No infringement dispute, no appellate jurisdiction in hypothetical breach of contract claim

Authors: John J. Thuermer and Bart A. Gerstenblith (Finnegan)

Laboratory Corporation of America Holdings v Metabolite Laboratories, Inc., 599 F.3d 1277 (Fed. Cir. 2010)

Citation: Journal of Intellectual Property Law & Practice (2010) doi: 10.1093/jiplp/jpq144

An issue of patent law must be disputed in a suit based on state contract law in order for the Federal Circuit to have appellate jurisdiction.

Legal context

In this appeal from a declaratory judgment action in the US District Court for the District of Colorado, the US Court of Appeals for the Federal Circuit considered whether it had subject matter jurisdiction where the declaratory defendant's hypothetical breach of contract claim did not arise under federal patent law or raise a substantial question of patent law.


Competitive Technologies, Inc. (CTI) owned US Patent No. 4,940,658, which claimed a method for detecting folate deficiencies by assaying total homocysteine levels.

The license agreement

The license agreement at issue between Metabolite Laboratories, Inc. (‘Metabolite’) and Laboratory Corporation of America Holdings (‘LabCorp’) consisted of two licenses. The first was a patent license. Operating under a license from CTI, Metabolite sublicensed the patent to Hoffmann-LaRoche, Inc., which later became LabCorp. The sublicense covered four types of assays, including homocysteine assays, and required LabCorp to pay CTI royalties of 6% of its net sales for assays that infringed the patent.

The second license was a know-how license. Metabolite developed know-how consisting of protocols and software that enabled automated assay testing. Metabolite licensed its know-how to LabCorp in conjunction with the patent sublicense and received 21.5% of LabCorp's net sales of licensed assays as royalties. The license agreement defined ‘licensed assays’ as assays using ‘methods and materials falling within the claims of the licensed patents’. ‘Licensed patents’, in turn, was defined to include the patent. LabCorp did not have to pay know-how royalties if it used Metabolite's know-how on unlicensed assays or if LabCorp referred the assays to Metabolite for processing. Additionally, the license agreement provided that it could be terminated in-whole or in-part if LabCorp or another party developed a more profitable non-infringing assay.

Procedural history

In an earlier litigation between the parties (Metabolite I), Metabolite sued LabCorp for patent infringement and breach of the license provisions pertaining to homocysteine assays after LabCorp used a third-party assay and stopped paying royalties. LabCorp contended that its use of the third-party assays did not infringe the patent and were not therefore ‘licensed assays’ within the terms of the license agreement. The jury, however, found that LabCorp breached the license agreement because the third-party assays infringed the patent and LabCorp failed to pay royalties. On appeal (Metabolite II) the Federal Circuit agreed, finding that LabCorp's refusal to pay royalties constituted a material breach that could have terminated the homocysteine assay provisions of the license agreement. Thereafter, LabCorp outsourced the testing to a third party that had an independent license from CTI to perform the assays.

In the current case (Metabolite III), LabCorp sued Metabolite for a declaratory judgment that it did not breach the license agreement by using Metabolite's know-how and outsourcing the testing. LabCorp's declaratory complaint raised a contract claim and averred that the district court had diversity jurisdiction. In response, Metabolite filed several counterclaims. Thereafter the parties filed competing motions for summary judgment, although Metabolite chose to pursue only its breach of contract counterclaim.

On summary judgment, the district court determined that the only issue in the case was whether the know-how license survived the breach of the patent license. The district court found that, because the license agreement could be severed and terminated for individual licensed assays, LabCorp had terminated the provisions of the license agreement (patent and know-how licenses) pertaining to homocysteine assays by not paying royalties for the third-party assays (even though the other provisions of the license agreement may have remained in force because LabCorp continued to make royalty payments for the other licensed assays). Thus LabCorp's outsourcing of the homocysteine assays did not breach the license agreement since the provisions applying to that assay had been terminated. Accordingly, the court granted LabCorp's motion for summary judgment.


Metabolite appealed to the Federal Circuit. LabCorp filed a motion to transfer the appeal to the Tenth Circuit (the regional circuit court for cases originating in the District of Colorado), arguing that the Federal Circuit lacked appellate jurisdiction. The Federal Circuit denied LabCorp's motion but permitted the parties to address the jurisdictional issue in their merit briefs.

The majority opinion
A panel majority found that the Federal Circuit did not have jurisdiction over the appeal. The majority began by reviewing the scope of its appellate jurisdiction. First, 28 USC § 1295(a)(1) gives the Federal Circuit exclusive appellate jurisdiction over patent cases arising under 28 USC § 1338. Second, the Federal Circuit also has jurisdiction where a party's right to relief necessarily depends on the resolution of a substantial question of federal patent law: Christianson v Colt Indus. Operating Corp., 486 US 800 (1988). Examples of substantial questions of federal patent law include issues of inventorship, infringement, validity, and enforceability.

To determine if an action arises under federal patent law in the context of a declaratory judgment action the Federal Circuit looks to the hypothetical well-pleaded complaint that the declaratory defendant would have brought had it initiated suit. The majority concluded that because (i) Metabolite I and II determined that LabCorp infringed the patent and (ii) neither party disputed whether the outsourced assays infringed in Metabolite III, Metabolite's hypothetical complaint would have raised a breach of contract claim rather than a patent infringement claim arising under section 1338.

Additionally, the majority did not find that Metabolite's right to relief (for its hypothetical claim) necessarily depended on a substantial question of federal patent law despite the definition of ‘licensed assays.’ To prove its hypothetical breach of contract claim, Metabolite would not have to prove infringement because neither party argued that LabCorp's outsourced assays differed from the assays previously found to infringe. Thus, while breach of the license agreement was, on its face, conditioned on proof of infringement, this was not the typical ‘case within a case’ because infringement was established prior to the time of the hypothetical complaint (cf. Air Measurement Tech., Inc. v Akin Gump Strauss Hauer & Feld, LLP, 504 F.3d 1262, 1272 (Fed. Cir. 2007: proof of infringement required to prevail on a malpractice claim; US Valves, Inc. v Dray, 212 F.3d 1368, 1372 (Fed. Cir. 2000: proof of infringement required to prevail on a breach of contract claim). Consequently, the majority determined that Metabolite's claim did not depend on a substantial question of federal patent law and that the Court lacked appellate jurisdiction.

The dissent
Judge Dyk dissented on two independent grounds. First, under a ‘look through’ approach, Judge Dyk asserted that a claim, which implicates a prior judgment involving a patent, also arises under section 1338 based on a res judicata theory. Under that theory, Metabolite I and II provided the jurisdictional basis for the present appeal.

Second, Judge Dyk believed that Metabolite's hypothetical claim raised a substantial question of patent law because Metabolite I and II had not determined whether the outsourced assays infringed the patent and the parties disputed infringement at the time of the hypothetical claim. In his view, the majority improperly focused on a time after the filing of Metabolite's hypothetical complaint rather than at the time of filing as required by Supreme Court precedent. Thus he would have found these facts to present a ‘case within a case’ because Metabolite's hypothetical contract claim hinged upon whether the outsourced assays infringed the patent.

The majority's response
First, the majority distinguished the cases upon which Judge Dyk relied to support his ‘look through’ argument. In particular, the majority found that those cases were distinguishable from the federal question context of the present dispute before the Court. Second, the majority found that Judge Dyk improperly relied on a post-complaint document, the Final Pre-Trial Order, in Metabolite III to support his view that infringement was disputed, rather than focusing on the time Metabolite would have filed its hypothetical claim.

Practical significance

First, it may be beneficial to license unpatented proprietary information and patented technology separately. In particular, Metabolite might have structured the license agreement to provide know-how royalties that were not contingent on using the patented technology to avoid having to prove infringement as part of a breach of contract claim. Second, the decision reinforces the ongoing need to consider possible appellate venues when drafting complaints and responding to declaratory judgment actions. Ironically, although Metabolite appealed to the Federal Circuit in this instance, it is unlikely that Metabolite wanted to dispute infringement as it would then have to prove an additional element of its breach of contract counterclaim (ie that the outsourced assays fell within the definition of ‘licensed assays,’ and, thus infringed the patent). Third, the decision reiterates that the mere mention of a patent is insufficient, in and of itself, to confer Federal Circuit jurisdiction.

October and beyond

Subscribers to the printed hard-copy version of JIPLP are advised that the October 2010 issue has been shipped and, if they've not yet got it, they should be receiving it very soon. The contents of this issue can be viewed here.

Subscribers to the online version of JIPLP can read and enjoy some of the 16 articles, reviews and Current Intelligence notes that are destined for publication in November or beyond by clicking the Advance Access button here.

Non-subscribers can gain advance access too, on a pay-per-view basis.

Time for a Tsar?

The October 2010 issue of the Journal of Intellectual Property Law & Practice is now published. You can read the contents in full here. This month's Editorial, "Time for a Tsar -— and a Tsar for our time?", touches on a subject that is being increasingly discussed in jurisdictions that have taken note of recent events in the United States -- the appointment of a person to champion the needs of those industries which invest in intellectual property. It reads as follows:
"Time for a Tsar -— and a Tsar for our time?"

Does the government of a country with an open economy, based on principles of private investment in competitive industry, require the appointment of an IP Tsar?

The question does not admit of a single unqualified answer, since it is contingent on the identification of functions which the Tsar is to discharge and on the facts that these functions are not being discharged by other public offices or are being inefficiently discharged.
IP Tsar (or Tsarina?) Victoria Espinel
In the USA, the appointment of Victoria Espinel as IP Tsar last year raised initial interest, a little mirth, and not a little admiration. Since then, we have seen little. Even for a person who is expert in the field, to be newly appointed as IP policy coordinator for any large, IP-rich and sophisticated economy requires months of listening, learning, aggregating shared opinions, and balancing opposing ones. Ms Espinel's first strategic IP plan, unveiled this June, has received a mainly warm reception from IP rights owners but a less enthusiastic one from those who are not. This is predictable and owes less to the quality of the plan, or to the role of the Tsar, than it does to the fact that IP policy is always a balancing act between opposites. While it is not often a zero-sum game, many of its protagonists generally react as though it were.
While it cannot be argued that the brief, recent experience of a Tsar in the USA has much evidential or precedental value in other jurisdictions, there is no basis for rejecting the experiment—in the same vein or with local variations.

Let us list some of the things that an IP Tsar might seek to do. Since there is already a surfeit of IP policy-making and strategic advice in terms of the civil law, this list concentrates more on the criminal side:

* Identify and coordinate the various public sector bodies that deal with IP issues and seek to repair the functional deficiencies which are caused by failure of one part of the public sector to deal with another. For example, the police, administrative authorities, customs, and taxation officials must be synthesized and coordinated, so that, instead of getting in one another's way, they work efficiently together;

* Identify and improve the points at which public and private sector activity meet. Thus data protection laws should not be allowed to interfere in matters such as the identification of infringers, and the laws of evidence should not hinder the use of evidence obtained in criminal proceedings when subsequent civil proceedings are brought, and vice versa;

* Take steps to publicize the wrongness of the most clearly immoral infringing activity and to utilize the media more effectively in naming and shaming the most serious infringers;

* Work to improve the speed and the extent to which proven infringers are separated from their ill-gotten gains;

* Hit together the heads of the many petty fiefdoms of IP whose organizations appear to mimic or duplicate each others’ aims and efforts to combat IP infringement;

* Oversee a licensed profession of IP infringement bounty hunters who would, under the terms of an approved code of conduct, root out infringers on their own initiative and be rewarded on a scale relating to the social or economic damage inflicted;

* Stand up to the competition authorities and explain to them what it is that IP owners do, any why they do it, and insist that the formulation of competition policy should require the full and informed cooperation of IP owners as well as generic competitors and consumers.

While a case for each of these roles must be made in respect of each jurisdiction, and may not be necessary or appropriate in any given state, it is submitted that a strong argument may be made for a Tsar whose duties are based upon these roles, and others like them, in almost every IP-rich jurisdiction. If there is no such Tsar, let the government of each country that rejects the notion at least affirm that the deficiencies in IP enforcement and in the formulation of any sort of strategic policy either do not exist or are adequately addressed by its current legislative programme".

Validity of a ‘saisie-contrefaçon’ carried out after the expiry of the patent

Authors: Marianne Schaffner and Romain Viret (Linklaters)

Citation: Journal of Intellectual Property Law & Practice
(2010) doi: 10.1093/jiplp/jpq124

The Cour d'Appel de Paris recently held that a saisie-contrefaçon can be carried out after the expiry of the patent on which that saisie-contrefaçon is based.

Legal context

The law of 29 October 2007 implementing the Intellectual Property Enforcement Directive entered into force on 30 October 2007. It amended several provisions of the French Intellectual Property Code (IPC) including Article L. 615-5 which governs the saisie-contrefaçon (i.e. a measure for preserving evidence within the meaning of Article 7 of the IP Enforcement Directive) in relation to patents.

Article L. 615-5 was amended in several aspects. The most discussed change related to the time limit within which infringement proceedings on the merits are to be commenced after a saisie-contrefaçon has been carried out. A less discussed change related to the persons entitled to have a saisie-contrefaçon carried out. While Article L. 615-5 IPC used to provide that the right to a saisie-contrefaçon was granted to ‘the applicant or the owner of a patent’, it now provides that such right is available to ‘any person entitled to commence infringement proceedings’.


Daiichi Sankyo, the owner of a supplementary protection certificate (SPC) which expired on 10 August 2006, alleged that Sandoz had infringed its rights in its SPC by launching its generic drug as from July 2006 while the SPC was still in force. On 17 March 2009, the President of the Tribunal de Grande Instance de Paris ordered that Daiichi Sankyo be granted the right to have a saisie-contrefaçon carried out at the premises of Sandoz.

Sandoz subsequently requested that the saisie-contrefaçon order be withdrawn on the ground that the SPC on which the application was based was not in force when Daiichi Sankyo filed its application. In order to support its claim, Sandoz relied upon a much-debated decision of the Cour de Cassation of 29 January 2008. In that case, the Cour de Cassation held that ‘the applicant is required, not only to present the patent on which his application is based, but also to prove that this patent is in force’.

Relying upon the Cour de Cassation's ruling, the President of the Tribunal de Grande Instance de Paris held on 15 April 2009 that the saisie-contrefaçon order should be withdrawn on the ground that it could not be ordered if the intellectual property rights on which it was based were no longer in force when the application was filed. Daiichi Sankyo appealed.

The Court d'Appel de Paris held that what was to be taken into account was whether the intellectual property rights were still in force when the alleged infringing acts occurred. Having ascertained that the SPC remained in force until 10 August 2006 and that the measures sought by Daiichi Sankyo were limited to the period when the SPC was still in force, the Cour d'Appel de Paris overturned the lower court decision and dismissed Sandoz's application to have the saisie-contrefaçon order withdrawn.


The Cour d'Appel de Paris relied upon Article L. 615-5 IPC as amended by the Law of 29 October 2007 which provides that the right to have a saisie-contrefaçon carried out is granted to ‘any person entitled to commence infringement proceedings’ and not only to ‘the applicant or the owner of a patent’ as previously provided for under the former Article L. 615-5 IPC. On the day that it applied for saisie-contrefaçon, Daiichi Sankyo was entitled to commence infringement proceedings against Sandoz in relation to infringing acts committed prior to the expiration of its SPC, those acts being not yet statute-barred. Therefore Daiichi Sankyo was entitled under Article L. 615-5 IPC to have a saisie-contrefaçon carried out in order to allow it to prove infringing acts that occurred prior to expiry of the SPC.

The ruling of the Cour d'Appel de Paris seems to be consistent not only with Article L. 615-5 IPC as amended by the law of 29 October 2007, but also with the intention of the legislator to ensure greater protection for intellectual property rights.

This decision will be welcomed by intellectual property rights holders.

Moreover, as a patent holder is entitled to commence infringement proceedings in relation to infringing acts that occurred before the expiry of its patent as long as they are not yet statute-barred, it should have the right to use all the evidentiary tools available under IPC to help him prove such infringing acts.

A contrary ruling would have resulted in a patent holder who commenced infringement proceedings after the expiry of his patent being placed in a less favourable position than he would have been had he commenced infringement proceedings prior to the expiry of his patent.

Practical significance

The ruling of the Court d'Appel de Paris in relation to patents applies mutatis mutandis to all other intellectual property rights (designs : Art. L. 521-4; semiconductor products: Art. L. 622-7; plant variety rights: Art. L. 623-27-1; trade marks: Art. L. 716-7 and geographical indications: Art. L. 722-4) in respect of which, since the enactment of the law of 29 October 2007, the right to have a saisie-contrefaçon carried out is also granted to ‘any person entitled to commence infringement proceedings’.

IP, civil procedure and arbitration in Germany

As a change from the publication of Current Intelligence pieces and editorials, here's a recent JIPLP book review:
Intellectual Property Law in Germany: Protection, Enforcement and Dispute Resolution (2nd edn.), by Klett, Sonntag, and Wilske
Published by CH Beck, 2010, ISBN: 9783406545306, Hard cover, 628 pp. Price: €98.
Reviewed by Guido Westkamp (Queen Mary, University of London)
There is very little literature on German IP law in English. This book promises, according to the publisher, to close that gap, having predominantly a practitioner audience in mind. The book covers, by way of an introduction, all aspects of German IP law. In addition to the salient categories (trade marks, designs, copyright and neighbouring rights, patents and utility models, plant varieties), specific emphasis is placed on enforcement, including the recent changes brought about by European legislation in that area. In addition, the editors provide basic information concerning practical enforcement by way of both judicial proceedings, including interim injunctions, and arbitration and mediation. Much of the text consists of a translation of each relevant German IP statute into English, complemented by a brilliant glossary. This is welcome and doubtless reflects a great deal of excellence and linguistic skill.

Overall, the editors place much emphasis on the procedural and contentious aspects of enforcement. To that end, they provide the reader with textual samples of relevant legal documents such as briefs, tables of calculating court costs, and a highly commendable glossary of legal terms. These samples provide an impression of legal writing in Germany translated into English; the samples cannot, of course, be practically used by a UK practitioner to enter into communication with German courts. Likewise, arbitration and mediation aspects in IP cover much ground, certainly much more than would be expected in a volume primarily concerning IP law.

In that sense, coverage of substantive law, especially where written for a UK audience, could have been much more extensive. Mostly, coverage is constrained to brief introductions to statutory law. Detailed examination beyond the statutory text is more or less absent, and there is hardly any reference to current debates and problem areas or to the many important recent decisions by the Federal Court of Justice in, specifically, copyright, design, and trade mark law. Likewise, the important area of unfair competition law, and its role as a form of complementary protection would have been of utmost interest specifically to readers in the UK to grasp fully the architecture of German IP law.

The bibliography on German IP law in English is, disappointingly, extremely limited. Many works referenced relate to general procedural and arbitration aspects rather than substantive IP law. Despite the admitted lack of a voluminous body of good work here, one would have expected a more concise and structured bibliography.

Overall, this reviewer has doubts as to the merits of such undertaking. For a UK lawyer in particular, many substantive divergences between the UK and the German system remain inaccessible, and in the same vein—as the editors agree—this book cannot replace the services of a specialized German attorney. Certainly, the work provides a good introduction to fundamental IP issues and doubles as a rather good introduction to civil procedure and arbitration in Germany. The glossary in particular will render this work a commendable purchase—in particular, for speakers of German. To be sure, nothing more than an introduction is promised, and the book is certainly recommended as a reference point for gaining a basic impression.

After your article has been submitted ...

As editor of JIPLP, I often receive emails from contributors with regard to the progress of their articles.  To this end, I've prepared the following post, which explains some of the points that crop up from time to time.

Do not be surprised if, having been received a warm note to the effect that your article has been accepted, you simply don't recognise it when you see the proof version. This will have been edited and very often a large number of changes will have been made to it. Some are to make your text conforms to house style, which authors in an ideal world would do before they submit their contributions in the first place, but busy IP portfolio managers, highly-skilled practitioners, perceptive academics and seasoned administrators will respond with a chorus of "we are IP experts, not copy editors -- if we write the article, you have to turn it into shape". We do.

On the subject of house-style, we try to keep quotes in their original form for the sake of authenticity. This means that the same word may appear in two different forms in successive sentences.

Often, changes are made in order to make the article read well: shortening sentences, eliminating repetitions of words, turning clumsy passives into elegant actives, and so on. Titles are frequently trimmed. Since titles appear in larger letters than does the text of an article, a 27-word title can end up almost half way down the page, which is why we prune it.  Footnotes are often radically altered, particularly if they contain text which should appear in the body of the article.

On receipt of the proof you will be required to confirm which part of your name is your surname. It does seem strange for someone with a name like "John Smith" to be asked to confirm that "Smith" is his surname, but some cases are more complex. Many Asian names cause problems, and European names too: Spaniards are blessed with more names than are many other nationalities, Hungarians like to invert their names and many Britons have double- or even triple-barrelled surnames which they extend or shorten for their own purposes and which can make their works difficult to locate in databases using "find-by-surname" criteria.

It is now possible to make corrections and amendments to your proofs, even though they are Adobe pdf files. Editing Adobe documents on-screen is 'clunky' in comparison with regular word-processing programs, but the principle is the same and each proof is prefaced with a sheet containing simple instructions.

Further production notes will be posted from time to time, dealing with other issues raised by readers.

Profile of JIPLP writers: Charles R. Macedo

In this, the first in an occasional series of features on contributors to JIPLP, we introduce Charles R. Macedo (partner at Amster, Rothstein & Ebenstein LLP). Apart from authoring numerous Current Intelligence pieces and being something of a public speaker, Charley is author of The Corporate Insider's Guide to US Patent Practice (published by OUP, here) and also writes for other publications.

So what sort of man is Charley?  When he is not off being a lawyer, he is at home in the suburbs of New York City with his wife and two sons. He loves to read series books that let him watch the characters develop and grow, whether it be Harry Potter, Percy Jackson, Mitch Rapp, or Ethan Gage. Having an educational background in Physics and History (in addition to Law), Charley also enjoys reading science fiction and historical novels.

On most weekends when school is in session, Charley can be found on the baseball field, soccer field, or basketball court coaching children with special needs. During the school year, he also donates time to teach high school seniors in New York City about patents and works with them on writing their own patent applications.

One reason why Charley writes so many articles and makes so many presentations is that he simply loves it. Many a weeken,d when he wakes up early in the morning he can be found in front of his computer writing another CI or Guest Column, or preparing a presentation to explain complex concepts in an easy-to-understand manner. He thinks of himself as an interpreter who is fluent in many different languages -- technical jargon spoken by inventors/clients, patentese spoken at the PTO, legalese spoken by courts and attorneys, business jargon (like ROI) spoken by suits and, most importantly, plain English (the American variety) spoken by the rest of us. His writings often seek to translate the complex legal principles of today's intellectual property law into the vernacular for the public to read and appreciate.

Over the past two decades since Charley graduated from law school, and almost three decades since he first started working in the intellectual property law field, he has witnessed the field of patent law grow and to some extent wane with the Federal Circuit. He has seen the development by the Regan, Bush Sr. and Clinton Administrations of domestic and international policies which focused on strengthening intellectual property protection in the US and around the world, with the concomitant growth in value of such protection. During George W's years, failings in the system began to emerge, the PTO got overwhelmed, the courts were challenged on how to value the merit of intellectual property protection, and the press criticized particular patents such as how to make a crustless peanut butter and jelly sandwich, a method of swinging on a swing, and a method for purchasing books at with one click, which sold a lot of papers. The US Supreme Court suddenly started to second guess decades of jurisprudence on patent law that came out of the Federal Circuit, and murky lines of jurisprudence began to be redeveloped on issues like when an invention is obvious, when an injunction should issue, who can bring a declaratory junction action and what types of processes are patent-eligible, etc.

Over the next ten years, Charley thinks the law in the US will need to grow to recognize that good patents are a good thing that should be upheld and reasonably valued, while bad patents are a bad thing that should not. While bright line rules that the Federal Circuit has been developing have provided greater predictability for the PTO and patent users, the US Supreme Court's interventions have eschewed such rules, and will likely continue to do so in the future, resulting in vaguer standards that are reminiscent of "I know it when I see it" tests famously applied in First Amendment pornography cases.

To learn more about Charley's professional background click here.  To contact him directly, whether to discuss intellectual property law questions or coaching techniques for children with special needs, you can email him here.

JIPLP news

* Tim Pinto (Taylor Wessing) has been an Editorial Panellist of JIPLP since its inception in 2005 and spoke at its launch.  If you'd like to see and hear him in action, he has recently had a cameo role (here) being interviewed on an ITV news item concerning the BBC's attempts to preserve the confidentiality of the identity of a racing driver known hitherto only as The Stig (for background on this curious dispute, on which JIPLP looks forward to carrying an analysis in the near future, click here and here.

* "Declarations of non-infringement of another's IP right-- when can, and should, they be invoked?" was the title of one of the Articles in Search of an Author for which JIPLP was recently seeking, and found, an author. Sadly the author concerned has had to withdraw from this project on account of pressure of existing commitments, so he has 'returned' it to JIPLP. If any reader would like to tackle this topic could he or she please notify me accordingly by email here.

* The hard copies of the September 2010 issue of JIPLP, which has now been online for some weeks, should now either be in the hands of their subscribers or should be just about to reach them. Subscribers and non-subscribers can browse the contents of this issue here and read the Editorial here.  A full list of articles published online ahead of the October 2010 issue can be viewed here.

Copyright licences: how it works for JIPLP

Contributors to the Journal of Intellectual Property Law & Practice (JIPLP) are required to grant a licence to Oxford University Press to use their contributions in periodical format and online.  Following its successful trial earlier this year, JIPLP has now been selected to operate OUP's the new licensing system with effect from 15 September.  Let OUP explain further:

Until now, authors have been asked to complete a paper licence, then fax or post it in to Oxford Journals Production.  This is increasingly outdated, when compared to the rest of the production process, almost all of which is now digitally managed.

Oxford Journals has therefore built an online licensing interface and database which allows corresponding authors to digitally sign and accept their licences. The completed licence will be saved and securely archived in three ways – in a licence database maintained by Oxford Journals, in an email attachment to Oxford Journals’ Rights Department, and as an email attachment to the corresponding author. The author will also be able to go back to the online system at any time to view all accepted licences.

The introduction of the new system will greatly help expedite the collection of licences for all papers, which should in turn result in faster publication times. At present waiting for the faxed/posted licence can occasionally slow publication of articles. Provision will still be made for authors who need to sign their licence offline.

Mars v Nestlé: protection of colour marks in Australia

Authors: Tim Golder and Sandi Montalto (Allens Arthur Robinson, Melbourne)

Mars Australia Pty Ltd (formerly Effem Foods Pty Ltd) v Société des Produits Nestlé SA [2010] FCA 639 (22 June 2010)

Citation: Journal of Intellectual Property Law & Practice, doi:10.1093/jiplp/jpq116

The Federal Court of Australia has allowed Mars' Australian trade mark application for a particular shade of purple referred to as ‘Whiskas Purple’ to proceed to registration, in respect of cat food and additives for cat food.

Legal context

Mars considers, in the context of the registration of a colour mark, the application of section 41 of Australia's Trade Marks Act 1995 which allows the rejection of the registration of a mark on the grounds that it does not distinguish the applicant's goods and services from those of other persons.


The Whiskas Purple trade mark was specifically created ‘from scratch’ for the Mars group in Europe, and is used by Mars as the principal colour of its Whiskas cat food product packaging. Nestlé's opposition to Mars' application for registration of the mark succeeded before a delegate of the Registrar of Trade Marks (Effem Foods v Nestlé SA [2008] ATMO 55, 30 June 2008) on the basis that the mark was not capable of distinguishing Mars' pet food products from the goods or services of other persons (section 41). Following Mars' appeal of the decision to the Federal Court, Nestlé withdrew its opposition to the registration, and Mars also agreed to amend its specification from the wider ‘foodstuffs for domestic pets and additives for such foodstuffs’ to ‘cat food and additives for cat food’. Thus the orders of the Federal Court were made by consent.


Notwithstanding that Nestlé withdrew its opposition to the registration and it was therefore unnecessary to consider section 41, Bennett J reviewed the evidence and concluded that Whiskas Purple, at the priority date, was capable of distinguishing Mars' goods from other cat food products and additives for cat food.

Mars contended that the trade mark was capable of distinguishing Mars' goods from those of other manufacturers because the mark is, or is to some extent, inherently adapted to distinguish (sections 41(3) and 41(5)). Alternatively, Mars claimed that the evidence established that the trade mark did in fact distinguish Mars' goods as at the filing date (section 41(6)). The Court accepted the substantial evidence adduced by Mars that it had marketed and used Whiskas Purple as an entirely new colour in Australia across the Whiskas product range both before and after the priority date. The colour was carefully developed to create a stronger brand identity and shelf-blocking in supermarkets, and functioned as a trade mark. The Court also accepted that, while other traders have used very similar shades of purple on pet food packaging, such use has not been trade mark use, and they would be unlikely to desire to use the mark as a trade mark without improper motive. Further, the Court emphasised that the registration would not prevent non-trade mark use of the purple or pink-purple colours by other cat food manufacturers, for example, to indicate a particular product variety.

Whilst the Court did not set out any principles concerning how a colour applied to goods may be inherently adapted to distinguish, the Federal Court of Australia did so in the earlier decision of Philmac Pty Ltd v Registrar of Trade Marks (2002) 126 FCR 525 (13 December 2002). There Mansfield J considered, in light of section 41, whether the registration of a trade mark consisting of the terracotta colour applied to the connecting inserts and split rings in respect of plastic compression fittings for B class/rural imperial sized polyethylene pipe, should have been allowed by a delegate of the Registrar of Trade Marks.

For the purposes of section 41(3), Mansfield J set out the circumstances in which a colour applied to goods will be inherently adapted to distinguish ((2002) 126 FCR 525 at 546):
  • the colour does not serve a utilitarian function, in that it does not physically or chemically produce an effect (such as light reflection or heat absorption);
  • the colour does not serve an ornamental function, in that it does not convey a recognised meaning (such as to denote heat, danger or environmentalism);
  • the colour does not serve an economic function, in that it is not the naturally occurring colour of a product and registration of that colour for that product would not submit competitors to extra expense or extraordinary manufacturing processes to avoid infringement; and
  • the colour mark is not sought to be registered in respect of goods in a market in which there is a proven competitive need for the use of colour, and in which, having regard to the colour chosen and the particular goods, other properly motivated traders might naturally think of the colour use it in a similar manner in respect of their goods.
The Court considered that point (iv) above raises two additional considerations ((2002) 126 FCR 525 at 546-7):
  • whether there is a competitive need for the use of colour and
  • the likelihood of such traders wishing to apply it to their goods should be considered in the context of both the colour in the application and the goods in respect of which registration of the trade mark is sought.
The Federal Court held that the mark was not inherently adapted to distinguish Philmac's goods from those of other persons under section 41(3), and that the mark applied to the split ring (as opposed to the insert) did not distinguish Philmac's goods from those of other manufacturers under section 41(6). However, the Court declined to neither reject nor accede to Philmac's application. The Court considered that the application may proceed to registration (based on the evidenced use of the mark) if it was confined to the terracotta colour applied to the connecting inserts of plastic compression fittings for B class/rural imperial sized polyethylene pipe. Indeed, Philmac amended the application and subsequently secured registration in Australia.

Practical significance

Increasing trend in the protection of colour marks in Australia?

The decision in Mars reflects an increase in the protection of colour marks in Australia, and is the second case concerning the colour purple in particular that has arisen in Australia. The long-running dispute between Cadbury and Darrell Lea over the use of the colour purple in chocolate packaging led to Cadbury securing trade mark protection of certain shades of purple in respect of chocolate, block chocolate and boxed chocolate.

Further, the decision of the Federal Court in Philmac demonstrates that, in the context of section 41, an application for a colour mark may not succeed where the application is made in respect of a colour generally, as opposed to a particular shade of a colour (eg, ‘purple’ as opposed to specific shades of purple, identified on a colour chart). This is in line with the acceptance of the application in respect of the specific Whiskas Purple colour in Mars and the Cadbury registration.

Use of a colour as a trade mark

The decision in Mars also demonstrates the need to show that a colour is being used as a trade mark (distinguishing the goods from those of competitors, as opposed to merely signifying a particular flavour or variety), and that registration does not prevent non-trade mark use of the particular colour.

As Mars illustrates, the registration of colour marks in Australia will undoubtedly be a contentious issue in the future, particularly if the number of applications for registration of such marks continues to rise.