White SW Computer Law Intellectual Property, Information Technology & Telecommunications Newsletter - March 1998

The owners of a web site should carefully consider their liability for copyright infringements, which occur on their web site. In the US district court case of Playboy Enterprises, Inc v Webbworld, Inc, Webbworld, who operated a web site from which you could download R Rated images, was sued for copyright infringement by Playboy. It was proven to the Court that Webbwolrd had copied 62 images, which had previously appeared in Playboy publications. The Court awarded damages in Playboy's favour in the sum of $310,000.00 (62 x $5,000.00) as a result of the copyright infringement. Webbworld's principal operators, Bentley Ives and Benjamin Ellis were found to be vicariously liable for the actions of Webbworld and it was ordered that they be held jointly and severally liable to Playboy for the payment of the $310.000 damages. WebbWorld, Ives and Ellis were unable to rely upon defences, which are available to ISPs in the US, as they charged a monthly access fee which did not include internet access at large. Similar laws apply in Australia with respect to liability for copyright infringement. Company directors should not operate under the misapprehension that they are protected by the corporate veil against legal actions for copyright infringements initiated against their company.

To be accepted for registration in Australia, a trade mark must be considered by the trade mark examiner to be capable of distinguishing the applicant's goods or services from those of other traders. In deciding whether the trade mark is distinguishing, the meaning of the words in the trade mark as used in ordinary language will be examined in addition to whether the combination of words is an unusual combination or not. The registration of trade marks is not intended to enable one party to register a trade mark which would prevent other parties from using descriptive words in their trade marks because of a potential for trade mark infringement.

If the trade mark is found to be non-distinguishing, the applicant may present further evidence to the examiner which details the applicant's use of the trade mark. If the trade mark has been widely publicised and used and as a result is seen to identify the applicant's goods and services, the registration of the trade mark may be allowed to proceed.

In the examination of a trade mark application made by Crain Communications for the trade mark “Automotive News”, it was considered that the trade mark was non distinguishing. Crain put forward a submission that due to the advertising expenditure spent on publicising the trade mark and the duration of the use of the trade mark in Australia, the trade mark should be considered to be so well known as to be distinguishing. The Registrar who heard Crain's submission found that there was insufficient evidence as to what proportion of the $1 million+ worldwide annual advertising budget was actually spent in Australia and that there was only a small number of Australian subscribers and so did not accept Crain's submissions that its use of the trade mark in Australia had been substantial. In some cases, the addition of a logo to a “word” mark may increase the likelihood of your trade mark being accepted for registration. If you are considering applying for the registration of a descriptive trade mark, you should ensure that you have sufficient evidence to present to the examiner to support the claim the your mark should be considered distinguishing due to, amongst other things, your substantial use of the mark.

Many employees have access to the Internet in the course of their employment and their use of this access is usually subject to little scrutiny. Employers should consider the importance of implementing and enforcing policies with respect to the use of Internet access and e-mail facilities. There have been a number of cases in which e-mails have been used as evidence in Court proceedings. It is difficult to ensure that copies of e-mails are not stored long term as enduring evidence of representations made by your employees, particularly when e-mails are sent to newsgroups which may provide an archive of all messages received. The level of access to the Internet should be considered as completely unrestricted use may expose an employer to costs incurred by an employee. In the US matter of Quad Graphics, Inc v Southern Adirondack Library System ("SALS"), Quad discovered that an employee had incurred over US$23,000 in long distance telephone charges as a result of accessing an electronic information service provided by SALS for their personal use. Quad was not able to determine from its records which employee had incurred the expense and applied to the Court to order SALS to disclose the identity of the employee. The Court found that it was not permitted, under US legislation, to breach the confidentiality of a library's records. In some cases, you may apply to the Court for an order that a party make preliminary discovery before legal action is commenced. If the Court considers that preliminary discovery will assist the parties to settle the dispute, or to ascertain the correct parties for litigation such an application will generally be granted, however, the confidentiality of the information being requested must always be considered.

It is important to remember that although copyright laws may not protect the subject material in a photograph, surreptitious taking of photographs may be considered to be a breach of confidence. In the UK matter of Creation Records and Ors v News Group Newspapers Ltd, a journalist for The Sun newspaper had been sent as a guest to a hotel where the musical group Oasis was conducting a photographic shoot for a forthcoming album. Security guards were employed to ensure that the public were only permitted to take photographs of the members of the group or themselves with members of the group but not of the set being used. The Sun's photographer was able to take photos surreptitiously of the set, which were subsequently published by The Sun in poster form. Creation Records claimed that the photographs infringed its copyright and that the taking of the photographs was a breach of confidence. The Court held that there was no copyright that subsisted in the set used, however it agreed that there had been a breach of confidence and so granted an injunction, which restrained further publication of the photograph. It is interesting to note that the Court considered (subject to UK laws) that there may have been a copyright infringement had the set used incorporated movement, story or action as a dramatic work; or had there been a sculpture used in the set; or had the scene been a result of the exercise of craftsmanship; or had the set been created as a collage.

It is an important consideration when entering into an agreement to state which legal jurisdiction governs the agreement. If an Australian company enters into an agreement with an international firm, it could find itself a party to legal proceeding commenced overseas, which will be costly to defend. The differences in the laws of each state of Australia and the increased costs of conducting legal proceedings interstate are reasons why an agreement should specify that the agreement is subject both to the laws of Australia and the state in which the company is located.

Equally important is the decision made about where legal proceedings are commenced. In a recent Victorian Supreme Court matter of Discovision Associates v Distronics, the Court granted an application by Distronics that the proceedings be stayed pending the hearing and determination of overseas proceedings. Discovision is a partnership comprised of subsidiaries of Pioneer Japan and the overseas proceedings involved issues including alleged non-payments of royalties, alleged mis-use of patents and alleged anti-trust activities. The proceedings initiated in Victoria were in relation to alleged non-payment of royalties in addition to damages. The Court granted the stay of proceedings requested by Distronics because, amongst other reasons, the question of whether the royalties were in fact payable depended upon the outcome of the overseas litigation and because the proceedings had little connection with the State of Victoria other than the fact that Distronics was a Victorian resident company.