If you did not see "Gods of Egypt", you weren't the only one

The business of movies has three characteristics that have longed intrigued this blogger. The first is the dynamic whereby a small number of successful movies not only constitute a profit center, but also subsidize the majority of a studio’s movies, which are usually much less successful. Something similar goes in the book business, although the costs to produce a new book are usually only a fraction of what it takes to commercially launch a movie. The second is the notion of the “franchise”, where the initial movie is followed by multiple sequels, such the “Star Wars” series. As with any successful brand, the goal is for repeated custom, this time by the movie goer. The third is the notion of the “flop”, which seems to describe a movie made at a high cost under the belief that success is all but assured. When the flop is the maiden voyage of what the producers had hoped would be a multi-movie franchise, the pain is magnified.

This is not to say that movie makers have not been warned. In his classic book, Adventures in the Screen Trade Adventures, the screenwriter and author, William Goldman, famously wrote—

"Nobody knows anything...... Not one person in the entire motion picture field knows for a certainty what's going to work. Every time out it's a guess and, if you're lucky, an educated one.”

His observation is oft-quoted, but it does not keep movie mavens from continuing to delude themselves that this time is different. When they are wrong, they call it a flop.

We are now witness to the first major movie flop of 2016— “Gods of Egypt.” As described by Wikipedia,

"Gods of Egypt is a 2016 fantasy film featuring ancient Egyptian deities. The United States-Australia production is directed by Alex Proyas and stars Brenton Thwaites, Gerard Butler, Nikolaj Coster-Waldau, Chadwick Boseman, Elodie Yung, Courtney Eaton, Rufus Sewell, and Geoffrey Rush. Butler plays the god of darkness Set who takes over the Egyptian empire, and Thwaites plays the mortal hero Bek who partners with the god Horus, played by Coster-Waldau, to save the world and rescue his love."

This blogger must confess that there is little in this description that would have driven him to catch the 7:00 pm showing of the movie at his local movie theatre. But Lionsgate, the studio responsible for Gods of Egypt, did not have this blogger in mind. As the studio behind the mega-successful movie franchises “The Hunger Games” and “Divergent”, Lionsgate was probably seeking to lure the same youthful movie goers to the Gods of Egypt and thus build it into another blockbuster movie franchise.

Au contraire. With an apparent overweening sense of confidence that failed to take heed of William Goldman’s admonition, over $140 million was sunk in the making of the movie. But after the crucial first weekend, Reuters reported that the paltry take amounted to only $14 million across 3,117 movie theatres in the U.S., with an additional $24.2 million received from 68 international markets. According to Wikipedia, the overall take was a bit more, $48.4 million. Whatever the exact weekend take, the likelihood that there will be a sequel, much less that the movie will become a bona fide franchise, seems slight to non-existent.

Before blog readers take out their tissues to commiserate with Lionsgate, however, there is another data point that should be taken into consideration. As reported, Lionsgate’s CEO has assured investors that the company’s exposure was less than $10 million. This is so, because the company received an unspecified amount of foreign pre-sales and a tax credit from the Australian government for 46% of the film’s budget.

As for the pre-sales, that is a private matter between business types, where there will be winners and losers, as in any business arrangement. As for the tax credit, however, one wonders why the tax payers of Australia need become part of Lionsgate’s movie-making plans. The continuing ability of the movie industry to obtain tax benefits as an inducement to carry out production in a given locale seems to remain a constant, even if the benefits to the taxpayers are doubtful. To this extent, at least, William Goldman was wrong.

Philip Morris claim against Australia for Tobacco Plain Packaging Dismissed

The issue of plain packaging for tobacco is a controversial one, which not only has the obvious public health issues, but an additional dimension relating to the value of intellectual property rights. If a company cannot use its trade mark to promote its product, then what value does that brand actually have? It's a discussion that has blown up several times at the World Trade Organisation Council and the WIPO magazine reported on the dismissal by the High Court of Australia of the challenge by several tobacco companies to Australia's law introduced in 2012.

Philip Morris International's Asian operation, based in Hong Kong, has challenged the law at the Permanent Court of Arbitration under the Australia  / Hong Kong Agreement for the Promotion and Protection of Investment. PML Asia argued through their Australian counsel that Australia's plain packaging legislation virtually "eliminate Philip Morris branded business by expropriating its valuable intellectual property". The brief continues that "... the plain packaging legislation bars the use of IP on tobacco products and packaging, transforming PML form a manufacturer of branded products to a manufacturer of commoditised products with the

consequential effect of substantially diminishing the value of PM Asia's investments in Australia". Essentially the argument is that by requiring companies to use plain packages in Australia, the value of the trade mark is substantially diminished, although it's unlikely to be "billions" as a report in the popular UK newspaper, the Daily Mail, reported. Australis Government's Attorney General has an informative website about the case setting out the government's case here.

The claim was dismissed on 17 December 2015 on procedural grounds. The Court of Arbitration concluded apparently that it did not have jurisdiction to hear the case. The full decision has not yet appeared on the website as it is apparently being redacted to remove confidential information. Philip Morris predictably issued a press release noting that the case was dismissed on procedural grounds and noted that there was nothing ... that address let alone validates plain packing in Australia or elsewhere".

Other challenges to Australia's law are still ongoing. Ukraine has challenged the law at the World Trade Organisation, but that dispute has been suspended to try and reach a mutually acceptable solution.

The decision to dismiss Philip Morris' case against Australia may have been done on procedural grounds - and it will be interesting to read the decision when it is published (can anyone send us a copy?), but already other countries are looking at compelling plain packaging for tobacco products and are apparently encouraged by the decision.

Which brings us back to the fundamental question: what rights do IP holders actually have if they can no longer use their registered trade marks on their products. Is this a destruction of "brand value" by government action, which could and should trigger compensation claims? As a non-smoker, this blogger is more than happy with the decline of smoking. As a trade mark lawyer and IP consultant he is concerned about the implications of the decision. It's established law in many countries that a government may only take private property into public use if a compensation is paid ("eminent domain" in the US; "compulsory purchase" in the UK and Australia; "Enteignung" in Germany). The existing laws are generally based on the idea of expropriating physical property - can they (or should they?) be adapted to take into account government restrictions on the use of a registered trade mark.

More FTAs for the EU -- and here's a chance to have your say

IP Finance has learned that the European Commission is planning to launch free trade agreement negotiations with Australia, New Zealand, Tunisia, Morocco and India in the near future.  In this context the UK Government is conducting its own business survey about existing barriers to trade in these countries [these might include not only the operation of intellectual property rights but issues such as the ability to remit royalties and the manner of their taxation]. Says the UK Intellectual Property Office

"We are very keen to hear from you about challenges you face in these markets. Your responses will help us identify issues thatcould be addressed through trade negotiations, including those related to intellectual property at question 14.  We would encourage you to complete it by Friday 27 November".

Here's the web link to the survey (which is where you will find, inter alia, question 14). 

Differential IT taxation, geoblocking and the 'Australia Tax': proposals for reform

Earlier today, Parliament of Australia's Standing Committee on Infrastructure and Communications tabled its report on the inquiry into IT pricing entitled "At what cost? IT pricing and the Australia tax".  The Foreword, reproduced below, gives a good idea of what it covers:

The importance of IT products to every sector of Australian society can hardly be overstated. IT products are woven into the fabric of our economy and society, and have driven rapid change in the way Australians communicate, the way we work, and the way we live. 

Australian consumers and businesses, however, must often pay much more for their IT products than their counterparts in comparable economies. In many cases Australians pay 50 to 100 per cent more for the same product. 

Consumer and business concern over IT price differences prompted the Minister for Broadband, Communications and the Digital Economy, Senator the Hon. Stephen Conroy, to refer the question of IT pricing in Australia to the House of Representatives Standing Committee on Infrastructure and Communications for an inquiry and report. 

Evidence presented to this inquiry left little doubt about the extent and depth of concern about IT pricing in Australia. Consumers are clearly perplexed, frustrated and angered by the experience of paying higher prices for IT products than consumers in comparable countries.
High IT prices make it harder for Australian businesses to compete internationally and can be a significant barrier to access and participation for disadvantaged Australians (in particular Australians with a disability). 

Based on the evidence received over a 12 month inquiry, the Committee has concluded that in many cases, the price differences for IT products cannot be explained by the cost of doing business in Australia. Particularly when it comes to digitally delivered content, the Committee concluded that many IT products are more expensive in Australia because of regional pricing strategies implemented by major vendors and copyright holders. Consumers often refer to these pricing strategies as the ‘Australia tax’. [European, and particularly UK, readers will recall a similar phenomenon with regard to the price differential for downloads from iTunes. Not for nothing was the UK called 'Treasure Island'.  This blogger also recalls a good deal of resentment against regional technological bars that prevented the playing of legitimately purchased product in the 'wrong' continent]

While the Committee recognises that businesses must remain free to set their own prices in a market economy, it has nonetheless made a range of recommendations that are intended to sharpen competition in Australian IT markets. The Committee hopes that these measures will increase downward pressure on IT prices and improve the access of Australian businesses and consumers to cheaper IT products. 

Given the ever-increasing importance of IT products to Australian society and the economy – in driving innovation, reducing isolation in regional and rural Australia, or improving the lives of Australians with a disability – it is essential that Australians get a fair deal.

The Standing Committee comes up with 10 recommendations, of which the following are of particular note:

Recommendation 4
The Committee recommends that the parallel importation restrictions still found in the Copyright Act 1968 (Cth) be lifted, and that the parallel importation defence in the Trade Marks Act 1995 (Cth) be reviewed and broadened to ensure it is effective in allowing the importation of genuine goods. 

Recommendation 5
The Committee recommends that the Australian Government amend the Copyright Act’s section 10(1) anti-circumvention provisions to clarify and secure consumers’ rights to circumvent technological protection measures that control geographic market segmentation. 

Recommendation 6
The Committee further recommends that the Australian Government investigate options to educate Australian consumers and businesses as to:
* the extent to which they may circumvent geoblocking mechanisms in order to access cheaper legitimate goods;
* the tools and techniques which they may use to do so; and
* the way in which their rights under the Australian Consumer Law may be affected should they choose to do so. 

Recommendation 7
The Committee recommends that the Australian Government, in conjunction with relevant agencies, consider the creation of a ‘right of resale’ in relation to digitally distributed content [this recalls the EU litigation in UsedSoft], and clarification of ‘fair use’ rights for consumers, businesses, and educational institutions, including restrictions on vendors’ ability to ‘lock’ digital content into a particular ecosystem. 

Recommendation 8
The Committee recommends the repeal of section 51(3) of the Competition and Consumer Act 2010. 

Recommendation 9
The Committee recommends that the Australian Government consider enacting a ban on geoblocking as an option of last resort, should persistent market failure exist in spite of the changes to the Competition and Consumer Act and the Copyright Act recommended in this report. 

Recommendation 10
That the Australian Government investigate the feasibility of amending the Competition and Consumer Act so that contracts or terms of service which seek to enforce geoblocking are considered void.

This blog will watch with interest to see how things progress.

This item was picked up via a Tweet from the excellent Matthew Rimmer (@DrRimmer).

Personal property securities and IP in Australia: a new article

"The Personal Property Securities Act and IP: a simpler way?" is the title of an article by the Allens Arthur Robinson triumvirate of Tim Golder, Tom Reid and Thomas Middleton. This article has just gone live on the website of the Journal of Intellectual Property Law and Practice (JIPLP), where it may be accessed by subscribers or rented for a limited time by non-subscribers. According to the abstract:

"Australia's new Personal Property Securities Act came into operation on 30 January 2012. It regulates security interests in nearly all kinds of personal property, including IP, and contains rules governing priority between competing security interests. The Act expands the traditional concept of a security interest to include interests such as those arising under retention of title clauses.

The Act has replaced a range of registers of personal property security interests with a new, online Personal Property Securities Register, or PPSR, which will serve as an authoritative record for priority purposes. New security interests must be registered on the PPSR if the secured party is to have priority over holders of security interests in the same property, although there is a 24-month transitional period during which unregistered pre-existing security interests will remain protected.

IP practitioners should be aware of practical issues that may arise when registering or searching for security interests in unregistered IP, such as copyright. Non-Australian practitioners will also need to be mindful of the potential for the Act to apply to transactions involving Australian registered IP, even where the owner of the IP is not Australian".

The IP Finance blog has been monitoring this topic since it was first mooted back in 2008 (see earlier posts here, here and here).

Australia: new register affects security interests in IP

The most recent Arthur Allens Robinson IP Focus is on "IP and the transition to the Personal Property Securities Act".  According to its authors (Tim Golder, Tom Reid and Geoff McGrath), companies and individuals that own, license or hold security interests in intellectual property should be aware that the Personal Property Securities Register (the 'PPS Register') will go live on 30 January 2012, ushering in the reforms implemented by the Personal Property Securities Act 2009. This focus looks at the transitional arrangements and the implications of the new regime.

IP owners and their advisers should be aware that security interests over intellectual property which have already been registered with IP Australia (the Australian patent and trade mark office) will not be automatically migrated to the PPS Register and will need to be re-registered. During a 24-month transitional period, pre-existing security interests will continue to be protected -- even if they have not yet been registered on the PPS Register. Once that period ends, owners of pre-existing security interests that have not been registered will risk losing priority.

Thanks are due to Robyn Chatwood (Slaughter and May) for drawing my attention to this item.

Australia's new personal property securities regime affects IP from next May

In May 2008 the IP Finance weblog noted proposals for reform of the law relating to personal property securities and intellectual property in Australia. A recent piece, "Personal property securities reforms and intellectual property", by the Allens Arthur Robinson team of Diccon Loxton, Tim Golder, Rebecca Sadleir and Robyn Chatwood, brings the topic up to date, summarising the impact of new rules that come into effect in May 2011. You can read it in full here.

The new law is to be found in the Personal Property Securities Act 2009 (Cth), which establishes a single national law governing security interests and similar transactions with respect to almost  all tangible and intangible assets -- not just IP -- and is fairly similar to the law applicable in New Zealand. It will make it easier to securitise IP assets when raising funds, providing a single register of security interests for all registered IP rights. Among the many points to note is that existing transactions raising finance against projected licensing royalties or franchise fees will be affected by the reforms and will therefore need review.

Seal-a-Fridge: even franchising has its limits

One of the best ways of generating quality earnings from a trade mark is by licensing its use under a business format franchise. In theory, once the business formula is tried and tested, the franchise becomes a licence to print money: the licensee invests in premises, equipment, hardware and labour, while the licensor -- while receiving sign-on fees, possible service and consultancy retainers and regular royalty payments --advertises the franchised service and reaps the benefit as the brand equity just keeps rising.

There are however limits to the money-making potential of the franchise format, as can be seen from a recent episode in Australia. In "Court decision brings cold comfort to franchisor", Tim Golder, Robyn Chatwood and Ben Mee (Allens Arthur Robinson) discuss in their firm's Intellectual Property Focus a complaint made against Seal-A-Fridge, in which the Federal Court ruled that the franchisor had abused its position of strength in order to impose significant increases in fees payable by its franchisees. This case also tested out the legality of a franchisor withholding its consent to assignment of a franchisee's interest to a new licensee unless the latter executes a franchise agreement which gives the franchisor additional benefits.

After explaining the facts of the complaint, the relevant legal principles and the outcome, the authors conclude as follows:

"... the case serves as a warning to franchisors who seek to take advantage of a franchisee's request for consent to an assignment of the franchise agreement. A court may find unconscionable conduct if consent is used as a lever to extract a better bargain than was originally made by the parties to the agreement, although it appears that evidence of bad faith may be required, as an erroneous construction of a contractual right will not in itself be unconscionable. However, careful drafting of the franchisor's contractual rights with a consideration of both this decision and Clause 20 of the Franchising Code may provide franchisors with greater flexibility in relation to the terms by which 'new' franchisees introduced under a transfer are bound".

IP Australia's IP tax advice

IP Australia's IP Toolbox offers a really useful page full of information concerning the tax implications for various IP regimes. Apart from breaking down current tax breaks and liabilities by (i) type of intellectual property right or product and (ii) species of tax, it also supplies information as to local variations in taxes across the different states. Considering that there are three sets of variables at play here, this page may just come in handy to anyone considering how, or where, to start an IP-based business in Australia.

The Vegemite/iSnack Trade Mark Saga Down Under: Fiasco or Triumph?

I have always wondered to what extent there is really no such thing as a good trade mark; at the most, there are bad trade marks that you simply wish to avoid. By this I mean that, as long as a trade mark passes muster legally, such that no one can challenge it as being too descriptive, and no third party can assert rights against the mark: it does not really matter at the end of the day what the precise mark actually is.

I thought about this question in reading an article that appeared on 3 November on nyt.com. Entitled "Vegemite Contest Draws Protests", under the byline of Meraiah Foley, the article describes a chain of events that began in July 2009 in connection with finding a name for a new variety of Australia's most distinctive food product--Vegemite. This product is described by the article as "salty, gooey yeast beloved millions of Australians", akin to that icon of the English breakfast table--Marmite. Akin perhaps, but in the eyes (palate?) of millions of Australians, Marmite is clearly inferior to their beloved Vegemite.

I have to admit--I have never understood the culinary attraction of Marmite, which means that I would probably also find Vegemite difficult to swallow. Perhaps the secret of Vegemite is a mix of culture and timing. As observed in the article, well-known Sydney chef Bill Granger observed that "Australian food was really bad until the 1970s: boiled meat and vegetables without any butter or salt. Vegemite was one of the things that actually had any flavor, and that's why it became so incredibly popular It is one of the only foods that is unique to Australia, and people see it as being quintessentially Australian." Whatever the reason, it seems that Vegemite has itself become an icon of Australian food products.

So what does any of this have to do with trade marks? It seems that the producer of Vegemite, Kraft Foods Australia, sought to launch a new variety of the Marmite product (mixed with cream cheese) by means of a contest to find a name for the gooey delight. To this end, Kraft caused jars and jars of the new product to appear on Australian supermarket shelves, with the words "Name Me" on the label. Weeks passed, and more than 3 million jars were sold (1 jar for nearly each 7th denizen of Australia), the product still remaining nameless. On 26 September, Kraft announced the winner via an expensive ad slot that appeared on the televised finals of the Australian football league--"Vegemite iSnack 2.0".

Now I would have thought that with the naming of the new product, the Vegemite business would return to normal. Au contraire. Anger poured in from all directions, inlcuding Facebook, Twitter, and a dedicated website (called "Names that are better than iSnack 2.0"). One online commentator called for the 27-year old designer who had come with the winning name to be "run naked through the streets of Sydney 'as retribution for his cultural crime' ". Another commentator simply said that the name was "un-Australian".

Kraft's reaction (or retribution) was soon to arrive. Four days later it announced that it was putting the name up for a re-vote. The ultimate winner, selected from an online and telephone poll, was --"Cheesybite." Product with the new name will appear on the shelf in a few months, after all of the jars with the "iSnack 2.0" name are sold.

Where Did You Hide the Cheesybite?

A public relations and marketing disaster for Kraft, no? Well, it it is not clear. As for the impact on Kraft's bottom line, the results were in fact spectacularly good. Sales for the "iSnack 2.0"-branded product rose 47% during the first two weeks of sales, while the sales of the original Vegemite product remained unaffected. In other words, Kraft actually increased sales for the Vegemite line. As well, the fact that the product had reached approximately 15% of all Australian households was a marketing achievement that brand managers usually only dream about.

There are those, especially with a conspiratorial bent, who seem convinced that Kraft planned the entire operation as a way of getting the consumers' attention amidst a cluttered and competitive supermarket environment. I rather doubt that, although Kraft's rapid response to the public outcry and subsequent revetting of the name must be applauded as an especially market-savvy move.Getting back to the question I raised at the beginning of this blog post--is there such a thing as a bad trade mark? I guess the answer, based on the Vegemite 'iSnack 2.0" experience, is both "yes" and "no."

On the one hand, the original mark per se seems to have been a bad marketing ploy, taking Australian culture and sensibilities into account. On the other hand, the trade mark issue was quickly resolved, the issue quickly disappeared, and Kraft does not seem to have suffered any harm to its business. So does, or does the mark, not matter? For the last word, I bring the words of Professor of Marketing, Paul Harrison, from Deakin University in Melbourne: "If people like the taste of it, they'll keep buying it--if they don't, they won't. Ultimately, you don't want people thinking too much about your brand, you want people to become habitual about it."

"Smarter than the average number ..."

Julian Gyngell's talk on "Phonewords and Finance", kindly hosted yesterday at the London office of McDermott Emery & Will, was a treat for those who attended. In short,

* Australia has instituted a system by which Smartnumbers, these being the numerical bases for alphanumerical telephone numbers, are auctioned to the highest bidder, subject to minimal conditions and limitations (thus a bid may be made for 13-473462623, which is the numerical equivalent of 13-IPFINANCE);

* the successful bidder for a Smartnumber acquires no more than a licence to use that number in any alphanumerical form, but this licence is transmissible even, it seems, to parties that are disqualified from bidding from it initially;

* there is no clear guidance as to whether the use of a Smartnumber in which the alphanumerical form incorporates a trade mark or trade name constitutes a trade mark use which can be prohibited by the trade mark owner;

* there are no provisions for the interplay between (i) Smartnumbers, (ii) trade marks, (iii) domain names and (iv) company names, though particular problems arise where a word which is a generic term for some products is a well-known trade mark for others (eg APPLE)

* there appears to be no accepted basis for the calculation of the value of a Smartnumber at its point of acquisition or disposition, nor has any practice yet developed with regard to the place of the Smartnumber within the balance sheets.

The event was both pleasant and informative -- and there's more to come. Julian's paper is likely to be published towards the end of this year in the Journal of Intellectual Property Law & Practice (JIPLAP). If you want to be notified when it comes out, email me here and I'll let you know.

10 minutes a month -- a small price to pay

Now it's Australia's turn to introduce legislation on resale royalty rights for second and subsequent sales of original art works. This article in the Allens Arthur Robinson IP newsletter by Jim Dwyer and Marina Lloyd Jones gives a clear summary of the proposals, which are expected to turn into law by 1 July 2009. Regarding the impact of resale royalty rights in Australia the authors write:

"Some fear that the resale right will have a negative impact on the Australian art market, and that works will be resold in New Zealand, where no such right exists. However, the experience in the UK is cited to allay this concern. A 2008 study commissioned by the UK Intellectual Property Office found no evidence that the introduction of the right had diverted business away from the UK or reduced prices. The size of the UK art market had, in fact, grown as fast (if not faster), and prices had appreciated faster, than in jurisdictions where there was no such right. Another concern relates to the administrative costs associated with compliance. The Australian Copyright Council points out that the royalty will be payable on a small number of resales and that art market professionals in the UK were found generally to take 10 minutes a month to meet their obligations under the resale royalty scheme".

The experience of the UK has been uniquely disappointing to critics of resale royalty there. Clearly the introduction of this right had about as much impact as a candle in a hurricane.  Some supporters of the right are also disappointed: in their view if it hasn't made a discernible impact on the art market the level of payments to artists, it's not doing enough to improve the position of artists and the scale of payments should be boosted accordingly.

Illegality doesn't prevent franchisor recovering sums owed under a contract

The latest Allens Arthur Robinson Focus on Franchising carries a note by Andrew Wiseman and Tim Holden on Master of Education Services Pty Ltd v Ketchell, an important decision on illegality and its effect on the ability of the parties to seek or reclaim money from one another.

In short, franchisor Master of Education sued Ketchell, the franchisee, before a local court in order to recover for money due under a franchise agreement. Ketchell claimed that since Master of Education failed to comply with clause 11 of the Australian Franchising Code, the franchise contract became unenforceable for statutory illegality. At trial the court concluded that, while Master of Education did not comply with the Code, its failure to do so did not render the receipt of the non-refundable payment illegal.

The New South Wales Court of Appeal concluded that the franchise agreement was effectively prohibited by the law; accordingly Master of Education could not recover the moneys claimed. The High Court has since unanimously upheld Master of Education's appeal, much to the great relief, presumably, of many a worried franchisor.

IP securities Down Under

Lorin Brennan has been working hard on a Commentary on the Australian Personal Property Securities Bill 2008. The IP community has until THIS FRIDAY, 15 August 2008, to submit comments and Lorin is anxious to receive comments on his commentary (he writes "identifying any errors would be most welcome").

For the record, Australia is one of the first countries to attempt to amend its secured financing law by reference to the UNCITRAL Guide on the securitisation of intangibles but without the benefit of the Annex relating to IP rights. The contents of the Commentary go like this:

"I. EXECUTIVE SUMMARY
II. Under Section 5 a Secured Creditor Should Be Treated as a Rights Holder of Intellectual Property
III. Section 21 Should Clarify Whether It Intends to Treat a Traditional Assignment of Intellectual Property as a Security Interest.
IV. Section 30 Should Not Allow a Security Interest in Tangible Property to Apply Automatically to “Related” Intellectual Property.
V. Sections 45 & 47 of the Bill Should Clarify the Law Applicable to a Security Interest in Intellectual Property.
VI. Section 69 Should Not Require a Secured Creditor To Make Continuous Filings Against Subsequent Transferees to Maintain Perfection of Its Security Interest.
VII. Sections 82 & 91 Should Not Allow A Person Who Acquires An Interest “In the Ordinary Course” To Take Free of an Intellectual Property Security Interest.
VIII. Sections 92 Should Clarify The Relationship Between The Priority Rules in the Guide with Those in the Intellectual Property Statutes.
IX. Section 116 Should Not Allow Transfers of Intellectual Property Licences Despite Contrary Licence Terms.
X. Section 113 Should Not Allow An Execution Creditor To Gain Automatic Priority Over An Unperfected Security Interest Without Registering In an Applicable Intellectual Property Registry".

If you've got some time to look at this document, peruse its contents and Lorin's comments on them, email me here and I'll send it to you a.s.a.p. Comments should be sent to Lorin here. Also, if you have any pertinent comments, I'll be happy to post them on this blog. Finally -- this blog has quite a few Australian readers: this is a great opportunity for you to take the initiative!

PPS proposed for Australia

In November 2006 the Australian Attorney-General released a discussion paper proposing significant Personal Property Securities (PPS) reforms.[1] In this context, “personal property” is any form of tangible or intangible property (other than land or buildings) and includes IP rights. The proposed reforms intend to establish a single, national PPS regime for the registration, protection and enforcement of personal property securities in Australia. The immediate need for reform is the existence of more than 70 separate Acts currently governing PPS in Australia and the reforms are based on similar PPS systems adopted in Canada and the United States.

On 16 May 2008,the A-G released a “consultation draft” of the Personal Property Securities Bill 2008 for public comment.[2] Submissions have been invited by 15 August 2008. At the same time, the A-G’s Department also released a Request for Tender that invites bids from information technology companies interested in building the new electronic PPS Register.

The stated goals of the PPS reform are

* to simplify the existing, fragmented PPS system by creating a single, national online register covering all forms of personal property (including, therefore, all forms of IP);
* to provide a more certain system of taking, registering, and searching security interests over all personal property; and

* to make secured lending more cost-effective and attractive to lenders.

The consultation period runs for three months and, although the PPS legislation has a high political priority, it would be optimistic to think that the Act in its final form will be passed before 2009. Drafting the legislation is the (comparatively) easy part - building the IT platform for the PPS Register may take much longer.[3]

[1] Attorney-General’s Department, “Review of the Law on Personal Property Securities – Discussion Paper 1 – Registration and Search Issues”, November 2006.
[2] See here. Press Release here
[3] See the Press Release here

This item was supplied to IP Finance by Australian solicitor Julian Gyngell.

New regime for film finance down under

From 1 July a new statutory body will be responsible for film production finance in Australia: Screen Australia will merge the present functions of three bodies -- the Australian Film Commission, the Film Finance Corp. and documentary production agency Film Australia -- into a single agency which will be responsible for film and TV industry financing and cultural development. The National Film and Sound Archive will be spun off as a separate government agency. According to the government, the new agency

"will help restore investor confidence and put the industry on a new growth path. It will ensure a strong Australian voice across film, television, documentary and children's programs".

Screen Australia will oversee the new financing incentives that were put in place last year, including a 40% tax offset available to producers of qualifying Australian films, a 15% locations offset and a 12.5% tax offset for postproduction.