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Intellectual Property Horror Stories
Horror Story #1 "No Sunday Picnic"

Not there for the peace and quiet
It was Sunday so no one was in the office when Michelle Smith* used her employer issued key and swipe card to let herself into the building. Once inside, Michelle locked the door behind her, and headed straight to her computer. She went through the motions as if it was a normal work day - powering her computer on, logging in and opening up her email account.

But Michelle was not there to take advantage of the peace and quiet and get some extra work done. Michelle Smith was there to steal.
Specifically, her plan was to email client information, proposal templates and other important documents, to her home computer.

Lining the Nest
On the Friday before, Michelle had met with the business's owner and founder Ian Phillips* and announced her resignation.

Ian was not happy to see her go but in his experience, once an employee had announced their resignation, it was best if they finished up as soon as possible. As a result Ian suggested that Michelle take a week to hand-over to another employee. Ian asked his PA to arrange drinks and nibbles for the following Friday and a card signed by the team to wish her well in her new endeavour.

What Michelle hadn't told Ian when she tendered her resignation, was that she was about to become his newest competitor.

Sprung
On Monday, completely unaware of Michelle's actions the day before, Ian checked out the logs of a behind-the-scenes email alert program and found that a smallish file had been emailed on Sunday. When he saw that it was Michelle's email account he was immediately surprised but not suspicious. Ian was willing to assume that Michelle had simply decided to come in and get an early start on completing her obligations before her last day.

Nevertheless, Ian clicked on the attachments and was absolutely dumbfounded when he realised that Michelle had attempted to steal the business's gems - the vital confidential information that not only helped run the business, but also helped to win blue chip clients time and time again.

What happened after that happened swiftly and was confronting for everyone involved.
Click here to read the consequences...

Horror Story #2 "Follow that car!"

Holiday blues
Jeanne* and her family had not had a holiday for about five years as she and her husband John* grew their cleaning business from just the two of them, to a team of 25 cleaners and a handful of admin staff.

They also had an excellent general manager who could certainly run their operations and keep things going while Jeanne and John stepped away from the business. The kids had been nagging them for a jam- packed Gold Coast holiday for a couple of years now, so they finally decided to bite the bullet and book a two week stay.

The goal was simple: have as much as fun as possible, try out every major ride at each theme park and hit the beach daily.

Their worst nightmare
The family of five had been on the Gold Coast having the time of their lives for about five days when Jeanne and John's worst nightmare started as they drove to a local restaurant for dinner. As they sat at the lights, a small van pulled up next to their rental car. John looked over and nearly had a heart attack when he saw their logo and their business name - even their colours - plastered along the side of the van.

For a moment, John thought perhaps one of his crew had driven up to the Gold Coast without informing them. But on closer inspection, he saw slight differences to the logo, and the colours were not exact - but gee, they were close. Jeanne could not believe her eyes. They were both gobsmacked. When the light changed to green, Jeanne yelled out, "Follow that car!". She had always wanted to say those three words, but not under these circumstances.

Call to their lawyer
The next morning Jeanne made three calls. She rang their general manager to see if Ahmed* could get any more details on the Gold Coast business, including a check of the business names register to find out how they could have the same name. She then rang her lawyer to find out what on earth to do next.

Ahmed called back and said that strangely he could only find Jeanne and John's business name on the register, but from looking at the other business' website, they had been trading for nearly five years as well.
Then he asked Jeanne if she was sitting down: they other business had already spread south to Sydney, and had just begun small a operation in Melbourne!

While Jeanne processed this crazy bit of information, another call came in. Their lawyer had rung back and referred Jeanne to a trade mark firm he knew, saying this was "really a trade mark issue". By now, the kids were going mental in the hotel room, so Jeanne headed out with them and John rang the trade mark firm.

As easy as spaghetti to untangle
After John explained to the trade mark attorney what the situation was, she advised him that the first thing to do was to conduct a search of the Australian trade mark register, stating that unfortunately what he and Jeanne had done with their company and business names was establish a right to trade, but not an automatic right to trade with the name.
This sounded absolutely ludicrous to John as, why on earth would you have business and company names offices, if they didn't protect you in the marketplace!

After the trade mark attorney conducted her searches of the official trade mark database, she rang John with very bad news: the Gold Coast business had actually filed and succeeded in registering the name and logo around four and a half years ago. In other words, the Gold Coast business had a federally granted monopoly over the use of the name in the goods and services relating to cleaning, cleaning solutions, repair and maintenance, even removals.

Jeanne and John were really at risk of hearing from their lawyers for infringing a registered trade mark. Really, it was just a matter of time before the Gold Coast business discovered their operation in Melbourne and took action against them.

Not happy!
John naturally asked what this meant for his and Jeanne's own business.
The attorney went through a handful of options, which included taking legal action, filing their own trade mark application and submitting a length statutory declaration to prove their slightly earlier usage of the name and logo, or changing their name.

As far as John was concerned, he wasn't too keen on any of those choices, and the worst would have to be changing their name - what about all of their loyal customers? He certainly did not want to pay for legal action, and evidently there was no guarantee that they would be successful with their trade mark application and statutory declaration, as both parties had been using the same name for roughly the same time.

Now he had to ring Jeanne...

* True story but names have been changed. Please note none of the above is legal advice. Not all actions detailed above are recommended by IP Wealth Pty Ltd. Each situation is different and a tailored approach is recommended.

Forewarned is Forearmed - Increase Your IP IQ™ Protecting Against Trade Mark Stoushes ...

The Continuing Battle Over the Colour Purple

Cadbury Schweppes Pty Ltd (Cadbury) instituted proceedings in February 2003, in the Federal Court of Australia as against Darrell Lea Chocolate Shops Pty Ltd (Darrell Lea) alleging that the use of a particular shade of the colour purple during the Christmas trading periods 2000-2004, amounted to actionable passing off at common law and misleading and deceptive conduct, in contravention of section 52, of the Trade Practices Act 1974 (C'lth).

It should be noted that the above-mentioned action relates to enforceability of rights in a colour where those rights are not based upon a trade mark registration.

The Federal Court of Australia in April 2006, decided that the use by Darrell Lea of purple did not amount to passing off or misleading conduct under the Trade Practices Act. Cadbury subsequently sought a new trial on appeal before the Full Federal Court of Australia. However, the court held that justice would be best served if there was a further hearing before the primary judge, Justice Heerey, who would consider Cadbury's expert evidence. Justice Heerey, had previously ruled that the expert evidence of Cadbury was not admissible as it did not amount to specialised expert evidence.

On 11 April 2008, after considering evidence adduced by three marketing experts, Justice Heerey stated that the experts had a "uniform lack of practical experience in the retail confectionery market". Though Cadbury through its expert and other evidence, alleged that consumers would be confused or caused to wonder whether chocolates sold in purple wrappings in Darrell Lea shops were those of Cadbury, Justice Heerey noted that the reasonable consumer could think along the following lines

"Purple makes me think of Cadbury chocolate. But I know that other chocolate maker's products such as Violet Crumble use purple. So Cadbury does not have a monopoly in the use of purple for chocolate. Seeing chocolate in a purple wrapper with Darrell Lea's name on it in a Darrell Lea shop does not make me think it comes from Cadbury."

Justice Heerey, also noted that conduct which resulted in mere confusion or gave the reasonable consumer "cause to wonder" did not amount to misleading or deceptive conduct or conduct which amounted to actionable passing off.

His Honour had therefore come to the conclusion that the evidence adduced before him did not support a finding in favour of Cadbury for either of its claims. In fact, his Honour stated "I am not persuaded that Darrell Lea, in using the colour purple, has passed off its business or products as those of Cadbury or contravened the Trade Practices Act".

Where to from here?

It has been widely reported in the Australian press that Cadbury intends to Appeal the decision so the battle may continue.

This decision illustrates the tension which exists between large corporations who seek to extend their proprietary rights from names and logos to the packaging and get up of their products and the right of all traders to package their goods as they like, particularly when other traders have previously utilised similar packaging and get up.

The Australian Trade Marks Office in April 2006, granted trade mark registration to Cadbury for a particular shade of purple for block chocolate and boxed chocolates following Trade Mark Opposition proceedings instituted by Darrell Lea. Darrell Lea lodged an Appeal with the Federal Court of Australia as against the Trade Mark Office decision. The matter is yet to be determined.

We will keep you informed as to further developments in respect of chocolate and the colour purple.