Effem Foods Limited v Tip Top Investments Limited HC Auckland Cl 21/00

[2001] NZHC 433

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CL.21/00 COMMERCIAL LIST

UNDER the Trade Marks Act 1953

IN THE MATTER of an Action for Rectification of the entry of Trade Mark No.229640 in the Register of Trade Marks.

BETWEEN: EFFEM FOODS LIMITED a company organised under the laws of New Zealand having its registered offices at 33 Lambie Drive, Manukau, Auckland, and carrying on business as a distributor
Plaintiff

AND: TIP TOP INVESTMENTS LIMITED a company incorporated under the laws of New Zealand having its registered offices at 133 Carbine Road, Mt. Wellington, Auckland, and carrying on business as a manufacturer and merchant
Defendant

Hearing: 15 March 2001

Judgment: 1 June 2001

Counsel: Julian Miles QC and Barbara Sullivan for plaintiff to oppose Kim McLeod and Rita Wilson for defendant in support

SECOND RESERVED JUDGMENT OF WILLIAMS J

[1] This is the second judgment delivered in relation to the interlocutory application before the Court. In its first, a reserved judgment delivered on 22 November 2000, the Court commenced by identifying what it understood to be the issues raised for decision in the following way:

[1] The defendant, Tip Top Investments, is the registered proprietor of Trade Mark 229640 SWEET CELEBRATIONS in Class 30 for -

“flour and preparations made from cereals, bread, pastry; confectionery; ice cream, iced confections, ice cream novelties and desserts, ices; honey, treacle; sauces (condiments)”

Tip Top’s SWEET CELEBRATIONS trade mark was applied for on 26 August 1993 and registered on 26 April 1996 with the deemed date of registration being the date of application.

[2] The plaintiff, Effem Foods, has lodged Trade Mark application 312995 for the trade mark CELEBRATIONS for “chocolate assortments, excluding frozen and/or icecream versions thereof.” Its application to register its trade mark CELEBRATIONS has been rejected by the Commissioner of Trade Marks because of the prior registration of Tip Top’s SWEET CELEBRATIONS mark.

[3] In this proceeding Effem Foods seeks an order rectifying the Register of Trade Marks by varying Tip Top’s entry for trade mark 229640 to -

“ice cream, iced confections, ice cream novelties and desserts, ices”.

The only ground in the statement of claim on which Effem Foods seeks rectification is that at the deemed date of registration of its trademark Tip Top “had no bona fide intention to use in New Zealand the trademark SWEET CELEBRATIONS in relation to confectionery” and that its use of that trade mark “has been limited to use in relation to icecream”. Effem Foods accepts that Tip Top has made bona fide use of the SWEET CELEBRATIONS mark on goods other than those to which it wishes to confine Tip Top’s trade mark 229640 by rectification.

[4] As raised in Tip Top’s statement of issues and as refined by counsel during the hearing, Tip Top pleaded the positive assertion that -

. . . following the coming into force of the Trade Marks Amendment Act, 1994, whether or not Tip Top had the necessary intention to use the SWEET CELEBRATIONS trade mark in relation to confectionery as at the application date is no longer a ground upon which Tip Top’s Trade Mark registration can be rectified.

Either as a preliminary point under r 418 or a striking-out application of a positive defence raised by Tip Top - such pleadings as there were did not indicate which - by the date of the hearing of this interlocutory application the parties had agreed that if Tip Top’s positive assertion was correct, the proceeding would be brought to an end.

[2] After discussing what it saw as relevant authority and, in particular, the form of the Trade Marks Act 1953 s 35 both before and after it was amended by the Trade Marks Amendment Act 1994, the Court took the view, (paras 24-26 pp 11-12) that

“[24] . . . the nub of the present matter is whether Effem Foods’ application for rectification of Tip Top’s SWEET CELEBRATIONS trade mark by confining it in the manner earlier set out can be brought within the grounds for rectification and correction of the register set out in s 41(1) which reads:

“41.(1)Any person aggrieved by the non-insertion in or omission from the register of any entry, or by any entry made in the register without sufficient cause, or by any entry wrongly remaining on the register, or by any error or defect in any entry in the register, may apply in the prescribed manner to the Court or, at the option of the applicant and subject to the provisions of section 67 of this Act, to the Commissioner, and the Court or the Commissioner, as the case may be, may make such order for making, expunging, or varying the entry as the Court or the Commissioner may think fit.”

[3] The Court reached the view that EFFEM Foods did not appear able to pursue its application for rectification under s 41 on the grounds that Tip Top had no bona fide intention to use its SWEET CELEBRATIONS trademark in New Zealand for confectionery at application date largely because the statement of claim did not plead the elements of that section and accordingly amendments seemed necessary. The Court said that the most it could order was that since the coming into force of the Trade Marks Amendment Act 1994 it appeared not to be open to persons aggrieved to oppose registration of a trademark on the ground of lack of an applicant’s intention to use it but only on the grounds in the amended s 35(1), and adjourned the application part-heard for further consideration by the parties including possible amendment and further argument.

[4] Following delivery of judgment a further hearing was convened pursuant to the leave reserved principally because counsel were of the view that the Court had misconstrued their submissions and failed to address fully the principal point in issue. Section 41, they submitted, was not limited to the three circumstances expressly appearing in the section but was a mechanical provision empowering the expunging or variation of entries which were wrongly on the register by virtue of the operation of some section of the Act other than s 41. Both counsel were of the view that amendment of the pleadings was unnecessary - indeed they said that the parties would not amend - and that their previous submissions had clearly put the correct issue before the Court and invited the Court to reconsider the matter.

[5] In its previous judgment the Court dealt with what it understood to be the issues put before it by the parties. Apart from the statements of claim and defence, there was no application before the Court as to what was in issue as para.4 of the judgment made clear and, whilst it is correct that s 41 was mentioned in counsels’ submission, each set of submissions appeared to the Court not to address in detail the points raised in the other and thus failed to define what counsel apparently regarded as being in issue.

[6] Counsel for Tip Top Investments properly raised the question as to the ability of this Court to reconsider the matter given the delivery of its judgment on 22 November 2000. However, the Court considers that it has the power to deal with the matters raised by counsel at the further hearing for two reasons.

[7] In the first place, as the Court recorded in its earlier judgment, it adjourned the matter part-heard for further consideration by the parties. Although the Court directed that consideration to include possible amendment as to whether Effem Foods’ rectification application could be brought within s 41, there was no express limitation on matters remaining in issue and accordingly, the Court is of the view that it is open to it to reconsider the matter generally.

[8] The second reason is that R 11(2) gives the Court power to make such amendments to the procedure in proceedings as are necessary for “determining the real controversy between the parties” and if the Court, as counsel submitted, failed in its earlier judgment to address the principal issue in contention, this Court takes the view that it is appropriate to open to it to reconsider the matter in order to determine that “real controversy” so as to provide the parties and, if appeal follows, the Court of Appeal with a decision at first instance.

[9] Mr Miles QC, senior counsel for Effem Foods, submitted that the correct approach to the operation of s 41 was as summarised earlier and as appears in Re GE Trade Mark [1973] RPC 297. However, it appears that the operation of s 41 is somewhat wider. The full citation from Lord Diplock’s speech in Re GE Trade Mark (supra at 323) relating to s 32 (the then English equivalent of s 41) reads:

“ . . . I reject the extreme submission of the American Company that section 32 is a mere procedural section prescribing the steps to be taken to give effect to an express power of removal conferred by other sections of the Act, . . . and does not in itself confer any power to expunge otherwise than pursuant to those sections. I reject also the extreme submission of the English Company that the words “wrongly remaining on the register” give to the court a discretion to remove from the register any entry the continued use of which the court considers would be contrary to the policy of the Act notwithstanding that it does not offend against any specific prohibition, express or implied, contained in the Act. In my opinion, an entry which was lawful at the time it was originally made can only be expunged under section 35(1) if, at the time of the application, its continued presence on the register is prohibited by virtue of some other provision of the Act. Such prohibitory provisions are not limited to those which also themselves confer an express power of removal. They include all provisions which, upon their true construction, make unlawful the continued presence of the entry on the register.

[10] The proper ambit of s 41 is accordingly as set out in Blanco White and Jacob Kerly’s Law of Trade Marks and Trade Names (12 ed (1986) para 11-16 p 183) dealing with the law in England as it was before the enactment of the Trade Marks Act 1994 (UK) which effected considerable change:

“On the one hand, section 32 provides a procedure for rectification where an entry is, by virtue of some other section of the Act, wrongly on the Register. On the other, it confers on Court and registrar a general jurisdiction to expunge or vary any mark whose presence on the Registrar is unlawful.

The most usual ground for removal under section 32 is that (by reason of section 9 or 10, as the case may be, or of section 11 or 12) the mark ought never to have been registered. But there are also cases where the original act of registration was proper (or is protected by section 13) but nevertheless the mark is liable to be removed.”

[11] The learned authors of Brown and Grant The Law of Intellectual Property in New Zealand ((1989) para 2.64 p92) do not comment on the operation of s 41.

[12] It was submitted on behalf of Effem Foods that the question was whether by virtue of non-compliance with s 26 of the Act Tip Top Investments’ SWEET CELEBRATIONS mark could be rectified by restricting it to ice cream and related products. It was submitted that, Effem Foods being accepted as a “person aggrieved” for the purposes of s 41(1), it could invoke that section by demonstrating that the SWEET CELEBRATIONS trade mark was an “entry made in the register without sufficient cause” or that the form of the entry amounted to an “error or defect” in the register or that it was an “entry wrongly remaining on the register” because the registration application filed pursuant to s 26 was lodged without a bona fide intention to use the mark. Tip Top Investments, however, argued that s 26 had, in effect, been amended by the Trade Marks Amendment Act 1994.

[13] Section 26 has never been amended. Subs (1) provides 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 in writing to the Commissioner”. As earlier noted, Effem Foods claims that at the deemed date of its registration of the SWEET CELEBRATIONS trade mark, 26 August 1993, Tip Top Investments had “no bona fide intention to use” the mark in relation to confectionery. Tip Top Investments disputes that contention but accepted that, for the purposes of this hearing, the Court would proceed on the assumption that Effem Foods’ claim was provable.

[14] Faced with the lack of amendment to s 26, Mr McLeod gathered his supporting arguments from a number of indirect sources the combined effect of which, he submitted, supported his argument that s 26 should now be read as he contended. Mr Miles, naturally, argued that, s 26 not having been amended, it should continue to be construed as it had been for many years but he also responded to Mr McLeod’s submissions. The Court accordingly turns to reconsider counsel’s arguments, particularly those relating to the indirect issues.

[15] Tip Top Investments’ argument centred round the Trade Marks Act 1953 s 35 (as amended by the Trade Marks Amendment Act 1987 s 18). As originally enacted, s 35 relevantly read:

“35. (1) Subject to the provisions of section 36 of this Act, a registered trade mark may be taken off the register in respect of any of the goods or services in respect of which it is registered on application by any person aggrieved to the Court or, at the option of the applicant and subject to the provisions of section 67 of this Act, to the Commissioner, on the ground either -

(a) That the trade mark was registered without any bona fide intention on the part of the applicant for registration that it should be used in relation to those goods or services by that applicant, and that there has in fact been no bona fide use of the trade mark in relation to those goods or services by any proprietor thereof for the time being up to the date one month before the date of the application; or

(b) That up to the date one month before the date of the application a continuous period of 5 years or longer elapsed during which the trade mark was a registered trade mark and during which there was no bona fide use thereof in relation to those goods or services by any proprietor thereof for the time being.”

[16] However, with effect from 1 January 1995, the Trade Marks Amendment Act 1994 re-enacted s 35(1) by deleting sub-para (a).

[17] Notwithstanding the repeal of the ground for removal of a registered mark on the basis that it was registered without bona fide intention to use coupled with no bona fide use up to one month before the application and notwithstanding that s 26(1) was not amended at the same time as s 35, Mr McLeod submitted that s 26 applied only to applications and could not be invoked to challenge registration once that process had been concluded.

[18] Mr McLeod submitted that:

“[a] The 1994 amendment omitted from the definition of “trade mark” the requirement that it was “used or proposed to be used”. He submitted that omission supported an interpretation that use or proposed use in s 26 should be confined to applications for registration and the processing of the same.

[b] He drew support from the lack of amendment to s 38 which debars refusal of registration applications “on the ground only that it appears that the applicant does not use or propose to use the trade mark” if a company is about to be constituted and the applicant intends to assign the trade mark to the newly-formed body. He also pointed to the unamended s 38(2) to the effect that s 35(1)(a) should be read in relation to marks registered under s 38(1) as if intention to use the mark referred to such intention by the new company.

[c] He relied on Ministry of Commerce Discussion Papers on the topic produced in 1990-91, progress of the Amendment Act through Parliament and provisions of the GATT Agreement on Trade-Related Aspects of Intellectual Property Rights Including Trade in Counterfeit Goods (TRIPS).

[19] The Ministry of Commerce Reform Discussion Paper entitled “Review of Industrial Property Rights Patents, Trade Marks and Designs” published in 1990 first discussed the appropriateness of retaining the use or intended use requirements in the definition of “trade mark,” and registration applications noting (para.17.4.3 p.136) that “the fact that an applicant has made a false statement as to intended use can help establish lack of bona fides in later opposition or removal proceedings”. The paper then discussed the question of lack of intention to use as then available for removal of the trade mark from the register but its options for reform contained no recommendation on that topic.

[20] After receiving submissions, including one from the New Zealand Institute of Patent Attorneys, the Ministry of Commerce published a set of proposed recommendations for amendments to the Trade Marks Act in December 1991. The recommendations included abolition of “use or intention to use as a requirement for the filing of an application for registration of a trade mark but allow for refusal or invalidity where applications are made ‘in bad faith’ ” and that removal applications could be made on the grounds of lack of bona fide use of the mark for three years from registration.

[21] In 1993 New Zealand became a signatory to the GATT Agreement on Trade-Related Aspects of Intellectual Property Rights including Trade in Counterfeit Goods (TRIPS), Art.15 of which entitled signatories to make registrability of protectable subject matter “depend on distinctiveness acquired through use”. Art.19 provided that “if use is required to maintain a registration” cancellation should only be available after an “uninterrupted period of at least three years of non-use”.

[22] In 1994 Government introduced the GATT (Uruguay Round) Bill. The interdepartmental report to the Commerce Select Committee on the submissions on that Bill noted that the New Zealand Institute of Patent Attorneys had recommended the repeal of s 35(1)(a) as this subsection did not comply with Article 19(1) of the TRIPS Agreement a comment with which officials agreed and which led Parliament to re-enacting s 35(1) in its amended form.

[23] In light of that legislative history, Mr McLeod submitted that Parliament’s intention was to retain use or proposed use as part of registration applications but to repeal those as grounds for removal or rectification once registration had been achieved.

[24] Mr McLeod further supported his basic premise that once registered a mark could not be removed on the ground that it was registered without bona fide intention to use by reference to Unilever plc v Cussons (New Zealand) Pty Ltd [1997] 1 NZLR 433. The Court dealt with that submission in its earlier judgment, the relevant passages of which read:

“[13] That was an appeal against refusal of an injunction to restrain infringement of a registered trade mark. Unilever owned the trade mark RADIANT pursuant to two registrations both in Class 3 for all goods in that class. The first had been registered on 31 March 1947 and renewed for 14 years from 31 March 1996 and the second was dated 21 July 1995 and ran to 21 July 2002. Detergents come within Class 3 and from mid-1996 onwards, Cussons had sold a laundry detergent throughout New Zealand under the trade mark RADIANT. Unilever’s application to this Court for an injunction to restrain Cussons from using the trade mark RADIANT was dismissed on the basis that it had no realistic prospect of resisting an application by Cussons for removal of the registration because Unilever had not used the older trade mark RADIANT in New Zealand during the five years ending a month before Cussons’ removal application was lodged. The appeal was allowed and an injunction granted largely on the grounds that although Unilever accepted that it had not used its original trade mark RADIANT for over five years, thus rendering that registration open to challenge, it registered its second trade mark for the same product in the lead-up to the case and Cussons was therefore unable to demonstrate that Unilever did not intend to use the mark within five years of that registration.”

[14] The Court of Appeal first observed (at 440):

“By s 32(1) the trade mark in registration no 251537 is deemed for all purposes to have been registered as a separate trade mark. It is inconsistent with that to have regard to the non-use of the mark in registration no 44598 (also deemed by s 32(1) to be registered as a separate trade mark). Section 35(1) refers to “the trade mark”. That must be the registered trade mark the subject of the application to remove. That trade mark was a registered trade mark by virtue of the registration (i.e. no 251537). That trade mark was not registered for five years before the application to remove was made.

It was submitted that such a construction would be contrary to the scheme of the Act and would greatly undermine the effectiveness of s 35. It would permit a trade mark owner, by successive registrations, to perpetuate protection by registration without ever using the trade mark. That consequence does not necessarily follow.

At the time of any new application to register, the trade mark must be used or proposed to be used (s 26(1)). If the Commissioner believes an application is made with no intention that it be used and it has been made simply to perpetuate a block against competitors, he may refuse the application (s 26(2)). Further, if an application is accepted by the Commissioner, it has to be advertised and any person may give notice of opposition to the registration (s 27). Those procedures provide safeguards against the suggested potential abuse.

It is true that once that mark is registered it is no longer (since the 1994 amendment to s 35) open to apply for its removal on the ground that it was registered without any bona fide intention that it should be used, so that non-use cannot be asserted for five years. But that does not mean there is no means for preventing possible abuse. In the present case, its interest in the trade mark RADIANT for New Zealand notwithstanding, Cussons, it seems, did not locate the Unilever application no 251537 when searching to ascertain whether registration no 44598 had been renewed in March 1996, nor did it notice the advertisement of the application for opposition purposes. In that situation the omission to take available steps to prevent the abuse of which it now complains hardly strengthens Cussons’ argument that the construction of s 35 for which Unilever contends is conducive of abuse.”

and then went on to hold (at 441) :

“Mr Brown drew upon the legislative history to support his proposition that there is a fundamental assumption underlying trade mark protection that the mark is to be used and not merely kept as a block against others. That submission can be accepted up to a point. The present legislation speaks for itself. There is the sanction of removal for non-use. No automatic invalidity stems from failure to use a registered mark. Until it is removed on application for rectification of the register, it remains, is valid and may support infringement proceedings.

The emphasis on use as a precondition of protection has been supplanted by a system of registration which no longer depends on use (except in special circumstances where distinctiveness must be proved). We find nothing in the legislative history to which we were referred that provides support for the construction contended for by Mr Brown. We therefore prefer the view that, as in other parts of the Act, each registration of the same mark is to be treated separately.”

[15] In an unsuccessful appeal to the Privy Council (Cussons (New Zealand) Pty Ltd v Unilever Plc and Unilever New Zealand Limited [1998] 1 NZLR 396) the question of the proper construction of s 35(1) was reduced to the following issue (at 402) :

“Their Lordships now turn to the construction of s 35(1), on which the Courts below were divided. The point is a relatively short one. The subsection says that there must have been a period of five years during which the trade mark was “a registered trade mark” and there was no bona fide use of the mark. Does this mean that the mark must have been registered for five years under the registration which it is sought to remove (as the Court of Appeal thought) or simply under one or more registrations (as Baragwanath J thought)?”

Their Lordships did not appear to differ from the Court of Appeal’s approach to the interpretation of the section when they held (at 403):

The [Trade Marks Act 1905 (UK)] provided in s 37 for removal for non-user in the following terms:

“37. A registered trade mark may, on the application to the Court of any person aggrieved, be taken off the register in respect of any of the goods for which it is registered, on the ground that . . . there has been no bond fide user of such trade mark in connexion with such goods during the five years immediately preceding the application . . .

In this section, “such trade mark” plainly refers back to the opening words of the section, “a registered trade mark”. This makes it clear that, at least under the 1905 Act, a registration could not be removed unless that registration had subsisted for at least five years without the registered mark being used. Their Lordships think that despite minor alterations in the language over the years, the current section has the same meaning.”

[25] For Effem Foods, Mr Miles submitted in relation to the statutory amendments that the deletion of use or proposed use from the definition of “trade mark” was undertaken because, as Commerce officials noted, the use to which a mark was or might be put was inappropriate as part of a definition. He submitted that the repeal of s 35(1)(a) arose because the TRIPS Agreement permitted removal for lack of use for three years after registration as opposed to the five years in s 35, but also because s 35(l)(a) offended against TRIPS in, however technically, permitting the lodging of an application for removal after only 32 days following registration if it had been registered without a bona fide intention to use and had not in fact been used for that period. He made the point that the Ministry of Commerce’s 1990 Discussion Paper on the Review of Trade Marks discussion on whether intention to use should be a requirement for registrability in relation to previously unused marks to prevent pirating or hoarding recorded the case law requirement that (para 17.4.1 p 136) “the intention is to use the mark in the reasonably immediate future” whilst noting (para 17.4.3 p 136) that a “false statement as to intended use can help establish lack of bona fides in later opposition or removal proceedings”. The possible options for reform included (para 17.5 p 137) to “abolish intention to use as a requirement for an application but allow objection or opposition on the grounds of ‘bad faith’”. The Paper then went on to discuss non-use or lack of intention to use as a basis for removal, commenting (para 17.9 pp 140-141) that “lack of bona fide intention to use a trade mark may be a ground for refusal” but that “once a trade mark has been registered s 35 (1)(a) requires proof of non-use as well as lack of intention” and that “therefore defects in the applicant’s original intention can be overcome by actual use”.

[26] He drew attention to other relevant passages in the Discussion Paper, namely (pp 18, 20, 22) :

“4.1.2

The present law requires an applicant for registration of a trade mark to have a present and definite intention to use the trade mark in the reasonably immediate future.

4.1.3

If the law is amended so that intention to use is no longer a precondition of application, but so that applications may be refused if made in bad faith, the question arises as to what indication (if any) the applicant should give on the application form as to his or her proposed use of the trade mark . . .

4.2.2

If the requirement to show a bona fide intention to use a trade mark as a basis for an application is removed, proof of an absence of such intention should no longer be grounds for subsequently removing a trade mark from the register . . .

4.3

PROPOSED RECOMMENDATIONS

. . .

2. Abolish use or intention to use as a requirement for the filing of an application for registration of a trade mark but allow for refusal or invalidity where applications are made “in bad faith.

. . .

6. Provide that an application for removal of a trade mark from the register can be made if there has not been bona fide use of the mark for a continuous period of three years from the date of actual registration.

[27] Mr Miles also made the point that since the passing of the Trade Marks Act 1994 in the United Kingdom a ground of opposition to registration and for rectification of the register is that an application is made in bad faith )s 3(6)). Bad faith has been held to include an application made without a bona fide intention at the date of application to use the mark. (Re Mickey Dees’ (Night Club) Trade Mark [1998] RPC 359, Re Demon Ale Trade Mark [2000] RPC 345, 356).

Mr Miles also submitted that the New Zealand position was comparable with that in Australia where the Trade Marks Act 1995 (C’th) provides for intention to use as one of the grounds for registration (s 27 (1)(b)(i)). Lack of intention to use is a ground of opposition to registration (s 59(a)). Amendment or cancellation - the Australian equivalent of rectification - can be sought on any of the grounds on which registration could have been opposed (s 88 (2)(a)).

[29] As to authority, Mr Miles submitted that authority both in this country and overseas had long recognised that, through s 41, a breach of s 26 in the sense of an applicant for registration lacking an intention to use had been accepted as a valid ground on which an aggrieved person could seek rectification quite distinct from removal under s 35. He submitted that, s 26 not having been amended, those authorities remained good law and the ground remained extant.

[30] Turning to that authority, the earliest case on which Effem Foods relied was the decision of the Court of Appeal in In the Matter of The Registered Trade Marks Nos.27,850 and 72,790 of J. Batt & Co. (1898) 15 RPC 534, 538 where Lindley MR held of a general exporter who was not actually exporting goods in the class covered by his registered mark that:

“We will assume, further, that he has always been, and is still ready to do so, but that he has not even yet exported or dealt in any goods in that class, except confectionery, biscuits, and butter, which exception we will assume in his favour. A question of law then arises, which may be stated shortly as follows :- Can a man properly register a Trade Mark for goods in which he does not deal, or intend to deal - meaning by intending to deal, having at the time of registration some definite and present intention to deal in certain goods or descriptions of goods, and not a mere general intention of extending his business at some future time to anything which he may think desirable? This question we answer in the negative. To answer it otherwise would be unduly to strain the language of the Acts relating to Trade Marks, and to render those Acts extremely mischievous, instead of beneficial to trade and commerce.

[31] Despite a change in statutory wording in the meantime, that decision was followed in In the Matter of Ducker’s Trade Marks (No.446798) (1928) 65 RPC 397, 402 where the words “proposed to be used” were held to mean a “real intention to use, not a mere problematical intention, not an uncertain or indeterminate possibility, but it means a resolve or settled purpose which has been reached at the time when the mark is to be registered”.

[32] In Imperial Group Ltd v Philip Morris & Co. Ltd [1982] FSR 72 the plaintiff cigarette manufacturer registered the mark “NERIT” as a ghost mark not proposing to use it and not in fact using it other than to try and stop the defendant marketing cigarettes under the name “MERIT”. Imperial Group sued for infringement of its trade mark. Philip Morris counterclaimed to have “NERIT” expunged from the register. Lawton LJ held that a mark which was not intended to be used at the date of registration but which was later successfully claimed to have been used sufficiently could not be ordered to be expunged but that, after registration, the English equivalent of s 35 could be used if an aggrieved party was able to adduce (at 78) “evidence that there had been neither bona fide intention to use nor bona fide use”. Shaw LJ held that an application under the then English equivalent of s 41 could be brought if use of the mark was not intended but based that view on the definition of trade mark whilst Brightman LJ held (at 87) that “if a mark is registered which the applicant does not in fact ‘propose’ to use . . . at the date of application the entry of the mark has in my view been made without sufficient cause” and the English equivalent of s 41 enabled a person aggrieved to apply to the Registrar to have it expunged.

[33] The decision in Imperial Group has been criticised (Kerly (op cit) para 2-4 p7; Shanahan, Australian Trade Mark Law and Practice (1982) p17; Brown and Grant (op cit) para 2.5 p l6), but it is unnecessary to consider its correctness since the position in both Australia and New Zealand is reasonably clear.

[34] In Aston v Harlee Manufacturing Co (1960) 109 CLR 391, 401 the High Court of Australia held:

“There is another element mentioned by Dixon J in the Shell Co’s Case [The Shell Co of Aust. Ltd v Rohm & Haas Co] (1949) 78 CLR, [601] at p 627, which is stated as essential to the proprietorship of an unused trademark. That element is the intention of the applicant for registration to use it upon or in connection with goods. As to this I need only say that I do not regard His Honour as meaning that an applicant is required, in order to obtain registration, to establish affirmatively that he intends to use it. There is nothing in the Act or the Regulations which requires him to state such an intention at the time of application and the making of the application itself is, I think, to be regarded as prima facie evidence of intention to use. I cannot think that the Registrar is called upon to institute an inquiry as to the intention of any applicant, and I think that, on an opposition or on a motion to expunge, the burden must rest on the opponent, or the person aggrieved, of proving the absence of intention. Again, I do not think that “intention” in this connection ought to be regarded as meaning an intention to use immediately or within any limited time. A manufacturer of (say) confectionery would, I should suppose, be entitled to register three trade marks in relation to confectionery, though he intended only to use two of them and had not made up his mind as to which two he would use. If he in fact does not use any of them for the period specified in s 72, the unused mark or marks may be expunged under that section. On the other hand, a manufacturer of confectionery, who had no intention of ever manufacturing motor cars, might be held disentitled to register a mark in relation to motor cars: the effect of In re Registered Trade-Marks of John Ball & Co (1898( 2 Ch 432; (1899) AC, is, I think, correctly stated in the first paragraph of the headnote to the report of the case before Romer J and the Court of Appeal.

[35] That passage was adopted for New Zealand in Philip Morris (NZ) Ltd v Liggett & Myers Tobacco Co. (NZ) Ltd (no.3) (1978) 1 NZIPR 195 where Philip Morris registered the trade mark “EVE” in 1972 but by 1977 had not used it. The Liggett Group had registered the mark “EVE” in many countries but not in New Zealand, though it used it in New Zealand. One of the issues in the case was whether Philip Morris’ registration of the mark “EVE” was valid, the Liggett Group contending that at the time of registration Philip Morris had no bona fide intention to use the mark and accordingly, that it should be expunged under s 41. After referring (at 210-211) to the passage from Aston earlier recounted, White J concluded on the facts that Philip Morris’ registration of the mark “EVE” was not undertaken solely with an intention to block Liggett Group but was based on a bona fide intention to use it in connection with the goods at the time of application.

[36] Mr McLeod, however, responded to all of that by pointing out that both the United Kingdom and Australia amended their legislation following the TRIPS agreement to include bad faith or lack of intention to use as an express ground for notification of a mark. He submitted that Parliament must have been of the view that New Zealand law did not require amendment in that respect. He submitted that Parliament had intended to amend the law consistently with Imperial Group and with the TRIPS agreement to exclude attacks on registered trade marks years after registration on the ground that there was no intention to use the mark at the time registration was sought. He made the point that, on Effem Foods’ approach, registrations would be open to challenge on the ground of lack of bona fide intention to use the mark at the time of application however long after registration the challenge was mounted and even if, despite lack of intention to use at the time of application, the mark had been used since that time. Parliament, he submitted, could not have intended such a result.

[37] In considering all those issues, as earlier noted the principal hurdle facing Tip Top Investments’ application is the fact that s 26 has never been amended. It has always required that, to be valid, applications for trade mark registration must be based either on use of the mark or proposed use. In relation to proposed use, if despite the statement as to proposed use which evidence showed is still required in registration applications, aggrieved persons consider themselves able to discharge the difficult evidential burden of proving a lack of intention to use the mark at the time of application, they have long been at liberty to apply to the Court or the Commissioner for an order expunging or varying the registration under s 41. The statutory amendments, the Departmental papers and the comments on them, the TRIPS agreement and all the other material put before the Court might have discussed possible amendments to s 26 or its interpretation but ultimately set standards or made recommendations on other aspects of the trade marks regime and did not recommend change to s 26. Those views were reached in the light of accepted case law. Section 26 can thus be read conformably with all that material. Although there is force in Mr McLeod’s rejoinder about the possibility of attacks on registered marks through ss 26 and 41 years after registration and despite possible use in the meantime, such has always been possible and there is nothing in the material put before the Court to suggest that Parliament intended amend that aspect of the law.

As a question of statutory interpretation, whilst it is not difficult to accept that the 1994 alteration in the definition of “trade mark” arose through officials’ view that use or proposed use was inappropriate as part of definition of a trade mark, in this Court’s view that does not lead to the conclusion that Parliament was intending in that Amendment to repeal the longstanding right for aggrieved persons to apply under s 41 for rectification on the basis that a statement as to proposed use in the registration application was wrong. In addition to the right to oppose registration applications for alleged non-compliance with s 26, registered marks have long been open to attack either under s 41 itself or, through that section, on other grounds set out in the Act including that the registration application was invalid as lacking bona fide intention to use the mark if registration were effected. There does not appear to be anything in the statutory Amendment or in the authorities or other documents to which counsel referred to overturn that long-standing practice.

[39] As far as the TRIPS agreement is concerned, Art 15 entitled signatories to make registrability depend on use but does not appear to exclude an additional ground for registration based on proposed use nor to extinguish opposition or removal for lack of bona fide intention to use. Art 19 deals with removal or cancellation if use is required to maintain registration. It prohibits cancellation for less than three years of non-use. Following the Amendment, s 35 exceeded Art 19’s minimum requirement.

[40] Whilst in Unilever it is correct to note the Court of Appeal’s comment that once a “mark is registered it is no longer . . . open to apply for its removal on the ground that it was registered without any bona fide intention that it should be used so that non-use cannot be asserted for five years” it is clear, with respect, that the focus of that observation was on removal and the effect of the amended s 35. Section 26 was dealt with in the preceding paragraph of the judgment but on a different point from that which here arises. Further, in the passage earlier cited (at 441) it is also clear that the Court of Appeal’s focus is on removal for non-use not on whether registration can be attacked for lack of bona fide intention to use. The Privy Council’s judgment also focuses on removal, not on the point here.

[41] Finally, as Batt & Co and Ducker’s Trade Marks makes clear, a lack of intention to deal in the goods for which a registered mark is sought has long been open to challenge by aggrieved person. Aston is conformable with that principle. However, the High Court did observe that an aggrieved person can raise absence of intention to use either in proceedings opposing registration or on an application to expunge. For New Zealand, Philip Morris makes it clear that applications for rectification under s 41 can be properly brought on the ground that an applicant for registration lacked bona fide intention to use the mark even though the application to expunge failed in that case.

[42] In the light of that, this Court concludes that the Trade Marks Amendment Act 1994 did not affect the right of an aggrieved person to apply for rectification on any of the grounds set out in s 41 or, under s 26 to seek to invalidate registration if it can prove that registration was achieved without a bona fide intention to use the mark.

[43] It therefore follows that Tip Top Investments’ application cannot be upheld.

[44] Whilst thus judgment was in final draft, an application was received from Effem Foods for leave to amend its pleading pursuant to R 187(5) to include an additional ground for rectification, namely, that up to one month before the amendment five years had elapsed without bona fide use of the trade mark SWEET CELEBRATIONS other than for icecream. The opportunity has also been taken for leave to amend the claim more generally. S.41 is now specifically pleaded. That application remains for future determination.

[45] If costs are to be pursued rather than reserved and if the parties are unable to agree, memoranda may be filed with counsel certifying, if they consider it appropriate so to do, that the Court may determine all questions of costs without a further hearing. If memoranda are to be filed, that from the plaintiff is to be filed within 28 days of the date of delivery of this decision, with that from the defendant within 3 5 days of that date.