AMTIL FORUMS

Avoiding the pitfalls of intellectual property.

Ben Mott gives advice about securing your IP rights, the possibility of infringing others’ rights and an overview of the different types.

‘Intellectual property’ (IP) refers to the ownership of creations of the mind. IP rights are a set of legal rights there to guard innovators from imitators. There are two key ways to lose out with IP rights: infringing others’ rights and failing to secure your own rights. Infringing others’ IP rights

It’s possible to infringe IP rights that you never knew existed, and it’s possible to infringe without copying, eg. you might independently develop a new product then not be able to use or sell it without infringing another company’s patent, even if you had never heard of the other company and had no idea that they had any interest in a similar product. Before investing in any new project, it’s prudent to consider whether others’ IP rights might be problematic. The pragmatic option may well be to simply forge ahead with the project; there might be good reason to feel comfortable that IP rights are unlikely to be a problem. By way of example, if you are developing your own version of a competitor’s 25-year-old machine, you can take comfort from the fact that, generally speaking, no in-force patent can validly cover a product that was publicly known more than 21 years ago. Other times, ‘Freedom To Operate’ (FTO) searches for potentially problematic rights may well be called for, eg. if you are about to develop a product with similarities to a competitor’s clever new product, it might be foolhardy not to check for rights that the competitor could hold against you. FTO searching takes a wide variety of forms. A basic search for problematic trade mark rights might cost only a few thousand dollars. You might consider this basic due diligence when weighted against the risk of finding that you can’t use your new brand after you’ve invested in a marketing campaign and filled a warehouse with branded stock. On the other hand, general patent FTO searching can be a far more significant exercise. Securing your own rights

Copying is often permissible in Australia. Usually, others are free to copy your new manufactured products unless you take action to secure your IP rights. That action should be proactive. The invention/ design should be kept secret and not dealt with commercially before initial patent/design applications are filed. Australian companies often lose out because they wrongly assume that their new products or processes are not clever enough for a patent, whereas you don’t need something especially clever – a non-obvious advance is enough. If you have a new product/ process, the question is often not so much ‘can it be patented?’ but ‘should it be patented?’. This involves weighing up the likely return on the non-trivial costs of pursuing patent protection. How do the patent costs compare to the margin that you will lose if you face price competition from imitators? The sums are different for trade mark registration. I regard trade mark registration as ‘basic business hygiene’. Usually, the costs are a lot less than patent costs and equivalent to amounts that can disappear ‘in the blink of an eye’ if you ever find yourself needing to rely on unregistered trade mark rights to deter an imitator. Moreover, unregistered rights might not be available, eg. if you don’t yet have a reputation in the relevant market (or more to the point, can’t prove that you have that reputation).

IP advisors and final thoughts

There are different types of IP rights (see side bar) and IP advisors have their specialities; a patent attorney is probably the right person to help you guard your new mechanical product, whereas you should turn to a copyright lawyer if someone has scraped details from your website. To avoid the pitfalls of IP, keep IP in mind and call your advisor whenever a potential issue arises. Any IP advisor worth their salt will be happy to have a brief chat without charge – and the advice might be that no action is called for, but at least you will know.

Wadeson provides a wide range of IP services, combining engineering and IP experience across a wide range of technologies. Ben Mott is Principal, Mechanical Engineer & Patent Attorney. ben.mott@wadesonIP.com.au Ph: 03 9819 3808 www.wadesonIP.com.au

Intellectual property rights

Patents can be used to stop others copying important functional details of new products and processes. They last for up to 20 years. Design registrations can be used to stop others copying the appearance of new products. Australian design registrations last for up to 10 years. Copyright provides protection for a wide range of ‘works’ including literary and artistic works, but Australian copyright usually does not protect three-dimensional products once in production. In most countries, copyright is automatic – there is no need to apply for protection. Trade secrets do not protect you from reverse engineering or from your competitors independently developing similar technology. Trade mark registrations can be used to stop others using your trade marks (e.g. name and logo). They can last indefinitely. Unregistered trade mark rights are also available to stop counterfeiters, but are usually harder to enforce and therefore less of a deterrent than registered rights.

What are the consequences if an employee does not comply with health & safety regulations?

Health & safety legislation are designed to decrease the risk of accidents and fatalities in the workplace. When employees fail to follow these regulations, it is often due to the failure of the employer to provide a safe working environment or proper training. Brendan Torazzi explains.

The Workplace Health and Safety (WHS) legislation does not cover penalties for employees who do not comply with safety regulations. In most cases involving a safety violation, the employer takes responsibility. However, there are exceptions, such as acts of gross misconduct. Most people do not fully understand the potential consequences if an employee does not comply with health and safety regulations. The following should help clear up any confusion. Why do breaches happen?

Most breaches are the result of a lack of training or inadequate safety measures in the workplace. Compliance is the employer’s responsibility. The employer must ensure that employees have the necessary skills, knowledge, and resources for dealing with potential hazards and risks. According to section 25 of the Work Health and Safety Act, employees must take reasonable care for their own safety and, of course, the safety of others. They must also cooperate with the employer to comply with any requirements of the OHS Act. Section 21 of the WHS Act details the duties of employers. Employers must maintain a safe work environment that is without health risks, as far as reasonably practicable. This typically requires the employer to: 1. Provide access to safe machinery and tools 2. Ensure that employees can handle and transport materials without health risks 3. Provide access to adequate facilities, such as washrooms and first aid 4. Provide access to training and safety information so that they can work safely Employers are also required to monitor the health of the employees and the conditions of the workplace. Employers must also allow employees to select a health and safety representative (HSR). The HSR has the right to issue a prohibition notice when they detect safety violations. When employers fail to uphold their duties, employees are more likely to breach health and safety regulations. In most situations, the employer is the one that may face consequences of non-compliance with health and safety. However, if an employee intentionally fails to comply with regulations despite having adequate equipment and training, the employer has the right to follow dismissal procedures. What are the categories of offences?

The Workplace Health and Safety (WHS) Act created four categories of offences for breaches of the work health and safety legislation: Industrial manslaughter; Category 1; Category 2 and Category 3 Industrial manslaughter is the highest category. It occurs when the negligence of the employer or senior officers results in the death of a worker. The maximum penalty for an individual is 20 years imprisonment. The maximum penalty for a corporate body is $10m. A Category 1 offence is a serious breach involving reckless behaviour that creates the risk of death or serious injury. Penalties for Category 1 include fines up to $3m for corporate bodies, $600,000 for PCBUs, and $300,000 for individuals. PCBUs, senior officers, and individuals may also face up to five years imprisonment. A Category 2 offence is defined as the failure of an individual to comply with their health and safety duties resulting in the risk of death or serious injury. PCBUs may face fines up to $300,000 and employees may receive fines up to $150,000. A Category 3 offence is the failure to comply with a safety duty when the violation does not create the risk of death or serious injury. Individuals may face fines up to $50,000, PCBUs may be fined up to $100,000, and corporate bodies may be fined up to $500,000. However, minor offences may simply result in spot fines with smaller penalties. Along with the penalties listed, the Court may also order the employer to follow a “Health and Safety Undertaking.” The enforceable undertaking may last for up to two years and requires the employer to avoid any further safety breaches. What is the right course of action?

When an employee fails to comply with safety legislation or codes of practice, the employer should begin an investigation into the violation. If the investigation determines that the violation was due to a breach on the employer’s part, the employer should take corrective disciplinary action to prevent the safety breach from reoccurring. If the internal investigation finds that the employee is at fault, the employer typically issues a written warning or a provisional improvement notice (PIN). Employees must be given the chance to correct their behaviour, as with dealing with an employee that is frequently late. Multiple warnings may result in the dismissal of the employee. After giving the employee a chance to correct their behaviour, the employer may choose to dismiss the employee to prevent any further breaches of health regulations. However, maintaining a record of warnings for past violations is necessary when dismissing an employee, as they may file a claim of unfair dismissal with the Fair Work Commission (FWC). How can courses help?

Training courses can help employers reduce the occurrence of breaches of health and safety at work. In Australia, employees may receive industry-standard training through registered training organisations such as AlertForce. Employers are ultimately responsible for the safety of their workers and work sites. Every employee should receive access to the necessary equipment and training to manage health and safety hazards.

Brendan Torazzi is the CEO of AlertForce - a registered training organisation specialising in short Health and Safety courses to meet compliance. Brendan also runs the Australian Health and Safety Business Podcast and is the owner of OHS.com.au, an online marketplace for safety courses. Ph: 1800 900 222 www.alertorce.com.au www.OHS.com.au

Ensure promotional material complies with Australian Consumer Law

Regardless of how you promote products and services to consumers, it is critical to ensure that all product packaging, advertising materials and marketing collateral complies with Australian Consumer Law (ACL), explain Emma Simpson, Ian Rosenfeld and Ian Liu.

False and misleading representations not only lead to distrust in your brand and reputation but can also open your business up to substantial penalties from the Australian Competition & Consumer Commission (ACCC) if you have breached the Australian Consumer Law (ACL). Manufacturers need to be cautious when specifying “country of origin” or “Made in Australia” claims. There are specific requirements under the ACL that must be met to substantiate such claims. The potential consequences have been demonstrated in a recent case where the ACCC contended that Kimberly-Clark had falsely marketed their products as “Made in Australia” on their website. The items’ packaging correctly stated their country of manufacture. To ensure your business is compliant, we have provided the key points to consider and broken down the essential facts of the case of ACCC v Kimberley-Clark [2020] FCAFC 107. Advertising and promotional material cannot make false or misleading claims

The ACL is a national law aimed at protecting consumers and ensuring fair and transparent trading in Australia. When advertising and promoting products and services, the ACL requires that businesses must not: 1. engage in conduct that does or is likely to mislead or deceive; and 2. make false or misleading statements. Businesses risk breaching the ACL if they do not ensure that all promotional materials (including packaging, websites, social media content and brochures) do not create an overall misleading impression about, for example, the quality, style, model, history or the country of origin. The ACCC is vigilant in monitoring claims made by businesses in their advertising and promotional materials and enforcing the ACL to protect the welfare of consumers and prevent conduct by businesses which could be harmful to consumers. One claim which has come under scrutiny by the ACCC is “country of origin” or “Made in Australia” claims. Country of origin claims can include: - explicit claims that a product was grown, produced, or made in a certain country or place; and - the use of images, logos and/or words which suggest that a product originated in or from a particular country or place. Claims or representations made must be accurate and not mislead or deceive consumers. The ACL sets parameters around which such claims can be safely made without raising concerns under the law. For example, to sustain a representation that goods are the produce of Australia: (a) Australia must be the country of origin of each significant ingredient or significant component of the goods; and (b) all, or virtually all, processes involved in the production or manufacture of the goods must happen in Australia. Case study: ACCC v Kimberley-Clark [2020] FCAFC 107

In 2016, the ACCC instituted proceedings against Kimberley-Clark, alleging it had made false or misleading representations related to “flushable” wipes marketed and supplied in Australia, and that these representations contravened the ACL. The ACCC’s case contended that Kimberley-Clark breached the ACL by marketing its Kleenex Cottonelle Flushable Cleansing Cloths as “flushable”: that is, the wipes would not cause harm to household and municipal sewerage systems. Although the Federal Court and ultimately the Full Court of the Federal Court dismissed the ACCC’s case related to the “flushable” claims, the parties agreed that Kimberley-Clark had made a false or misleading representation that its wipes were “Made in Australia”, when they were not. The representation was made on the footer of the product website by a “Made in Australia” logo, displayed from late October 2015 to late February 2016. The product’s packaging correctly stated the wipes’ manufacture location. The maximum penalty for corporations engaging in misleading or deceptive conduct regarding their products is the greater of (a) $10,000,000, (b) three times the value of benefit received, or (c) 10% of annual turnover in the preceding 12 months. In this case, the Federal Court imposed a penalty of $200,000 on Kimberley-Clark for the false or misleading “Made in Australia” representation. What does this mean for manufacturers?

The penalties imposed by the Federal Court in the Kimberley-Clark decision reminds manufacturers to be aware of and understand their obligations under the ACL when promoting and selling products. It makes no difference whether a business intends to mislead consumers or not. A representation will be false, misleading, or deceptive if it induces or is capable of inducing error. When the representation is directed to the public, it will be judged according to the impression it leaves on the ordinary or reasonable members of the public. Care and diligence at all times is critical. Accordingly, manufacturers should: - review product packaging, websites, social media content and other advertising and promotional materials against the requirements or ACL (particularly country of origin labels) to ensure materials are accurate; - ensure clear processes are in place for singing off product labelling and advertising materials including ongoing reviews of existing materials; - provide ACL training to staff. Manufacturers should also hold their competitors to account for false or misleading claims on their collateral.

Rigby Cooke Lawyers are experienced in advising manufacturers on their obligations under the ACL. If you require advice concerning your obligations, or if you would like assistance reviewing your or a competitor’s marketing materials for compliance, please contact us. Ian Rosenfeld is Partner, Corporate & Commercial, ph: 03 9321 7850 or IRosenfeld@rigbycooke.com.au. Emma Simpson is Senior Associate, Corporate & Commercial, ph 03 9321 7805 or ESimpson@rigbycooke.com.au. Ian Liu is Lawyer, Corporate & Commercial

An insurance broker = good business sense

With a multitude of individual insurance policies offered through multiple brands, it can be difficult to find the one which works best for you. For this reason, insurance brokers are a valuable guide, as explained by BMS. As a business owner, it can be tempting to seek short cuts to What insurance brokers do find your best-fit insurance cover. The internet offers you an overwhelming range of options, but it can be tricky to work out the right cover to suit your business needs (and cheaper is not always the best). Also, other insurance markets may be available to an insurance broker, which are not directly accessible by business owners. As insurance brokers, it’s our business to navigate the information tsunami. We offer professional advice with expertise in insurance and risk management. Our aim is to scaffold business growth - and support you in selecting your best-fit insurance cover. Once you’ve purchased the policy, we keep tabs on it, your circumstances, and how it relates to you. You could have then taken out a policy because it was quick and ticked most of your boxes. Maybe the impact of COVID-19 has belatedly made you take to the fine print with a magnifying glass. We drill down into insurance products and policies for insights into the finer details such as the: But you may still not have taken the cover that is best for your • Terms and conditions in the policy business – and this is where a broker can provide you with the • Benefits (also known as optional inclusions) required advice. • Exclusions (these are critically important to ensure you don't For example, did you have a chance to check the independence have nasty surprises when you need to make a claim) of the comparison website? Social proof might have weighed in • Costs of a diverse range of competing insurance policies, and on your decision-making too, rather than doing your usual due diligence. • Validity of the insurance cover when there are changes in the business. Spoilt for choice We’ll also advocate for you when making a claim, seeing that With many individual insurance policies offered through multiple process through and allowing you to focus on running your brands, and distribution channels across Australia, insurance business. brokers are a valuable guide to help businesses determine which policy offers the best fit for their needs. Also, all the options available A licence to broker to business owners is not always accessible via online platforms. To become a broker, we’ve each undertaken training and must It can be hard work finding the right one. A quarter of sole traders have no insurance, according to an Industry Council of Australia report. Meanwhile, one in 10 businesses underinsure their business successfully apply to the Australian Securities & Investments Commission to secure an Australian Financial Services Licence. We can also do this work as a representative of a licence holder. assets, saying: This licence compels insurance brokers to provide “efficient, honest • “I can’t afford to pay more for insurance.” and fair financial services” and to comply with the Corporations Act 2001. We must also follow the Insurance Brokers’ Code of Practice. • “Premiums are too high”, or Safety (and savings) in numbers • “You can never be adequately insured.” Licencing, laws, and the code of practice give a broker’s client great Maybe you’ve thought or said the same about your own business? peace of mind. DIY insurance cover is not your best bet Once we’ve discussed your insurance needs and risk management In short, businesses need to protect their assets, customers, issues with you, we could suggest bundling policies together to employees, business owners, and earnings. There’s plenty more offer you savings. But, if you prefer to spread your policies among that companies might need to insure, including compulsory different insurers, you’ll still do well to use a broker. coverage. In fact, that process helps pre-qualify you for a policy in the eyes If you’ve gone for the Google ’quick-fix’ option, you could be paying of an insurance company. They see you as a lower risk because higher insurance premiums after an initial honeymoon period. you’ve taken on board your broker’s expert advice. That’s why Chances are you’ll need to renegotiate with an insurance company brokers can access better rates for their clients than if a business for a better rate or elect to take a higher excess to reduce your dealt directly with an insurance company. premiums. This will need to be repeated for each of your policies. Having a broker on your side helps make you more savvy about The insurance companies that provide on-line insurance options risk management in your business. It’s a proven way to ensure you will not provide advice to you as a business owner on the insurance have sufficient cover for your risk exposure, leaving you to get on needs for your business – whereas an insurance broker is able to with what you do best - running your business. provide you with insurance advice specific to your business. BMS is a dynamic global broker that provides specialist Would it make better business sense to deal with the same person insurance, reinsurance and capital markets advisory services. for all of your business insurance policies? Someone who’ll guide you when your policy needs reviewing, provide regular updates and take the stress out of insurance for you. Established in 1980, today, $2.6bn of premiums are placed each year by BMS and more than 450 people are employed worldwide. BMS has 19 offices around the world in key hubs including London, New York and Bermuda. The BMS team is This is where we come in. Insurance brokers manage more than highly experienced and respected in the market. We value our 90% of commercial insurance transactions in Australia - providing strong personal relationships with clients and contacts which economies of scale to achieve competitive deals and the experience – together with our entrepreneurial flair – enable us to get the to advise on the insurance needs for your business. best solutions for our clients. ph: 1800 290 978

amtil@bmsgroup.com www.bmsgroup.com