Background

The defendant, Primary Distributors New Zealand Ltd (PDNZ) was the exclusive distributor of the HEFTY range of cling-film wraps, papers and domestic products in New Zealand from the mid-1990s.  In 2005 the owner of the HEFTY trade marks was placed in receivership and PDNZ entered into a strict three month licence agreement to sell the remaining HEFTY stock in New Zealand.

When the owner of the HEFTY trade marks went into liquidation, PDNZ attempted to purchase the HEFTY marks in New Zealand.  On the assumption that the trade marks would soon be owned by either itself or its established supplier (a Thai entity which was also bidding for the marks), PDNZ continued to purchase and import HEFTY products directly from Thailand and to sell these products in New Zealand.

Unbeknown to PDNZ, the appellant Intellectual Property Development Corporation Pty Ltd (IPDC) was also negotiating to purchase the HEFTY trade marks, which were assigned to IPDC in December 2005.  The assignment included the right to sue and claim (and retain) any damages and other remedies for past infringements of the trade marks.

In early February 2006 PDNZ became aware that a different party had acquired the New Zealand trade marks, yet continued to import and distribute HEFTY products up until June 2006, while undertaking preparations to launch a new brand of cling-wrap film.

The date when IPDC first became aware of PDNZ’s actions was debated by the parties.  However, IPDC contacted PDNZ in July 2006 seeking undertakings to cease distribution and also financial compensation.  IPDC then commenced trade mark infringement and passing off proceedings at the High Court of New Zealand.

While PDNZ accepted that it had infringed the trade marks, it argued that IPDC was aware of the infringement occurring during the latter part of the infringement period yet took no action, and therefore should not be entitled to an account of profits for that period.   At first instance, Asher J held that IPDC became aware of the infringement on 18 January 2006 and restricted the period of the account of profits up to this date.

Court of Appeal Decision

Before the court of appeal, IPDC argued that Asher J was wrong to restrict the period of the account of profits merely on the basis of a five month delay in commencing proceedings. The Court considered that a delay of five months, on its own, should not deprive IPDC of a remedy.

The Court then considered whether any other factors influenced Asher J’s decision to deny a remedy for part of the infringement period.  The main additional factor appeared to have been that IPDC had suffered no additional loss (as it was not in a position to trade itself in that period) and that awarding it an account of profits “may give [it] a boon it has not earned and indeed may reward its failure to protest”.

The Court of Appeal noted that for a remedy to be denied because of factors outside the recognized defences (laches or acquiescence in this case), there would need to be an element of unconscionability involved, stating “there is no duty on a trade mark owner to protest, and it must not be lost sight that PDNZ is the wrongdoer”.

Further, in considering the nature and purpose of an account of profits, the Court of Appeal noted that this remedy is designed to prevent unjust enrichment and concentrates on the wrongful actions of the infringer, and not on the position or the actions or omissions of the owner.  Therefore, the Court held that the fact that IPDC was not in a position to exploit the trade marks was irrelevant and should not have been taken into account by Asher J.

Indeed, the Court considered that PDNZ may have been more culpable in the first half of 2006 than in the earlier period of infringement, as it knew for certain by this time that its attempt to purchase the trade marks had been unsuccessful and that a third party had done so.

The account of profits was ordered for the whole period claimed and the matter was remitted back to the High Court to reconsider further issues raised at the appeal.

The relevant issues before the Court of Appeal were whether this mark was sufficiently distinctive, and if so, whether its use was likely to deceive or cause confusion in the marketplace due to Intellectual Reserve’s prior trade marks.

It is slightly ironic that Intellectual Reserve pursued the distinctiveness ground, given its own registrations for FAMILYSEARCH.  In considering this issue, the Court of Appeal stated that a mark consisting simply of the words “family search” (whether separated or run together) would be non-distinctive in either plain block letters or cursive form, and expressed surprise (obiter) that Intellectual Reserve had been granted registrations for the plain words FAMILYSEARCH.

Nonetheless, the opposed mark as a whole was held to be distinctive, as the koru/arrow device combined with the words FAMILYSEARCH created a “total sign capable of being memorable to a consumer”.  However to avoid any misunderstanding within the marketplace, the court directed that as a condition of registration a disclaimer be entered that “registration of this trade mark shall give no right to the exclusive use of the words ‘family search’”.  Interestingly, this disclaimer does not appear in relation to the registration’s entry on the Intellectual Property Office of New Zealand’s online database.

Regarding the likelihood of confusion or deception between the marks, the Court considered whether there was any potential that the marks would be used in respect of overlapping services.  Although the services offered by Mr Sintes and Intellectual Reserve both concerned research of births, deaths and marriage records, it was held that the overlap between the two parties’ fields was “simply insubstantial”.  Genealogy-type services were concerned with research of the past, whereas Mr Sintes’ services were for helping others to locate family members in the present and the future.

The fact that Intellectual Reserve’s registrations covered different classes to the class listed for Sintes’ application (class 45) was also considered to be material to the finding that the services were different.  This is unfortunate for Intellectual Reserve, as genealogy services are classified in the current edition of the Nice classification in class 45, a class which did not exist at the time Intellectual Reserve’s trade marks were registered.

The fact that the words “family search” are in common parlance was another reason for finding that confusion or deception was unlikely.  The Court noted that the public is alert to small variations in largely descriptive marks because they expect others to use similar marks.  Therefore, the common features of the marks were neutralised.

It was found that Mr Sintes’ application did not breach any of the provisions relied on by Intellectual Reserve, and that the mark could be registered.

Fosters, relying on section 17(1)(a), alleged that the trade marks applied for would be deceptive or would cause confused having regard to its own trade marks, shown below:

Foster’s had not sold any goods bearing the above trade marks in New Zealand at the relevant date. However, it had sold such goods in Fiji and sought to rely on that use to in support of its opposition.

The Assistant Commissioner accepted that Foster’s could rely on the use of its trade marks in Fiji in support of the opposition because of the significant number of people who travel between New Zealand and Fiji.  The evidence provided by Foster’s in support of this proposition included details of its share of the Fijian beer market and the number of New Zealand resident departures to Fiji from 1983 to 2007.

Nonetheless, the opposition was unsuccessful.  The Assistant Commissioner, having compared the trade marks, found that they looked different and did not share conceptual similarities, and as such use of the marks applied for would not cause deception or confusion.

Interestingly the Assistant Commissioner stated that because the marks being compared were logo marks, the sound of the marks, or the manner in which they would be spoken was not applicable or significant.

IPONZ proposed to reject the application on the basis of lack of distinctive character (section 18(1)(b)).  The applicant did not file any evidence use and it was left to the Assistant Commissioner to decide whether the mark had sufficient inherent distinctiveness.

The applicant argued that consumers of perfume recognize the shapes of bottles as trade marks, and the applicant’s mark was distinctive by virtue of its combination of features, including an octagonal shaped bottle; with flat surfaces on the front and back; raised square studs in each corner (giving the bottle an industrial appearance); and a two level ziggurat cap.

The Assistant Commissioner concluded that the whole of the mark lacked the inherent distinctiveness required for prima facie registration, because:

• It consists largely of a rectangular bottle, which other traders are likely to wish to use;
• Other traders were also likely to wish to use features such as a similarly shaped cap or similar forms of decoration around their bottles; and
• The scope of the application was broad; the application only provided two perspectives of the mark, it was not limited to colour, size or materials, all increasing the likelihood of other traders being caught by the proposed registration of the mark.

The Assistant Commissioner’s approach is in line with the current practice at IPONZ. It is notoriously difficult to register bottle shapes as trade marks without either evidence of use or a high degree of stylisation contained within the mark.  However, it would be interesting to know whether the outcome in this case would have been different had the explanation of the trade mark further limited the mark in terms of colour, size and material composition.

In relation to the ENO mark, the hearing officer considered that it was neither substantially identical nor deceptively similar to the applicant’s ENOVA marks, noting that:

I believe that the significant differences, both visual and aural, between the ENO and ENOVA trade marks militate against the possibility that they would leave deceptively similar impressions in the minds of potential customers

In relation to the EUNOVA mark, the hearing officer referred to passages in the text Shanahan’s Australian Law of Trade Marks and Passing Off 4th ed to the effect that in an opposition, “cogent evidence” was required where the ground of opposition relied upon could have been raised during examination but was not and in particular that:

In addition to the usual burden on an opponent, there are the problems that an examiner has already decided that an objection under s 44(1) or (2) could not be established

In this case, despite no indication that the original examiner considered the prior EUNOVA mark, the hearing officer concluded that:

absent both prior notice and supporting evidence relating to the EUNOVA trade mark, I am prepared to lean against a finding of deceptive similarity with the applicant’s ENOVA trade marks

These findings also resulted in a failure to establish the grounds of opposition raised under sections 42(b) and 60.

This change has been made to standardise the application process across patents, designs and trade marks; to increase the security associated with online filings; and to reduce party duplication issues.