Bayer Consumer Care AG v DBC, LLC

[2013] NZHC 3203

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2013-485-3115 [2013] NZHC 3203

UNDER  the Trade Marks Act 2002

IN THE MATTER             of an appeal from the decision of the Assistant Commissioner of Trade Marks dated 1 July 2013

ANDTrade Marks Appplication Nos 812734 and 812736

BETWEEN  BAYER CONSUMER CARE AG Appellant

ANDDBC, LLC Respondent

Hearing:                   18 November 2013

Counsel:                  H Cull QC and A J Evans for Appellant

Respondent abides decision of the Court

Judgment:                3 December 2013

JUDGMENT OF GODDARD J

This judgment was delivered by me on 3 December 2013 at 3.30 pm, pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Henry Hughes and Co, Wellington for Appellant

BAYER CONSUMER CARE AG v DBC, LLC [2013] NZHC 3203 [3 December 2013]

[1]      This  is  an  appeal  from  the  decision  of  the  Assistant  Commissioner  of Trademarks (the Commissioner) dated 1 July 2013 allowing the registration of the respondent’s trade mark in two applications:

(i)       No 812734     (ii)        No 812736          

[2]      The appellant is Bayer Consumer Care AG, a division of Bayer Healthcare, a

subgroup of Bayer AG.   The appellant has a presence in more than 100 countries with a portfolio of more than 170 consumer healthcare products.

[3]      The respondent is a direct sales company which began business operations in

2002.  The respondent’s goods are sold through independent distributors in various

countries including in New Zealand.

[4]      The appellant seeks by way of relief orders reversing the Commissioner’s decision and, in the exercise of the powers that could have been exercised by the Commissioner,  declining  registration  of  the  respondent’s  trade  marks  numbers

812734 and 812736, and costs.

[5]      The respondent advised that it does not wish to be heard on the appeal and will abide the decision of the Court.

The ELEVIT product

[6]      Two products lie at the centre of this case.  The first relates to the ELEVIT product, a vitamin and mineral supplement especially created for women who are pregnant, planning to become pregnant or are breastfeeding.    ELEVIT is marketed and sold under the trade mark ELEVIT.  The mark was first registered in 1966 and is now registered in 145 countries.

[7]      The mark was registered in New Zealand on 17 March 1972 and is deemed to have  been  registered  here  since  1969  (when  registration  was  first  applied  for).

Registration encompasses the word ELEVIT and covers “vitamin preparations” in

class 5.

[8]      The ELEVIT product was first launched in 1984 and its market worldwide is significant.  It is an over-the-counter product, sold in blister packs in quantities of 30 or 100 tablets, and is available from pharmacies without prescription.  The product was approved as a registered medicine in New Zealand in 2001 and has been sold in New Zealand since 2002.  It is sold in 100 per cent of all Unichem, Amcal, Life and Radius pharmacies in New Zealand.

[9]      The  evidence  before  the  Court  establishes  that,  internationally  and  in New Zealand, sales of and promotional expenditure for the ELEVIT product have been substantial.

[10]     The ELEVIT trade mark is used by the appellant in both a standard font as ELEVIT  and  in  a  stylised  form  as:       .  Collectively   they   are   “the ELEVIT trade mark”.  The mark features prominently on product packaging, both on

carton labels and on foil casing for the tablets.  The mark also features prominently in advertising for the product.

The ELEVIV product

[11]     The respondent’s applications to register stylised versions of the trade mark ELEVIV in New Zealand were in respect of “dietary and nutritional supplements; nutritional shakes for use as a meal substitute; nutritional bar for use as a meal substitute” in class 5.

[12]     These dietary and nutritional supplements are sold in capsule form in bottles containing 60 capsules or blister packs in boxes of 84 capsules, using the ELEVIV trade marks.

[13]     No restriction was sought or has been made on the trade channels through which the respondent’s ELEVIV product may be sold.  As a direct sale, it may be sold in person to person transactions.  However, without any restriction, it could also be sold in supermarkets, health food shops or pharmacies.

[14]     As a dietary and nutritional supplement, ELEVIV clearly has a similarity of kind to the appellant’s product, which is also a vitamin preparation.   Despite the similarity, however, there is a critical and distinguishing inherent factor.   ELEVIV should not be taken by pregnant or lactating women and carries a warning on its packaging in small print to that effect, advising: “Warning: Do not take if pregnant or lactating”.  This is a potentially dangerous aspect, should confusion arise between the two products, as ELEVIT, a pharmacy only medicine, is intended specifically for use by pregnant or lactating women.

The Commissioner’s decision

[15]     The appellant opposed the registration of the respondent’s applications under both  s  17  and  s  25  of  the  Trade  Marks Act  2002  (the Act).    The  s  17(1)(a) consideration is directed to deception and confusion in the use of marks and the s

17(1)(b) consideration is directed to passing off and/or breach of the Fair Trading Act 1986.   Section 25 focuses on conflicts with marks that are already registered. The appellants’ opposition was advanced on four grounds, namely that:

(a)      the use of each opposed mark would be likely to deceive or cause confusion (s 17(1)(a));

(b)the use of the opposed mark is contrary to New Zealand law because it would amount to passing off (s 17(1)(b)); and/or

(c)       the use of each opposed mark would breach the Fair Trading Act

1986, and therefore be contrary to law (s 17(1)(b)); and

(d)each opposed mark is similar to the registered mark ELEVIT, which is registered in respect of the same or similar goods, and its use is likely to deceive or confuse (s 25(1)(b)).

[16]     After setting out the relevant tests correctly and evaluating each against the responding application, the Commissioner determined that registration of ELEVIV’s trade marks should be allowed, on the basis that the marks ELEVIV and ELEVIT

were not sufficiently similar and confusion was not likely, notwithstanding there was a difference of only one letter, being the last letter of each trade mark.

[17]     In particular, in paragraph 27 of her decision, the Commissioner said:

My impression of the totality of each opposed mark and the opponent’s ELEVIT name/mark, having regard to the essential features of those marks and,  in  particular,  their  similarities  is  that  each  opposed  mark  and  the ELEVIT name/mark are dissimilar even though they have in common the same first five letters “elevi”.  I consider that the last letter of each opposed mark, which is a “v”, and the last letter of the opponent’s name/mark, which is a “t”, cause the marks as a whole to be distinct and dissimilar.  In the case of the opponent’s name/mark, I consider that the last syllable, which is “vit” is likely to be taken as a reference to vitamin(s), especially as this is what the ELEVIT product covers – vitamins and minerals for pregnancy.   The applicant’s evidence is that “eleviv” is a combination and manipulation of the words “elevate”, “revive”, and “vigor”.   However, I consider that it is unclear what the relevant market will perceive ELEVIV as meaning, but I consider that it will not be taken to be visually, aurally, or conceptually similar to ELEVIT, which includes the definite concept of “vit” for “vitamin(s)”.   I also consider that ELEVIT is reminiscent of the word “elevate”, which might be taken to mean elevate a person’s vitamin levels. A person who is familiar with the opponent’s MENEVIT product, which is for men,  may  also  perceive  the  ELEVIT  product  as  referring  to   women’s  vitamins for pregnancy.

The appeal

[18]     On appeal, the appellant advanced eight grounds, as follows:

(a)      the Commissioner erred in fact and/or law in finding that the trade marks  ELEVIT  and  ELEVIV are  not  similar,  notwithstanding  the difference of only one letter, being the last letter of the trademarks;

(b)the Commissioner erred in fact and/or law in failing to find that the high  degree  of  similarity  of  the  composition  of  the  trademarks, namely five out of six letters, and the similar font and style, is likely to deceive and/or confuse the consumer, and therefore that registration of the opposed marks would be contrary to s 17(1)(a) of the Act;

(c)      the  Commissioner  erred  in  fact  and/or  law  in  misapplying  the

“totality”  test,  by  focussing  on  the  meaning  of  the  ELEVIT  and

ELEVIV marks, without cogent and balanced evidence and to the exclusion of other factors;

(d)the Commissioner erred in fact and/or law in reaching the finding, that confusion of consumers is unlikely due to “the discerning nature of consumers and the differences in the trade marks,” when there was no evidence to support such findings;

(e)      the Commissioner erred in fact and/or law in finding that the last letter of each opposed mark causes the marks as a whole to be distinct and dissimilar, when the Courts have regularly held that the first part of a trade mark is most relevant;

(f)      the  Commissioner  erred  in  fact  and/or  law  in  failing  to  consider whether use of each opposed trade mark would amount to passing off, contrary to s 17(1)(b) of the Act;

(g)the  Commissioner  erred  in  fact  and/or  law  in  failing  to  consider whether  use  of  each  opposed  trade  mark  would  breach  the  Fair Trading Act 1986, contrary to s 17(1)(b) of the Act; and

(h)the Commissioner erred in fact and/or law in misapplying the s 17 similarity test to the s 25(1)(b) consideration.

[19]     In terms of the approach to be taken on appeal, in Austin, Nichols & Co Inc v Stichting Lodestar, the Supreme Court confirmed that an appeal under the Act is a “rehearing on the record” and the appellant is “entitled to judgment in accordance with the opinion of the appellate court, even where that opinion is an assessment of fact and degree and entails a value judgment”.1     The Supreme Court also confirmed that there is no “basis for caution in differing from the assessment of the tribunal appealed from” and that a High Court Judge is obliged to reconsider the issue,

stating:2

1      Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [13]

and [16].

2 At [3].

... the general appeal under s 27(6) requires the High Court to come to its own view on the merits.   The weight it gives to the decision of the Commissioner is a matter of judgment.  If the High Court is of a different view from the Commissioner and is, therefore, of opinion that the Commissioner’s decision is wrong, it must act on its own view.

Discussion: s 17(1)(a)

[20]     The many relevant tests postulated on the issue of similarity provide the framework for determining whether the Commissioner in this case erred in finding that the trade marks ELEVIT and ELEVIV are not similar, notwithstanding the difference of only one letter in each mark, being the last letter of the marks.  In VB Distributors Ltd v Matsushita Electrical Industrial Co Ltd Hammond J found these tests best encapsulated in the following observation of Evershed J in Smith Hayden

& Co Ltd’s Application.  Of that, Hammond J said:3

… the relevant tests have probably never been more concisely put than by

Evershed J, in these terms:4

… is the Court satisfied that the mark applied for, if used in a normal and fair manner in connection with any goods covered  by  the  registration  proposed,  …  [is]  reasonably likely   to   cause   deception   and   confusion   amongst   a substantial number of persons?

I would add only this.  It is not the differences between two trademarks but the similarities which are most significant.   Similarity may arise at three levels.   There may be a visible similarity, or an audible similarity or a distinct pronunciation in the language of the country where the trademark is to be protected.

[21]     In comparing the subject trademarks, the Commissioner combined the three distinct requirements of look, sound and ideas of the marks and, while accepting that five of the six letters of the appellant’s and respondent’s marks are the same, did not assess the visual and phonetic similarity of the marks.   Ms Cull submitted that, compounding that oversight, the Commissioner had additionally not considered the impact of slurring and the acknowledged tendency of persons using the English language to slur the termination of words and to accentuate the beginning of words. This tendency of itself serves to underscore the necessity to have particular regard to

the first syllable of a mark as likely the most important for comparison.

3      VB Distributors Ltd v  Matsushita Electric Industrial Co Ltd  (1999) 9 TCLR 349 (HC) at

[51]-[52].

4      In Smith Hayden & Co Ltd’s Application (1946) 63 RPC 97 at 101.

The similarities

[22]     In my view, the ELEVIT and ELEVIV trade marks have a marked similarity in spelling, in their stylisation, in the selection of font and in their pronunciation. These similarities I find are to a degree and extent that gives rise to a real risk of consumer confusion and deception.

[23]     In relation to font and stylisation, both trademarks have a high degree of similarity,  including in  the placement  of a pictorial  element  over the  “I”.   The average  consumer  will  not  discern  any  striking  significance  in  the  differences between these pictorial elements; nor in the use of a slanted “e” in the stylised ELEVIV mark.

[24]     Such a degree of visual similarity between the marks is likely to result in deception or confusion for a significant number of consumers in the market place, with  the  average  consumer  unlikely  to  analyse  the  subtle  graphic  differences between the marks as a whole to the degree that an expert in marks or graphics might do.

[25]     In this regard, I also accept that the common feature in the first and major part of the respective trademarks is that which is more likely to create an impression and to linger in the mind of consumers.

[26]     Thus,   taking   all   of   these   features   into   account,   I   differ   from   the Commissioner in finding that the high degree of similarity in the composition of the trademarks, namely five out of six letters, and the similar font and style, is not likely to deceive and/or confuse the consumer.

The totality test

[27]     In applying the totality test in [27] of her decision, set out in [17] above, the Commissioner placed emphasis on the last letter of each opposed mark and determined that it was these last letters that caused the marks as a whole to be distinct and dissimilar.  The Commissioner was assisted in reaching this decision by

means of an analysis of the concept that each word might conjure up in the minds of the consuming public occasioned by the different last letter in each mark.

[28]     However, I reiterate that it is the common feature in the first and major part of each trademark that is more likely to create an impression and to linger in the mind of consumers.  The dissimilarity in the last letter of each mark is of negligible impact.  Further, consumers are not going to closely analyse the respective marks for possible differences in their meaning, as an academic might.

Similarity of the products leading to confusion and deception

[29]     The nature of the products, the similarity between the goods to which the marks are to be applied and the range of consumer who is likely to purchase the goods is a further factor which in my view is likely to add to confusion in the market place.

[30]     The  Commissioner  found  that  the  respondent’s  product,  which  includes “dietary and nutritional supplements”, was broad enough on a notional fair use basis to include the appellant’s product, which is a “vitamin and mineral supplement for pregnancy”.  I agree with that finding, whilst disagreeing with the Commissioner’s ultimate finding on similarity which overlooks both the fact that ELEVIV must not be sold to pregnant or lactating women and the fact that neither product is a prescription medicine.

[31]     Further, as Ms Cull submitted, notwithstanding the different channels of trade for the respective products, the respondent’s product could be sold through a fixed retail location, such as a pharmacy, supermarket, on-line or could be ordered by telephone.   In such circumstances, the goods would inevitably be sold in similar locations and may be presented on the same shelf or in the same aisle.

[32]     Even  leaving  that  contingency  aside,  the  similarity  in  the  nature  of  the product, and the similarity of their trademarks will be likely to lead to confusion and deception, with a possible risk to pregnant or lactating women.

The discerning nature of likely consumers?

[33]     The Commissioner found that “the discerning nature of consumers and the differences in the trademarks” would mean that confusion was unlikely.  However, there was no evidence adduced as to how discerning the potential market for these goods might be.  Further, as Ms Cull submitted, the “discerning nature of consumer’s test has in any event no basis in law”.

[34]     The only prudent course is to assess likely confusion by having regard to the average consumer; or, in this case, by adopting a benchmark of the least discerning consumer, given one of the products has an inherent health risk for a category of consumers.

Impact of the last letter of the marks

[35]     I have already found that it was an error to determine that the last letter of each respective mark causes the marks as a whole to be distinct and dissimilar, as this finding is contrary to the line of authority in which it has been held that the first part of a trademark is most relevant.  It is also contrary to the established wisdom that the first syllable of a word is generally more important for the purpose of distinction so that the identicality of the first two syllables of the appellant and respondent’s trademarks is the important aspect.

Conclusion on s 17(1)(a)

[36]     I am satisfied that the visual, phonetic and stylistic similarity of the marks, the high degree of similarity in their composition, together with the similarity in the nature of the products each is intended to market, are to a degree and extent that gives rise to a real risk of consumer confusion and deception.

[37]     A particular decision handed up by Ms Cull during the hearing was very much on point and bore a striking similarity to the facts in this case.  It concerned an application to register the mark UNIVER for a range of goods which were restricted to “cardio-vascular preparations for use in treating humans and for supply only on prescription  by  a  registered  medical  practitioner”  on  the  ground  that  it  nearly

resembled the trade mark UNIVET registered in respect of “veterinary preparations and substances etc”.

[38]     Julian Jeffs QC, sitting as a Deputy High Court Judge in the High Court found that the marks UNIVER and UNIVET were confusingly similar and that the goods for which the two marks were proposed to be registered were of the same description although they were for different uses.5

Discussion: Passing off and/or breach of the Fair Trading Act 1986 contrary to s 17(1)(b)

[39]     The  Commissioner  declined  to  consider  whether  the  respondent’s  marks

amounted to an unfair trading practice and/or a breach of s 9 of the Fair Trading Act

1986.

[40]     I am satisfied, for the reasons I have already given on the similarity of the marks, that the consuming public would be misled or deceived if the respondent were permitted to market its product under the ELEVIT trade mark.

[41]     Although  the  respondent  provided  evidence  as  to  how  the  trade  mark ELEVIT was derived, the close similarity of the name ELEVIV to ELEVIT is too coincidental and is of a nature and extent that amounts to misrepresentation.

[42]     In Neumegen v Neumegen & Co the Court of Appeal held that there:6

... will be no misrepresentation by means of the adoption of a trading name unless the name has already acquired a reputation amongst a class of consumers as denoting the goods or services of another trader, so that members of that class will be likely mistakenly to infer that the goods or services are connected with the business of that other trader.

[43]     On the issue of reputation, the evidence adduced by the appellant has clearly established (and the Commissioner accepted this) that the appellant has a long-

standing reputation in the relevant market; viz, New Zealand.

5      Univer Trade Mark [1993] 11 RPC 239.

6      Neumegen v Neumegen & Co [1998] 3 NZLR 310 (CA) at 319.

[44]     I therefore find that use of the respondent’s marks would amount to passing off and constitute a breach the Fair Trading Act, contrary to s 17(1)(b) of the Act.

Discussion: s 25(1)(b)

[45]     The focus of s 25(b) is on conflicts with marks that are already registered.

[46]   Ms Cull submitted that the Commissioner erred in fact and/or law by misapplying the s 17 similarity test to the s 25(1)(b) consideration.

[47]     As Ms Cull submitted, by analogy with the test articulated in Smith Hayden and by reference to the disputed marks in this case, the test under s 25(1)(b) is that of likely deception or confusion arising from any fair use of the ELEVIT mark and use of the respondent’s mark for which it seeks registration. 7   In contrast, under s 17(1), the comparison is between the applicant/opponent’s actual use of the ELEVIT mark and any fair use of the respondent/applicant’s mark.   Any fair use encompasses actual  use.    Therefore  the  inquiry  under  s  25(1)(b)  is  broader  than  that  under s 17(1)(a).

[48]     However, given the high degree of similarity between the marks and the subject goods in this case, it might be said that the order of consideration of the first two elements specified by s 25(1)(b) will not make any discernible difference to the outcome.

[49]     Applying the correct test, I find that on a comparison the goods covered by each opposed mark are the same or similar; and that the marks are visually, aurally and conceptually similar.  Therefore I find there is a likelihood of confusion on the part of consumers.

Conclusion and Relief

[50]     The appeal is allowed and in consequence the following orders are made:

(i)       the Commissioner’s decision is reversed in its entirety;

7      Smith Hayden & Co Ltd’s Application, above n 4.

(ii)      registration  of  the  respondent’s  trade  marks  applications  numbers

812734 and 812736 are declined; and

(iii)     costs in favour of the appellant are awarded on a 2B basis.

Goddard J