Aqua Technics Pool and Spa Centre New Zealand Ltd v Aqua-Tech Ltd

[2007] NZCA 90

IN THE COURT OF APPEAL OF NEW ZEALAND

CA257/05

[2007] NZCA 90

BETWEENAQUA TECHNICS POOL AND SPA CENTRE NEW ZEALAND LIMITED

Appellant

ANDAQUA-TECH LIMITED

Respondent

Hearing:8 February 2007

Court:Chambers, Robertson and Ellen France JJ

Counsel:D L Marriott for Appellant

K W McLeod for Respondent

Judgment:22 March 2007 at 11 am

JUDGMENT OF THE COURT

A        The appeal is dismissed.

BThe appellant is to pay to the respondent costs of $6,000 plus usual disbursements.

REASONS OF THE COURT

(Given by Ellen France J)

Table of Contents

Para No.

INTRODUCTION  [1]
FACTUAL BACKGROUND   [3]
APPLICABLE PRINCIPLES   [12]
JUDGMENT OF THE HIGH COURT  [19]
THE APPELLANT’S CASE  [28]
USE AS PART OF A COMPANY OR TRADING NAME?  [32]
USE IN RELATION TO SERVICES OR GOODS?  [43]
SPA POOLS  [54]
EVIDENCE   [65]
EFFECT OF LAPSE OF REGISTRATIONS  [66]
RESULT AND COSTS  [68]

Introduction

[1]       This is an appeal from a decision of Venning J delivered on 3 October 2005 (HC AK CIV2005-404-002037) allowing an appeal from a decision of the Assistant Commissioner of Trade Marks delivered on 22 March 2005.  The Assistant Commissioner had declined to register “Aqua‑Tech” as a trade mark in relation to swimming pools in class 6 and pools including swimming pools, spa pools, and therapeutic pools in class 19.

[2]       The issue on appeal is whether Venning J was wrong to decide that the respondent, Aqua-Tech Limited, had established a use of the trade mark, “Aqua‑Tech”, in relation to spa and swimming pools.

Factual background

[3]       Venning J at [2] - [7] describes the parties and the facts and the description which follows is largely taken from those paragraphs.

[4]       Both parties are involved in the spa and swimming pool markets.

[5]       The appellant, Aqua Technics Pool and Spa Centre New Zealand Limited, was incorporated in New Zealand in 2001.  Aqua Technics markets and installs fibreglass spa and swimming pools in New Zealand.  The pools are imported from an Australian company, Aqua Technics (WA) Pty Limited.  The New Zealand company is a wholly owned subsidiary of Aqua-Technics (WA) Pty Limited.  “Aqua Technics” has been used as a trade mark in Australia since 1976 and in New Zealand by the appellant since April 2001.  There is no suggestion that the use of the “Aqua Technics” mark by the appellant was in bad faith.

[6]       The respondent, Aqua-Tech, was incorporated in New Zealand in 1975. Aqua-Tech manufactures, sells and installs acrylic spa pools and swimming pools in a variety of materials.  It sells primarily to trade.  Aqua-Tech also manufactures and sells a variety of other goods and services related to the pool industry. 

[7]       Aqua-Tech obtained registration for the mark “Aqua-Tech” for three classes including the two now in issue in 1975 – 1976.  The marks in relation to these two classes were unintentionally allowed to lapse between 1996 and 1999. Aqua-Tech made fresh trade marks applications for all three classes in August 2001.  Aqua Technics lodged its trade mark applications in the relevant classes in October 2002.

[8]       Aqua Technics opposed the respondent’s trade mark applications.  It did so on two grounds.  First, that registration would be deceptive or confusing (s 16 of the Trade Marks Act 1953).  Second, that Aqua Technics had prior use of the mark. The latter ground turned on whether the respondent had shown it used the mark on spa and swimming pools prior to its use by Aqua Technics (s 26 of the 1953 Act).

[9]       The Assistant Commissioner said there could be no deception or confusion so the opposition in reliance on s 16 was unsuccessful.  There is no appeal from that part of the decision.  The Assistant Commissioner concluded that Aqua-Tech had failed to satisfy her that there was evidence showing continued or any use of the “Aqua-Tech” mark on spa or swimming pools.  Hence the opposition to registration in relation to spa and swimming pools based on s 26 succeeded.

[10]     On appeal the only issue related to the use in terms of s 26.  Venning J said the evidence established that the respondent had used the mark, “Aqua-Tech”, as a trade mark in relation to spa and swimming pools and accordingly allowed the appeal.  Orders were made that registration of the relevant trade marks proceed to registration without amendment.

[11]     There was an error in service of the documents relating to the appeal to this Court.  This meant special leave was required for this appeal.  Leave was granted in a decision delivered on 13 March 2006.

Applicable principles

[12]     The parties agree that the effect of the transitional provision (s 203) of the Trade Marks Act 2002 is that this appeal is governed by the Trade Marks Act 1953 and the Trade Mark Regulations 1954 (SR 1954/222).

[13]     Section 26 of the 1953 Act provides that any person claiming to be the “proprietor” of a trade mark used or proposed to be used by that person who wants to register the mark:

(1)… shall apply in writing to the Commissioner in the prescribed manner for registration either in Part A or in Part B of the register.

(2)Subject to the provisions of this Part of this Act, the Commissioner may refuse the application, or may accept it absolutely or subject to such amendments, modifications, conditions, or limitations, if any, as he may think right.

[14]     The proprietor of a trade mark in New Zealand is the first person to use that mark in New Zealand, see Philip Morris (NZ) v Liggett & Myers Tobacco Co (NZ) Ltd (No 3) (1978) 1 NZIPR 195 (SC).

[15]     The parties agree that the requirements for a legitimate claim to proprietorship under s 26 of the 1953 Act are as set out in Newnham v Table for Six (1996) Ltd (1998) 44 IPR 269 at 278 (HC) citing Brown and Grant, The Law of Intellectual Property in New Zealand (1989) at [2.8], that is:

(1)There is no prior use or prior assertion of proprietorship.

(2)The applicant is using or has sufficiently definite intention to use the mark.

(3)There is no fraud or breach of duty involved.

[16]     Here there is no question of fraud or breach of duty.  The focus is on whether Aqua-Tech used the mark in relation to the pools before use by the appellant and the related question of whether Aqua-Tech was using or had sufficient definite intention to use the mark.

[17]     As to the type of use required to maintain a claim to proprietorship based on use, again, there is no dispute between the parties about that.  The approach is described in Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 at 432 as follows:

The prior use of the trade mark which may suffice, at least if combined with local authorship, to establish that a person has acquired [in a particular country] the statutory status of “proprietor” of the mark, is public use [in that country] of the mark as a trade mark, that is to say, a use of the mark in relation to goods for the purpose of indicating or so as to indicate a connection in the course of trade between the goods with respect to which the mark is used and that person … .

[18]     Section 2(2)(a) of the 1953 Act is relevant to this issue.  The effect of s 2(2)(a) is that the sign that comprises the trade mark must be use of a sign “upon, or in physical or other relation to, goods”.

Judgment of the High Court

[19]     After setting out the relevant background and discussing the evidence, Venning J observed that the evidence showed that Aqua-Tech primarily sold its swimming pools to an associated company, Cascade Industries Limited.  Cascade acted as a retailer to sell the pools to the public.  Venning J noted that Aqua-Tech’s promotional materials for the trade referred to these pools as “Cascade pools”.

[20]     Venning J saw it as significant, however, that all of the products, including the Cascade pools, were advertised under the heading of “Aqua-Tech”.  That mark “featured prominently” at the head of the respondent’s 1995/96 catalogue and its 2000 catalogue.  Venning J said at [27] that he was satisfied that those in the trade dealing with Aqua‑Tech:

[W]ould know that if they were buying a Cascade pool for on-sale the pool had been manufactured by Aqua-Tech.  The Aqua-Tech mark identified the pools as those of the [respondent].

[21]     Venning J referred to New South Wales Dairy Corporation v Murray‑Goulburn Co‑operative Co Ltd (1989) 86 ALR 549 at 566 where Gummow J held on the issue of use:

The use must be as a “trade mark” … relevantly, a mark used or proposed to be used in relation to goods for the purpose of indicating or so as to indicate a connection in the course of trade between the goods and the proprietor, whether with or without an indication of the identity of that person. … The phrase “in the course of trade” is wide enough to cover steps necessary for the production of goods, as well as the actual placement of the goods on the market”:  “Hermes” Trade Mark [1982] RPC 425 at 432.

[22]     The Judge also placed some reliance on the fact there was evidence that each pool had a notice attached referring to Aqua-Tech.  Venning J’s conclusion was that the use of Aqua-Tech in the promotional materials and in the material attached to the pools met the requirement for the use of the sign in “relation to goods”.

[23]     Venning J said there was some, although limited, evidence of sales by Aqua‑Tech direct to the public.  In the context of that evidence, there was a catalogue advertising a “Caprice” pool sufficient to establish priority.

[24]     In terms of the spa pools, the Judge decided the Assistant Commissioner was wrong to disregard the evidence about sales by Aqua-Tech of spa pools under and by reference to the mark.  Venning J concluded there was sufficient evidence to find Aqua-Tech had used the mark in relation to spa pools.

[25]     The Judge then dealt with Aqua Technics’ argument that any use as a mark was use in relation to services but not in relation to the goods.  Venning J distinguished the authorities relied on by Aqua Technics and we come back to his reasoning on that.

[26]     Venning J’s conclusion at [50] was that, in summary:

[T]he evidence establishes the [respondent] used the trade mark Aqua-Tech in relation to swimming pools and spa pools prior to 31 August 2001.  If anything the earlier trade mark registrations would support rather than detract from such established use.

[27]     On this basis, Venning J allowed the appeal.

The appellant’s case

[28]     The appellant’s case is that the respondent did not use Aqua-Tech as a trade mark upon or in physical or other relation to spa and/or swimming pools.  This means, Aqua Technics says, that the respondent’s rights lapsed when the corresponding registrations lapsed.  Thus, when the respondent filed its applications in 2001, the respondent no longer had proprietorship because by then the appellant had used the mark.

[29]     The appellant developed its case by arguing first, that the respondent’s use in relation to any form of pool was as part of a company or a trading name, namely, “Aqua-Tech Industries Limited” or “Aqua-Tech Industries”.  The appellant says that Venning J was accordingly wrong to rely, for example, on promotional material and on stickers on the pools because those materials refer to “Aqua-Tech Industries Limited” and not to “Aqua-Tech”.  The appellant’s related argument is that if the mark is used in proximity to the goods, the use is not as a trade mark.

[30]     Second, the appellant’s submission is that any trade mark use is as part of a trade mark in relation to services.  The register having been split between goods and services, there has to have been use in relation to the goods to which the mark relates.  The appellant says that Venning J was therefore wrong to distinguish cases such as Mitre 10 (New Zealand) Ltd v Benchmark Building Supplies Ltd [2004] 1 NZLR 26 (CA); The Hoyts Corporation Pty Ltd v Hoyt Food Manufacturing Industries Pty Ltd (2003) 61 IPR 334 (ATMO); and Re Application by Pumps‘N’Pipes Pty Ltd (1990) 18 IPR 378 (PTMDO). The appellant says this case is on “all fours” with those cases.

[31]     Finally, the appellant is critical of a number of aspects of the evidence for the respondent particularly that of Laurence Ogden, who is a director of Aqua‑Tech.  The submission is that this Court should look critically at the evidence for the respondent and that Venning J was wrong to rely on it.

Use as part of a company or trading name?

[32]     It is the case that, particularly in terms of swimming pools, some of the promotional material relied on by Aqua-Tech and accepted as trade mark use by Venning J refers to “Aqua-Tech Industries” or to “Aqua-Tech Limited”.  For example, Mr Ogden relies on a brochure for the Caprice swimming pool which is described as “Caprice by Aqua-Tech Industries”.  The sticker attached to the pools to which Venning J refers reads as follows:

Caution Cascade swimming pools are designed to eliminate the need to drain a swimming pool.  As such, the water forms an integral part of the pool construction and the pool must never be emptied.  For further information contact your local Cascade dealer or …. Aqua-Tech Industries Limited.

[33]     On the basis of these references, the appellant says that when Mr Ogden claims sales of its spa pools feature the “Aqua Tech trade mark” the Court should be sceptical of that claim because an analysis of Mr Ogden’s evidence shows that Mr Ogden is often referring in fact to “Aqua-Tech Industries” or to “Aqua‑Tech Industries Limited”. 

[34]     The appellant also points to the absence of evidence as to when the notice began to be used.

[35]     It is accepted by Mr Ogden that the use of the word “Limited” as part of the trading name of Aqua-Tech Industries Limited on these sorts of notices and other material is an error.  Mr Ogden confirms that there has never been a company Aqua‑Tech Industries Limited and that all of the trading activities since 1975 to which he refers as having been undertaken by Aqua-Tech have been by Aqua‑Tech Limited, the respondent.

[36]     We agree that there is some looseness in language at times in Mr Ogden’s evidence.  But Mr Ogden does distinguish in at least some of his evidence between “our company name Aqua-Tech and our use of the Aqua‑Tech trade mark” in relation, for example, to swimming pools.  Absent cross-examination of Mr Ogden at the hearing before the Assistant Commissioner, we do not consider much can be made of this point. 

[37]     This aspect is not central in any event because the appellant accepts that it is possible for the mark to be used as part of the company or trading name.  Certainly, as the respondent points out, use of a mark as part of a trading name was sufficient to amount to passing off in Anheuser-Busch Inc v Budweiser Budvar National Corporation [2003] 1 NZLR 472 (CA).

[38]     Here, the two catalogues relied on by Venning J are headed “Aqua-Tech” and there is no dispute that this sort of promotional material can comprise the use of a trade mark so long as there is a “separate and distinct commercial impression” from the other components of the image: Colorado Group Ltd v Strandbags Group Pty Ltd (No 2) (2006) 69 IPR 281 at [8] (FCA) citing BP plc v Woolworths Ltd (2004) 212 ALR 79 at [64] (FCA). The respondent is right that “Aqua-Tech” is stylised and so is separately identified and distinct from “Aqua Tech Industries” in the promotional material. We do not see any error in Venning J’s reliance on this material as evidence of use of the mark.

[39]     As to when this notice was used, we see no reason to disregard Mr Ogden’s evidence that a notice featuring the Aqua-Tech name and mark has been used since 1975.

[40]     Finally, under this head, it is relevant that the Assistant Commissioner found that those in the trade would by means of the catalogue “see a connection between [Aqua-Tech] and the relevant goods”.  Because the Assistant Commissioner considered there was a need to show that members of the public would see “Aqua‑Tech” as having trade mark significance, the Assistant Commissioner did not consider that the “connection” referred to was sufficient.  Venning J found that in focusing on the public in this respect, the Assistant Commissioner erred. 

[41]     It is the case, as the respondent submits, that the “connection” identified by the Assistant Commissioner as between the respondent and the goods is exactly what is required to show trade mark use.  That is because it is a link between Aqua-Tech and the origin of the goods.  This answers the appellant’s argument that any use of the mark is not use as a trade mark.

[42]      Slightly different issues arise in relation to the evidence about spa pools so we deal with that separately. 

Use in relation to services or goods?

[43]     The primary focus here is on the Cascade swimming pools.  We illustrate the appellant’s point by reference to the 1995/96 catalogue.  The table of contents to this catalogue is headed up “Aqua-Tech” but the first item in the table of contents is described as “Aqua-Tech Series 120 diving boards …”.  The appellant accepts that this is a use of the mark in relation to the goods, that is, diving boards.  That is not so, the appellant says, in terms of the treatment of swimming pools in the catalogue. The relevant descriptions in the table of contents for swimming pools are as follows:

CASCADE Swimming Pool Kits Dealer Pricelists

Cascade Pool Models, Shapes and Sizes

Cascade Suggested Retail Price List.   (Our emphasis.)

[44]     Then, when reference is made to the cautionary sticker on the swimming pools described above (at [32]) it is plain, the appellant says, that Aqua-Tech is simply providing the relevant services. 

[45]     The appellant takes issue with the respondent’s claim that the use of the Cascade “mark” is as a sub brand, as in “Ford Mondeo” or “Ford Telstar” with Mondeo and Telstar equating with Cascade.  The appellant says that this analogy is flawed and points out that there has to be some distinction between, for example, the Ford motor company and the Ford modelling agency.

[46]     This is essentially a factual question and the various factual findings made by Venning J were open to the Judge.  The threshold is a low one given that a single use of the trade mark in relation to the sale of a boat was held to be a sufficient claim to proprietorship:  Thunderbird Products Corp v Thunderbird Marine Products Pty Ltd (1974) 131 CLR 592 at 602 per Jacob J.

[47]     It is relevant to consider here the distinction Venning J drew between this case and the cases about use in relation to services relied on by the appellant namely Mitre 10, Hoyts, and Pumps‘N’Pipes.Venning J’s conclusion was that these cases were different because in those cases the party seeking to establish use as a trade mark was not the manufacturer of the goods.  In the present case, by contrast, the respondent manufactured the goods for which it sought trade mark protection.

[48]     We consider Venning J was right that there was a factual difference between the cases relied on by the appellant and this case.  The three earlier cases are simply examples of a factual situation where the trademark use relates to services and not to goods.  For example, in Mitre 10 the claim of trade mark infringement related to brochures produced by Benchmark Building Supplies Ltd which used Mitre 10’s brochures but with Benchmark’s retail outlets’ (Bunnings’) lower prices superimposed on the Mitre 10 brochures.  This Court in concluding there was no trade mark infringement, said at [52] that the Mitre 10 mark was used to identify or distinguish the retail source, not the origin of the goods.

[49]     Similarly, in Pumps‘N’Pipes, the applicant applied its mark in proximity to the manufacturer’s marks.  It was seeking registration in relation to its services, i.e. distributing, installing, maintaining or repairing them.  Registration was refused because the applicant’s use would associate the goods with the applicant as the provider of the retailing service only.  It was important that the goods had the mark of the manufacturer who was “ultimately responsible for the quality” (at 384).  In that case the applicant sought to establish a connection with quality control by the selection and distribution of the goods to the end user.  That was not sufficient.

[50]     By contrast here, as the manufacturer of the goods, the respondent could establish the requisite connection to the quality of the goods.  In this case, even if the ultimate buyer did not know that Aqua Tech was the source of the pools, Cascade would certainly know that.  Because of this connection with the quality of the goods, Venning J was correct to conclude that the respondent was not using the mark simply as a provider of services.

[51]     Venning J was also entitled to rely on the evidence about the “Caprice” swimming pools.  The relevant brochure refers to “Caprice by Aqua-Tech Industries” (our emphasis).  The appellant now queries whether this brochure was in use at the relevant time.  On that issue, Mr Ogden describes this as a brochure for the Caprice pool.  Mr Anthony Sutherland, also a director of Aqua‑Tech, says they sold the pool between January 2001 and the end of 2003 and he exhibits the 2002 catalogue description of this pool.

[52]     It was an available inference that this catalogue was in use at the relevant time.

[53]     The appellant is critical of the later reference in this brochure to the Caprice pool “from” Aqua-Tech but, read in conjunction with the earlier notation, Caprice by Aqua-Tech, we do not consider anything turns on the use of the word “from”.

Spa pools

[54]     In relation to spa pools, the issue is whether the Judge was right to accept that the 1995/1996 catalogue together with Mr Ogden’s evidence was sufficient to confirm that the appellant marketed spa pools in the course of trade.

[55]     This raises a question about the reliability of Mr Ogden’s evidence.  There are two aspects.  The first relates to Mr Ogden’s reliance on a 1975 brochure and second, Mr Ogden’s evidence that some spa pools sold by Aqua-Tech were embossed with the “Aqua-Tech” trade mark. 

[56]     Turning first to the appellant’s argument about the 1975 catalogue, Mr Ogden’s evidence is that since 1975 Aqua-Tech sold and installed spa pools under the trade mark “Aqua-Tech” and continues to do so.  The 1975 catalogue he produces in support of this claim refers to “Aqua-Tech spa pools” and to “Aqua‑Tech spa pools” as being “on display now”.

[57]     The appellant’s submission is that the 1975 catalogue should be disregarded because it is under the name “Aqua-Leisure Centre” and the Court cannot be satisfied any intellectual property in the “Aqua-Tech” mark was properly transferred from Aqua-Leisure Centre to Aqua-Tech.

[58]     On this issue, Mr Ogden explains that he and another man, Robert Smith, started up the business now called Aqua-Tech Limited in the early 1970’s.  The business was transferred to the company Aqua-Tech Limited on its incorporation in 1975.  Aqua‑Leisure Centre is the name under which the business originally traded.

[59]     We consider it was open to infer that intellectual property in the Aqua-Tech mark was properly transferred to Aqua-Tech.  Any other inference would be somewhat unreal given what has occurred. 

[60]     The appellant also says that the Assistant Commissioner was right that there was nothing more than “mere assertion” in Mr Ogden’s evidence as to the sale of spa pools to Australia. 

[61]     What Mr Ogden said was that Aqua-Tech spa pools have been “extremely popular” in the past “with thousands sold since the early 1970’s including many that were exported to Australia”.  Mr Ogden’s evidence is that the Australian pools were “embossed” with the “Aqua-Tech” trade mark and that “Aqua-Tech continues to offer for sale and sell spa pools both direct to the public and to its distributors on demand”.

[62]     This later evidence was in reply to evidence from Brian Hoffmann on behalf of the appellant who said:

I see Mr Ogden has included an example of the Aqua-Tech trade mark used in relation to spa pools in 1975. … This surprises me because I know the swimming pool and spa industry well and have never encountered an Aqua‑Tech spa pool.  I can only assume that Aqua-Tech was used in relation to spa pools in 1975, but has not been used in recent years.

[63]     Mr Hoffmann also noted that Mr Ogden had not included examples of promotions of the Aqua-Tech brand.  Mr Hoffmann’s evidence was that this was “not surprising” because none of this promotional material linked the “Aqua-Tech” mark to spa or swimming pools. 

[64]     We agree with Venning J that Mr Ogden’s evidence is more than mere assertion on this point.  Venning J was right that in reaching the conclusion the evidence only amounted to an assertion the Assistant Commissioner did not take account of the 1995/96 catalogue.  In the 1995/96 catalogue there was a reference to classic hot tubs which were plainly spa pools.  These hot tubs were part of the Aqua‑Tech catalogue marketed to the trade under the mark “Aqua-Tech”.  That gave support for Mr Ogden’s evidence that Aqua‑Tech sold spa pools under and by reference to its name and trade mark “Aqua-Tech”.

Evidence

[65]     We have dealt with the particular issues raised by the appellant which are said to impact on the reliability of Mr Ogden’s evidence.  We add that if the appellant wanted to challenge Mr Ogden’s evidence, the appellant should have asked that he present himself for cross-examination.  It is unfair to challenge the veracity of a witness when the challenge has not been put to him, as it could have been.  The evidence is, on its face, sufficient to establish proprietorship. 

Effect of lapse of registrations

[66]     Finally, the appellant suggests that Mr Ogden was not right when he said that the lapse of the earlier marks was unintentional.  The submission is made on the basis that one of the three marks which lapsed was subsequently renewed.

[67]     There is no evidence to support the proposition that one of the three marks was renewed.  In any event, we see no reason for taking a different view of Mr Ogden’s evidence.  We add that, as Venning J said, there is no evidence to suggest an intention to abandon and the catalogues are clear evidence of the respondent’s intention to use the trade mark in relation to its goods.

Result and costs

[68]     The appeal is accordingly dismissed.  The respondent shall have costs of $6,000 plus usual disbursements.

Solicitors:

James and Wells Lawyers, Auckland for Appellant
A J Parks Law, Auckland for Respondent