Trade Marks 2002: Big Changes to Some Key Provisions

The Trade Marks Act 2002 repeals and replaces the Trade Marks Act 1953. The primary focus of the Act, as stated on its introduction into Parliament, was to modernize the trade marks legislation and to meet the needs of the business community. A secondary aim was to address Maori concerns over the registration of Maori words and symbols as trade marks.

I propose to make some preliminary remarks on the origins and interpretation of the Act and then to look at four key aspects of the new legislation where there are major changes. These are:

The concept of “bad faith” applications
Infringement and in particular the new “Dilution” form
Changes to Comparative Advertising
Remedies and Defences

(1) THE ORIGINS OF THE ACT; STATUTORY INTERPRETATION

The first relevant issue concerns the statutory interpretation of the new Act. The 2002 Act is drawn from a variety of sources:

(a) Importantly, it carries over a number of features and provisions from the 1953 Trade Marks Act;
(b) At the same time, it draws substantially from the Singapore Trade Marks Act 1998 which has the virtue of plain drafting and clarity of expression. But the Singapore Act is itself heavily based on the UK Trade Marks Act 1994. The UK Act, in turn, implements the European Community Council Directive on Trade Marks of December 21, 1988/89/104 (“the European Directive”);
(c) There are several features of the new legislation where the approach of the Australian Trade Marks Act 1995 has been adopted - for example in relation to shape trade marks and the decision not to include in the New Zealand legislation s3(2) of the UK 1994 Act which contains specific rules on the registrablility of shape marks.

When seeking to interpret the new legislation, it will be important to appreciate that the 2002 Act is not the UK Trade Marks Act 1994 “in drag”. Nor does it implement the European Directive in full. There are a significant number of differences. Can I illustrate this by several examples:

New Zealand has retained and made an absolute ground for not registering a trade mark (and for challenges to validity) what is currently s16 of the Trade Marks Act 1953 (now s17(1)(a) and (b) of the 2002 Act). This provides that the Commission must not register as a trade mark or part of a trade mark “any matter the use of which would be likely to deceive or cause confusion”. For those wanting to hang on to something familiar, this retains the existing law and the ability to rely on the use or reputation of earlier marks or, indeed any other matter, which would result in the mark applied for giving rise to confusion or deception. In particular the new Act retains the “caused to wonder test” which is a lower test than that applying in passing off.

By contrast, the UK has changed, and in some respects narrowed, the right to oppose registration based on earlier trade marks. (This is now a relative ground for refusal of registration: s5.) Where an opponent seeks to rely on an unregistered trade mark, opposition can only be substantiated under s5(4) of the UK Act if passing off can be shown. This is a much more stringent test.

A second example is that New Zealand has specifically rejected the UK provision on shape trade marks (mentioned above) and has preferred the Australian approach of relying on the overall requirement for registrability that the mark has acquired a distinctive character: s18(2).

I cite these two examples (there are a number of others) to illustrate that in construing the provisions of the new statute, the New Zealand courts will need to exercise considerable care. In many cases the English courts, when construing their 1994 Act have had recourse to the European Directive. For example, in one English case, Road Tech [1996] FSR 806, 817 Robert Walker J referred to the fact that the UK 1994 Act is implementing the European Directive, that a purposive approach was necessary and that “fine linguistic arguments based on the English text alone may not carry much weight”.

By contrast, the New Zealand statute has only selectively adopted some parts of the Singapore/UK Trade Marks Acts - and therefore, by a side wind, the European Directive. There will need to be careful consideration of the whole scheme of the New Zealand legislation. I suggest that reliance on the European Directive and adoption of a purposive approach toward its interpretation may not be appropriate in New Zealand. Whereas in the UK the 1994 Act has been described as “providing a fresh start for the law of trade marks” (Kerly 13th edition para 1-11) this is not so in New Zealand. New Zealand has not fully implemented the European Directive and indeed there has never been any legislative discussion of the Directive. There will be a need for careful consideration of other provisions in the New Zealand statute, which might require a different and specifically New Zealand interpretation. In summary therefore, caution will be needed before the interpretations of the UK and Singapore courts are adopted here.

(2) BAD FAITH; SECTION 17(1)(b)(iii)

An important new concept which has been introduced in the new Act is the prohibition on registration of an application that is made in bad faith. This provision is the “sleeper” in the new legislation. It is something which trade mark professionals in New Zealand must come to grips with very quickly. Unquestionably, this provision will give rise to a flood of new trade mark cases and jurisprudence. Yet ironically, the inclusion of this provision in the new legislation has virtually passed unnoted.

Section 17(1)(b) prohibits registration of a trade mark or part of a trade mark if:

“(iii) the application for the registration of the trade mark is made in bad faith.”

Although the 2002 Act does not make any reference in the footnote to the derivation of this provision, it comes from s7(6) of the Singapore Trade Marks Act 1998 which, in turn, was sourced from s3(6) of the UK Trade Marks Act 1994. The UK provision derives from the optional Article 3(2)(d) of the European Directive.

Thus by a very circuitous route, New Zealand has adopted this European concept. The European flavour of this provision is noted in Kerly 13th edition p210:

“The 1994 Act does not define the term bad faith. The concept is not unknown in the United Kingdom but continental lawyers are likely to be more familiar with it, since consequences flow from acts done contra bones mores or in bad faith in many civilian systems of law.”

Previously, the nearest that New Zealand came to a bad faith concept was:

The restriction in s16 of the 1953 Act which prevents registration of matter “the use of which would be contrary to law or morality or would otherwise be disentitled to protection in a court of justice”. In Wham-O Manufacturing Co v Lincoln Industries Limited [1984] 1 NZLR, the Court of Appeal upheld a finding that the defendant’s application was not in good faith and was therefore “disentitled to protection in a court of justice”. (See also North Shore Toy Company Limited v Charles L Stevenson Company Limited [1973] 1 NZLR 562, 572.)
The requirement under the original s35(1)(a) of the 1953 Act - but repealed in 1994 - which formerly required bona fide intention to use the trade mark. Bona fide can be said to be the converse of bad faith, so that some of these cases will be relevant to the new provision. For example, in Re Trade Mark Bragatto (1976) 1 NZIPR 30, Commissioner Dalefield held that there was no bona fide intention by an applicant who stated in opposition proceedings that her whole intention in applying for the mark ROMEO BRAGATTO was to prevent her famous father’s name and reputation (as a pioneer in the wine industry) from being the subject of a trade mark application by an unconnected company.

The concept of bad faith will be important in three stages of a registered trade mark namely, examination, opposition and invalidity proceedings.

The fact that bad faith arises at the examination stage is obvious from s17. At opposition stage the grounds of opposition (s47) will obviously include s17. The jurisdiction in invalidity proceedings arises under s73. This provides:

S73(1)

The Commissioner or the Court may, on the application of an aggrieved person (which includes a person who is culturally aggrieved), declare that the registration of a trade mark is invalid to the extent that the trade mark was not registrable under Part 2 at the deemed date of its registration.

What will amount to “bad faith” in New Zealand?

Perhaps a starting point in defining “bad faith” in New Zealand is s75 of the 2002 Act - which has no equivalent in the UK 1994 Act. This states:

“The registration of a trade mark is, after the expiration of seven years from the deemed date of registration, deemed to be valid unless -
(a) The registration was obtained by fraud; or
(b) The trade mark should not have been registered on any of the grounds set out in s17(1); or …

Fraud is not specifically mentioned anywhere else in the new Act but will be covered by s17(1)(b)(i) - “contrary to New Zealand law or … otherwise disentitled to protection in any Court”. This means that both fraud and bad faith (via s17(1)(b)) are separate grounds for an application for invalidity. This strongly suggests that bad faith is likely to be something less than fraud.

It is also important to note that the 2002 Act no longer has any direct equivalent to s26 of the 1953 Act governing proprietorship of a mark. S26 provided that “any person claiming to be the proprietor of a trade mark used or proposed to be used by him who is desirous of registering it shall apply …” cf s32(1) 2002 Act. The absence of such a provision means that the challenge that an application is made in bad faith will in future be the key way in which trade mark proprietorship disputes will be litigated. More of this later.

Considerable assistance can also be gained from UK source material and case law or what amounts to bad faith. (But again, the caveat is very important that there are significant differences in the legislation in the two countries.) I propose to refer to some of the official UK material and then to mention some of the differences in the legislation and finally refer to cases.

The UK Patent Office Work Manual

The UK Patent Office Work Manual Chapter 6, s9.11 sets out some guidelines as to when the Office will raise objection to registration on grounds of bad faith. Several of these are:

Unduly wide specifications

Applications will normally be accepted in the UK even if they cover goods or services in many classes. However, in extreme cases, or where vague and wide terminology is used, the UK Registrar will raise an objection under s3(6) of the UK Act on the basis that the statement on the application form (i.e. that the applicant has a bona fide intention that the mark should be used in relation to those goods and services) appears to have been made in bad faith. It will then be up to the applicant to demonstrate that he intended to use the mark in connection with all the goods/services claimed. See also UK Practice Amendment Note PAN8/02 19 June 2002, which indicates that where “all goods in class” or “all services in class” are named, then these will be objected to.

Great care may be needed before assuming that bad faith in New Zealand automatically includes a lack of bona fide intention to use the mark for the whole goods or services listed in the application. This is because New Zealand already has a specific provision allowing the Commissioner to refuse registration unless satisfied that the specification is justified by the use or intended use - see s20 1953 Act and now s32(2) of the 2002 Act. The UK did not previously and still does not have such a provision.

The 2002 Act s32(1) provides that a person may apply for a trade mark “used or proposed to be used”. But the UK Act has a much more specific provision in s32(3) which requires the applicant to “state that the trade mark is being used by the applicant or with his consent in relation to those goods or services or that he has a bona fide intention that it should be so used”.

Clearly with such an explicit UK provision, a bad faith challenge can be mounted. It is not so clear in New Zealand when we already have s32(2) and no requirement to state bona fide intention.
The ability to challenge a trade mark in New Zealand for invalidity is contained s73. The court may on application “declare that the registration of a trade is invalid to the extent that the trade mark was not registrable under Part 2 at the deemed date of registration”. Part 2 would certainly cover the bad faith challenge in s17. But it does not cover s32(2) containing the Commissioner’s discretion to refuse registration. This is to be found in Part 3. Does this mean that a bad faith invalidity action does not or cannot include an over-wide specification?

No doubt this point will be litigated.

Names of famous individuals

“Where a sign consists of, or incorporates, the name of a famous individual (living or recently deceased) and the applicant’s name differs from that of the individual, objection will be taken on the grounds that the applicant is not the owner of the mark. This can be overcome if permission to registration is obtained from the individual or his/her legal representatives.” : UK Work Manual Chapter 6 para 9.11.2.

Portraits or pictures of famous individuals

The same approach is taken in respect of portraits or pictures of famous persons: UK Work Manual Chapter 6 para 9.11.3

UK Parliamentary Notes on 1994 Act

UK case law and decisions on bad faith frequently cross-reference to the Notes on the UK Trade Marks Act which were used by the UK Parliament during the passage of the Bill (see Mickey Dee’s (Night Club) Trade Mark [1998] RPC 359, 366). The Notes gave the example of no bona fide intention to use the mark for the whole range of goods and services listed. One interesting category in the Notes is where there is a wrongful claim to proprietorship:

(ii) where the applicant was aware that someone else intends to use and/or register the mark, particularly where the applicant has a relationship, for example as employee or agent with that other person, or where the applicant has copied a mark being used abroad with the intention of pre-empting the proprietor who intends to trade in the United Kingdom

UK cases on bad faith

The leading UK case on the test to be applied as to what constitutes bad faith is Gromax Plasticulture Limited v Don & Lowe Nonwovens Limited [1999] RPC 367. In that case, Lindsay J stated at 379:

“I shall not attempt to define bad faith in this context. Plainly it includes dishonesty and, as I would hold, includes also some dealings which fall short of the standards of acceptable commercial behaviour observed by reasonable and experienced men in the particular area being examined. Parliament have wisely not attempted to explain in detail what is or is not bad faith in this context; how far a dealing must fall-short in order to amount to bad faith is a matter best left to be adjudged not by some paraphrase by the courts (which lead to the danger of the courts then construing not the Act but the paraphrase) but by reference to the words of the Act and upon a regard to all material surrounding circumstances.”

Similarly, in Demon Ale Trade Mark [2000] RPC 345, 356 it was suggested by Geoffrey Hobbs QC (the Appointed Person) that “bad faith” does not necessarily equate with a breach of a legal obligation:

“… the expression “bad faith” has moral overtones which appear to make it possible for an application for registration to be rendered invalid under section 3(6) by behaviour which otherwise involves no breach of any duty, obligation, prohibition or requirement that is legally binding on the applicant.”

The test appears to be primarily objective. In both the Demon Ale Trade Mark case [2000] RPC 345, 356 and in C A Sheimer (M) Sdn Bhd’s TM Application (the VISA case) [2000] RPC 485, 500, Geoffrey Hobbs QC (the Appointed Person) stated:

“I do not think that section 3(6) requires applicants to submit to an open-ended assessment of their commercial morality and I do not accept the broad general submission made on behalf of Visa International to the effect that lack of veracity in connection with an application for registration is sufficient per se to constitute bad faith for the purposes of section 3(6).
The observations of Lord Nicholls on the subject of dishonesty in Royal Brunei Airlines Sdn Bhd v Philip Tan Kok Ming [1995] 2 AC 378, PC at page 389 appear to me to provide strong support for the view that a finding of bad faith may be fully justified even in a case where the applicant sees nothing wrong in his own behaviour.”

Kerly 13th edition, suggests that the test should be primarily objective, but also contain a subjective element. At p220-2, the authors state:

“Truly the test is not subjective, if this ground depended wholly on what the applicant said his state of mind was at the relevant date, it would do little to promote a reliable system of registered trade marks, let alone harmonisation. At the other extreme, it is unlikely that the test is wholly objective, since no account would then be taken of the state of mind of the applicant, which must have some relevance. Therefore, it is suggested that the appropriate test is principally objective with a limited subjective element so that evidence from the applicant as to his state of mind at the time may be taken into account. What an applicant says about his state of mind at the relevant time cannot be determinative. Particularly once the allegation of bad faith has been made, an applicant may honestly convince himself that he was in the right, even though an objective observer, applying the standards of a reasonable businessman would view the applicant as being in the wrong. However, in cases which are evenly balanced or near the line and particularly in view of the seriousness of the allegations, evidence from the applicant as to his state of mind and intentions, unless seriously undermined, may defeat an allegation of bad faith.

(Note also the recent Daawat case [2003] RPC 187, 203 where Geoffrey Hobbs QC held that the test does not involve a combination of objective and subjective tests.)

The sheer scope and extent of what might amount to bad faith is apparent from a number of examples:

Copying of another party’s work

Where a mark showed a “striking similarity” to marks which had long been used by the opponent. The applicant did not deny an allegation that he had copied the mark which was a reasonably complex logo mark comprising a number of different components. The Hearing Officer found that it defied belief to suggest that the logo mark had been independently designed by the applicant: Team Lotus [1999] ETMR 669.

In New Zealand the applicant’s actions appear to have involved copyright infringement and would also have amounted to a breach of s17(1)(b)(i) i.e. “contrary to law or would otherwise be disentitled to protection in any court”.

Applicant selling unregistered trade mark then applying in his own name to register it

A second example is the opponent acquired a business owned by the applicant together with the services of the applicant as an employee. The business included the rights to certain unregistered trade marks. While still employed by the opponent, the applicant applied for two marks he had supposedly transferred to the opponent as part of the deal and which the opponent was using: Customer Care (SRIS O/039/99) and Profinish (SRIS O/043/99).

Registering an overseas proprietor’s trade mark

A vexed area of the law has always been when a local person registers a trade mark in New Zealand knowing that the overseas owner of the mark may well come to New Zealand and use the mark, but at the time of application, the overseas owner has not used the mark here. In 1994 (as part of compliance with the TRIPs Agreement), provisions inserted in the 1953 Act as s17(2) and (4) provided protection in such circumstances but only where the mark was well-known. If the trade mark was not well-known and the overseas owner could not show breach of some fiduciary or other duty, no remedy was available. Now the bad faith provision offers a real basis for opposing or declaring invalid trade marks registered in such circumstances: Re Daawat Trade Mark [2003] RPC 187.

Local Distributor registers Principal’s mark

Bad faith was found established where an overseas company employed a local distributor, who, being fully aware of the overseas company’s intention to use the mark locally, registered that mark for himself. Be Natural (SRIS O/106/99)

The same result applied where a party had an established business in the United States under the mark and had begun to trade in the United Kingdom. One of its customers in the United Kingdom then attempted to register the trade mark for himself. When challenged, he sought to register the mark in combination with his own name. The Registrar said at p9 of his decision that, “It is difficult to see how a person who applies to register a mark in his own name which he has previously recognised as the property of a potential overseas principal can be said to be acting in accordance with acceptable standard of commercial behaviour. I do not believe that combining the mark with the applicant’s own name is any answer to that criticism.”: New Century (SRIS O/018/00).

The activities of trade mark brokers

Bad faith has been found where trade marks were registered by a self-described “trade mark broker” with no real or bona fide intention to use the mark, and who had offered the trade mark for sale to the opponent. (The proprietor of the trade mark appears to have been a somewhat shady character all round. His business offered a range of services including the provision of ‘anonymous’ and ‘untraceable’ 0700 telephone numbers, kits for “legally” removing county court judgments, anonymous credit cards and camouflage passports “to use instead of your real one at hotels”. It even offered to help customers set up their own tax exempt church, and ordain the customer to the title of reverend or minister): Oxyfresh (SRIS O/095/99)

To defeat a non use application

In one English case, an application was made to remove the mark from the register on the basis of non-use. A fresh trade mark application was filed for the same mark in order to defeat the non-use application. This was held to be in bad faith: Magic Ball (No. 2) (SRIS O/084/99).

This same practice was in issue in the New Zealand Privy Council case, Cussons (New Zealand) Pty Limited v Unilever Plc [1998] 1 NZLR 396 - the RADIANT case. In the litigation, the applicant’s intentions were not in issue because the case arose by way of an interim injunction. See [1998] 1 NZLR 396. However, the Privy Council made it quite clear that if Unilever had made the second application with the attempt to block Cussons, without any intention itself to use the trade mark RADIANT in New Zealand, then it would have been right for the Commissioner to exercise his discretion against granting the application (404-5). This strongly suggests that the practice of filing a fresh application, as a means of defeating a non-use case and without a genuine intention of using the mark, will amount to bad faith.

Ulterior motives

Ulterior motives such as seen in Re Trade Mark Bragatto (1976) 1 NZIPR 30, 40-41 may now be enough to constitute disqualifying bad faith.

Pleading bad faith

The UK Tribunal Practice Notice TPN 4/2000 sets out the general practice for the scrutiny of statements of case and counter-statements by the Registrar. If the Registrar considers that either of these documents is inadequately pleaded or particularised, he or she will refuse to serve it and will require its amendment. Any delays caused as result of this may sound in costs against the offending party.

It seems that in the UK, bad faith allegations in particular are often pleaded badly. They tend to be needlessly included in pleadings, only to be abandoned at the hearing, and/or are poorly particularised or substantiated.

The Practice Note refers specifically to the proper procedure for alleging bad faith under s3(6). It provides as follows:

“Another ground frequently found is that under section 3(6). The Registrar considers an allegation that an application was made in bad faith to be a particularly serious one, (see Gromax [1999] RPC 367). If a party wishes to raise this ground in their statement of case then the Registry will expect the allegation to be particularised and will not accept a general allegation that an application is made in bad faith. An explanation of why the opponent believes that the conduct of the applicant was dishonest or fell below the normal standards of commercial behaviour will be expected. The registrar would not expect the statement of case to set out a party’s evidence on this ground but an indication of the basis of the claim should be given. If the allegation is that the applicants do not have the bona fide intention to use the trade mark in relation to the full range of goods or services for which registration is sought then the goods and services in respect of which the allegation is made should be set out.”

I expect that IPONZ will adopt a similar approach in New Zealand.

In addition, there are duties on counsel, solicitors and patent attorneys alleging bad faith. Bad faith is akin to fraud. Where fraud is pleaded, there is a positive duty on counsel to satisfy himself/herself that the claim is justified. Bad faith falls into a closely analogous category. Considerable care will be needed before making such a claim.

(3) TRADE MARK INFRINGEMENT: SECTION 89; THE NEW “DILUTION” PROVISION

The rights that attach to a registered trade mark are now to be found in ss9-11 of the Act. Specifically s10(1) reaffirms the exclusive right to use the registered trade mark and to authorise other persons to use the registered trade mark (cf s8(1) 1953 Act).

When it comes to infringement, the previous tortured wording of s8(1A) of the 1953 Act has been simplified. Section 89 retains the three existing bases of infringement from s8(1A) i.e.:

Identical sign in relation to the goods and services for which the mark is registered.
Identical sign in relation to similar goods and services if that use would be likely to deceive or confuse.
Similar sign in relation to identical to similar goods or services if that use would be likely to deceive or confuse.

But there are three important issues to note about the new provision.

“Use as a Trade Mark”

First, New Zealand has retained the requirement that in order to infringe, the use of the sign must be likely to be taken as being use as a trade mark (see s89(2)). This provision has been removed from the UK Act and is already causing problems there - see the Arsenal decision and contents by Kerly 13th edition paras 13.13 - 13.21.

“Importing a Reference” disappears

Secondly, the 2002 Act removes the alternative basis of infringement “importing a reference” (s8(1A)(e) of the 1953 Act) which was used to catch comparative advertising. This is discussed further in section 4 of this paper.

A new protection against dilution: section 89(1)(d)

Thirdly, there is a new form of infringement in s89(1(d)) which adds considerably to the registered proprietor’s armoury of rights by providing a type of dilution protection. It is this provision which is the primary focus of the rest of this section.

Section 89(1)(d) provides that:

“A person infringes a registered trade mark if the person does not have the right to use the registered trade mark and uses in the course of trade a sign -
(d) identical with or similar to the registered trade mark in relation to any goods or services that are not similar to the goods or services in respect of which the trade mark is registered where the trade mark is well known in New Zealand and the use of the sign takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the mark.”

This broadly equates with s10(3) of the UK Trade Marks Act 1994, which implements the optional provisions of Article 5(2) of the European Directive.

Section 89(1)(d) is the first time that New Zealand has had anything akin to the law of dilution in respect of registered trade marks. Neuberger J in the UK decision Premier Brands UK Limited v Typhoon Europe Limited [2000] FSR 767, 786-7 stated in respect of the equivalent UK provision:

“This sort of detriment has been generically described as “dilution”, and has also been said to occur normally in one of two ways, namely by “blurring” or by “tarnishing”. The concept of “dilution” in this context is not without its critics, for instance Mr Geoffrey Hobbs QC, acting as the Appointed Person in VISA Trade Mark (unreported, September 28, 1999). However, as I read his observations, what Mr Hobbs was primarily saying was that one should not, as it were, blindly re-write a provision in a statute or a directive, and then seek to interpret it as re-written. To my mind, that is plainly right. However, it does appear to me that dilution is a useful concept to bear in mind when considering the application of section 10(3) to a particular set of facts….
However, while dilution is a useful concept to bear in mind, it does not necessarily follow that every case of infringement under section 10(3) will necessarily involve dilution, nor does it follow that the proprietor of a mark will necessarily succeed in establishing infringement under section 10(3) in every case where he establishes dilution.”

In looking at the English provisions for guidance, it is important to note the following:

(a) First, the New Zealand Act (s89(1)(d)) requires proof that the registered trade mark is well-known, whereas the UK Act (s10(3)) simply states “where the trade mark has a reputation in the UK”;

(b) Secondly, at the opposition stage in the UK, this infringement provision is mirrored by a similar ground of objection to registrability: s5(3) 1994 Act.

A trade mark which -
(a) is identical with or similar to an earlier trade mark, and
(b) is to be registered for goods or services which are not similar to those for which the earlier trade mark is protected,
shall not be registered if, or to the extent that, the earlier trade mark has a reputation in the United Kingdom (or, in the case of a Community trade mark, in the European Community) and the use of the later mark without due cause would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trade mark.

In New Zealand, we have no identity between the infringement and the registration provision. The relevant section regarding registrability, s25(1)(c) provides:

(1) The Commissioner must not register a trade mark (trade mark A) in respect of any goods or services if—
(c) it is, or an essential element of it is, identical or similar to, or a translation of, a trade mark that is well known in New Zealand (trade mark D), whether through advertising or otherwise, in respect of those goods or services or similar goods or services or any other goods or services if the use of trade mark A would be taken as indicating a connection in the course of trade between those other goods or services and the owner of trade mark D, and would be likely to prejudice the interests of the owner.

It will be interesting to see if this disparity is commented on by the New Zealand courts in due course. One immediate consequence for our purposes is that while the case law on both the UK ss 5(3) and 10(3) will be relevant to the interpretation of s 89(1)(d), none of this case law will be directly relevant to the interpretation of s 25 of the New Zealand Act.

It may be that the issue of the disparity between the infringement and registration provisions will not often arise in practice. Many instances where s 89(1)(d) would apply are caught at the opposition stage by s 17(1)(a), which provides:

The Commissioner must not do any of the following things:
(a) register as a trade mark or part of a trade mark any matter the use of which would be likely to deceive or cause confusion
…

(c) Thirdly, a helpful summary of principles is contained in a recent UK decision, Lex Service Plc v Skoda AS v Registrar (SRIS 0/560/01). This usefully sets out a number of guidelines on the operation of s 10(3) distilled from the reported cases:

The provision is not intended to give marks “an unduly extensive protection”. There must be actual detriment or unfair advantage (not merely risks) which must be substantiated to the satisfaction of the national court or tribunal: Daimler Chrysler v Alavi (Merc) [2001] RPC 813 para 88 - per Pumfrey J
The stronger the earlier mark’s distinctive character and reputation, the easier it will be to accept that detriment has been caused to it: General Motors Corp v Yplon SA [1999] ETMR 122; [2000] RCP 572 para 30
The provision is not aimed at every sign whose use may stimulate the relevant public to recall a trade mark which enjoys a reputation with them: Neuberger J in Premier Brands v Typhoon [2000] FSR 767, 787
Confusion as to the trade source of the goods or services offered for sale under the later mark is not a necessary condition before there can be detriment, but is one form of detriment: para 88 Daimler Chrysler (supra) per Pumfrey J
Unfair advantage can take the form of feeding on the fame of the earlier mark in order to substantially increase the marketability of the goods or services offered under the later trade mark: Geoffrey Hobbs QC C A Sheimer’s Application (Visa) [2000] RPC 484, 505 lines 10-17

Degree of reputation required for s 89(1)(d)

As noted above, in New Zealand, s 89(1)(d) applies where a trade mark is “well known in New Zealand”. This differs from the UK provision, which provides that a mark must have “a reputation in the United Kingdom.” The New Zealand test involves a higher threshold than the UK - although in practice in many cases the tests will not be dissimilar, particularly because of the need to show also under both statutes that the use of the defendant’s trade mark takes “unfair advantage of or is detrimental to the distinctive character or repute of the [plaintiff’s] mark”. Plainly to do so the plaintiff’s mark must have a certain magnitude: Valucci Designs Limited v IPC (the LOADED case) (SRIS 0/455/00 para 15).

The nature of the reputation required to be proved in respect of ss 5(3) and 10(3) was considered by the European Court of Justice in General Motors Corporation v Yplon S.A. [2000] RPC 572. At p577-8, the Court concluded as follows:

“Insofar as Article 5(2) of the Directive, unlike Article 5(1), protects trade marks registered for non-similar products or services, its first condition implies a certain degree of knowledge of the earlier trade mark upon the public. It is only where there is a sufficient degree of knowledge of that mark that the public, when confronted by the later trade mark, may possibly make an association between the two trade marks, even when used for non-similar product or services and that the earlier trade mark may consequently be damaged.
The public amongst which the earlier trade mark must have acquired a reputation is that concerned by the trade mark, that is to say, depending on the product or service marketed, either the public at large or a more specialised public, for example traders in a specific sector.
It cannot be inferred from either the letter or the spirit of Article 5(2) of the Directive that the trade mark must be known by a given percentage of the public so defined.
The degree of the knowledge required must be considered to be reached when the earlier mark is known by a significant part of the public considered by the products or services covered by that trade mark.
In examining whether this condition is fulfilled, the national court must take into consideration all the relevant facts of the case, in particular the market share held by the trade mark, the intensity, geographical extent and duration of its use, and the size of the investment made by the undertaking in promoting it.”

The Court also found that there is no requirement that the reputation must exist in the whole of the country concerned - in that case, the United Kingdom - but it must exist in a substantial part of it. Although the New Zealand Act specifies that the mark must be “well-known in New Zealand”, it is suggested that a mark can be well-known here without being known in every corner of the country.

A consideration of the reputation of the earlier mark will also be relevant to assessing the likelihood of detriment to that mark. Where a mark has become very well-known, there will be a greater propensity for the public to associate a similar mark used on dissimilar goods to the detriment of the earlier mark: Premier Brands UK Limited v Typhoon Europe Limited [2000] FSR 767 at 789.

Confusion need not be shown under s89(1)(d)

Neither s10(3) of the UK Act nor s89(1)(d) of the New Zealand explicitly require that the use of the trade mark give rise to confusion in order to the section to be triggered. (In fact, in New Zealand, the Ministry of Economic Development considered whether or not to include “confusion” as part of the section, and decided against this.)

In both New Zealand and the UK, this contrasts with the infringement provisions regarding identical sign/similar goods or services (s89(1)(b)) and similar sign/identical or similar goods or services (s89(1)(c)). In order to rely on either of these provisions a plaintiff must prove a likelihood of confusion in order for infringement to arise.

In the UK there has been some initial division in the caselaw as to whether a likelihood of confusion must be shown where the goods or services are dissimilar - even though the statute does not say so: (See Baywatch Production Co Limited v The Home Video Channel [1997] FSR 22, 30-31; British Telecommunications Plc v One in a Million Limited [1998] FSR 265, 272-3.)

It now seems to be at least tolerably well settled in the UK that the statute means what it says and that confusion is not an element of s10(3) (infringement) or its mirror image provision in the UK at opposition (s5(3)); C A Sheimer Trade Mark Application [2000] RPC 484, 504; Neuberger J in Premier Brands UK Limited v Typhoon Europe Limited [2000] FSR 767, 788-9.

The authors of Kerly 13th edition take the view that although a likelihood of origin confusion is not a necessary element of s 10(3) or s 5(3), if there is evidence of such confusion this will almost certainly take unfair advantage of or will be detrimental to the distinctive character or the repute of the mark.

"In circumstances where the use is such as to cause confusion as to the origin of the goods or services, then it would seem almost inevitable that the effect of that confusion will be to affect detrimentally the distinctive character and reputation of the registered trade mark. It may also provide an unfair advantage to the alleged infringer. In such circumstances, and absent a specific defence, one can see a court readily finding infringement.
The provision is not, however limited to use which is likely to cause confusion as to origin. One deputy judge has found that this must be an inherent requirement of the provision. But...it is suggested that the better interpretation is that it is not."
It may well be that in most cases and absent a finding of likelihood of confusion, a court would be reluctant to find that the requirements of s10(3) are satisfied. But the wording of the provision allows for that possibility. It appears that the proprietor may therefore be afforded rights in relation to dissimilar goods which he is not afforded in relation to similar goods. A curious but inevitable result of the wording of the TM Directive."
(citations omitted.)

And the use of the sign takes “unfair advantage of or is detrimental to the distinctive character of the mark”

This additional requirement for dilution infringement is also found in s10(3) of the UK Act. But note that there is a significant difference between the UK and New Zealand provisions. The UK has an additional requirement “if the use without due cause takes unfair advantage of…”. This is omitted in New Zealand. (This helpfully avoids some of the different arguments referred to by Neuberger J in Premier Brands Limited v Typhoon Europe Limited [2000] FSR 767, 789-791.

This same wording is also to be found as part of the s94 provision in the 2002 Act dealing with comparative advertising.

What amounts to taking unfair advantage of or being detrimental to the distinctive character or the repute of the mark? In the leading case Premier Brands Limited v Typhoon Europe Limited, Neuberger J gave some helpful guidance. In that case, the plaintiff (the registered proprietor of the famous UK brand of tea TY.PHOO) alleged infringement against the defendant who launched a range of kitchenwear and domestic utensils under the brand TYPHOON. The plaintiff alleged that the use of TYPHOON would cause “detriment” by tarnishing and blurring.

Plainly each case will be fact driven, but Neuberger J found, on the facts of that case, that:

The mere fact that a proportion of the public associate the mark with the plaintiff’s does not of itself mean that the sign is infringed - some detriment is required (p798)
Tarnishing was not proved. The allegation was that use of TYPHOON would lead to unfavourable association between TY.PHOO and the destructive power of typhoons/tropical cyclones. Neuberger J found this to be a shallow association and that there was no real detriment.
As to blurring, Neuberger J accepted (p801) that there would be some association between the marks but not in a way which was detrimental. The use of TYPHOON did not lessen the capacity of TY.PHOO to identify and distinguish goods. Nor could it impair the originality and distinctive character of TY.PHOO.

The fact that the marks were not identical was obviously a relevant factor. Had the defendant’s mark been TY.PHOO, then I suggest detriment may well have been proved.

(4) COMPARATIVE ADVERTISING: SECTION 94

Comparative advertising using another’s registered trade mark became an infringement in New Zealand under the 1939 Amendment Act. The fact that comparative advertising was an infringement of Part A marks was explicitly confirmed by the Court of Appeal in Villa Maria Wines v Montana Wines Limited [1984] 2 NZLR 422, 430. But if the marks were in Part B there was always the prospect of the defence in s9(2) of the 1953 Act being established - as indeed occurred in that case.

Judicial antagonism to the concept of automatic infringement for comparative advertising using Part A marks - even if there was no misleading or deception - was very evident in the decision of Elias J in PC Direct Limited v BestBuy Limited [1997] 2 NZLR 723. There the court refused to grant injunctive relief - despite a finding of infringement - relying on the rights of freedom of speech and freedom to receive information, both of which are protected by the Bill of Rights Act.

Since that decision, the restrictions on comparative advertising have not (to my knowledge) been tested in litigation in New Zealand. Similarly in many sections of industry, both overseas and in New Zealand, there has been “virtually a moratorium on enforcement”: Vodafone Group Plc v Orange Personal Communications Services Limited [1997] FSR 34, 39.

The 2002 Trade Marks Act now follows the UK 1994 Act in expressly allowing for comparative advertising in certain circumstances. Section 94 provides as follows:

A registered trade mark is not infringed by the use of the registered trade mark for the purposes of comparative advertising, but any such use otherwise than in accordance with honest practices in industrial or commercial matters must be treated as infringing the registered trade mark if the use, without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.

The new provision for New Zealand law is the proviso. This mirrors almost exactly s10(6) UK Trade Marks Act 1994. Note that the second part of the proviso uses the same language as in the dilution infringement provisions (s89(1)(d)) of the 2002 New Zealand Act - except this time the words “without due cause” are added.

General Principles

In Cable & Wireless v BT [1998] FSR 383 at pp389-90, Jacob J adopted a summary of the operation of s10(6) proposed by Mr Crystal QC, sitting as a Deputy Judge in Vodafone Group v Orange [1997] FSR 34. This is perhaps a good place to start to get the flavour of the way in which s94 might operate in New Zealand:

“(1) The primary objective of section 10(6) of the 1996 Act is to permit comparative advertising;
(2) As long as the use of the competitor’s mark is honest, there is nothing wrong in telling the public of the relative merits of competing goods or services and in using registered marks to identify them;
(3) The onus is on the registered proprietor to show that the factors indicated in the proviso to section 10(6) exist;
(4) There will be no trade mark infringement unless the use of the registered trade mark is not in accordance with honest practices;
(5) The test is objective: would a reasonable reader be likely to say, upon being given the full facts, that the advertisement is not honest?;
(6) Statutory or industry agreed codes of conduct are not a helpful guide as to whether an advertisement is honest for the purposes of section 10(6). Honesty has to be gauged against what is reasonably expected by the relevant public of advertisements for the goods or services in issue:
(7) It should be borne in mind that the general public are used to the ways of advertisers and expect hyperbole;
(8) The 1994 Act does not impose on courts an obligation to try and enforce through the back door of trade mark legislation a more puritanical standard that the public would expect from advertising copy;
(9) An advertisement which is significantly misleading is not honest for the purposes of section 10(6);
I venture with diffidence to make a number of additional observations.
(10) The advertisement must be considered as a whole;
(11) As a purpose of the 1994 Act is positively to permit comparative advertising, the court should not hold words in the advertisement to be seriously misleading for interlocutory purposes unless on a fair reading of them in their context and against the background of the advertisement as a whole they can really be said to justify that description;
(12) A minute textual examination is not something upon which the reasonable reader of an advertisement would embark;
(13) The court should therefore not encourage a microscopic approach to the construction of a comparative advertisement on a motion for interlocutory relief.”
(citations omitted.)

“Use otherwise than in accordance with honest practices in industrial or commercial matters” : A Robust approach

The UK courts have taken a fairly robust approach as to what sort of advertising is acceptable under s10(6). They have allowed quite a considerable degree of puff and hyperbole, on the basis that consumers are accustomed to taking advertising statements with a grain of salt. This accords with New Zealand authorities under the Fair Trading Act: see for example Telecom v Ad.Viser (1992) 26 IPR 37 - per Williams J.

In British Airways Plc v Ryanair Limited [2001] FSR 541 Jacob J said, at p552:

“It is of course the case that the average consumer has been exposed from birth to advertising. People get case hardened by it. They expect hyperbole and puff. One can almost say no advertisement is complete without them. The Courts have long recognised this.”

(Also in that case, the court found that the fact that an advertisement (“EXPENSIVE BA….DS!”) was offensive did not render it actionable as trade mark infringement.) Similar comments were made in Barclays Bank Plc v Advanta [1997] RPC 307, 315:

“Otherwise than in accordance with honest practice” - a subjective or objective test?

In Vodafone Group Plc v Orange Personal Communications Services Limited [1997] FSR 34, Jacob J held that the test of “honest practice” in s10(6) is an entirely objective one, saying at page 39:

“In this case it is common ground that there is no infringement unless the use of Vodafone in the comparison falls within the qualification of section 10(6). This qualification was considered by Laddie J in Barclays Bank Plc v Advanta [1996] RPC 307. He held that it is a for the plaintiff to show that the use falls within the qualification and there the test of honesty is objective (i.e. would a reasonable leader be likely to say, upon being given the full facts, that the advertisement is not honest?) Laddie J gave as an example the case where the advertisement is “significantly misleading”. In trade marks, as [counsel] rightly submitted there is no “one meaning rule”. If a comparison is significantly misleading on an objective basis to a substantial portion of the reasonable audience, it is not an “honest practice” within the section.”

Later, in Cable & Wireless Plc v British Telecommunications Plc [1998] FSR 383, Jacob J again commented on the nature of the test of honest practice. In this case, His Honour seemed to allow a partially subjective element (namely, the relevant knowledge of the advertiser) to be taken into account in what he had previously expressed as an entirely objective test. His Honour said at p391:

“[I]n the end I think the parties were right in submitting that the test is objective in this sense: that one should ask whether a reasonable trader could honestly have made the statements he made based upon the information that he had.”

Kerly (13th edition) suggests (p370) that these latter comments of Jacob J should be applied with some caution:

“It is possible to imagine circumstances where the advertiser has not made reasonable inquiries and accordingly has honestly made statements based upon the information he had, but where that information was, on any reasonable objective view, inadequate.”

The use without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark”

The words “without due cause” have been held to govern both the use of the sign and the words “takes unfair advantage of or is detrimental to …”: Neuberger J in Premier Brands Limited v Typhoon Europe [2000[ FSR 767, 790-1.

The second part of the qualification in s94 provides that as well as being otherwise than in accordance with honest practices in industrial or commercial matters, in order to infringe the use must take unfair advantage of, or be detrimental to, the distinctive character or repute of the trade mark.

In the United Kingdom, quite what this additional requirement adds (if anything) is unclear. In Vodafone, Jacob J took the view that it adds very little, saying at pp39-40:

“The provision contains a further qualification - “that the use without due cause takes unfair advantage of, or is detrimental to the distinctive character or repute of the mark.” Here Orange say that even if the slogan is misleading it does nothing to the distinctive character of the mark Vodafone. I think this is false. The slogan clearly takes advantage of the distinctive character of the mark: it would be meaningless if no-one had heard of Vodafone. And, on the hypotheses that the mark is misleading, that would be an unfair advantage. I agree with Laddie J that these words “in most cases add nothing of significance to the first part of the proviso”. If the slogan is misleading there will be infringement.”

However, in C A Sheimer (M) Sdn Bhd’s TM Application [2000] RPC 484 at 505, Geoffrey Hobbs QC emphasised the importance of examining whether the use of the mark would take unfair advantage of or be detrimental to the repute of the mark. The Court observed that the provisions of s5(3) (i.e. the equivalent provision applying at opposition stage) are clearly not intended to have the sweeping effect of preventing registration of any mark which is the same or similar to a trade mark with a reputation, nor are they intended to make it automatically objectionable for the use of one trade mark to remind people of another, so “the importance of this question should not be under-estimated”.

(5) REMEDIES AND DEFENCES; THE OWN NAME DEFENCE

The final matter is to touch briefly on the issue of remedies and then to concentrate on one particular defence, the use of one’s own name.

One of the curiosities of the 1953 Act was that there was no statutory provision outlining the remedies applicable to trade mark infringement. These were a matter of common law and included injunctive relief, the option of an account of profits or damages, obliteration or delivery up. These remedies are now codified in ss106, 108 and 109-116.

Section 108 provides for an order requiring the defendant to erase, remove or obliterate the offending sign or, if this is not reasonably practicable, to destroy the infringing goods, material or object. Under s108(2), if the order is not complied with, the court may go on to order that the infringing objects be delivered to any person to whom the court may direct to either obliterate the mark or to destroy the goods. This is a new provision giving extended powers.

The delivery up provisions (ss109-116) reasonably closely follow the same delivery up provisions contained in the Copyright Act 1994 (ss122 and 134).

A number of the defences from the 1953 Act carried over to the new statute. The one which I wish to highlight is the own name defence.

The own name defence has undergone a reasonably significant change from the 1953 to 2002 Acts. Section 12(a) of the 1953 Act stated:

“No registration of a trade mark shall interfere with -
(a) any bona fide use by a person of that person’s own name or of the name of that person’s place of business, or of the name, or of the name of the place of business, of any of that person’s predecessors in business;”

Section 95 is more explicit:

“A person does not infringe a registered trade mark if, in accordance with honest practices in industrial or commercial matters, the person uses:
(a) the person’s name or the name of the person’s place of business; or
(b) the name of the person’s predecessor in business or the name’s predecessor place of business;”

The own name defence is arisen in a number of cases recently in New Zealand and in the UK. I would urge considerable caution against parties and practitioners thinking that this is an easy way around an infringement allegation. My reasons for these comments are:

(a) An objective test

It is now plain from the wording of s95 “in accordance with honest practices in industrial or commercial matters” that the test is an objective one. It is never enough for the company to honestly believe that it can use its own name.

In the UK, the equivalent change of wording in the legislation has been widely regarded as implementing a change from a subjective to an objective test. However, a close reading of some of the English cases under the earlier provision reveals that even under the old law, the test was not entirely subjective. See, for example, Financial Plc v Halifax Building Society [1994] FSR 1994 81,93.

In New Zealand the Court of Appeal has expressly acknowledged that bona fide use even under s12(a) of the 1953 Act, was not to be tested wholly subjectively: Advantage Group Limited v Advantage Computers Limited [2002] 3 NZLR 741, 751.

(b) Scope of the defence

The case law in the United Kingdom demonstrates significant inconsistencies as to what conduct will be considered to fall within the ambit of the defence. The high water mark is the decision of Laddie J in Mercury Communications Limited v Mercury Interactive (UK) Limited [1995] FSR 850. In that case, his Honour suggested that the own name defence would be available even in circumstances where the name was significantly abbreviated and used as a trade mark - even as a trade mark in a logo form.

This approach has not been followed in New Zealand. In Advantage Group Limited & Ors v Advantage Computers Limited (CA 1368/02, 7 October 2002), the Court of Appeal held (p 14) that the defence did not go so far as to protect the use of a single word taken from a corporate name and prominently presented with the first letter in logo form as the masthead for the business of the parent company and each of its subsidiaries. The Court referred to the Mercury decision and stated that if that case was in fact authority for that proposition, they declined to follow it.

The Court of Appeal was also relatively scathing in its comments about a party seeking to adopt an abbreviation of its name e.g. ADVANTAGE in that case and then rely on that as use of its own name. The court referred to this as “pulling one’s self up by one’s boot straps” (p750).

The result of comments in the Advantage case para 46 and its decision in Anheuser Busch (CA 158/01, 19 September 2002) paras 122-125 - taken with the additional requirement of s95 - is that where a defendant uses its company name and highlights part of the mark as a trade mark, this is unlikely to be regarded as bona fide use of the person’s name. Nor is it likely to pass the requirement of being “in accordance with honest practices in industrial or commercial matters”.