Gotalk forced to compensate consumers for the actions of its telemarketers
Hoy Mobile v Allphones: Lessons for mobile phone distributors
Policing trademark use on the internet: Tiffany v eBay
Nine Network v Ice TV: the copyright protection debate continues
Recent developments in the domain name sphere
Privacy: Lessons from recent Case Notes
Back page Bytes #8: Representations and section 52 risk
Feedback
eBay and PayPal: Public Benefit? eBay International AG's proposal to limit the payment processing options for sales on eBay.com.au was controversial. After months of very public debate on the public benefits and detriments of the proposal, it has been abandoned.
eBay issued a statement on 3 July 2008 indicating that it had withdrawn its exclusive dealing notification to the Australian Competition and Consumer Commission (ACCC) and confirmed that all existing payment methods will continue.
Exclusive Dealing Section 47 of the Trade Practices Act 1974 (Cth) (TPA) prohibits exclusive dealing, including the supply by a company of goods or services on condition that the purchaser will not acquire goods or services from a competitor of the company or a competitor of one of its related bodies corporate. Some forms of exclusive dealing, such as that described above, are prohibited only if the conduct in question has the purpose or likely effect of substantially lessening competition. Others are prohibited "per se", that is, regardless of their effect on competition.
Section 93 of the TPA permits companies to obtain statutory protection for specified exclusive dealing conduct which may otherwise contravene section 47 by notifying the ACCC of the conduct. The notification process differs depending on whether the conduct in question is "third line forcing" or other exclusive dealing conduct.
For the latter, the effect of notification is that the conduct will be deemed not to have the effect or likely effect of substantially lessening competition for the purposes of section 47 from the point at which the notification is lodged, therefore providing the entity engaging in the conduct with "immunity" in relation to that conduct for the purposes of section 47. The ACCC may withdraw that immunity by revoking the notification if it is satisfied that the conduct is likely to have the effect of substantially lessening competition and that the public benefit likely to result would not outweigh the detriment caused by the likely lessening of competition.
Print document Back to top
Baker & McKenzie
Notification eBay has withdrawn its exclusive dealing notification to the ACCC.
In this case, the conduct in question related to PayPal, a related body corporate of eBay that supplies online payment services.
eBay filed an exclusive dealing notification with the ACCC on 11 April 2008 proposing that:
• sellers on eBay must offer PayPal as one of their accepted payment methods;
• payments may only occur via PayPal, Visa/MasterCard processed by PayPal or payment on collection; and
• an exception would apply for the sale of large products, being cars, motorcycles, aircraft, boats, vehicles, trailers, trucks, services, real estate and businesses.
eBay argued that this would increase safety and security and lead to a better customer experience.
ACCC Draft Notice Benefits such as increased safety and security were weighed against reduction in consumer choice.
The ACCC received approximately 700 submissions, mostly critical of eBay's proposal. On 12 June, it issued a draft notice proposing to revoke the immunity which automatically applied to eBay when the notification was lodged.
The ACCC accepted that, on the information available, it appeared that eBay was implementing the conduct for the purposes of transaction security. However, the ACCC's draft view was that:
• eBay holds a substantial degree of power in the online marketplaces market in Australia; and
• the conduct in question:
− would allow eBay to leverage that power into the market in which PayPal operates (which was not fully defined);
− would have, or is likely to have the effect of substantially lessening competition in that second market;
− may result in detriment, including: The ACCC has reinforced the paramount importance of consumer choice.
• by preventing customer choice of their preferred payment method; and
• by reducing the incentive for other payment system providers to innovate; and
− may result in public benefit, including by providing increased dispute resolution for high value transactions.
The ACCC's overall draft view was that the substantial anti-competitive detriments outweighed any public benefits arising from the proposal. The ACCC stated that "consumers are in the best position to determine whether, for their particular transaction, PayPal offers the best features in terms of security, fraud protection, dispute resolution and insurance, at the price offered."
Back to top 2
The ITC Edge, July 2008
The ACCC set a 3 July deadline for further submissions on the issue, after which it intended to issue a final ruling.
In response, eBay extended the deadline for the implementation of its proposal pending the ACCC's decision but continued to push towards implementation with suggestions it may negotiate with the ACCC and potentially consider court action. However, on 3 July as the ACCC's submission deadline was reached, and in the face of continuing negative public comment, eBay indicated that it was retracting its notice and abandoning the second stage of its policy.
Evidence showed rapid growth in the online retail industry.
Gotalk has agreed to make a court enforceable undertaking after an ACCC investigation determined that, through the actions of its telemarketing contractors, Gotalk had breached the fair trading provisions of the TPA.
eBay's 3 July statement confirmed that all existing payment methods will remain, but that all sellers on eBay.com.au would be required to offer PayPal as a payment choice.
Lessons Learned While eBay's retraction of its notice means that the legal issues in dispute here will not be pursued further at this stage, it is important to note the ACCC's view that consumer choice is of paramount importance and that any public benefit arising from conduct that limits that choice must be significant to swing the balance in favour of such conduct being permitted. It should not be assumed therefore, that the immunity obtained when the exclusive dealing notice is lodged will be allowed by the ACCC following examination.
The ACCC's draft notice indicated that the online retail industry has been growing at approximately 5%-10% per year over the last 5 years, and is currently earning approximately $15 billion in revenue. It is essential that businesses operating in this expanding space have a good understanding of both the market, and their own market power.
The information made available in this case about the current state of the online retail industry is therefore a valuable resource for online retailers. To access the materials that are available on the ACCC website click here.
Gotalk forced to compensate consumers for the actions of its telemarketers The Australian competition and Consumer Commission (ACCC) investigated telecommunications service provider Gotalk after receiving a series of complaints from consumers during the course of a Gotalk telemarketing campaign. It was alleged by consumers, who contacted the ACCC, that Gotalk's telemarketers represented that:
• Gotalk was calling on behalf of the consumer's current telecommunications carrier;
• Gotalk was an owner, subsidiary, agent or reseller of the consumer's current carrier;
• consumers were required to change their carrier to Gotalk; and
• the price and/or effect of the terms and conditions of Gotalk services, and changing to Gotalk, would not compromise any benefit they currently enjoyed for bundling multiple services with one carrier.
The lawfulness of a telemarketing campaign is the responsibility of the company and the onus is on the company to monitor what the telemarketing contractor says and does.
After investigating Gotalk's telemarketing campaign the ACCC concluded that, through the actions of its telemarketing agents, Gotalk breached the fair trading provisions of the Trade Practices Act 1974 (Cth) (TPA) prohibiting false and misleading representations and harassment or coercion.
The ACCC accepted court enforceable undertakings from Gotalk concerning the actions of its telemarketing agents, under section 87B of the TPA, under which Gotalk has, among other measures, undertaken to:
• compensate consumers who suffered any financial loss as a result of Gotalk's breaches of the TPA;
• write to customers who transferred their services to Gotalk since mid 2004 as a consequence of telemarketing, advising them of the conduct alleged by the ACCC to have affected Gotalk customers;
• publish advertisements in major newspapers informing the public of the agreed breaches and that Gotalk will pay compensation to those who have suffered financial loss as a result of them;
Gotalk must monitor the conduct of its telemarketing contractors and pay compensation to consumers who suffered any financial loss as a result of its breach of the TPA.
• establish and implement a trade practices compliance program for its employees and other persons involved in Gotalk's business to minimise the risk of further breaches;
• not acquire telemarketing services unless it is reasonably satisfied, in each case, that the supplier has the internal controls and compliance procedures necessary to ensure that any conduct concerning the promotion of Gotalk services complies with the TPA;
• use best endeavours to ensure the strict compliance by any telemarketer with scripts supplied by Gotalk for the promotion and sale of its products;
• cause the live monitoring and recording by a Gotalk representative of a random sample of customer calls; and
• provide the ACCC with recordings of calls to consumers and any other correspondence if the ACCC requests.
The ACCC will hold the company, not the telemarketer, responsible The ACCC Chairman Graeme Samuel has warned that "Australian businesses using outsourced telemarketers must control what their agents are doing" and "[u]ltimately, if the telemarketers breach the law, the business will be held responsible".
These comments emphasise that companies who rely on outsourcing a service, such as telemarketing cannot 'pass the buck' or attempt to hide behind its contractors. The Gotalk example demonstrates that a company needs to be mindful of its contractors' actions and ensure that contractors act in accordance with the directions they are given. A failure to do so may expose a company to liability for unlawful conduct, even though the company has not endorsed the conduct.
Back to top 4
The ITC Edge, July 2008
Companies must monitor telemarketers The Gotalk experience demonstrates that the ACCC will prosecute companies who fail to control their telemarketers. In addition, recent developments in the law dealing with telemarketing has given the ACCC teeth to prosecute companies for unlawful telemarketing practices, regardless of whether the company conducts the telemarketing themselves or outsources it to contractors.
A company must ensure its telemarketing contractors act in its best interests, and in accordance with its directions.
Companies utilising telemarketing, should take precautions to safeguard against breaches of the TPA and other laws, such as the Do Not Call Register Act, regulating telemarketing.
In order to minimise risk, it is imperative that companies ensure telemarketing contractors act in accordance with the best interests of the company and do not act outside the scope of their instructions. Ensuring the lawfulness of the telemarketing campaign is the responsibility of the company and the onus is on the company to monitor what the telemarketing contractor says and does.
Companies must ensure that telemarketers comply with legal obligations During the Gotalk telemarketing campaign, the complaints made to the ACCC against Gotalk primarily related to Gotalk's telemarketers conduct, which was alleged to be false, misleading, and deceptive conduct in breach of sections 52 and 53 of the TPA. There were also claims that Gotalk, through its telemarketers, had harassed and coerced consumers under section 60 of the TPA.
In order to avoid liability, it is best practice to ensure that all aspects of a telemarketing campaign comply with the TPA, such as by vetting scripts to ensure that consumers are being provided with true and accurate descriptions of the products and/or services being promoted to them.
In addition, companies who rely on telemarketing must be aware of their obligations under the Do Not Call Register Act 2006 (Cth) (DNCR Act) and other laws regulating telemarketing, such as the Fair Trading Acts in certain States.
Measures to protect yourself and your business Any company utilising telemarketing, whether through a contractor or on its own, should take precautions to safeguard itself against breaches of the TPA, the DNCR Act and any other laws regulating telemarketing. Possible measures that may be used to minimise risk include:
• recording both successful and unsuccessful telemarketing calls to avoid conduct that may amount to harassment or coercion.
Back to top 5
Baker & McKenzie
Hoy Mobile v Allphones: Lessons for mobile phone distributors The recent Federal Court decision of Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) 2008 FCA 810 concerned a souring relationship between Allphones and a dealer/franchisee. The case highlights:
A business' own conduct may prevent it from exercising a right to terminate.
The agreement was not updated to keep up with changes to the commission structure.
• the challenges of managing distribution arrangements in the highly competitive mobile sector, in which plans and commissions are constantly adjusted to meet competitive pressures;
• the danger of over-reacting to poor dealer behaviour or imposing conditions on dealers that are in addition to the agreed contract terms; and
• that a business' own conduct may prevent it from terminating a dealer who has engaged in fraud.
Overview of the dispute In June 2003 Allphones granted Hoy Mobile a franchise for an Allphones mobile phone retail business. Over time a number of disagreements arose between Hoy Mobile and Allphones.
In August 2006 Allphones gave Hoy Mobile notice of termination for breach, on the basis that Hoy Mobile had engaged in fraud by unlocking and selling mobile phones and not accounting to Allphones for extra amounts earned from these sales.
Hoy Mobile admitted the fraud but claimed Allphones should be prevented from terminating due to Allphones' dishonesty. Allphones had concealed from Hoy Mobile and failed to pay it certain "commissions" which Allphones had received from mobile carriers based on sales made by Hoy Mobile. During the course of the franchise agreement, certain of the mobile carriers made changes to the commission structure, so that "bonuses" as well as "commissions" were payable. No amendments were made to the franchise agreement to reflect the new structure.
Allphones did not disclose to franchisees all payments that Allphones received based on sales by the franchisees. Allphones took steps to conceal this from franchisees through the payment directions it gave to mobile carriers and by making undisclosed changes to financial schedules issued on mobile providers’ stationery before forwarding them to franchisees.
When Hoy Mobile began querying whether amounts were being correctly paid there were already difficulties in the relationship. At a meeting to discuss the payments, Allphones' representative became abusive, overbearing and aggressive to Mr Hoy and threatened to take away Hoy Mobile’s signage and stock. On another occasion, an Allphones representative said that it would not lift a "hold" on Hoy Mobile’s commission, unless Hoy Mobile executed a new (and different) franchise agreement. Allphones had no contractual basis for the suspensions or for this demand.
Not all payments received by Allphones for franchisees' sales were disclosed to the franchisees.
Decision Rares J held that, each party was in breach and had acted dishonestly. Allphones had actively and deliberately concealed commission payments due to Hoy Mobile. The fact that a payment was labelled a "bonus" rather than a "commission" made no difference. Allphones had engaged in "calculated dishonesty".
Each breach was of such seriousness that the other party would ordinarily be entitled to terminate the franchise agreement. However, Rares J noted that a party who wishes to terminate must be ready and willing to perform at the time at which the right is sought to be exercised.
In this case, neither party passed this test. As a result, even though Hoy Mobile had engaged in fraud and the franchise agreement gave Allphones an express right to terminate due to Hoy Mobile's fraud, Allphones could not rely on its contractual right to terminate.
Although Hoy Mobile had engaged in fraud, Allphones could not rely on its contractual right to terminate.
Each party was hampered by being unable to produce evidence of agreed terms on important matters.
In addition, by placing Hoy Mobile's commission and stock on hold and demanding that it execute a new franchise agreement, Allphones had engaged in unjustified bullying and oppressive conduct. That together with its conduct in concealing commissions, amounted to unconscionable conduct in breach of section 51AC of the Trade Practices Act 1974 (Cth), which justified an order preventing Allphones from relying on the termination notice.
Hoy Mobile was unsuccessful in an argument that Allphones had elected to affirm the franchise agreement by continuing to treat it as a franchisee after it became aware of the fraud, because at all relevant times in the election period, Allphones had some but not full knowledge of the fraud. Rares J noted that Hoy Mobile could not complain that it was prejudiced by any delay by Allphones in exercising its right of termination when Hoy Mobile had not made full disclosure of its fraud to Allphones and had sought a delay to enable Hoy Mobile to explain its position.
Lessons Learned The decision provides key reminders for those entering mobile phone or similar distribution arrangements:
• A party is exposed to significant risk if the agreement does not reflect the key terms of the arrangement. The franchise agreement did not properly identify the agreed arrangements regarding commission or territory;
• The basis for charging must be clearly set out in the agreement. Allphones was found to have introduced a number of additional charges for which it had no basis under the agreement;
• Important communications should be confirmed in writing and retained. In a number of matters Rares J rejected the recollection of discussions and events put by representatives of the parties and there was little documentation to support any version of events. Each party was hampered by being unable to produce the signed version of the agreement and franchise disclosure document and critical emails;
Back to top 7
Baker & McKenzie
• Bullying and threatening behaviour will not be viewed favourably. In addition to refraining from overtly abusive behaviour, companies need to consider carefully their reasons for treating any one dealer or franchisee more harshly than the others (such as by withholding a commission or supply or not passing on a benefit passed onto others); and
For more information please contact: • A party will be prevented from enforcing a right of termination if it is itself in breach and not ready and willing to perform at the time it wishes to terminate. Although Hoy Mobile had clearly breached the agreement through selling unlocked phones and had engaged in fraud, Allphones’ conduct which was "every bit as dishonest", prevented it from exercising its rights of termination.
Conclusion While both parties in this case were at fault, Allphones’ own dishonest behaviour and aggressive conduct towards Hoy Mobile prevented Allphones from exercising what would have ordinarily been a clear right to terminate for fraud.
Policing trademark use on the internet: Tiffany v eBay Who should bear the burden of policing trademarks in internet commerce? In the US, the recent United States District Court case of Tiffany (NJ) Inc. and Tiffany and Company v. Ebay, Inc. (14 July 2008) suggests that the answer is the trademark holder. Trademark holder bears burden
of policing trademarks in internet commerce. This case revolved around the sale of counterfeit Tiffany silver jewellery on
eBay's online auction platform.
Tiffany argued that eBay was on notice that a counterfeit problem existed on its website and eBay therefore had a responsibility to proactively investigate and control the individual sellers who posted counterfeit items on eBay's website. Specifically, Tiffany argued that eBay had engaged in direct and contributory trademark infringement.
Direct trademark infringement The Court considered a two pronged test for trademark infringement:
1. whether Tiffany's mark was valid and entitled to protection; and
2. whether eBay's use of the mark was likely to cause confusion as to the origin of the goods.
As to the first point, it was easy to see the value and worth in affording the Tiffany trademarks protection. As to the second point, the Court considered the various ways eBay used the Tiffany marks to advertise the sale of Tiffany's products on its website. The marks may appear on eBay's home page, through communications with sellers and buyers, through lists of popular brand names and top search terms and finally through purchased sponsored link advertisements on Yahoo! and Google.
The Court held that eBay's use of the marks in each of these ways was permitted by the US doctrine of nominative fair use. This doctrine recognises the right of a trader in a branded product to use the product's brand name to accurately describe the product, so long as the trader does not imply an affiliation with the owner of the product and thereby create confusion. The Court held that eBay's use of the marks in no way suggested sponsorship or endorsement by Tiffany and that eBay only used so much of the marks as was reasonably necessary to identify the product:
eBay's use of the marks did not suggest sponsorship or endorsement by Tiffany. eBay only used so much of the marks as was reasonably necessary to identify the products.
Query whether law inadequate to protect trademark owners' rights in light of increasing internet commerce.
[T]he Tiffany name is what gives the jewelry the cachet it enjoys. Absent the Tiffany brand, a silver heart necklace or a silver bracelet with an ID chain would simply be a piece of jewelry instead of a symbol of luxury. Indeed, were eBay precluded from using the term “Tiffany” to describe Tiffany jewelry, eBay would be forced into absurd circumlocutions. To identify Tiffany jewelry without using the term Tiffany — perhaps by describing it as “silver jewelry from a prestigious New York company where Audrey Hepburn once liked to breakfast,” or “jewelry bearing the same name as a 1980s pop star” — would be both impractical and ineffectual in identifying the type of silver jewelry available on eBay.
Contributory trademark infringement Here, the relevant test was whether a person continues to supply its product to a person it knows or has reason to know is engaged in trademark infringement. The Court held that the relevant standard was whether eBay knew or had reason to know that a third party was infringing Tiffany's trademarks and subsequently continued to permit that party to list its items on eBay's website. It rejected that any lower threshold of responsibility of 'reasonable anticipation' or 'generalised knowledge' of any third party infringement applied to eBay.
Working in eBay's favour was the concession by Tiffany that eBay speedily responded to take down notices and since Tiffany's initial complaint to eBay, it had removed Tiffany advertising from its home pages, greeting pages and on Google and Yahoo!.
Other claims The Court also rejected Tiffany's alternate claims of unfair competition, false advertising and direct and contributory trademark dilution. In rejecting these arguments, the Court cited eBay's willingness to remove items or suspend sellers when it discovered counterfeit goods on its website and the defensive doctrine of nominative fair use.
Outcome In rejecting each of Tiffany's claims, the Court noted that as the law currently stands in the US, Tiffany must ultimately bear the burden of protecting its trademark. However, Tiffany and other significant trademark holders should take some comfort from the Court's further comments that "policymakers may yet decide that the law as it stands is inadequate to protect rights owners in light of the increasing scope of Internet commerce and the concomitant rise in potential trademark infringement". Considering this comment, it would not surprise many if this case is appealed.
Back to top 9
Baker & McKenzie
How would this case be decided in Australia?To date, no similar case has been brought before an Australian court. The law in Australia is therefore undecided on this issue.
Australia does have similar prohibitions to US law on the use of registered trademarks by anyone other than the registered owner or an authorised user of the trademark. Similar to the US doctrine of nominative fair use, under Australian law, where a mark is used in good faith and purely for description, such as to describe a characteristic, quality or function, there is no trademark infringement.
Therefore, the reasoning of the US court that the use of the word 'Tiffany' was reasonably necessary to identify the products on offer and that eBay's use of the marks only extended to describing the products should equally apply against any claim of trademark infringement in Australia.
However, given the subjective nature of this area of law and the fact that no similar case has yet been decided in Australia, it is not certain that an Australian court would decide this case the same way. In any event, even if the reasoning of the US court was followed here, in Australia the additional prohibition of misleading and deceptive conduct under the Trade Practices Act 1974 (Cth) may present further legal obstacles to the kind of trademark use in which eBay engaged.
Nine Network v Ice TV: the copyright protection debate continues Can copyright be relied upon to protect mere facts and if so, to what extent? The Full Federal Court's decision in Nine Network Australia Pty Limited v Ice TV Pty Limited [2008] FCAFC 71 fuels debate in Australia on this controversial issue.
At date of publication, Ice TV has applied for special leave to appeal to the High Court.
In its 8 May 2008 finding that electronic programme guide maker Ice TV had infringed the Nine Network's copyright in its weekly programme guide, the Court:
• reversed Bennett J's decision in August 2007 in favour of Ice TV. (See Headlines November 2007);
• clarified the scope of copyright protection for compilations; and
• reviewed the relevant test for infringement of copyright.
Background The Nine Network creates a weekly schedule of its programming (Weekly Schedule). The Weekly Schedule contains time and title information for all programming in one broadcast week. It also incorporates programme information and synopses.
Nine provides the Weekly Schedule to a number of programming aggregators including HWW Limited, eBroadcast Australia and Pagemakers Pty Limited (Aggregators). The Aggregators incorporate the Weekly Schedule into various television guides which contain the programming schedules for all free to air broadcasters. These guides are published in print (eg TV Week), online (eg yourtv.com.au), as mobile phone content services, and as an electronic programme guide (EPG) via Foxtel.
Ice TV launched its own EPG for free to air television. Ice TV's EPG can be used with personal video recorders (PVRs) and computer based media centres which facilitate the viewing of digital television through a computer. In addition to their time shifting capabilities, PVRs typically enable viewers to "skip" or fast forward through advertising in recorded programming which, in turn, has the potential to adversely impact the advertising revenue generated by free to air networks.
Bennett J's decision While it was common ground that Nine owned copyright in the Weekly Schedule, Bennett J held that the Weekly Schedule as a whole was the relevant copyright work. This was significant because Nine then needed to establish infringement of the Weekly Schedule as a whole (and could not establish infringement by claiming, for example, that a component of the schedule which had been reproduced by Ice TV was a separate copyright work).
Bennett J held that the Weekly Schedule as a whole was the relevant copyright work.
In addition, the Weekly Schedule did not enjoy copyright protection because of its literary merits but rather as a compilation of factual information. Compilations of this kind expressly qualify for copyright protection as original literary works under the Copyright Act 1968 (Cth). It has been long established that such protection exists to protect the skill and labour of the author of the compilation.
Justice Bennett identified two types of skill and labour in the creation of the Weekly Schedule:
• the skill and labour of selecting and arranging the programmes to be shown on the Nine Network to attract viewers; and
• the skill and labour of drafting the synopses, selecting and arranging additional information and recording all the information into documentary form.
Bennett J held that the "time and title" information was not a substantial part of the whole compilation and therefore there was no copyright infringement.
Importantly, Justice Bennett held Nine's programme selection was not relevant to the compilation once the Weekly Schedule was prepared. Because of this finding, Justice Bennett confined her consideration of copyright to the labour and skill relevant to the arrangement and content of the schedule itself (eg a comparison of the Schedules themselves). As the synopses prepared by Ice TV
Back to top 11
Baker & McKenzie
for its guide were different from those prepared by Nine for the Weekly Schedule, there was no infringement arising from the synopses.
This meant that the principal similarity between the schedule was the "time and title information" in the respective schedules (eg both schedules stated that the 6pm Network Nine news was on Channel 9 at 6pm). Crucially, Bennett J held that such "time and title" information was not a substantial part of the whole compilation and that therefore there was no copyright infringement.
The Full Federal Court Interestingly, the three judges of the Federal Court who decided this appeal were the same three judges who decided Desktop Marketing Systems Pty Limited v Telstra Corporation Limited [2002] FCAFC 112 which had been the most recent authoritative case in Australia on copyright protection for compilations.
The Full Court held that the preparatory work of programme selection should not be ignored for the purpose of assessing the skill and labour which is protected by copyright in a compilation.
The Full Court held that the correct approach is to determine whether the time and title information is an essential or material part of the work.
Expansive copyright protection for compilations provides defacto control over the subject of those compilations.
The Full Court in Nine v Ice held that the preparatory work of programme selection should not be ignored for the purpose of assessing the skill and labour which is protected by copyright in a compilation.
Indeed, the Court took the view that:
"the skill and labour in selecting and arranging programming should not be regarded as separate and discrete from the extremely modest skill and labour involved in setting down on paper the programmes already selected and presenting them in the form of the Weekly Schedule. The skill and labour expended by Nine were part of a single process leading to the creation of the copyright work".
The Court also held that Bennett J had erred in assessing whether the time and title information was "qualitatively more important" than the synopses when determining infringement. According to the Full Federal Court, the correct approach is to determine – irrespective of the relativities of particular content - whether the time and title information is an essential or material part of the work.
As the time and title information was of particular interest to potential viewers, and as the accuracy of the time and the information is essential to Ice's business model, the Court held that:
"Ice's use of time and title information, derived ultimately from the Weekly Schedules, involved the reproduction of more than a slight or immaterial portion of Nine's copyright work".
Implications The decision is generally consistent with the trend of Australian cases involving compilations. Our courts give priority to protecting the time and effort invested by the compiler ahead of concerns about the risk that expansive copyright protection for compilations provides defacto control over the facts or data which are the subject of those compilations.
As the Federal Court appeared to have protected the skill of Nine's programme directors in their programming selections (rather than the effort in compiling
factual information about the program), it raises real questions about the capacity, if any, for EPG makers to produce a competitive programme guide. For example, would copyright in a weekly schedule be infringed by a guide created solely from watching television? On this point, it should be noted that Ice TV did much more than crudely and slavishly copy the Weekly Schedule.
As a practical matter, any EPG maker in Australia will almost certainly have to deal with the free to air networks in order to obtain programme information or otherwise face the real risk of copyright infringement.
At the date of publication, Ice TV has applied for special leave to appeal to the High Court.
Recent developments in the domain name sphere In July there were two major developments in the domain name sphere that provide greater scope for organisations to use a broader range of domain names.
The first of these is the new policy which allows organisations to transfer Australian second level domain names for any reason. The second is the proposed introduction of a process that will allow organisations to apply for a large range of top level domain names, subject to the fulfillment of certain criteria.
New rules on domain name transfers A new policy on the transfer of .au domain names (New Policy) took effect on 1 June 2008. It has replaced the Transfer (Change of Registrant) Policy dated 12 July 2004 (Old Policy).
Old Policy Broadly speaking, the Old Policy was designed to prevent cybersquatting, domain or name hoarding and speculative behaviour. A domain name could only be sold or transferred to a new registrant if one or more of the following circumstances applied:
Old Policy on Domain Name transfers no longer apply.
• the registrant sold part or all of its business operations or assets or assigned part or all of its intellectual property rights to the new registrant;
• the registrant ceased to exist and the domain name passed to the new registrant by operation of law;
• the registrant and the new registrant were legal entities belonging to the same group of related entities;
• the registrant held the domain name licence as agent of the new registrant;
• the registrant was ordered to transfer the licence to the new registrant by an arbitrator, tribunal, court or legislative body; or
Back to top 13
Baker & McKenzie
• the registrant agreed to transfer the domain name licence to the new registrant in settlement of a dispute.
In addition to the above, the new registrant was required:
• to satisfy the normal eligibility and allocation rules for the domain name; and
• not to breach the Australian Domain Name Administrator's (auDA) policy prohibiting the sale of domain name registrations or the transfer of a proprietary interest in the registration.
The review recommending change to the Old Policy On February 2007, the auDA Board established the 2007 Names Policy Panel (Panel) to consider whether registrants should be allowed to sell their .au domain names. Following public consultation, on November 2007, the Panel recommended that:
• the registrant transfer policy be relaxed to allow a registrant to transfer its domain name licence to another eligible entity for any reason; and
• the auDA conduct a two year review of the new transfers policy.
Its main rationale was to allow people to access domain names that would not otherwise be available and allow the transfer of domain names to those who have the best use for them.
The Panel suggested that the two year review consider:
• the total number of domain names transferred and the number of times individual domain names are transferred;
• secondary market pricing; and
• whether there has been any increase in complaints and disputes over domain names.
These recommendations were approved by the auDA Board on December 2007.
New Policy The New Policy took effect on 1 June 2008. It removes the limit on the circumstances in which domain names may be transferred. Upon the transfer of the domain name, the new registrant will be subject to the normal eligibility and allocation rules, including the .au Dispute Resolution Policy.
Domain Names may be transferred for any reason after six months.
The main restrictions on a sale or transfer under the New Policy are:
• domain names cannot be registered for the sole purpose of resale or transfer to a third party;
• a domain name cannot be transferred for the first six months after it is registered. This restriction does not apply to domain names that have been renewed or previously transferred. An organisation can apply to the auDA for authorisation to transfer a licence to a domain name within the first six months in certain circumstances, such as where a
Back to top 14
The ITC Edge, July 2008
court orders the transfer or where the registrant and the new registrant are legal entities belonging to the same group of related entities;
• the new registrant must comply with normal eligibility and allocation rules for .au domain names; and
• the transfers will be processed by the registrar for that domain name using a standard transfer form. The registrar for the domain name may charge a fee for the transfer.
For a full copy of the New Policy, click here.
Impact of the New Policy The New Policy will allow organisations to more easily transfer and sell their licence to a domain name.
Organisations should regularly review their .au domain names to ensure they have registered all names they require in their business.
Proposed release of new top level domain names.
Organisations with a strong brand name or who are in a particular location, industry or who wish to reach non-english speaking markets should take advantage of this opportunity.
On the flip side, the New Policy makes it easier for organisations to register and sell domain names that may be similar to an organisation's registered domain names. For example, an organisation may register the domain name www.organisation.net.au then, after six months, sell its licence to that domain name for any reason. In this case, the organisation who owns the licence in the domain name www.organisation.com.au may (among other recourse) commence proceedings under the auDA Dispute Resolution Policy which would require the organisation to show that (a) the domain name www.organisation.net.au is identical or confusingly similar to a name, trademark or service in which it has rights, (b) the new registrant has no right or legitimate interest in respect of the domain name, and (c) the domain name had been registered or subsequently used in bad faith.
Therefore, as the transfer and sale of domain name is easier under the New Policy, it is important that organisations regularly review their .au domain names to ensure that they have registered all the names they require in their business.
New global domain names approved for implementation Presently, organisations have a limited range of top level domain names (e.g. ".com" and ".org") and country level domain names (e.g. ".com.au") from which to choose. On 26 June 2008, the Internet Corporation for Assigned Names and Number (ICANN) Board approved the recommendation of the Generic Names Support Organisation (GNSO) to introduce new generic Top Level Domain names (gTLDs).
The new gTLDs will consist of new and generic ASCII based top level domain names (TLDs) as well as internationalised TLDs which will allow TLDs to be in languages such as Arabic or Chinese.
Implication for organisations The introduction of new gTLDs will allow organisations to select TLDs that best express the nature of their businesses or that are more appropriate for their customers. This will be particularly useful for organisations that:
• have established brand names or are located in a particular geographic area (e.g. ".pepsi" or ".sydney");
• are in a particular industry (e.g. car retailers may choose the TLD ".car" or matchmaking organisations may choose the TLD ".love"); or
• that wish to reach non-English speaking markets such as China, as TLDs will be able to be in foreign languages.
Draft Implementation Model The June 2008 ICANN Board meeting discussed a model outlining the process for introducing new gTLDs (Draft Implementation Model) to be further developed and detailed.
The Draft Implementation Model had the following components: Third parties may object to application for certain top level domain names. • Application Period (a period in which applicants apply for a particular
TLD);
• Evaluation Processes (which involved an evaluation of the proposed TLD and the capabilities of the applicant); and
• Delegation & Approval Process (which involved processing and entering into of a contract with the applicant and ICANN Board approval).
The Draft Implementation Model includes a process to enable third parties to object to proposed TLDs. In particular, applications will be able to be objected to on any of the following four criteria:
• string confusion;
• existing legal rights;
• morality and public order; or
• community objection (such as the interests of religious organisations, geographically based communities and indigenous groups).
The model suggests that disputes will be handled by independent, internationally-recognised dispute resolution providers.
What's next? The plan is for applicants to be able to start applying for the new top level domain names in mid 2009. The Draft Implementation Model is to be reviewed and developed further, to
enable introduction of new gTLDs on the following timeline: For more information please contact:
July to September 2008: Policy approved. Dispute Resolution Providers retained.
October 2008 to June 2009: Global Communication Campaign in relation to the introduction of new gTLDs.
October to December 2008: Draft Request for Proposal (which provide applications with a step by step roadmap from application to approval) issued.
January 2009 to March 2009: Final RFP issued.
Back to top 16
The ITC Edge, July 2008
April 2009 to June 2009: Application launch. It is expected that, during this period, applicants may start applying for domain names.
Though we can be guided by the Draft Implementation Model, much of the detail of the actual process for introducing new gTLDs has yet to be developed.
Privacy: Lessons from recent Case Notes Each year since 2002 the Privacy Commissioner has published Case Notes summarising complaints relating to alleged breaches of the Privacy Act 1988 (Cth) (Act). Notably, these can include interpretations of the Act in new circumstances, can be illustrative of systematic issues, or can illustrate how the Commissioner will apply the law to a particular industry or subject area.
The new Case Notes provide guidance on compliance and how to respond to complaints and requests for access.
The Notes consider when an organisation is entitled to withhold personal information, and give examples of improper disclosures of personal information.
The Commissioner has issued 18 new Case Notes this year. These Notes provide guidance for organisations on how to comply with the Act and on how to respond to complaints and requests for access to personal information.
New Case Notes Interesting Case Notes recently published include:
• Request for access: A private school was asked by the subject of an investigation by the school to disclose personal information it held about them. The school refused to give the complainant access to information about other individuals because it was concerned that those other individuals might be the subject of reprisal. The Commissioner found that the school was entitled to withhold that information on the basis that the disclosure would have had an unreasonable impact on the privacy of those other individuals.
• Improper disclosure: Following receipt of a claim from an insured, who had been involved in a car accident, an insurance company disclosed the insured's contact details to a third party who was involved in the accident who subsequently contacted the insured to discuss the claim. The insurance company acknowledged that it had inadvertently disclosed the insured's contact details to the third party and resolved the complaint by informing the insured that the third party would not contact the insured again and by providing a written apology.
• Improper disclosure: The complainant's former spouse submitted an application form to a government agency which included the complainant's address. The agency inadvertently applied the spouse's address to the complainant's records, which resulted in mail intended for the complainant being sent to the spouse. The complainant and spouse were involved in a legal proceeding relating to the information that was disclosed. The agency acknowledged that it had interfered with the complainant's privacy, apologised to the complainant, and offered to pay part of the legal expenses that were incurred as a result of the disclosure.
• Giving notice when collecting information: The complainant was required to provide personal information to a contractor to a government agency as a condition of entry onto premises. The Commissioner agreed that the collection of the information was integral to one of the contractor's lawful functions, but found that the contractor did not provide the individual with adequate notice of the purposes for which the information had been collected or for which it would be used or disclosed. The contractor amended its information collection notice to include this information.
The Notes also examine what information must be provided to individuals when their personal information is collected, what steps an organisation must take to protect information, and when disclosure is permitted by law.
• Security and improper disclosure: An employee of a government agency accessed the records of a former employee of the agency, to determine the complainant's address. The complainant alleged that they subsequently feared for their safety and had to change their name and address. The Commissioner found that the agency had not taken reasonable steps to protect the complainant's personal information and had used the complainant's personal information for a purpose other than that for which it was collected. In response, the agency informed the Commissioner that it had improved its security systems and terminated the employment of the relevant employee.
• Disclosure permitted by law: Two financial institutions each reported separate cash transactions conducted by the complainant, along with the complainant's name, address, date of birth and occupation, to AUSTRAC in accordance with Commonwealth legislation relating to financial transactions reporting. One of the financial institutions incorrectly reported the complainant's occupation. The Commissioner found that both financial institutions were entitled to make the disclosure to AUSTRAC because this disclosure was required to be made by law. The financial institution which had reported incorrect information apologised to the complainant, arranged for AUSTRAC to correct its records, and corrected its own records.
Helpful tips on compliance Case Notes published by the Commissioner demonstrate that: Previous Case Notes also give
helpful tips on: • how the National Privacy
Principles are applied in practice; and
• how to handle requests for access to personal information.
• where it is feasible to do so, an organisation should monitor access to personal information held on its computer systems where this information can be accessed by its employees, particularly in an environment where it holds sensitive information, such as financial information;
• a document that may otherwise be subject to the "employee records exemption" will not be subject to the exemption if it is disclosed to an organisation's legal counsel or for another purpose that is not directly related to the employee's employment;
• where an organisation in Australia collects personal information to enter it into a database that is held overseas, this will constitute collection and inclusion of that information in a record in Australia, even if only momentarily, and the organisation must comply with its obligations under the Act in relation to this information; and
• an organisation must comply with its obligations under the Act in relation to personal information it holds in a record, even if the information is otherwise publicly available.
Back to top 18
The ITC Edge, July 2008
Helpful tips on handling requests for access Guidance from Case Notes relating to handling requests for access to personal information includes:
• the factors that are relevant to assessing whether an organisation is entitled to refuse to provide access to a document on the basis that it would have an unreasonable impact on the privacy of others include:
− whether the individual would expect that the information would be disclosed to the third party;
− the extent of the impact on the individual's privacy and whether any public interest reasons for providing access to the information outweigh any expectation of confidentiality; and
• if a document contains personal information relating to another individual, if feasible, the organisation should mask that information and provide access to the masked document rather than withholding access to the entire document;
• when determining the fees to charge, an organisation should take into account factors such as the number of pages in the record, the method of storage and the retrieval process involved, the cost likely to be incurred in providing access, and the individual's capacity to pay for access; and For more information please contact:
• the costs of obtaining legal advice regarding an organisation's obligations under the Act should not be passed on to an individual.
Practical guidance for organisations As well as providing practical guidance, the Case Notes also highlight that one of the Commissioner's functions is to endeavour to resolve complaints by conciliation and that one factor the Commissioner considers when investigating a complaint is what steps the organisation has taken to attempt to resolve the complaint. This means any conciliatory steps taken by an organisation after it first receives a complaint may be looked upon favourably by the Commissioner during the investigation process.
Back to top 19
Baker & McKenzie
Back page Bytes #8: Representations and section 52 risk Back page Bytes, a regular feature of The ITC Edge, gives practical reminders and drafting tips for everyday use. This eighth edition provides practical reminders concerning the impact of section 52 of the Trade Practices Act 1974 (Cth) (TPA).
A broad prohibition Section 52 of the TPA prohibits "conduct that is misleading or deceptive or is likely to mislead or deceive".
The prohibition on misleading or deceptive conduct applies to all aspects of business.
Although it is contained in Part V of the TPA (consumer protection), its application is not limited to consumer protection. The section applies to all aspects of trade and commerce: from advertising, to the acquisition or supply of goods or services, to the sale of a business.
In addition, section 53 of the TPA prohibits certain types of false or misleading representations. Importantly, unlike the case with section 52, a breach of section 53 is an offence. Prohibited representations include:
• false representations that goods or services are of a particular standard, quality, value or grade;
• representations that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have; and
• false or misleading representations with respect to the price of goods or services.
Where the relevant conduct is a representation as to a future matter, section 51A deems a representation to be misleading unless the person who made the representation had reasonable grounds for making it.
Liability for breach A breach of sections 52 and 53 may result in a claim for damages.
A person who suffers loss or damage by conduct in breach of section 52 or section 53 may recover the amount of the loss or damage against the corporation which engaged in the conduct, or against any person involved in the contravention. Causation is essential to a claim for damages under section 82. There must be a nexus between the relevant conduct and the loss or damage suffered.
In addition, a breach of section 53 may give rise to fines of up to AUD1,100,000.
What will amount to a breach? Whether conduct is misleading or deceptive will depend on the particular circumstances in each case and the context in which the conduct occurred. Bear in mind that:
• Target audience: The relevant conduct must be assessed with regard to its effect on reasonable members of the relevant section of the
Back to top 20
The ITC Edge, July 2008
public. The fact that a person has actually formed an erroneous conclusion based on the conduct is not conclusive that conduct is misleading or deceptive;
• Silence: Silence may amount to misleading or deceptive conduct, although the courts are generally careful not to impose obligations contrary to ordinary commercial expectations; and
• Confusion: The fact that conduct causes confusion will not mean the conduct is misleading or deceptive. There must be a greater level of error than mere confusion.
The following factors are not required for conduct to be misleading or deceptive:
A corporation may breach section 52 even when it did not intend to mislead or deceive.
• Intent: Whether a corporation intended to mislead or deceive or took reasonable care is irrelevant. A corporation which has acted honestly and reasonably may still be in breach; and
• Actual erroneous conclusion: Whether anyone was actually misled or deceived is irrelevant to whether conduct is in breach, although it will be relevant to an assessment of damages.
Managing risk Disclaimers and exclusion clauses do not avoid the operation of section 52 if there was a representation on which a person relied. If misleading or deceptive conduct has induced a party to enter into a contract, the fact that the contract contradicts the conduct will not negate the inducement. Whether a particular provision or disclaimer negates the misleading nature of the relevant conduct is a question of fact. However, boilerplate disclaimers are most unlikely to have any effect.
Disclaimers will often be ineffective.
Misleading conduct can be qualified or corrected, but for a qualification or correction to be effective it must be contemporaneous, sufficient and prominent.
Processes can be designed to minimise the risk of breach.
Contract negotiation and management processes should be designed to minimise the risk of breaching section 52. This should include requiring those involved in the contracting process to:
• clearly identify and record key representations made; For more information please contact:
• draw the other party's attention to superseded, modified or corrected information;
• ensure that the other party confirms in writing exactly what it has relied upon in entering into the relevant arrangement (and that nothing else has been relied upon); and
• employ other techniques to ensure that contracting parties do not rely on conduct (such as requiring other parties to make their own inquiries and carry out appropriate due diligence).
Back to top 21
Baker & McKenzie
Baker & McKenzie’s Australian information technology and communications practice provides complex ITC transactions, ecommerce, outsourcing, telecommunications and media advice, working closely with our 14 offices in Asia and 70 offices internationally.
