Telecom IP Limited v Beta Telecom Limited
High Court, Wellington
Ronald Young J
27 September 2006
This was an appeal from the decision of the Assistant Commissioner of trade marks to allow registration of the mark BETA TELECOM and device for telecommunication services in class 38.
In New Zealand Telecom is the dominant telecommunications services provider having begun its corporate life as a state-owned monopoly. An important aspect of the application was therefore that it was accepted that Telecom in the New Zealand context was not generic and that Telecom by virtue of its dominant position in the telecommunications services market had a well-established public awareness of its mark.
Because this was a trade mark application before the 2002 Act came into force, it was considered under the provisions of the Trade Marks Act 1953. However, the general principles considered in this case will still be relevant to determining whether a mark is registrable under the 2002 Act with one exception. That exception is in relation to the statutory criteria for refusing registration to a mark that is identical or similar to a well-known mark. Under the 2002 Act it is only necessary to show that use of the later mark would be likely to prejudice the interests of the owner of the well known mark.
At first instance, the Assistant Commissioner held that the BETA mark was registrable. After considering the evidence, she held that a substantial number of persons were not likely to be confused or deceived by the BETA mark and the TELECOM mark (s16) and that the BETA mark was not similar to the registered TELECOM mark (s17(3)). Although it was accepted that Telecom’s mark was well known, for essentially the same reasons the Assistant Commissioner concluded that use of BETA’s mark was not likely to deceive or cause confusion for the purposes of s17(4). The Assistant Commissioner then considered whether the BETA mark had established honest concurrent use of the mark concluding that it had in light of evidence that had it been using the name BETA TELECOM since 1981, some six years prior to the appellant coming into existence.
Telecom appealed to the High Court on the grounds that the Assistant Commissioner erred when she concluded that:
(1) use of the BETA trade mark would not cause confusion with Telecom’s use and reputation of its mark (s16); and
(2) the BETA mark was not similar to the registered TELECOM marks (s17(3) and (4)).
(For the appeal Telecom accepted those marks were restricted to the registered marks TELECOM and TELECØM.)
The High Court held that the Assistant Commissioner had erred. First, Ronald Young J held that the Assistant Commissioner erroneously focused on BETA’s actual use of the mark rather than the notional services that it intended (as identified in its trade mark application). Secondly, the Court held that the Assistant Commissioner had applied the wrong test in terms of confusion and deception. The test was not, as the Assistant Commissioner had held, whether a substantial number of persons are not likely to be confused. Rather it is whether a substantial number of persons are likely to be confused (noting that both situations could exist concurrently).
In allowing the appeal, the Court held that use by BETA of the BETA TELECOM mark in a normal and fair manner in connection with the telecommunication services identified was likely to deceive or cause confusion amongst a substantial number of people. The Court noted that the word TELECOM “was such a strong trade name in New Zealand that its use in another mark would require substantial distinguishing features to distinguish from the “TELECOM” mark to avoid similarity of marks causing confusion or deceit”. The deception or confusion would be that potential customers of BETA would believe that BETA is part of or closely connected to TELECOM. For the same reasons registration was refused under ss17(3) and (4).
The Court also observed that the oft-cited proposition that, for the purposes of comparison, the first part of the mark is the most important was nothing more than an observation about speech patterns and emphasis and was not to be elevated to some form of principle of law.
In relation to honest concurrent use, the Court held that there was no evidence of past concurrent use by BETA in relation to the particular services in issue. The statutory test for concurrent use under s17(5) involved a comparison between what services in fact BETA had provided compared with the services by Telecom. Applying that test, it was clear from the description of BETA’s business and the use of its mark that it did not come within the description of concurrent use.