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John R. Morss[*]
“Monopolies should not be so readily created.”
Simon Brown LJ[1]
Creativity may well be key to New Zealand’s future economic growth. Paradoxically however, it is not in its “pure” innovatory sense (what one might call primary creativity), but in its adding of value to pre-existing resources, that creativity may most contribute to the economy. Such secondary (or derivative) creativity involves the commenting on or reference to some pre-existing named product or expressed object, with or without a commercial purpose. However, such secondary creativity may be stifled by the over-protection of items of intellectual property that are already made available in the market-place. The aim of this paper is to propose a substantial de-regulatory shift in New Zealand’s intellectual property regime, to enable the greater flourishing of secondary creativity. Two contentious areas have been selected for discussion:
“dilution” of a reputed name (supposedly actionable as a form of passing-off) and parody as a form of fair use in relation to copyright. Both cases, it is submitted, exemplify the need for a relaxation in the protection afforded to originators in order that creativity may be encouraged in others — even if these others are competitors. The argument made here does not rely on particular technologies or media. But it is undoubtedly the case (as recently argued by Van Caenegem[2]) that information technology and the “knowledge society” necessitate a re-evaluation of traditional protections. With rapid innovation and dissemination of products worldwide, the defence of existing products against imitation becomes inefficient or even irrelevant.[3]The financial advantage to a competitor of imitating rather than competitively innovating, itself decreases since imitation always involves a lag and the life cycle of the product may be exceeded by that lag. Intellectual property rights, van Caenegem argues, become resources for bargaining with competitors and for interacting with customers, rather than grounds for protective litigation. I shall return at the end of this paper to a point that extends van Caenegem’s, which is to speculate that in the information age, the end of Intellectual Property itself may be nigh. The opportunity will be taken also in the concluding section to counter the protectionist arguments recently advanced by Belinda Isaac.[4]
As is well known, the common law action of passing off has been significantly extended during the last 100 years or so. Appropriation of another’s actual trade, through deception or confusion of the purchaser as to the source of the goods, need no longer be shown. What is now required may be formulated as “misrepresentation prejudicial to the plaintiff’s goodwill”.[5]It may even be enough, in some fact situations, for the unlicensed use of a name to “dilute” the senior use where “dilution” is little more than an inferred and hypothetical consequence of such use. Thus in New Zealand the extension of the action of passing off has given rise to the protection of a generic descriptive term
(“champagne”)[6]used by a class of producers against competitive use that does no more than “dilute or erode the distinctiveness [of ] the trade name.”[7]
This form of protection of the plaintiff’s “common law goodwill rights”[8]would seem to go beyond the LEGO case in England’s High Court of Justice where some evidence of retailer confusion was found as between toy bricks and sprinkler systems,[9]supporting the finding of infringement by the latter. In effect, and in principle, the judicial recognition of dilution as a ground would be to penalise a competitor for the mere use of a brand, carrying the international trend to protect goodwill[10]to unprecedented lengths. The general persecution of “free riders” for poaching upon the “commercial magnetism” of (another’s) mark is strongly urged in some quarters,[11]a view consistent with Cooke P.’s comments on
“commercial honesty” in Wineworth’s Group Ltd.[12]In general however, in the UK and also in the USA, unlicensed use of a mark must be in some way contaminatory or tarnishing (that is, must give rise to unsavoury associations or connotations of inferiority) for a breach to occur. This judicial practice has emerged from activist interpretations of statutes such as the Lanham Act in the USA.[13]
Thus in the USA, pornographic web-site names contaminated the marks
“Toys R Us”[14]and CANDYLAND.[15]Less persuasively perhaps, BUTTWEISER on t-shirts contaminated BUDWEISER,[16 ]and VISA for condoms diluted VISA for credit cards.[17 ]However, LEXUS (a vehicle) did not infringe on the rights of LEXIS.[18]In the UK, somewhat less protectively, the EVEREADY brand of condom did not infringe the original mark (for batteries),[19 ]consistent with the earlier finding that a brand of potato chips did not infringe the rights of a night club.[20]
The classic finding of infringement by a moneylending agency on the name of Harrods Limited[21]relied predominantly on orthodox grounds of passing off, including some evidence of confusion in customers[22 ]given that Harrods did operate a banking (but not moneylending) service. The exact boundaries of contamination are unclear, but it seems that where no issue of tarnishing arises, the courts in the USA as well as the UK are reluctant to prevent the (junior) referential use on grounds of mere dilution. Similarly, in an Australian case taken to the Privy Council,[23 ]there was no passing off despite similarities in advertising the “pub squash” in the absence of evidence of impact on goodwill for the Cadbury Schweppes original.
It is submitted that this line of judicial reasoning is the correct one in a commercial context and that it is incorrect to castigate the junior activity here as “nothing less than theft.”[24]I would therefore respectfully disagree with the proposals of Ricketson and of Glengarry for the introduction of anti-dilution legislation into Australia and New Zealand. In this respect at least the Trade Marks Bill 2001 needs careful scrutiny.[25 ]Glengarry advocates protection against pure dilution for a few “superbrands” (or “supra-trade marks”) such as COCA- COLA.[26]The justification for this enhanced protection for already successful brand marks focuses on the value of the brands, seemingly a circular argument. For if there is any sense in which a firm becomes “a victim of its own success”, in that its brand name becomes vastly over-extended in use, that is surely a matter for the firm itself to deal with (presumably by diversification and other procedures[27]). On the other hand if the value of such a brand itself may be estimated at more than the firm’s entire plant (etc)[28]then the financial threat posed by dilution cannot be great, for a vulnerable asset would not be valued so highly. On a more modest scale, Glengarry argues for the inadequacy of existing legislation to deal with dilution-like situations. Consumer-protection legislation such as New Zealand’s Fair Trading Act 1986 and cognate Australian legislation, offers some indirect protection to firms under its prohibitions of misleading or deceptive conduct by other firms. I return to the general issue of legislation below, but Glengarry’s example (the Olivia Newton-John case[29]in the Federal Court of Australia) raises the important issue of character merchandising. Consistent with the suggestions above, I would respectfully submit against Glengarry that the Federal Court was correct (at least on commercial grounds) to find no breach in a “lookalike” Newton-John being used in advertising, when no deceit of the public took place.
Shortly after the Newton-John case however, the Federal Court found[30 ]that unlicensed use of an image based on actor Paul Hogan’s “Crocodile Dundee” persona was actionable, without fraud or loss being demonstrated. Pincus J thus suggested that the courts should defend rights of an “inventor” to use a personality or character against an unauthorized business use, even if the inventor had no business activity himself.[31]Such an “extension” of passing off severed the action from its roots in the protection of ongoing business. Consistently with this finding, Grosby “Leatherz” shoes were subsequently prohibited from making visual reference to the “Crocodile Dundee” persona of Paul Hogan in their advertisements.[32]Misrepresentation of a commercial arrangement (of licensing) was found by the majority in the Federal Court to constitute passing off. Dissenting, Sheppard J emphasized that no property right was involved[33]and that the only question (which he answered in the negative) related to the misleading or confusing of consumers. Sheppard J did not refer to Hogan v Koala Dundee.
The situation in Australia remains somewhat uncertain. An injunction was refused to the rights-holders of singer Michael Jackson in Australia[34 ]to prevent the marketing of low-quality recordings of Jackson’s music, on the grounds that explicit and sufficient disclaimers were in place on the product. The refusal was based on the robust grounds that misunderstanding as to endorsement by Jackson could not be said to be sustainable on rational grounds.[35]This approach was not however followed in the “Duff Beer” case where it was held[36]that a proposed explicit disclaimer on beer cans as to connection with “The Simpsons” TV series, would reinforce rather than remedy the breach involved.[37]This rationale would seem to undermine any kind of disclaimer explicit enough to serve its remedial purpose — something of a Catch-22 situation. Overall it is submitted that the approach of Sheppard J in Pacific Dunlop better represents the correct approach, firmly resisting the over-protection of originators from the rough-and-tumble of the marketplace. This view receives support from the discussion of Koala Dundee by Fisher J in Tot Toys v Mitchell (the “Buzzy Bee” case).[38 ]Fisher J affirms that “the essence of passing off is deception which damages the plaintiff”[39]and points out that it is sophistic to find deception in a defendant’s mere harnessing of the beneficial associations of an image. The supposed usurpation of a plaintiff’s rights to license the use of the character are conceptually inadequate grounds for damage, given the uncertain status of such licensing — if the character can be appropriated without any breach then licensing is redundant. As things stand (i.e., in the absence of damage independently proven) the argument is circular. Fisher J robustly rejects the implication that an action for passing off may be based on a property right[40]and rhetorically enquires why the square peg of character merchandising should be forced into the round hole of passing off.[41]
More generally, Fisher J warns against the ready creation of new monopolies, citing “community access to intellectual progress and the public interest in competition.”[42]The existing protections of the Fair TradingAct 1986 are affirmed, together with the flexible employment of appropriate disclaimers in particular cases such as the “Buzzy Bee” itself.[43]
The generic nature of character merchandising cases – refusing to treat them in effect as a cause of action sui generis – was recently affirmed by the English Court of Appeal in the “Elvis” case.[44 ]The touchstone is actual or likely deception of the public. Here, the owners of the Elvis Presley “brand” (Elvis Presley Enterprises) were not able to register certain marks on toiletries against the objections of the plaintiff who had established usage of “Elvisly Yours.” There was insufficient connection between the Elvis marks and the toiletries, and there was an implied disclaimer by the plaintiff of connection with Elvis Presley Enterprises.[45]Simon Brown LJ went on to clarify that there exists no general right to character exploitation enjoyable exclusively by the celebrity. “There should be no a priori assumption that only a celebrity or his successors may ever market ... his own character. Monopolies should not be so readily created.”[46]
Defences to passing off actions under character merchandising in Australia have appealed to parody.[47]Although unsuccessful, the attempt highlights the conceptual relationship between a claimed fair use of a known image or mark in the passing off context and fair use (or fair dealing) in the copyright context. Here, the international position on fair dealing in copyright, especially in the case of parody, will be overviewed. Because of its extensive, recent judicial consideration of parody, most attention will be devoted to the USA. It will be submitted that the judicial practice of the USA provides the basis of a good working model for a liberal (de-regulatory) approach in this important area of intellectual property law.
New Zealand
It has been suggested[48]that New Zealand has an unusually protective regime with respect to the fair dealing exceptions in its Copyright Act 1994. The general position in New Zealand was established by TVNZ Ltd v Newsmonitor Services Ltd[49]where a commercial service that involved the copying of whole programmes, prior to selling transcripts of requested material to clients, was found to infringe. The immediate purpose of the copying (or “appropriation”) was commercial gain, not research or private study so that fair dealing exceptions were found unavailable under statute. The news monitoring service is “parasitic” and New Zealand Bill of Rights Act 1990 arguments notwithstanding, should not be entitled to a “free ride.”[50]
Blanchard J went on to comment on the hypothetical application of fair dealing, as if Newsmonitor’s clients had themselves carried out the copying, for their own research purposes. “A fair dealing is simply a reasonable use.”[51]For research or private study, purpose, nature and substantiality must be considered; also in some cases, usurpation of the plaintiff’s market and relatedly (perhaps as here), the issue of ready availability of the material. (His Honour was not considering criticism/review and therefore not parody, for which his dictum on reasonable use would apply.) On the basis of these factors, the decisive criterion was substantiality, with brief extracts of soundtrack/graphics only (of up to eight percent of the original programme) found to be fair but a complete item (of
2.5 minutes) and an 8-minute extract found to infringe. This allowance was described as “liberal.” More recently, in the High Court inAuckland, it has been reaffirmed in Copyright Licensing Ltd. v The University of Auckland and Others[52]that there is a predisposition neither to a strict (rights-centred) nor a liberal (user-centred) approach. This is consistent with Longman Group and Others v Carrington Technical Institute.[53]The finding in Newsmonitor that it is the purposes of the copier, not those of third parties, that is of relevance, is also reaffirmed. In general, the approach in New Zealand with respect to research and private study emphasizes commercial use and substantiality — the two factors given minimal weight in the USA in digital technology as well as in criticism/review cases. The recent (updated July 2001) recommendations put forward by the Ministry of Economic Development[54 ]included some general questions on fair dealing, without committing itself to proposals,[55]beyond indicating that the issue of “format shift” might be solved in the same, specific statutory (rather than judicial) way as was the issue of
“time shift.” [56]
England
In Ashdown v Telegraph Group Ltd.[57]the English Court of Appeal found that the newspaper’s publishing of “leaked” unpublished diary memoirs of a politician was not covered by fair dealing under section 30(2) of the Copyright, Designs and Patents Act 1988. This was due to the newspaper’s commercial aims[58], together with substantiality: it was not necessary, for their limited proper purposes, to reproduce large amounts of the original expression (reasoning thus being similar to Hyde Park Residence Ltd. v Yelland[59]where a newspaper’s reproduction of photographic surveillance records was gratuitous).
The English Court of Appeal also, however, wished to accommodate the Strasbourg (European Court of Human Rights) case of Fressoz and Roire v France[60]where (in a case involving the satirical weekly “Le Canard Enchaine”) journalists’ own discretion was found to be the best guide to their use of precisely reproduced documents used in order to establish credibility[61]— the situation argued by defendants in Ashdown and in Hyde Park. The Court did not consider that the fair dealing exceptions in the Copyright, Designs and Patents Act 1988 sufficiently met this need, even with the loosening of the criterion of recency for
“current” events from Pro Sieben AG v Carlton UK Television Ltd. It was proposed that on rare occasions, and in the interests of freedom of expression, public interest may override the protected right; or, also exceptionally, an injunction might be denied and yet the defendant be required to pay damages or make account to the plaintiff.[62]The latter would be an oblique manner by which to protect democratic rights and one which if implemented for the reporting of current (or not-so- current) affairs, might be difficult on principle to deny to political satire.
Australia
In the Federal Court of Australia in TCN Channel Nine v Network Ten,[63]
Channel53
[Nine took]A.1530/84
action against Network Ten which had re-broadcast extracts from Nine’s recent output within its show The Panel. The plaintiff failed on grounds of substantiality (under section 103A of the Copyright Act 1968) since disconnected parts of programmes were used and for different purposes to the originals.[64]This was arguably inconsistent with the Court’s endorsement[65]of the defendant’s own admission that a mere “highlights” style recapitulation of the other channel’s recent output (i.e., a sequence of snippets) would have been unfair (the inconsistency arising from the fact, irrespective of transformation considerations, that substantial [whole-programme] copying would still not have taken place).
However, the Federal Court of Australia went on to explain how claimed infringements would have been dealt with, either as criticism or review or as reporting news, under the fair dealing defence. Here, the decision of the English Court of Appeal in Pro Sieben AG v Carlton UK Television Ltd[66]was endorsed to emphasise that the issue of purpose is an objective test. The plaintiff Channel Nine contended[67 ](implying that The Panel was parody of some kind) that in Australia, as in Canada, parody is not an available (fair dealing) defence to copyright. As there cited, Compagnie Generale Des Establissements Michelin- Michelin & Cie v National Automobile Aerospace Tranportation and General Workers Union of Canada[68]stated that parody is not criticism in Canada or the (British) Commonwealth. It was however found by Conti J that as indicated by the word
“mimics” in the Canadian court’s preferred definition of parody, parody (with
“burlesque”) involves imitation (and is thus distinguished from satire). To that extent at least, parody may qualify for the fair dealing defence in Australia on a similar basis as in the USA (see below). Here however, Ten’s usage was (mainly) satire (at least in contradistinction to parody) and not imitative, for example by means of “dissembling [sic] copyright material as its own.”[69]In relation to criticism or review, the overall commercial/ entertainment nature or purpose of the defendant’s programme (The Panel), in which the contentious material was aired, was not determinative. The fair dealing defence would hold for examples of technical criticism (e.g., of camera work or of a “glitch” leading to an undersized presenter appearing on screen); of critique of scriptwriting standards (of creativity or of the difficulty level of scripted questions); or comment on an artistic performance. That is to say, fair dealing includes evaluative and/or informative comment on how something was made, even when comment is delivered in a humorous or entertaining fashion.
In contrast, the fair dealing defence would have failed when satirical (and other) comments were made about a presenter (despite arguably technical comments being made on ratings), or on the Prime Minister’s admiration for a cricketer: both were accompanied by a coarse reference to the PM’s anatomy
(the issue of vulgarity is discussed in defamation by Handley and Davis, and by Magnusson[70]); or otherwise where an extract was used only to entertain
(with insufficient evidence of technical criticism, for example of a studio set). This is notwithstanding the admitted[71]absence of any clear line between news and entertainment. With respect to news reporting, the on-field post-match celebration by a winning sports team was not news. It is noteworthy that the Commonwealth of Australia Copyright Law Review Committee (CLRC) recommended in 1998[72]that Australia’s statutory provisions on fair dealing should be reformed and consolidated. The proposal was to replace the present sections 40—43 (and sections 103A and B) of the Copyright Act 1968 with one section, covering all relevant media, setting out fair dealing exceptions closely modeled on those in the US Copyright Act 1976 section 107. It would be an “open-ended model,”[73 ]“akin to but more precise than” the US provisions on fair use (see below). The proposed newAustralian statute[74]states that for “any purpose” (including research, study, criticism, review, and reporting of news), in order to determine fair dealing, “regard shall be had” to five factors. (In this respect the proposal is therefore more prescriptive than the present section 40(2) of the Copyright Act 1968, applying only to research and study, which has “matters to which regard shall be had include”[75]these five factors). These five factors are: purpose and character; nature of material; substantiality; effect on the market; and the possibility of obtaining the copyright material “within a reasonable time at an ordinary commercial price”. The fifth factor, derived from the present section
40(2) (c), is the only one not to be found in the US statute[76 ]although it can be discerned in the dissent to Worldwide Church of God v Philadelphia Church of God.[77]
Some items found to be outside fair dealing in TCN News might remain protected under the CLRC proposals under considerations of usurpation. This might apply for example to the sports-field celebration item, since there is no reason why the copyright holder might not wish to use this footage himself in a similar way to that complained of. The incident involving reference to Mr Howard’s posterior could not it seems be thus protected.
If the broader approach recommended by CLRC had been in operation, a wider range of the separate incidents might have been categorised as parody
(as a recognised purpose); in which case substantiality might not have been an issue. The combining of a copyright item with the defendants’ own creative contribution is the essence of parody. It could be argued that this is exactly what The Panel did.
USA
US Copyright Act 1976 section 107 refers to four factors that are to be
“include[d]” in a determination of fair use, namely: purpose of use; nature of original; substantiality of copying; and economic impact on the original. In a watershed case[78]the US Supreme Court in Campbell v Acuff-Rose Music, Inc.[79]described the way in which the four factors in section 107 should be defined and weighed in fair use in general, as well as specifically in the case of parody. The case involved a “rap” version of the well-known Roy Orbison song “Oh Pretty Woman.”
Generally, the fourth factor (economic impact) is not to be predominant, even when correctly understood. Economic impact is not to be presumed as problematic for the defendant merely on the basis of a commercial purpose under the first factor. The evaluation of economic impact must relate to the usurping or displacing of proper exploitative rights of the holder of copyright in the original, not impact on market success per se for the original. That is to say, derivatives that the rights holder could not legitimately have exploited himself
– such as disparaging criticism that reproduced original extracts – are not protected. Also, commercial purpose (under the first factor) does not in general rule out fair use: it must be weighed against the extent of transformation (as against mere reproduction). Since commercial purpose is virtually ubiquitous,
“transformation” becomes key. Parody as such is a kind of transformation of an original; it seeks a new market. By its nature it appropriates substantially (even the “heart”) from the original work so that this (third) factor, and also the second, play a minor role in adjudging parody cases. Where adjudged sufficiently transformative in nature, partly on the basis of seeking a new market (as in the case of 2 Live Crew’s rap version of the plaintiff-respondent’s “Oh Pretty Woman” in Campbell) infringement will not be found unless (relevant) adverse economic impact is shown. Parody is distinct from satire, which does not necessitate substantial adoption from an original work. Any borrowing or copying in satire needs its own positive defence. Clearly it becomes highly desirable for a US defendant to prove parody status for a work at issue. In the Court of Appeals, Campbell was followed closely in Leibovitz v Paramount Pictures Corporation.[80]The photographic compilation of a film actor’s head and a pregnant woman’s body, the latter done in the style of a renowned photograph by the plaintiff, was a parody, for which no relevant consequent economic impact was shown. There is no need for the defendant to show that the plaintiff would positively prohibit the use now complained of.[81]
The commercial function of the defendant’s transformation, and the undoubte creative originality of the original, weighed only insufficiently in favour of the plaintiff. Artistic/aesthetic value in the original work, even if (arguably) substantially greater here than in Orbison’s original work “Oh Pretty Woman” in Campbell, is of little relevance in the case of parody. Subsequently in the Court of Appeals, in Castle Rock Entertainment, Inc. v Carol Publishing Group Inc.,[82]a quiz-book of trivia questions based on Castle Rock’s
“Seinfeld” series was found to fail a fair use defence. It was emphasised that the four factors are to guide the analysis, not control it: they are not exhaustive, and attention should be paid to the general purpose of the copyright regime (as stated in the US Constitution) of promoting “Progress of Science and Useful Arts”. Here the new product (“The SAT”) was “at best minimally transformative” although more so than a telephone directory.[83]There was minimal alteration of original expression (although recontextualising can cover this requirement), however wrong answers had been invented and levels of competence assigned. Even
“attempted” parodic creativity with respect to the incorrect choices invented (for multichoice questions) would have strengthened the fair use claim.[84]
With low transformation, the high substantiality of borrowing weighed against the defendant; and the market into which the new product had obtruded, being a non-critical derivative of the show, was a market that belonged to the copyright holder (so that it was actionable displacement, rather than non- actionable suppression, that had or may have occurred). It was raised, but not settled, that since a test of the reader’s knowledge of, for example, “Ulysses” or “Hamlet” would qualify under fair use as criticism, comment, research etc., and since the artistic quality of the subject matter (the “Seinfeld” show) would not be salient, defence might be sought on analogous grounds here. Relevant economic impact (i.e., usurpation)[85]might still bar this defence. It seems here that the statement of aims (leisure-entertainment) of the quiz-book itself undermined such a defence.
In the Court of Appeals for the 5[th ]Circuit, in Lyons Partnership v Giannoulas,[86]the defendant’s use of a “Barney” (a large purple dinosaur) lookalike in a sports mascot performance was found to be parody. Following Campbell, there was no infringement because of fair use considerations. It was implied that the defendant’s use of the imitation Barney, involving ridicule and mock-violence, was not a use that usurped the plaintiff’s proper exploitation rights. Worldwide Church of God v Philadelphia Church of God[87]confirmed that low or possibly zero commercial gain did not substantially assist a defence. Areligious tract, allowed to become unavailable by one church because of the perceived obsolescence of the tract’s dogma, had been obtained and distributed by the other church which remained faithful to that dogma. The defendant’s similar use of the religious material — that is, the absence of transformation — counted strongly against fair use. Significant dissenting points were however expressed by Brunetti J. for whom the plaintiff’s prior decision not to continue publication of the material in question (thereby rendering it unavailable for public access) weighed for the defendant. Moreover, the plaintiff’s motivation in so doing was to suppress the material (as being doctrinally unsound) – a censorious motivation, inconsistent with the spirit of the First Amendment, that His Honour argued should not be facilitated by the law of copyright. Motivation of the defendant in the form of commercial purpose was a major focus for the judgment for the plaintiff in Greenberg v National Geographic Society,[88]apparently going against the grain of Campbell. The Society used the plaintiff’s copyright photograph (earlier used by them, uncontroversially, on a magazine cover), together with equivalent works of other photographers, in an opening morphing-sequence segment in its CD-ROM. The (alleged) severe likely impact of the Society’s extensive use of the plaintiff’s copyright photograph on his proper exploitation of that right – that is, usurpation – was arguably the only available ground (after Campbell) for a rejection of the fair use defence. For the society’s use was undeniably transformative – almost quintessentially so (they even rotated the image). Further, it was not open to the plaintiff to morph his own image with those of the other photographers whose work had also been used by the defendant, so that even the finding of usurpation must be questioned. It would appear that considerations of equity (small plaintiff, large defendant) may have influenced the bench in this case to ignore the Supreme Court’s clear prescription[89]that “the more transformative the new work, the less will be the significance of commercialism.”
The generous license of defendants’ parody established in Campbell was however precisely applied to a novel-form appropriation of the novel “Gone With the Wind” in Sun Trust Bank v Houghton Mifflin.[90]The degree of transformation into “The Wind Done Gone” outweighed the profit motive of the parody and, crucially, there was no question of usurpation of the copyright-holder’s market
– with the copyright holder indeed insisting, in its own licensed derivatives of the earlier novel, on the proscription of some of the very issues highlighted in the defendant’s parody (homosexuality and “miscegenation”). However, and as with the dissent in Worldwide Church, encroachments on free speech by the plaintiffs were held against them in a manner closer, on this point, to an equity approach than to the factorial approach of Campbell itself. Indeed Campbell’s definition of parody is described in Sun Trust Bank as “vague,”[91]in proposing that subjective estimation of the quality or success of humour should be avoided. The proposed “broad” view is to define parody as the commenting on or criticising of a prior work in creating a new artistic work, by appropriating elements of the original.[92]Consistent with such a “broad” approach, the four factors in Campbell are to be taken as no more than “illustrative.”[93]While explaining the judgment in Campbell and in Lyons Partnership (and not being inconsistent with Worldwide Church), this broad definition would seem to overturn Greenberg. But Sun Trust Bank is with Greenberg in apparently promoting equitable considerations above the factorial approach laid down by the Supreme Court. In general, the US experience demonstrates the wide range of lower court decisions enabled by the open-ended and indicative legislative regime there operating, with its scope for judicial concern for equity. This is so despite the fact that a clear direction has been given by the Supreme Court (itself acting with judicial initiative). Consistently with the approach to copying in parody, US Courts have taken a proactive approach to judicial interpretation where challenges to innovative reproduction technologies have arisen. While not precisely a Copyright Law case as such (being decided under the Audio Home RecordingAct 1992[94]) — so that the successful defence was not categorised as “fair use” — Recording Industry Association of America v Diamond Multimedia Systems Inc.[95]illustrates a tendency to exclude new technological processes from the scope of existing protectionist regimes designed for older technologies. The extension
(or re-definition) of protectionist regimes to cover new technical possibilities is left to the legislature, partly on the basis of First Amendment considerations.
(In addition, recourse is always open to patent application procedures, see Sony Computer Entertainment, Inc. v Connectix Corporation[96]). Similarly, and closer to the parody situations, copying video game software in order to examine it by “reverse engineering” (when designing a competitive, compatible platform) is fair use under the US Copyright Act, Sony Computer Entertainment, Inc.v Connectix Corporation. In Sony, commercial purpose was not determinative because of Campbell; the original (PlayStation) was “modestly” transformed into the legitimate competitor, Virtual Game Station (incorporating a new object code). Many elements of the program were unprotected because they were mere ideas, or mere constrained expressions and copying (of the whole of the original) was in any event a necessary intermediary step to access unprotected elements of a program (applying Sega Enterprises Ltd v Accolade, Inc.[97]which predated and in many ways anticipated Campbell[98]). Sony redefines the proper zone of protected exploitation for the holder of a copyright, making it even harder to understand Greenberg (above) other than on equitable grounds.
As a result of judicial activism (rather than legislation as such), parody has become in the USA a de facto “purpose” alongside such recognised purposes as criticism and research in action for copyright. Parody is in effect seen as a species of review, potentially covered by fair use however negative its impact on the market for the original. Correspondingly, the undoubted commercial purpose of (most) parody is not sufficient to outweigh the transformative dimension, a strong affirmation of the free speech retrenchment of copyright protections. The outcome of this affirmation of parody is probably to be welcomed since it encourages creativity. Also in the USA, but to some extent elsewhere too, protection of brands against pure (non-contaminatory) dilution is unusual and “character merchandising” has in general failed to establish itself as a proprietary activity. Even so, the
“stretching”[99]of passing off has been extensive, threatening to leave behind a requirement for demonstrated economic impact on a plaintiff. It is submitted that the parody environment in the USA should be taken (by analogy to some extent) as the template for brand protection. To imitate a brand is in a conceptual sense at least to transform or make a parody of it. This would be to re-assert the primacy of relevant economic impact, either actual or objectively “likely,” within the broad sphere of passing off. Economic impact is relevant only if it is direct damage to the legitimate market of an original source. Unless it is to be alleged that a “generic” brand of body spray looking somewhat like the body spray of Gillette[100]is within Gillette’s proper market, any commercial success for the generic would be (contra Isaac) merely by the way. Indeed, famous brands such as Kellogg’s expressly disclaim involvement in generics.[101]On this basis, arguments such as those of Isaac, advocating the enhancement of brand protection, would fail.
Isaac has argued[102]that the legislative environment should be determined by the proscription of free-riding, seen as constituting a breach of a general restitutionary obligation. Isaac argues for the legal protection of effort, investment and risk (in the creation of a commercial product) against unfair advantage being taken by competitors, and hence addresses herself to “shortfalls in protection.”[103]Comparative advertising should thus be controlled[104]on the restitutionary rationale of unjust enrichment. Since the principle of restitution connotes unjust enrichment “at the plaintiff’s expense”[105 ]the logical end result might be similar to the present submission. For Isaac however the restitutionary approach proscribes imitations that are commercially successful for the imitator, irrespective of economic effects on the originator. She would thereby overturn the “pub squash” finding.[106]Brand protection under what amounts to a strict liability regime would be very generous. In general, and not inconsistently with a rigorous restitutionary approach, it is submitted against Isaac that evidentiary primacy should be given to effects and not to acts per se.
The argument being developed here, in opposition to that of Isaac, is that protection of intellectual property on a US level at most, should be countenanced in New Zealand. For this reason the “dilution” clause in the Trade Marks Bill 2001 is a cause for concern. Current legislation is sufficient, if not more than adequate, to prevent practices disadvantageous to consumers which, it is submitted, is the litmus test in the commercial area. The Fair Trading Act 1986 protects consumers directly; the Commerce Act 1986 protects consumers indirectly by encouraging legitimate forms of competition among firms.Arguably, regulation for protecting firms against each other should not exceed the level of regulation necessary to thereby protect the consumer. The function of the firm (in the interest of the community) is to compete.[107]
It may be that international obligations make some minimal level of protection non-negotiable, and that the US level of protection may in some respects be close to such a minimum. This claim is arguable since the Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) emphasises that measures for the enforcement of intellectual property rights must not themselves “become barriers to legitimate trade”[108 ]but rather should contribute to innovation and social and economic welfare.[109]Further, the express protection in TRIPS of such features as geographical indications[110]may be taken to imply a liberal (non- protectionist) attitude to other varieties of the passing off suit (such as typically form the basis of a claim under “dilution” of a brand). Some speculative points may in any event be made concerning a possible low- protection environment of the future. Such an environment would go beyond the regime articulated by TRIPS, which was, it appears, influenced by the difficulties that large businesses would have had adapting to a radically new environment.[111]
Even pharmaceutical and agri-food concerns will sooner or later need to adjust to the kinds of trend identified by Van Caenegem.[112 ]Financial criteria (such as the cost margin between imitation and innovation) rather than the threat of litigation will come to determine business decisions in the intellectual property area. In fact, the distinction between imitation and innovation would itself begin to fade: there would be a premium on “transformation”, which involves both. In such an environment the legal protections will soon fall into disuse even if they are not legislated away. Together with the unprecedented technologies for reproduction, editing and communication represented by the internet, this situation would undoubtedly threaten the very existence of intellectual property. Anticipating such a brave new world, New Zealand might position itself as a location friendly to secondary creativity. Transformative creativity is after all, at least according to patriotic mythology, a strength of New Zealand culture. Monopoly and other forms of defensive, proprietary claim-staking may be deeply inappropriate in an economy that aspires to the riding of a “knowledge wave.” And as Pincus J observed[113]in Hogan v Koala Dundee, “Obviously, the applicants cannot monopolise the word ‘G-day’.”
[* ]Of Cariss & Company, Kew, Victoria. LLB (Hons) University of Otago 2002. This essay is a substantially revised and extended version of a Research paper originally submitted for Laws 444 Intellectual Property, Faculty of Law, University of Otago, 2002. Some response has been made in the revision to Professor John Smillie’s helpful feedback on the Research paper and I wish to express my thanks to Professor Smillie for his teaching and encouragement.
[1]Elvis Presley Enterprises Inc v Shaw (t/as Elvisly Yours Ltd) (1999) 47 IPR 441, 467
[2]W. Van Caenegem “Intellectual Property and Intellectual Capital” (2002) 48
Intellectual Property Forum at 10 (“Van Caenegem”)
[3]Ibid at 16
[4]B. Isaac, Brand Protection Matters (Sweet & Maxwell, 2000) (“Isaac”)
[5]Tot Toys v Mitchell [1992] NZHC 2902; [1993] 1 NZLR 325 at 334 per Fisher J
[6]Wineworths Group Limited v Comite Interprofessionel du Vin de Champagne [1992] 2
NZLR 327
[7]Ibid at 332 per Cooke P.
[8]Ibid at 331 per Cooke P.
[9]LEGO System Aktieselskab and Another v LEGO M. Lemelstrich Ltd [1983] FSR 155 at
165
[10]Van Caenegem at 21
[11]Isaac at 214
[12]Wineworth’s Group Ltd. at 330
[13]J. Glengarry “AnAnti-Dilution Trade Mark Law for New Zealand?” (2000) 6NZBLQ
258 at 261 (“Glengarry”)
[14]Toys R Us Inc v Akkaoui 40 USPQ 2d 1836 (MD Cal 1996)
[15]Hasbro Inc v Internet Entertainment Group Ltd 40 USPQ 2d 1479 (WD Wash 1996)
[16]Anheuser-Busch Inc v Andy’s Sportswear Inc 40 USPQ 2d 1542 (MD Cal 1996)
[17]CA Sheimer(M) Sdn Bhd’s Application (Decision of the Comptroller-General, 31 July
1998)
[18]Mead Data Cent, Inc v Toyota Motor Sales USA, Inc [1989] USCA2 468; 875 F2d 1026 (2d Cir 1989)
[19]Oasis Stores Limited’s Trade Mark Application [1998] RPC 631
[20]Stringfellow v McCain Foods [1984] RPC 501
[21]Harrods Limited v R. Harrod Limited (1924) 41 RPC 74
[22]Ibid at 86 per Warrington LJ
[23]Cadbury Schweppes Pty Ltd v The Pub Squash Co Ltd [1981] RPC 429
[24]Lahore 1981, cited by Isaac at 189
[25]A. Brown “Legislative Developments” (2002) 49 Intellectual Property Forum 51
(“Brown”)
[26]Glengarry at 268
[27]See M. Yestreboff “Managing the Transfer of ‘House’ Brands : Licensing and Trade
Mark Splitting” (2002) 13 Australian Intellectual Property Journal 87
[28]Glengarry at 268
[29]Newton-John v Scholl-Plough (Australia) Ltd (1986) ATPR 40-697
[30]Hogan and Another v Koala Dundee Pty Ltd and Others [1988] FCA 333; (1988) 83 ALR 187
[31]Ibid at 196
[32]Pacific Dunlop Ltd v Hogan [1989] FCA 185; (1989) 23 FCR 553
[33] Ibid at 33
[34]Sony Music Australia Ltd & Michael Jackson v Tansing (1993) 27 649
[35]Ibid at 656 per French J
[36]Twentieth Century Fox Film Corporation and Another v South Australian Brewing Co
Ltd and Another (1996) 34 IPR 247
[37]Ibid at 254 per Tamberlin J
[38]Tot Toys v Mitchell [1993] 1 NZLR
[39]Ibid at 361 per Fisher J
[40]Ibid at 362
[41]Ibid at 363
[42]Ibid at 364
[43]Ibid at 366
[44]Elvis Presley Enterprises Inc v Shaw (t/as Elvisly Yours Ltd) (1999) IPR 47 441
[45]per Simon Brown LJ at 467
[46]Ibid
[47]Pacific Dunlop Ltd at 23
[48]Copyright Law Review Committee, Simplification of the Copyright Act 1968, Part 1: Exceptions to the exclusive rights of copyright owners (Commonwealth of Australia,
1998) at App C26
[49][1993] NZHC 2004; [1994] 2 NZLR 91, High Court, Auckland; decided under the Copyright Act 1962
s 19
[50]Ibid at 108, per Blanchard J
[51] Ibid at 107, per Blanchard J
[52] CL 16/01 at para 24, per Salmon J
[54]Ministry of Economic Development, New Zealand, Digital Technology and the
Copyright Act 1994: A discussion paper (July 2001. Inspected in May 2002 at: http:
//www.med.govt.nz/buslt/int_prop/digital/index.html)
[55]Ibid at paras 52, 199; para 215 Q16
[56] Ibid at para 200
[57][2001] EWCA Civ 947; [2001] 3 WLR 1368
[58]Ibid at para 82
[60](1999) 31 EHRR 28
[61]Ashdown at paras 39, 42
[62]Ibid at para 46
[63][2001] FCA 108; (2001) 50 IPR 335 at 396
[64]Ibid at para 70
[65]Ibid at para 56
[66] [1999] 1 WLR 605, CA
[67]TCN Channel Nine at para 63
[69]TCN Channel Nine at para 63
[70]E Handsley and G Davis “Defamation and satire: Hanson v Australian Broadcasting Corporation” (2001) 9 Torts Law Journal 1; R Magnusson, “Freedom of speech in Australian defamation law: Ridicule, satire, and other challenges” (2001) 9 Torts Law Journal 269
[71]TCN Channel Nine at para 58 TCN; citing from FCA, Nine Network Australia Pty
Ltd v Australian Broadcasting Corp [1999] FCA 1864; (1999) 48 IPR 333 at para 36
[72]Copyright Law Review Committee, Simplification of the Copyright Act 1968, Part 1: Exceptions to the exclusive rights of copyright owners (Commonwealth of Australia,
1998)
[73]Ibid at 2.03
[74]Ibid at 6.143
[75]Ibid at 4.08
[76]Ibid at 5.06; also see for New Zealand, Copyright Act 1994 s 43(3)(c )
[77][2000] USCA9 462; 227 F 3d 1110 (9[th] Cir 2000), per Brunetti Cir J.
[78]S Halpern, C Nard, and K Port Fundamentals of United States Intellectual Property
Law (Kluwer, 1999) at 119 (“Halpern”)
[79] 127 L Ed 2d 500 S Ct. (1994)
[80][1998] USCA2 73; 137 F 3d 109 (2d Cir 1998)
[81]Halpern at 129
[82][1998] USCA2 288; 150 F 3d 132 (2d Cir 1998)
[83] Ibid at 143
[84]Ibid at 143 note 7
[85]Ibid at 142
[86][1999] USCA5 1070; 179 F 3d 384 (5[th] Cir 1999)
[87][2000] USCA9 462; 227 F 3d 1110 (9[th] Cir 2000)
[88]244 F 3d 1267 (11[th] Cir 2001).
[89]Campbell v Acuff-Rose at 515 per Souter J
[90][2001] USCA11 368; 268 F 3d 1257 (11[th] Cir 2001)
[91]Ibid at 1268 per Grady Jolly J
[92]Ibid at 1268, 1271
[93]Ibid at 1268
[94]An amendment to the Copyright Act 1976 of USA, Digital Technology and the Copyright Act 1994 at para 200
[95][1984] USSC 14; 180 F 3d 1072 (9[th] Cir 1999)
[96][2000] USCA9 80; 203 F 3d 596 (9[th] Cir 2000) at 605
[97] [1993] USCA9 19; 977 F 2d 1510 (9th Cir 1992)
[98]Ibid at 1522; Campbell at 519
[99]Isaac at 129
[100]Ibid at 308
[101]Ibid at 303
[102]Ibid at 191
[103]Ibid at 217
[104]Ibid at 213
[105]R. Goff and G. Jones The Law of Restitution (4[th] ed, Sweet & Maxwell, 1993) at 16
[106]Cadbury Schweppes Pty Ltd v The Pub Squash Co Ltd [1981] RPC 429
[107]G. Crocombe, M. Enright, and M. Porter Upgrading New Zealand’s Competitive
Advantage (OUP, Auckland, 1991) (The Porter Report)
[108]Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”), Preamble
[109]TRIPS Article 7
[110]TRIPS Article 22
[111]D. Gervais The TRIPS Agreement: Drafting History and Analysis (Sweet & Maxwell,
1998) at 26
[112]Van Caenegem (supra note 2)
[113]Hogan and Another v Koala Dundee Pty Ltd and Others [1988] FCA 333; (1988) 83 ALR 187 at
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