Can An Error In Naming An Applicant For A Design Registration Be Fatal? Foster’s Australia Limited V Cash’s (Australia) Pty Ltd

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Overview: more haste, less speed

In what circumstances should an error in naming an applicant for a design registration be fatal? In this case note, we look at Foster’s Australia Limited v Cash’s (Australia) Pty Ltd1, where the court declined to grant orders revoking design registrations on the basis of such an error.

Despite the Designs Act requirement that only the entitled person should be registered as the registered owner of a design registration, it appears the judiciary is willing to uphold the validity of a design registration in certain cases where a constructive trust can be found between the original registered owner and the entitled person.

This case provides some reassurance for entities operating in large company groups – but underscores the importance of making design applications in the name of the correct entity.

Background

Foster’s Australia Limited (FAL) was a wholly-owned subsidiary of Foster’s Group Limited (FGL), both of which were members of the Foster’s group of companies (“Foster’s Group).  During this time, FGL were able to direct the activities of FAL as FGL saw fit.

The Foster’s Group had Dot Design Pty Ltd design a new form of bar tap, pursuant to an agreement under which FAL owned the intellectual property rights created by Dot Design Pty Ltd. Under the terms of the agreement, a reference to FAL included a reference to its affiliates (which was defined so as to include FGL).

The Foster’s Group then had their patent attorneys file design applications in relation to the bar tap design created by Dot Design Pty Ltd in January 20092. Foster’s did not give explicit instructions to their patent attorneys as to which Foster’s entity should be named as applicant, and the patent attorneys nominated FGL as applicant. 

The design applications proceeded to registration in the name of FGL in July 2009. Shortly after in January 2010, the Foster’s Group noticed that FGL was the registered owner, rather than FAL. The patent attorneys were then asked to prepare and record assignments for the registered designs from FGL to FAL, which assignments were recorded in the Register of Designs in August 2010. 

FAL then brought an action against Cash’s for design infringement. Cash’s counterclaimed that the designs were invalid and should be revoked as the original registered owners (FGL) were not entitled to the design when it was first registered, and that registration of the design was obtained by false suggestion or misrepresentation.

Designs Act - The person entitled to be the registered owner

In simplified terms, there are two periods in the life of a design registration:

  • Application period - which occurs between initial filing of the design application and registration of the design; and
  • Registration period – which occurs from registration of the design until the end of life of the design. 

In accordance with s 21 and reg 3.01, a person (that is, any person) may file an application for a design.  The minimum filing requirements for a design application requires identification of the applicant – there is no requirement this needs to be the entitled person.  In the majority of cases, the applicant is taken to be the entitled person, and on registration, this person is entered onto the Register as the registered owner.

The Designs Act clearly contemplates that the applicant of the design may not necessarily be the registered owner of the design at registration, and s 29 and 30 allows amendments to the application such that registration of a design application can proceed in the name of an entitled person that is different from the original applicant.

However, what is important is that at the time the design was first registered, the person who is entered on the Register as the original registered owner is entitled to the design in accordance with s 13 and 14.  If the original registered owner was not entitled at that time, the registered design is liable to be revoked under s 93.

Constructive trust?

Cash’s argued that FGL was never entitled to be entered on the Register of Designs as the registered owner. Cash’s argued that there was no evidence that Dot Designs Pty Ltd had received written consent from FAL to assign the intellectual property rights to FGL.

On the other hand, FAL argued FGL was entitled to be recorded as registered owner of the designs because:

  1. FGL could have at the registration date required FAL to assign any design rights it had to FGL, because FGL controlled FAL; 
  2. the conduct of the Foster’s Group in relation to the filing of the design applications was enough to assign the right to apply for the designs in equity from FAL to FGL. FAL also raised an argument, but did not follow it through, that alternatively an assignment of the rights could be implied;
  3. FGL held the rights as constructive trustee for FAL. That is, equity would consider it unconscionable for FGL to deny FAL’s entitlement to the design applications and registrations, such that law would operate to require that FGL holds the rights on trust for FAL.

The court decided that FGL held the design applications and registrations as constructive trustee for FAL. This appears to have been partly:

  • on the basis that both FGL and FAL were members of the Foster’s Group, and the policy of the group clearly stated that IP of this kind was to be devoted to the Group’s interests; and
  • following precedent3, where a court finds that an application has been made other than by the true owner, and there would be no fraud on the public to do so, finding that the applicant holds the application on constructive trust for the true owner from the date of application. 

That is, at all times, the applications were made by FGL, and the design registrations granted in the name of FGL, with FGL acting on behalf of FAL (who would otherwise be entitled to apply for, and be granted, the design registrations). These findings saved the resulting design registrations from being revocable on the basis of lack of entitlement. 

On the allegation the design registrations were obtained by false suggestion or misrepresentation, the court did not find sufficient evidence that the alleged misrepresentation, of filing the designs in the name of FGL instead of FAL, was material to the Registrar registering the design registrations.  Furthermore, the court found FGL did not misrepresent its entitlement to be registered since FGL had entitlement as a constructive trustee for FAL. Therefore, the court rejected the Cash’s argument that the design registrations should be revoked on the grounds of false suggestion or misrepresentation.

Next steps

Although the design registrations were upheld by the facts and the court’s finding of a relationship that established a constructive trust, this case highlights the importance of ensuring correct entitlement of a design at the time of registration.

It is not unusual for design applications to be filed in a hasty fashion in order to ensure rights can be claimed. However, large company groups should consider establishing a default protocol with their patent attorneys to identify who should be named as applicant if instructions cannot be obtained quickly.  If there is doubt, the attorneys should be advised so that consideration can be made to amend the applicant and entitled owner of the design application before it proceeds to registration.

1. [2013] FCA 527

2. While patent applications were also filed, the issue is no longer live, following new section 22A Patents Act 1990 (Cth) (introduced as part of the Raising the Bar Act amendments), which provides that a patent is not invalid merely because the patent was granted to someone not entitled to it. This case note consequently does not cover patent aspects of the case.

3. Edwards v Liquid Engineering 2003 Pty Ltd [2008] FCA 970, Figgins Holdings Pty Ltd v Registrar of Trade Marks [1995] FCA 1455, Chang v Registrar of Titles [1976] HCA, Imagic Inc v Futuretronics (Australia) Pty Ltd (1983) 51 ALR 122,