Koninklijke Philips & Anor v Remington
[2001] HCATrans 95
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Sydney No S175 of 2000
B e t w e e n -
KONINKLIJKE PHILIPS ELECTRONICS NV
First Applicant
PHILIPS ELECTRONICS AUSTRALIA LIMITED
Second Applicant
and
REMINGTON PRODUCTS AUSTRALIA PTY LIMITED
Respondent
Application for special leave to appeal
GLEESON CJ
KIRBY J
TRANSCRIPT OF PROCEEDINGS
AT SYDNEY ON FRIDAY, 6 APRIL 2001 AT 10.42 AM
Copyright in the High Court of Australia
MR A.J.L. BANNON, SC: May it please the Court, I appear for the applicant with my learned friend, MR D.B. STUDDY. (instructed by Allen Allen & Hemsley)
MR D. SHAVIN, QC: May it please the Court, I appear with my learned friend, MS E.A. STRONG, for the respondent. (instructed by Freehills)
GLEESON CJ: Yes, Mr Bannon.
MR BANNON: Thank you, your Honour. Your Honours, this case raises for consideration by this Court for the first time the impact of important new provisions introduced in the 1995 trade marks legislation relating to shape marks. The new provisions ‑ ‑ ‑
GLEESON CJ: Mr Bannon, can I ask you for this information. It appears from the judgments that there has been perhaps similar litigation in other countries, is that right?
MR BANNON: Yes, that is so.
GLEESON CJ: And is the outcome in the Full Court of the Federal Court materially different from the outcome in other countries?
MR BANNON: The difference between the outcome in this country, in result, no, but means, yes. In every other country where this matter has been litigated, the validity of the mark has been attacked and successfully so, and in particular in the United Kingdom which has the nearest equivalent to our legislation, although it is affected by European Community directives. So, in other words, it is only in this country where Remington chose not to attack the validity of the mark and hence not much assistance, none really, is gained from decisions overseas.
GLEESON CJ: I just wanted to be clear that there was nothing in this decision that significantly conflicts with any decisions in the courts overseas.
MR BANNON: No, I suppose except to this extent, the infringement was established in the United Kingdom but on the basis of legislation there which said any use of the mark- and it did not need to be a trade mark use - amounted to an infringement. That was the view taken by the English Court of Appeal.
GLEESON CJ: I just wanted to put aside what would otherwise have been a troubling matter, but we can deal with this on its merits.
MR BANNON: Yes, one can.
KIRBY J: You had a win in Sweden, did you not?
MR BANNON: We did, yes, and I think that is still current, I am not sure. I think it has been stayed, subject to a further European court decision, and that, again, was on issues of validity as well.
The new provisions introduced affect both registration of new shape marks and infringement of those marks and as well, importantly for the purposes of this case, infringement of existing two dimensional marks. Having afforded registrability and infringement protection to such marks, the question is posed by this case, how does one infringe a shape mark? What constitutes use as a trade mark of a shape? Does one need to establish any more than that the defendant made goods in the shape of the mark and promoted those goods in that shape as the defendant’s goods? We say one does not. That is exactly what Remington did in this case. That is what traders do on a daily basis. Emphasis on the shape and appearance of goods is a hallmark of modern marketing.
KIRBY J: The Remington shaver was slightly different. It was bent over. Is hard to vary very greatly an electric or battery-operated shaver. Ultimately, it has to contour to the human face and there is just not so much you can do to change its shape, is there.
MR BANNON: There is a lot one can do with the ‑ ‑ ‑
KIRBY J: I should declare that I had a Philips shaver years ago. I do not think that disqualifiesme.
GLEESON CJ: I do not regard it as anybody’s business how I shave.
MR BANNON: There was a finding, in effect, of deceptive similarity between our two-dimensional mark and the shape applied to the Remington shaver. Whether or not one can make different shavers in different shapes does not arise, we say, for consideration on an infringement issue. The question simply is deceptive similarity. One of the flaws in the Full Court’s approach was to introduce on questions of infringement questions of validity. Implicit in the Full Court judgment is really a view that this mark was not validly registered. There was no challenge to the validity of the mark and so the starting point is, on the assumption one has the benefit of this new legislation which enables infringement by shape, is the test for infringement as constrained and as difficult as opposed by the Full Court? If it is, it has an extraordinarily constricting effect on these new changes.
We say, on the contrary. These changes were introduced to reflect modern marketing approaches. That the hook or grab is the look of a product. We are bombarded daily by images and what traders are doing is they are saying, “Look at our product. That is our product. When one sees it in the shop, one will recognise it as our product because you have seen it advertised.” That is what they did here and that should be enough. But it was not enough for the Full Court because they sought to impose - overlay qualifications which do not appear in the words of the legislation by suggesting that there is some metaphysical difference between a shape which can be regarded as a mark and the shape of the goods themselves, something to do with the inherent form of goods. To pose by way of an example the difficulties the Full Court judgment presents, we have put on an affidavit indicating the types of marks which have been registered.
KIRBY J: There is some objection to this, though I think the objection is misconceived because this is not the appeal and the Court has said you cannot receive evidence on the appeal but I think we have quite commonly taken evidence on special leave applications.
GLEESON CJ: We have commonly received evidence on special leave applications to prove that the matter is one of general important.
MR BANNON: Yes, and this evidence shows there are lots of shape marks being registered and an example of the types of shape marks being registered are included in the application book, starting at page 131. At 131 is the well known Weber Barbecue registered in respect, as one sees from 130 ‑ ‑ ‑
KIRBY J: It may be well known, it is not well known to me.
MR BANNON: ‑ ‑ ‑ “barbecues”. If that is a strike, your Honour, can I try page 136 and 137 which is the Bic biro, that is registered in respect of “Retractable ball point pen”. Now, how does one infringe that shape mark?
GLEESON CJ: What do you say is the answer to the question?
MR BANNON: We say the answer is by making a product in that shape and promoting that product as the product of the defendant. You see, if one looks at that shape, every feature of it is functional. It has a pocket clip, it has a button to push the thing up and down, it is in a shape which is convenient, it has a finger holder which is desirable. It is obviously one of the most desirable shapes in which to make a pen. It is a highly successful pen. If the intent of the legislation was to recognise this marketing trend which has been going on for some years, it must carry with it some force, some effect and that is to say that we are going to give, in effect, a form of monopoly in shapes if they are registrable, if they achieve registration. The form of the monopoly is if you use the shape and promote that good in that shape as your product, then you are infringing the mark. That was the point at which the Full Court struggled. It apparently did not like that consequence. His Honour Justice Burchett wrote the judgment with which the others agreed, regarded the case of raising ‑ ‑ ‑
GLEESON CJ: When you say, “if you use that shape” you mean if you make a product that has that shape.
MR BANNON: That is so. The Full Court thought that you could not sensibly in a trade mark sense use a shape by making a product in accordance with a shape ‑ ‑ ‑
GLEESON CJ: You mean the result of this is that nobody else can market a ball point pen that has a clip to attach it to your pocket, a button at the top that makes the ball point retractable and a retractable ball point?
MR BANNON: Yes, in that shape, or a deceptively similar shape and market it as one’s own.
GLEESON CJ: When you say “that shape”, it is just the shape of an ordinary pen, apart from those things, is it not?
MR BANNON: Yes, well, it has a particular shape which is recognisable. If one saw one on the table from a distance, one would immediately recognise at the well-known ball point pen. There are findings of fact in our case that the Philips electric shaver was exclusively associated in the minds of the consuming public, the relevant public, with us because they had seen many of them, they saw it on the table from a distance, they would regard it as our shaver. It is on all fours. Now, does one construe the legislation, as the Full Court did, in a constrictive way and say, “Well, although the legislation uses the words ‘shape’, we are going to construe ‘shape’ as meaning something other than the inherent form of the goods and say a shape in the new legislation means something which is other than the fundamental form, whatever that may be.”
GLEESON CJ: I do not know whether they have, but suppose Victa Motor Mowers registered a trade mark. Maybe this is just the result of the success of their product, but it is difficult now to imagine a motor mower with rotary blades that does not look like a Victa.
MR BANNON: Yes, and for that reason they may never achieve or may never apply for a shape mark in the shape of the Victa mower. But the starting point of this case is there was a registration. It was not a registration for a shape, it was a two-dimensional registration, but we get the benefit of the shape amendments because infringement by shape is now permissible. They apply both to old marks and new shape marks. But, yes, if the Victa mower had been registered in that shape, the consequence would be that if someone made the goods in accordance with that shape and promoted them as their goods, they would necessarily be saying, “You see that shape which I promote. That is the shape which you consumers should associate with us.” That is what Remington did in this case and the only answer to that question is to try and feed in some words into the legislation which say “shape” does not mean shape; “shape of goods” means something - fancy shape, non-functional shape.
Of course, that is plainly not the view which the registrar took when the registrar registered the Big Biro, for example, and it was not the view which is widely regarded in the community as to what the impact of these changes would be. We have included in the recent materials an academic article by one Ms Janice Luck which refers to the widely perceived view of the new changes and impact it would have prior to this case.
KIRBY J: Remind me, did those changes follow any international developments in trade mark law or are they peculiar to Australia?
MR BANNON: They were intended to put into effect our obligations under, I think, the Uruguay Round of the GATT Treaty or discussions and Article 15 of that article refers to - it does not refer to shapes. It appears behind tab 3 of our material, and it is Article 15. It uses language under item 1 of Article 15 of:
signs . . . names, letters, numerals, figurative elements and combinations of colours . . . Where signs are not inherently ‑ ‑ ‑
KIRBY J: Can I put the thought that is in my mind directly to you. On the face of things with new legislation and with especially legislation that is designed to implement international obligations in global markets, one would consider that as a matter worth the attention of this Court.
MR BANNON: Yes.
KIRBY J: An off-putting idea is the fact that other courts dealing with presumably similar legislation for similar international purposes has come to a conclusion in this particular controversy unfavourable to your client. Now, to what extent should that consideration be put out of mind?
MR BANNON: The only extent to which there have been unfavourable conclusions are that the mark should not have been registered. There was no ‑ ‑ ‑
KIRBY J: You say that in Australia, having got it registered, you are a step up on the ladder.
MR BANNON: That is right. Part of the reason for the attack on the validity of the mark overseas is because of the obvious problem of infringement.
KIRBY J: Problem of - - -?
MR BANNON: Infringement, it is so easy to infringe. What Article 15 says, in effect, that marks which were previously unregistrable because they had no inherent capacity to distinguish can be registered if they achieve distinctiveness in fact. We have findings of what we say are distinctiveness in fact.
A theme of the Full Court judgment is to say because our shape is useful, it is a mark or a shape which other traders would legitimately wish to use. Under the old tests before these changes, such a mark would never have been registered. It now can under a combination of 41(6) ‑ ‑ ‑
KIRBY J: Is there any final national court in a country where your client secured registration of its mark that has determined the matter in the way the Full Court of the Federal Court has?
MR BANNON: None, no. In other words, I do not think there is any. So the difficulty is – in other words, the underlying assumption in relation to those foreign cases is that infringement, really – and one has to be careful about this because there are slight differences in legislation, but the infringement just was not going to be a difficulty. Here, where there is no attack on validity, the attempt has really been made to plug the validity test in an impermissible way into the infringement test which may achieve a result which is thought more palatable having regard to a concern about monopoly in this case, but we say it is in error, but it sets a standard for all other shape marks which may come for consideration which is simply inappropriate. It is a very good case of a hard case of, say, making bad law, and it is important, we submit with respect, for this Court to consider the impact of the changes and to see whether there really has been a change since the Smith Kline days which is the judgment of Justice Windeyer.
The effect of the Full Court decision was really there has been no change. What the Full Court does not mention is that part of these changes, as well as introducing shape, was to introduce colour as a candidate for a trade mark. Justice Windeyer in Smith Kline was considering precisely colour. What was sought to be registered was the colour of capsules. To say that this legislation does not really change the Smith Kline law we say is simply wrong.
But the position taken by the Full Court is inconsistent in drawing the metaphysical distinction between shape, which may be a mark, and shape of the goods themselves is inconsistent with the approach taken by Justice Jacobs at trial in the United Kingdom, and not disturbed on appeal. He described it, we have referred to it in our submissions, as something all too metaphysical for men of commerce It was not the approach adopted by Justice Lehane. He looked through all the provisions and he came to the view that there had been a change. My learned friends in their submissions suggest to the contrary. We say that is not so. So the Full Court is at odds with Justice Lehane in that regard.
The other aspect of the Full Court approach which is worthy of note is that their exclusion, in effect, from the provisions of functional marks is inconsistent with the omission in the final form of the legislation of working party recommendations that there should be restrictions on infringement relating to functionality. In other words, the working party which produced the draft which resulted in this legislation said shape should be included, but there should be a break by reference to the functionality. The break was not included and we say that is a very important factor in considering the impact and import of this legislation.
KIRBY J: It may not be such a bad social consequence that the Full Federal Court has inserted a break, if it is viable and consistent with the language of the legislation.
MR BANNON: One can understand an emotional desire to find such a break, but the existence or otherwise of such a break is critical.
KIRBY J: Well, you say a legislative break was suggested by the working party, but the Parliament did not see fit to include it?
MR BANNON: That is so, and the Full Court said, “Well, it is there anyway”. They did not include it because they did not need to. That is an important question. The Full Court may be right, we say they are not. But it is something on which this Court, we respectfully submit, should proffer its opinion.
GLEESON CJ: Thank you, Mr Bannon. Yes, Mr Shavin.
MR SHAVIN: If the Court pleases, nowhere in the world has it been held that by the registration of a trade mark for a shape one gets a perpetual monopoly for the manufacture of the product of that shape. In the United Kingdom the approach taken was different to Australia because the structure of the United Kingdom Trade Marks Act is significantly different. First, unlike section 120 of the Australian Act, there is no requirement in the United Kingdom for use to be used as a trade mark before its infringing use. Secondly, in section 3 of the United Kingdom Act there are a number of qualifications and provisions relating to whether a mark is registrable which are not applicable in Australia.
In our respectful submission, this is not a case in which there is brought for the Court’s determination the application of the shape provisions of the 95 Act. These are not a 95 trade marks, these are 1977 trade marks. They were registered as two‑dimensional marks, device marks under the 1955 Act. They were probably properly so registered on the packaging which Philips uses for its products and has for some time. The images of the marks themselves appear clearly as marks, albeit in very small dimensions, on the side of the pack. What is not permissible and what is not achieved under the 95 Act is to convert those device representations into a perpetual monopoly over the right to produce triple‑headed shavers.
KIRBY J: Yes, but there are three things. One, there is the Uruguay Round with a new international obligation to which Australia has apparently acceded. Two, there is new federal legislation specific to shapes. Three, in this case apparently there was a registration of the shape.
MR SHAVIN: Can I deal with those in ‑ ‑ ‑
KIRBY J: Four, none of the decision that you have referred to in the cases in this particular controversy are really coming at the problem from that sequence of events.
MR SHAVIN: May I deal with those in sequence, your Honour. First, the TRIPS Agreement under the Uruguay Round did not mandate protection for shape marks. The insertion of the ‑ ‑ ‑
KIRBY J: I thought I had seen that there was some reference to shapes.
MR SHAVIN: The only reference dealing with protectable subject matter for trade marks is Article 15. The word “shape” does not appear. Indeed, the language of signs is redolent of the language in the 1955 Act. There is no reference to shape. Why the Full Court in paragraph 15 of its reasons decided there would be no change of the law, that when one examines the legislative materials, the Minister does not even refer to shape. To give to a shape mark the scope of protection for which our learned friends contend would be a revolution in trade mark law because it would effectively say, “You no longer need any protection under the Designs Act, you can forget about the Patents Act”.
As my learned friend propounded it, all one needs to do is to design a good, promote it in that shape and if someone else manufactures and sells it, they are going to infringe your mark. He took the Court to page 137 of the application book for the registration of the biro, and the consequence that our learned friends would say follows from the change in the 95 Act is that now no one else in Australia, other than the owner of that mark, can produce a ball point pen with a shape which is substantially identical thereto or deceptively or confusingly similar thereto. Now, that would be an extraordinary revolution in the law in Australia. You would think it would crack at least a mention, a single sentence in either the second reading speech or the explanatory memorandum.
KIRBY J: Apparently the problem was referred to in a working party report suggesting there should be a check on this. Now, what is your answer to that?
MR SHAVIN: Yes. We say that the answer adopted by the Full Court is correct that Parliament decided it was not necessary. It was not necessary, your Honour, because what has happened is that there has been no new category of protection created. What the Act provides in section 120 is that there will only be infringement if the shape is used as a mark as was settled in this Court in Shell. What our learned friends have done has been to move away from what Justice Kitto lay down and is now well settled and has never been questioned or challenged and has never been criticised seriously in the academic literature and that is that you can only have infringement of a mark if you use the sign as a mark, that is, to connote a connection in the course of trade between the product and you and distinguish your good from the goods of all other producers.
Now, what was found as a fact at trial and upheld in the Full Court was that in the context of the advertising and promotional literature placed before the Court, the use of the shape on the product was not trade mark use. What was found, for example, was that in all shavers, whether they are triple-headed, twin-headed, single-headed rotaries, whether they are foils, the way in which they are presented in advertising brochures, including Philips own brochures, is to stand them up so that you can see the head. Why? Because the head tells the consumer the quality of the product, that is, what sort of a shaver it is. Thus, it fits within what Justice Kitto said in Shell that the ‑ ‑ ‑
KIRBY J: It does look awfully as if you are copying the Philips shaver, though. I mean, that is what it looks like to this consumer.
MR SHAVIN: Except we put different features on it. We make it wet and dry; we put a dual track.
KIRBY J: Well, that is true, yes. Yes, but it was the 1995 Act that included shape in the definition of “sign”.
MR SHAVIN: Yes.
KIRBY J: So that is something new and the implications of it, on the face of things, have some importance and interest, and on the face of things, that might attract, in my mind, special leave because it is something new and it is an important area of the law and especially it has consequences in large markets in which we participate. Now, the question is whether anything that has been decided in the overseas cases speaks against taking the course which has been urged on us by the applicant. That is at least how the issue is formulating in my mind.
MR SHAVIN: In the United Kingdom the issue did not arise in the same way because there is an express qualification, section 3, and because of the difference in the infringement test, though the court did not overturn Justice Jacobs’ conclusion that this was not distinctive of Philips in a trade mark sense. So the Court of Appeal in referring the matter off to the European Court of Justice in fact reached conclusions similar to those reached by the Full Court in relation to the nature of the three-dimensional shape as a mark, as opposed to the device drawing which was registered in 1977. In other words, the conclusion was clearly anticipated that the court did not accept that this mark was adapted to distinguish the Philips shaver from any other triple-headed shaver. Now, it arose in the United Kingdom in a registration context because it could not arise sensibly in an infringement context. In our submission, what our learned friends cannot point to is any jurisdiction anywhere in the world.
KIRBY J: What happened in Canada in the Canadian court?
MR SHAVIN: In the Canadian Court of Appeal and outcome was similar to that in the Full Federal Court in that again it was said that this mark was not a mark that could distinguish and they implied a concept in the majority decision particularly which put a functional limitation on the mark, that if a mark was purely functional there could not be a proper trade mark. So there had to be a distinguishing guise. So that, again, in Canada in the Court of Appeal, in the United Kingdom at first instance and in the Court of Appeal, an outcome consistent with that of the Full Court was reached. In no jurisdiction did they say that simply if you have a product, you can register that product because you are the first and you get a perpetual monopoly. That has not been an outcome anywhere in the world.
There is nothing inherent in what has been said by the Full Court to suggest that a sign is not registrable and that there are not signs that can be registrable. Rather, in our submission, all that has happened in the Full
Court is they have said, “This is a 1955 Act mark. We apply established principle to the facts of this case and on the facts of this case, we have found that there has not been use by Remington of that mark as a trade mark. Accordingly, there is no infringement.” This was not a mark which went through the special regulatory processes to get registration as a shape mark. It was not established as being registrable as a shape mark. It does not raise for this Court consideration of what happens when you have a mark that has been registered as a shape mark.
So that, in our respectful submission, all that is raised for this Court is a reassessment of the factual contention, “Was use by Remington of this shape on its product use as a mark?” Four judges have held that it was not. Our learned friends are simply asking this Court to reassess the facts on established principle where those principles are not called into question and where neither the treaty, nor the change in the Act, nor the legislative materials accompanying that change in the Act, suggest that by the insertion of the word “shape” in the definition of a sign any significant change in the law was intended. If the Court pleases.
GLEESON CJ: Thank you, Mr Shavin. Yes, Mr Bannon.
MR BANNON: So far the Uruguay aspect is concerned, could I refer your Honours to application book, page 11, and in the middle of the page it refers to the working party appointment, third line:
among the matters taken into account by the Working Party were the then draft agreement in respect of trade-related aspects of intellectual property rights (TRIPS) associated with the Uruguay Round –
and it continues. It refers to the report of the working party against that background:
There is majority support for the proposition that if the sign constitutes some element of the shape or the packaging of the product, and if the applicant can demonstrate that the element is not necessary for the proper functioning ‑ ‑ ‑
KIRBY J: But there is a point is there not, in the proposition that had it been intended to pick up such a large consequence, one would have expected perhaps a clearer provision in the TRIPS agreement, a clearer provision in the legislation and at least a sentence from the Minister pointing that this radical change was being introduced into the Act?
MR BANNON: Page 12 refers to there was a Bill passed but never came into force in 1994 which included clause 39 which was the specific legislative break. That was the break which did not appear.
KIRBY J: The suggestion is that subsequent thought led to the conviction it was not really needed because the established doctrine was so clear and the changes in the text of the legislation were so insignificant.
MR BANNON: That was not the view of Justice Lehane. Justice Lehane, if I can just take your Honours quickly to what his Honour said on that issue.
KIRBY J: Which page?
MR BANNON: It starts at page 9 of the application book, line 40. His Honour said:
It may be accepted that before the 1995 Act took effect the shape or appearance of goods was not registrable . . . for the reason given by Windeyer J –
and over on page 10 at line 40:
Thus, if a “mere description of goods simply by shape” could not be registered as a trade mark in respect of those goods, neither could the manufacture or sale of goods, having a particular shape, amount of itself to use of the shape –
Paragraph 19:
The question, then, is whether by its expanded definition of “sign” the 1995 Act has significantly changed the law. The question is not altogether easy.
Over at the top of page 11, his Honour discusses the possible limitations, which is the approach ultimately taken by the Full Court, but ultimately comes to the conclusion, on page 14 of the application book, after referring to all of that, at line 15:
In short, the legislative history, I think, suggests nothing to the contrary of, but rather offers some support for, what I think is the natural meaning of the word “shape” included in the definition of “sign”: it includes the shape of goods, or of part of them, in relation to which a sign of that kind is used.
He relied on the absence of a statement of the Minister’s speech to say that shape had been used in the 1994 Bill and, therefore, introducing the 1995 Act which was actually passed and came into force, nothing much needed to be said.
Secondly, as to whether a fundamental issue is raised, it clearly is and was accepted as such by the Full Court. If one goes to page 87 of the application book, Justice Burchett at line 30 commences the judgment by saying:
A fundamental issue of trade mark law is involved in this appeal.
KIRBY J: Yes, and disposed of by the court that normally has the responsibility for disposing of such matters.
MR BANNON: At 94 – well, yes, your Honour.
KIRBY J: Unanimously and failing to disturb the decision of a primary judges. Four judges against you.
MR BANNON: The primary judge accepted there was a fundamental change, but said that the message was not one of exclusive association. The Full Court said there had not been a fundamental change and although there was a message of unique association, because there had been no fundamental change, there was no infringement established. So there are quite different approaches taken by the two courts.
At 94, line 30, his Honour referred to what was “At the heart of the . . . appeal”. It is still at the heart of the appeal. What one has is legislation has been enacted around the world to reflect international obligations. It has taken varying forms. Consistently around the world, the adoption of the shape provisions has been included. The highest court in European will be the European Court, will come to consider it, it has not yet. The highest court in Canada, or the Court of Appeal, has. It is appropriate for this Court to consider Australia’s own version of the legislation against the background of the fundamental issues which have been raised.
GLEESON CJ: Thank you, Mr Bannon.
The Court is of the view that in this matter there are insufficient prospects of success of an appeal to warrant a grant of special leave and, for that reason, the application is dismissed with costs.
AT 11.17 AM THE MATTER WAS CONCLUDED
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Intellectual Property
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Commercial Law
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Injunction
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Breach
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