivity

Section 20 of the Trade Marks Act 1995 provides that the proprietor of a trade mark, from the date of registration of the trade mark, has the “exclusive right” to use the trade mark in relation to the goods and services for which it is registered. But, and this is a big but, notwithstanding the language of the section this does not necessarily give the exclusive right to use the trade mark.

Prior use by others may mean that they also have the right to use the trade mark. Very importantly, infringement of a trade mark only occurs where the use of the mark is as a ‘trade mark’ and this means use in a commercial sense or “in the course of trade”.

It seems clear from cases such as WD & HO Wills (Australia) Ltd v Rothmans (1956) that use for the purpose of trade mark registration does not include “private or personal use”. It follows that if the domain name is used for a “private purpose” that this will not be an infringement of a trade mark.

An additional difficulty arises because the concept of “use as a trade mark” is not consistent throughout the world. For example, in two cybersquatting cases, one in the United Kingdom and the other in Australia where the issue of trade mark infringement was considered, two different approaches are evident.

In the United Kingdom in British Telecommunications Case, the court was prepared to find that the “mere registration” of a domain name was use as a trade mark. In Australia on the other hand in CSR Ltd v Resource Capital Australia the court felt that more was required than mere cybersquatting to constitute use as a trade mark.

In the United States the Federal Trademark Dilution Act (1995) has been used to protect trade marks where commercial actions, for example registering a domain name that uses the trade mark of another, causes “dilution of the distinctive quality of the mark”.

As can be seen in Australia, United Kingdom and the United States, the registration of a domain name which incorporate another person’s trade mark may, depending on the circumstances, constitute an infringement of that trade mark. Registering domain names in a number of countries, without a thorough preliminary search may leave the registrant open to a claim that the trade mark of another has been infringed.

Australian Customs will then seize the goods. Notices last up to four years. The owner of the mark then has 10 days to commence legal proceedings for infringement of the trade mark, after which the goods are released to the importer. There is no up front fee for this service.

Note this does not grant the same rights to an unregistered common law trade mark owner. The owner must however indemnify customs for costs incurred of up to $10,000.

Trade mark owners should also consider registering their trade mark in China where it is possible to arrange for the seizure of counterfeit goods at the factory or elsewhere, on a similar basis as in Australia. Again this only applies if the trade mark is registered in China and remember, it is the first to register the trade mark in China that is entitled to enforce the trade mark. A registered trade mark in Australia will not solve the problem at source.

It’s also worth noting that from July 1, 2009 Australian exporters may be able to partially recover the cost of their IP protection including the cost of granting, registering or extending rights under foreign laws as well as insurance costs relating to the rights under Austrade’s Export Market Development Grant Program (EMDG), so the costs of obtaining IP protection in China is now partly helped by the Australian government.

IP Australia has logged complaints from trade mark owners who have received unsolicited correspondence requesting payment for publication of the trade mark owner’s trade mark details in a register.

IP Australia has stated that the company is not in any way associated with their organisation and has no official or government authority.

“The letters are often designed to trick the account payer into paying for unnecessary services such as domain name registrations, listings on online databases and ads in various publications,” said ACCC deputy chair Michael Schaper. “The end result is the business owner paying for a new listing on a website or in a directory, often of little value.”

IP Australia has advised trade mark owners to check whether the service provider is legitimate and to find out what protection, promotion or value the service will provide before handing over any money.

The ACCC recommends business owners follow these five steps to make sure they get what they pay for:

1. Don’t assume that any ‘renewal’ notice is from your original supplier. You may receive many such offers from operators competing for your business or they could be scammers. Check all the details.
2. Ensure that only authorised employees are responsible for payments and they should have ready access to important dates and suppliers. Update them on any scam or unsolicited service that may be targeting businesses.
3. If the service is something that you would like, shop around to see what deals are available and who are the most reliable suppliers.
4. If you receive letters of demand you may need to get legal advice to understand your rights.
5. Alert your industry association or local business adviser about any offers that you think may be untoward or misleading. They may be able to warn others in your network.

For more information relating to the risks of unsolicited IP services, please visit the IP Australia website.