Energy Beverages LLC v Frucor Suntory New Zealand Ltd
[2020] NZHC 3296
•14 December 2020
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2020-485-301
[2020] NZHC 3296
UNDER the Trade Marks Act 2002 IN THE MATTER OF
an appeal from the decision of the Assistant Commissioner of Trade Marks dated 11 May 2020, [2020] NZIPOTM 5
BETWEEN
ENERGY BEVERAGES LLC
Appellant
AND
FRUCOR SUNTORY NEW ZEALAND LIMITED
Respondent
CIV-2020-485-302 UNDER
the Trade Marks Act 2002
IN THE MATTER OF
an appeal from the decision of the Assistant Commissioner of Trade Marks dated
11 May 2020, [2020] NZIPOTM 6
BETWEEN
ENERGY BEVERAGES LLC
Appellant
AND
FRUCOR SUNTORY NEW ZEALAND LIMITED
Respondent
Hearing: 16 and 17 November 2020 Counsel:
G F Arthur, M C Hayes and G M Toner for appellant A H Brown QC, A E Isaacs and S Lee for respondent
Judgment:
14 December 2020
RESERVED JUDGMENT OF DOBSON J
ENERGY BEVERAGES LLC v FRUCOR SUNTORY NEW ZEALAND LTD [2020] NZHC 3296
[14 December 2020]
Contents
Introduction [1]
Invalidity appeal [10]
The scope of s 75 [19]
Mark at issue not a sign capable of being represented graphically [35]
Analysis [66]
The revocation appeal [76]
The Assistant Commissioner’s reasoning [79]
Arguments on appeal [81]
Analysis [89]
Costs [97]
Introduction
[1] These two appeals are brought from decisions of the Assistant Commissioner of Trade Marks (the Assistant Commissioner), both issued on 11 May 2020, rejecting two forms of challenge by the appellant (EBL) to a trade mark for class 32 (energy drinks, none being cocoa-based beverages) which is in terms including the predominant use of a particular shade of green, Pantone 376C.1 The respondent (Frucor) uses the trade mark in the marketing of its V energy drink. EBL markets its own energy drink in containers that may arguably be the same or a similar shade of green and commenced their challenges fearing infringement proceedings by Frucor.
[2] In the first appeal (the invalidity appeal), EBL appeals the Assistant Commissioner’s dismissal of a claim that the trade mark had been invalidly registered. That appeal is procedurally somewhat complicated and I begin the analysis of it below by reviewing its history.
[3] The second appeal (the revocation appeal) is from the Assistant Commissioner’s separate decision dismissing EBL’s application for revocation of the trade mark on the grounds of non-use. The basis for that application was that the colour swatch as reproduced on the register for the trade mark does not accurately reproduce the swatch of Pantone 376C as provided with Frucor’s application. Instead, the register includes a somewhat darker shade of green. The different shades are illustrated as follows:
1 Energy Beverages LLC v Frucor Suntory New Zealand Ltd [2020] NZIPOTM 6 [the invalidity decision] and Energy Beverages LLC v Frucor Suntory New Zealand Ltd [2020] NZIPOTM 5 [the revocation decision].
Pantone 376C The green represented in the register
[4] Frucor’s application had been lodged in August 2008, relying on the extent of its use of Pantone 376C on containers, packaging and promotional material being sufficient for it to have acquired a distinctive character. The explanation for the mark was that it:
… consists of the colour green (Pantone 376C), as shown in the representation attached to the application, applied as the predominant colour to the goods, their packaging or labels. Section 18(2) of the Trade Marks Act 2002 applies.
[5] The Intellectual Property Office of New Zealand (IPONZ) was satisfied that the use of that colour for Frucor’s energy drinks had acquired a distinctive character and the trade mark was accordingly granted. It was registered on 23 June 2012 with the filing date acknowledged as 29 August 2008.
[6] After assessing the evidence Frucor had submitted in support of its application, the principal trade mark examiner corresponded with Frucor’s patent attorneys in November 2011, reiterating a proposed change to the explanation for the mark to be expressed in terms that it:2
… consists of the colour green (Pantone 376C) as shown in the representation attached to the application, applied as the predominant or predominant background colour to the packaging of the specified goods.
[7] It was part of Frucor’s defence of the trade mark that the wording in the explanation challenged by EBL was not only approved by IPONZ, but reflected terms proposed by the chief examiner.
2 IPONZ Compliance Report (23 November 2011).
[8] On the basis of the discrepancy between the colour as represented on the register, and the colour used on the drink containers in which the V product is sold, as well as packaging and associated promotional material, EBL sought revocation for non-use of the registered mark. The Assistant Commissioner’s decision was that requisite use of the mark had occurred, essentially on grounds that Frucor could rely upon the representation of the colour in its application, and not be bound by the inaccurate reproduction of it on the register.
[9] Both appeals are general appeals, to be determined on a rehearing that applies the approach in Austin, Nichols & Co Inc v Stichting Lodestar.3 The Court must be satisfied that the appealed decision was wrong, and the Court has all the powers the Assistant Commissioner had.
Invalidity appeal
[10] Before the Assistant Commissioner, EBL pleaded that the registration of the mark was invalid, relying on s 17(1)(b) of the Trade Marks Act 2002 (the Act), which provides:
17 Absolute grounds for not registering trade mark: general
(1)The Commissioner must not register as a trade mark or part of a trade mark any matter—
(a)the use of which would be likely to deceive or cause confusion; or
(b)the use of which is contrary to New Zealand law or would otherwise be disentitled to protection in any court; or
…
(2)The Commissioner must not register a trade mark if the application is made in bad faith.
[11] That provision was invoked because of the terms of s 75 of the Act, which recognises a degree of indefeasibility for a trade mark, once registered, if a challenge is brought any later than seven years after its date of registration. Section 75 is to be considered together with s 73. Those sections provide:
3 Trade Marks Act 2002, s 173; Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.
73 Invalidity of registration of trade mark
(1)The Commissioner or the court may, on the application of an aggrieved person (which includes a person who is culturally aggrieved), declare that the registration of a trade mark is invalid to the extent that the trade mark was not registrable under Part 2 at the deemed date of its registration.
(2)Despite subsection (1), the registration of a trade mark that has acquired a distinctive character after its registration must not be declared invalid even though the trade mark was not registrable under section 18(1)(b), (c), or (d) at the deemed date of its registration.
(3)The Commissioner or the court, as the case may be, may refuse any application for a declaration of invalidity that is vexatious.
…
75 Presumption of validity of registration of trade mark
The registration of a trade mark is, after the expiration of 7 years from the deemed date of registration, deemed to be valid unless—
(a)the registration was obtained by fraud; or
(b)the trade mark should not have been registered on any of the grounds set out in section 17(1) or (2); or
(c)the registration may be revoked on any of the grounds set out in section 66.
[12] In the invalidity proceeding before the Assistant Commissioner, Frucor argued that the substantive basis for EBL’s challenge was under s 18 of the Act, but was mislabelled as being brought under s 17 to avoid the indefeasibility provision in s 75. EBL’s challenge had been brought some two years after the expiry of the seven year period since the date of registration of the mark.
[13]Section 18 is in the following terms:
18 Non-distinctive trade mark not registrable
(1)The Commissioner must not register—
(a)a sign that is not a trade mark:
(b)a trade mark that has no distinctive character:
(c)a trade mark that consists only of signs or indications that may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin, time of
production of goods or of rendering of services, or other characteristics of goods or services:
(d)a trade mark that consists only of signs or indications that have become customary in the current language or in the bona fide and established practices of trade.
(2)The Commissioner must not refuse to register a trade mark under subsection (1)(b), (c), or (d) if, before the date of application for registration, as a result of either the use made of it or of any other circumstances, the trade mark has acquired a distinctive character.
[14] EBL contended that inclusion of the term “the predominant use” of Pantone 376C in the description of the mark meant that the registration was of a sign that was not capable of graphic representation. EBL relied on criticism of the use in trade marks for colours of expressions such as “predominant”, particularly by Lord Justice Mummery in the English Court of Appeal.4 The Assistant Commissioner accepted that the challenge was indeed brought in substance under s 18 of the Act, rather than s 17, and that a challenge to registration of a mark because of breach of s 18 is a ground that is caught by the presumption of validity under s 75. Accordingly, that limited indefeasibility provision precluded the invalidity challenge being determined.
[15] In the event that the Assistant Commissioner was wrong in that, she analysed the substance of the criticism as one under s 18, and held that the criticism could not in any event be made out.
[16] On its appeal from the invalidity decision, EBL sought leave to advance the same argument, but now acknowledging that it was advanced under s 18(1)(a), rather than s 17(1)(b) of the Act. Mr Arthur characterised the change as raising a new point on appeal, which he submitted relied upon the same facts and evidence. In opposing leave, Mr Brown QC for Frucor submitted that what was proposed was in fact a new ground for the appeal and one which Frucor would have adduced additional evidence to oppose.
4 Société des Produits Nestlé SA v Cadbury UK Ltd [2013] EWCA Civ 1174, [2014] 1 All ER 1079 at [51], [52].
[17] Prior to the filing of submissions, I directed that I would hear the opposed application for leave to argue invalidity under s 18(1)(a) of the Act as part of the substantive hearing. I heard counsel separately on whether leave should be given, including argument on Frucor’s ground of opposition that leave should not be given for a ground of appeal that was, in any event, time-barred because a challenge to the trade mark under s 18 is now precluded by s 75 of the Act.
[18] Mr Brown’s submission on this point was that if Frucor is correct in arguing that a challenge to the validity of the trade mark could not be brought under s 18 of the Act because it is outside the seven year time period for such challenges, then there would be no utility in granting leave to now argue the appeal on that ground. That makes it appropriate to address first whether indeed an application to declare the trade mark invalid under s 18(1)(a) could not now be entertained because it was advanced more than seven years after the date of registration of the trade mark.
The scope of s 75
[19] Mr Arthur argued that the presumption of validity in s 75 once seven years has elapsed since the date of registration only applied to registrations of trade marks. Relevantly in this case, he submitted that what had been registered was not, and could not be, a trade mark because the registration was for a sign that did not constitute a trade mark.
[20] Mr Arthur submitted that on the definitions in s 5 of the Act, a trade mark had to comprise a sign that was capable of being represented graphically and capable of distinguishing the goods or services of one person from those of another person. Because the explanation of the mark included the reference to Pantone 376C being applied as the predominant colour to the goods, he contended there was no single graphic representation conveyed to the reader of the register so the register was describing something that could not conform to the definition of a trade mark. If it was not a trade mark in the first place, then its inclusion on the register could not be protected by the provisions of s 75.
[21] Mr Arthur accepted that this approach required distinguishing the provisions of s 18(1)(a) of the Act from the other provisions in s 18(1)(b), (c) and (d). He
submitted such a distinction is contemplated because in both ss 18(2) and 73(2) the Act makes separate references to subss (1)(b), (c) and (d). This arguably reflects Parliament’s intention to treat the circumstances in which the Commissioner must not register a trade mark because the sign proposed is not a trade mark differently from the other circumstances where registration cannot occur.
[22] Texts on the New Zealand Act do not make the distinction Mr Arthur argued for. They do not treat the grounds for challenging a mark in s 18 as being excluded from the presumption of validity in s 75 so that, at least implicitly, their commentaries would require any challenge to a mark on any of the grounds in s 18 to be brought prior to the expiration of seven years from the date of deemed registration.5
[23] Nor has Mr Arthur’s argument found favour with the Assistant Commissioner. The authority principally relied upon by Mr Brown on the scope of the presumed validity in s 75 and the policy behind it was Bohemia Crystal Pty Ltd v Crystallite Bohemia SRO.6 That proceeding involved an application seeking a declaration of invalidity for three marks that had been brought more than 11 and 16 years after their registration. Although advanced on the ground that the original registrations had been made in bad faith (that is, under s 17(2)), the argument was characterised on the facts as being “a s 18 (non-distinctiveness) ground masquerading as a bad faith claim”. The applications were held to be time-barred. The point was dealt with as follows:7
[73] In my view, there are important reasons for the presumption of validity in s 75 of the Act. It achieves certainty for registered trade mark holders to the effect that they can be reassured that their trade marks may only be declared invalid after seven years on one of the limited grounds in s 75(a)-(c) of the Act. Those exceptions to the presumption of validity in s 75 fulfil a strong and clear public interest purpose. The primary focus of those grounds is not to protect competitors. ·
74. The presumption of validity also minimises situations where applications for declarations of invalidity are decided on stale evidence. Over the years memories fade, records may be lost and witnesses may even die. It is clearly advantageous if applications such as the present one are brought while evidence is available and fresh. …
5 For example, Paul Sumpter Trade Marks and Practice (4th ed, LexisNexis, Wellington, 2018) at [TMA75.3]; Ian Finch (ed) James & Wells Intellectual Property Law in New Zealand (3rd ed, Thomson Reuters, Wellington, 2017) at [7.17.7].
6 Bohemia Crystal Pty Ltd v Crystalite Bohemia SRO [2015] NZIPOTM 25.
7 Footnotes omitted.
75. Another justification for the presumption of validity is that, with the passage of time, owners of registered trade marks should be able to order their businesses according to the status quo, without fear of being held to account for ancient obligations. The owner submits that if the registrations for the relevant marks are declared invalid it will have been prejudiced by the applicant's substantial delay given it has not had the opportunity to re-brand earlier.
76. If the legislature had intended that invalidity applications such as the present, which are essentially based on s 18 of the Act, could have been brought seven years after the deemed date of registration of the relevant mark then I consider it would have included s 18 of the Act in the clear exceptions to the presumption of invalidity, which are set out in s 75(a)-(c). The legislature has not done so and, for the reasons set out above, I am concerned about the implications of allowing what is essentially a backdoor attempt to bring a s 18(1) claim despite that being prohibited by s 75 of the Act.
[24] The Assistant Commissioner has adopted the same approach in the present case.8
[25] Mr Arthur submitted that the analysis of the then authors of Kerly in its twelfth edition is to be preferred.9 That 1986 edition is the last dealing with the United Kingdom Trade Marks Act 1938. The learned authors commented that s 13 (the equivalent in the United Kingdom 1938 Act of s 75 of the Act):10
… only operates if what is registered is a mark, and is a trade or service mark within the definition in s 68(1).
[26]Translating those references to apply to the Act reflects the view:
Section 75 only operates if what is registered is a sign, and is a trade mark within the definition in s 5.
[27] The authors of Kerly acknowledged an observation by one of the judges in the English Court of Appeal decision in Imperial Group Ltd v Philip Morris & Co Ltd (Nerit) to the effect that the presumption of validity overrides the objection that what was registered was not a mark.11 Therefore apart from the academic commentary by
8 That approach was also taken in S C Johnson & Son Inc v International Consolidated Business Pty Ltd [2017] NZIPOTM 4.
9 T A Blanco White and Robin Jacob Kerly’s Law of Trade Marks and Trade Names (12th ed, Sweet & Maxwell, London, 1986).
10 At 11-06.
11 Imperial Group Ltd v Philip Morris & Co Ltd (Nerit) [1982] FSR 72 (EWCA) at 88.
highly respected academics and practitioners, that English authority reflects the same approach to the policy behind, and terms of, s 75 as has prevailed in New Zealand.
[28] For Frucor, Mr Brown submitted that the legislative history supported an interpretation that confined the exceptions to s 75 to just those s 17 grounds explicitly cited in it. He referred to a submission on the Trade Mark Bill by the New Zealand Institute of Patent Attorneys that raised concerns at the exclusion of what has become s 18 from the list of exceptions to s 75. The Ministry of Economic Development’s response to the submission rejected the concern, observing:12
If the trade mark has been registered for such a significant period of time without challenge, it should be allowed to remain on the register subject to the stated exception.
[29] Mr Brown also submitted that the legislature should be taken to have intended consistency of approach between ss 73 and 75 of the Act. Both are to be interpreted as treating the status of registration as what, first, can be challenged under s 73 but, second, what is protected by s 75 after a period of seven years. An explicit legislative purpose was to simplify procedures,13 and it would instead add complexity if the concept of registration was to be used distinctly in ss 73 and 75.
[30] There is something of an existential aspect to Mr Arthur’s argument. Because an opponent now wishes to argue that the Assistant Commissioner was wrong to treat the sign in issue as capable of being represented graphically, the mark that has been registered for a substantial period of years should be treated as not comprising a trade mark to afford the challenger jurisdiction to seek to make out that assertion. That approach relegates the consequences of registration to no more than a reflection of what the challenger asserts was a mistake by the Commissioner in allowing the mark onto the register.
[31] The contrary proposition in existential terms is that the trade mark does have status as such because the effect of registration says that it has. For seven years from the date of deemed registration, that status is able to be challenged on the ground that
12 Ministry of Economic Development, “Report to the Commerce Committee on the Trade Mark Bill 2001” (26 November 2001).
13 Trade Marks Act 2002, s 3(b).
the Commissioner erred in treating the sign as capable of being represented graphically. However, if any such challenge to the Commissioner’s decision recognising its status is not pursued within seven years, then the trade mark is thereafter secure from challenge on grounds that contend an error by the Commissioner.
[32] I am satisfied that the provisions of s 75, read in the context of the purpose of the Act, support the latter approach. The proposition Mr Arthur relies on to contend that the mark is in fact not a trade mark may well be tenable (as I traverse below), but it is by no means an unassailable proposition. Acceptance of his proposition that this is not a trade mark would require the challenger to prevail over the defence of its status, and the Assistant Commissioner’s justification for previously arriving at the contrary conclusion.
[33] I am not persuaded that a challenge advanced under s 18(1)(a) of the Act can be brought after the expiration of seven years from the deemed date of registration of the trade mark, because I find the presumption of validity in s 75 prevents that argument being raised. Mr Arthur’s submission that there is policy justification for purging the register of marks that ought not to be there has to yield to the policy aim of affording owners of trade marks a measure of certainty in respect of their rights after a period of seven years. I accept Mr Brown’s points about the interpretation of the scope of s 75.14 It follows that I find there is no basis on which to grant leave for EBL to advance a challenge to the validity of the trade mark under s 18(1)(a) of the Act.
[34] That outcome renders it unnecessary to resolve the contest between counsel as to whether EBL’s initiative to challenge the validity of the trade mark under s 18(1)(a) instead of s 17 constitutes a new point within the appeal as foreshadowed, or an entirely new ground of appeal. It also obviates the need to determine the merits of Frucor’s claim that it would be prejudiced because, had it known that s 18(1)(a) was to be raised, it would have adduced additional evidence.
14 See [28]–[29] above.
Mark at issue not a sign capable of being represented graphically
[35] Against the prospect that she was wrong in deciding that s 75 of the Act applied so that the challenge to the validity of the mark was out of time, the Assistant Commissioner went on to consider the substance of EBL’s challenge to the validity of the trade mark. Her decision was that those grounds for challenging the trade mark were not made out and accordingly she would in any event have dismissed the challenge to its validity.
[36] Against the prospect that this challenge may go further, it is appropriate for me to similarly record the comprehensive arguments I heard on the substance of the invalidity challenge, and provide my view on it.
[37] Under the definition of “sign” in s 5 of the Act, that concept may include a diverse range of items such as colour, device, letter, name, shape, smell or sound or a combination of such signs. To qualify as a trade mark, the sign must be capable of both being represented graphically, and distinguishing the goods or services of one person from those of another.
[38] As set out at [13] above, under the heading “Non-distinctive trade mark not registerable”, s 18(1)(a) provides that the Commissioner must not register a sign that is not a trade mark.
[39] Mr Arthur challenged the terms of the register for this trade mark on two grounds. The first was that the explanation did not describe a sign that is capable of being represented graphically because the reference to applying a particular colour as the predominant one to the goods, and extending the trade mark to not only the goods but their packaging or labels, contemplated not a single, definitive mark, but rather a range of signs.
[40] The second of the grounds overlapped with the point taken in the revocation appeal, namely that the swatch of colour included on the register is not Pantone 376C so (among other consequences) that results in the registration being ambiguous and lacking the required clarity and precision to qualify as a sign and therefore a trade mark under the Act.
[41] The Assistant Commissioner rejected the first argument in the following terms:15
55. I do not think that asking whether a colour is predominant if it constitutes say 50% of the colour on packaging, for example, is helpful. In some cases (for example, if the packaging features a significant proportion of another colour such as white or grey) the colour may still be predominant, in the sense of being the most eye- catching or obvious. Ultimately, whether a colour is predominant in any given context will depend on the particular circumstances. The fact that this might be a difficult judgement to arrive at in some cases does not automatically mean that the formula “application as the predominant colour” will render a mark insufficiently clear to be capable of graphical representation under s 5.
[42] Mr Arthur submitted that this approach, which has been adopted in an earlier proceeding in New Zealand, is wrong, and is out of step with the correct approach taken in the United Kingdom, in Europe and, he suggested, in Australia.
[43] Mr Arthur relied in particular on the decision of the Court of Appeal of England and Wales relating to Cadbury’s attempt to register predominant use of a particular shade of purple for its chocolate confectionary products.16 Nestlé had opposed an application for registration of a trade mark of a sign described as:
The colour purple (Pantone 2685C), as shown on the form of application, applied to the whole visible surface, or being the predominant colour applied to the whole visible surface, of the packaging of the goods.
[44] In that litigation, the hearing officer (the United Kingdom equivalent of our Assistant Commissioner) and a first appeal had allowed registration of the trade mark but those decisions were reversed by the Court of Appeal.
[45] Trade mark law in the United Kingdom has, throughout the period in which the authorities he cited were decided, been influenced by the need for conformity with the approach in the European Union. The decisions cited in argument in Cadbury’s case were predominantly judgments of the Court of Justice of the European Union (CJEU).
15 The invalidity decision, above n 1.
16 Société des Produits Nestlé SA v Cadbury UK Ltd, above n 4.
[46] Mr Arthur distilled propositions from European case law, much of which is considered in the Cadbury’s appeal, including that graphical representation encompasses both the visual representation and any description in words, and that the sign must always be perceived unambiguously and uniformly. Further, he cited authority that wording to the effect that a colour is applied as the predominant colour to the goods is not sufficiently precise, and that wording which encompasses multiple signs does not satisfy the requirement that the registered trade mark has to be for a (singular) sign. Specifically, the term “predominant” was submitted by Mr Arthur as not being sufficiently clear for the Commissioner, the public or traders to know whether what they are using is “identical” to the registered trade mark.
[47] These propositions derived from by the European jurisprudence are reflected in the analysis of the Court of Appeal in the Cadbury’s case. In that appeal, Sir John Mummery concluded his reasoning with the following observations:17
[55] … the description of the mark as including not just the colour purple as a sign, but other signs, in which the colour purple predominates over other colours and other matter, means that the mark described is not ‘a sign’. There is wrapped up in the verbal description of the mark an unknown number of signs. That does not satisfy the requirement of ‘a sign’ within the meaning of art 2, as interpreted in the rulings of the CJEU, nor does it satisfy the requirement of the graphic representation of ‘a sign’, because the unknown number of signs means that the representation is not of ‘a sign’. The mark applied for thus lacks the required clarity, precision, self-containment, durability and objectivity to qualify for registration.
[48] In his concurring judgment, Sir Timothy Lloyd also reflected a concern on the need for precision:18
In my judgment the use of the word ‘predominant’ in this context, makes the description of the mark too subjective, too imprecise, and inadequately clear and intelligible, to be capable of registration.
[49] Mr Arthur cited the more recent English Court of Appeal decision in Glaxo Wellcome UK Ltd (t/a Allen & Hamburys) v Sandoz Ltd as a further example of the requirement for precision in the explanation for a colour trade mark.19 That case
17 Société des Produits Nestlé SA v Cadbury UK Ltd, above n 4.
18 At [63].
19 Glaxo Wellcome UK Ltd (t/a Allen & Hamburys) v Sandoz Ltd [2017] EWCA Civ 335.
involved Glaxo’s allegation of infringement of a trade mark for an inhaler device that was both pictorially represented and described in the following terms:20
The trade mark consists of the colour dark purple (Pantone code 2587C) applied to a significant proportion of an inhaler, and the colour light purple (Pantone code 2567C) applied to the remainder of the inhaler.
[50] Sandoz successfully defended the alleged infringement. The reasoning of Lord Justice Kitchin included:21
… in order to fulfil its role as a trade mark and meet the requirements of precision and clarity, the sign must always be perceived unambiguously and uniformly. In my judgment it follows that if the authorities and the public are left in a state of confusion as to the nature of the sign then these requirements will not be satisfied.
…
… As Advocate General Philippe Leger explained in his opinion in Heidelberger at [56], assessment of notions of “identity” and “risk of confusion” necessarily implies a precise knowledge of the sign and mark in question, as they are or as they may be seen by the public concerned.
[51] In that case, the Court was concerned that the terms of the trade mark could extend protection for its owner to a range of inhalers with different proportions of the dark and light purple tones. The Court was concerned that those options would leave the public (including economic operators) “in a position of complete uncertainty as to what the protected sign actually is”.22
[52] Mr Arthur also relied on the Australian Federal Court decision in opposition proceedings to Frucor’s application for registration of the same mark as has been registered in New Zealand. That application was lodged in the same terms, but Frucor’s application had copied the incorrect shade of green from the New Zealand register, rather than attaching a swatch of colour that accurately reproduced Pantone 376C. Accordingly, the error was Frucor’s responsibility rather than that of the trade mark regulator.
20 Glaxo Wellcome UK Ltd (t/a Allen & Hamburys) v Sandoz Ltd, above n 19, at [4].
21 At [35]–[36].
22 At [80].
[53] In those circumstances, Coca-Cola’s opposition to registration of the trade mark was successful. Yates J reasoned:23
121. The matter can be considered in the following way. A person inspecting the Register would readily understand that application has been made for the colour green shown graphically by the representation. He or she is told that this colour is “Pantone 376c”. He or she may accept that as a fact, not knowing that the colour is not Pantone 376C. However, if he or she were to inquire further, he or she might come to know that the colour, as depicted in the representation, is not Pantone 376C. At this point, it becomes manifest that the representation and the description are in conflict. They cannot both be correct. Where does the error lie? Is it in the description of the colour depicted in the representation as “Pantone 376c” or in the graphic representation of the colour itself? Each alternative is equally possible on an objective assessment. A person presented with this conundrum would not know how to resolve it and thus come to an understanding of what mark has been applied for. This is why the delegate accepted that the application was fatally flawed.
…
… I do not accept that a person inspecting the Register should be taken as having an understanding that the reproduction of colour through processes such as scanning, uploading, downloading and printing can be compromised in the process. A person inspecting the Register is entitled to act on the assumption that the trade mark applicant’s own depiction of colour in the representation accompanying the application is accurate.
[54] Mr Arthur submitted that the mark could not be represented graphically because its description admitted of numerous alternative representations accommodating the part of the packaging not presented in the predominant colour.
[55] Mr Arthur supported his submission as to the need for a single precise description of the mark by referring to the test for infringement in s 89 of the Act. Paraphrasing s 89(1), infringement of a registered trade mark can occur by:
(a)the use of a sign identical with a registered trade mark in relation to goods in respect of which the trade mark is registered; or
(b)the use of a sign identical with a registered trade mark in relation to goods similar to goods in respect of which the trade mark is registered if that use is likely to deceive or confuse; or
23 Frucor Beverages Ltd v The Coca-Cola Company [2018] FCA 993 at [121]–[122].
(c)the use of a sign similar to the registered trade mark in relation to any goods or services that are identical with or similar to the goods in respect of which the trade mark is registered if that use is likely to deceive or confuse.
[56] The distinction between the identical and deceptively similar forms of potential infringement have been referred to as the umbra and penumbra of the trade mark. If the owner of the mark can establish a competitor’s use of an identical mark, then that fact alone makes out infringement. Alternatively, if there is use of a similar mark, but to an extent that it is likely to deceive or confuse, then the owner must establish that likelihood of deception or confusion: hence the “umbra” for identical use and the “penumbra” for similar use.24
[57] Mr Arthur argued that if the description is of predominant use of Pantone 376C, then it will be impossible to draw the distinction between the umbra and the penumbra when considering a competitor’s use of what is arguably the same colour.
[58] Mr Arthur also contended there was a lack of necessary precision by instancing a product packaged in this shade as to 51 per cent, or a product packaged in this shade of green as to 40 per cent, with three other colours, each appearing as to 20 per cent. The Assistant Commissioner acknowledged that whether a competitor was using a sign that was identical or merely similar to the registered trade mark might involve a difficult judgement.25 Mr Arthur submitted this indicated that the trade mark was insufficiently precise in the first place.
[59] Mr Arthur also argued that allowing a description of a colour with the imprecision inherent in “predominant” meant that the owner could get protection for a mark wider than the get up relied upon to make out distinctive use of the colour in the first place.
24 As applied by the Supreme Court in Crocodile International PTE Ltd v Lacoste [2017] NZSC 14, [2017] 1 NZLR 679 at [46]. The Court derived these terms from a number of United Kingdom trade mark cases.
25 The invalidity decision, above n 1, at [55].
[60] For Frucor, Mr Brown sought to distinguish the European jurisprudence by distinguishing the factual circumstances in which the various applications had been considered, and on the basis that European decisions require a graphically represented sign to be “clear, precise, objective, durable, self-contained, easily accessible and intelligible” to comply with art 2 of the EU Trade Mark Directive. Such requirements would arguably place an unwarranted and unnecessary gloss on the requirements in s 5 of the New Zealand Act. Mr Brown also distinguished a majority of the cases on the ground that they involved various forms of opposition proceedings, rather than challenges to the validity of a registered mark.
[61] Mr Brown emphasised that the terms used in Frucor’s description of its mark reflected the evidence that had been advanced for Frucor to establish that those features of its products had acquired a distinctive character under s 18(2) of the Act. He also attributed relevance to the distinction that Nestlé was opposing an application for a trade mark rather than challenging the validity of an existing one.
[62] Perhaps most importantly, Mr Brown criticised the analysis of the English Court of Appeal decision for attributing relevance to the remainder of the packaging which was implicitly contemplated because the description of the colour purple was only that it was used “predominantly”. Sir John Mummery had reasoned:26
… If the colour purple is less than total, as would be the case if the colour is only ‘predominant’, the application would cover other matter in combination with the colour, but not graphically represented or verbally described in the specific, certain, self-contained and precise manner required. …
[63] However, in the present case, the description of the rest of the appearance of the products that are not presented in Pantone 376C is irrelevant. The distinctive character of the mark is the predominant use of that shade of green, and nothing more nor less. Arguably, it was therefore wrong for the English Court of Appeal to attribute relevance to the remainder of the packaging, on the basis that it would extend the protection enjoyed by the owner of the mark to a variety of other combinations of features in the packaging of its products, thereby giving rise to the rights to claim
26 Société des Produits Nestlé SA v Cadbury UK Ltd, above n 4, at [51].
infringement for not just one, but a variety of get ups that might be used by other producers of (in that case) chocolate bars.
[64] Mr Brown submitted that the law and practice in New Zealand providing for registration of colour marks was intended to provide for registration of marks used as a predominant colour where the evidence justified the recognition of the distinctive character of its use. Mr Brown produced a search of the register showing 123 existing colour trade mark registrations, 21 of which used the same or substantially similar wording to the explanation contained in Frucor’s application for the current mark.
[65] Mr Brown cited an earlier decision of the same Assistant Commissioner dealing with an application in this country by Cadbury for a colour mark in respect of their distinctive purple wrapping on chocolate blocks.27 Although Cadbury’s application in that case did not include the specification of the Pantone shade of purple, the Assistant Commissioner considered that should be included and, subject to that, the reference to its “predominant” use was sufficiently certain.28 The extent of distinctive use of the particular colour was critical:29
… I conclude that the applicant has established the very substantial level of factual distinctiveness needed to overcome the low inherent distinctiveness of its colour mark.
Analysis
[66] I do not accept that the strict requirements for the definition of a mark in the European jurisprudence is either necessary or appropriate in the context of the New Zealand Act. I accept as appropriate the practice of descriptions such as was proposed and accepted in this case as being capable of providing a sufficiently certain definition for a colour trade mark. The essence for an applicant is in discharging the evidentiary onus on distinctiveness of use of that colour.
[67] I am also not inclined to adopt the concerns reflected in the English Court of Appeal decision in respect of Cadbury’s use of a shade of purple. The analysis in those
27 Cadbury Ltd v J H Whittaker & Sons Ltd [2004] NZIPOTM 26.
28 At 26.
29 At 26.
judgments reflects an expectation that the terms of the written explanation for the mark must necessarily be distinctive of its whole appearance. That approach does not contemplate acceptance of a mark that is described in less than entirely exhaustive detail, in part at least because that would enable non-material details to be present in more than one form. That reasoning would require every detail of the mark as sought being identical in every form, and all being aspects of what renders its use distinctive.
[68] The approach of the English Court of Appeal in Cadbury reflects a concern that the breadth of protection where the relevant colour’s use is described as “predominant” would be illegitimately extended by acknowledging that the distinctive character extended to products with a range of other features in addition to the predominant use of the distinctive colour. However, that does not necessarily arise on the approach adopted for colour marks in New Zealand. The viable alternative is that the mark affords protection only for the predominant use of the distinctive colour, with the remainder of the get up being a matter of indifference so that any additional features can neither add to nor detract from the scope of the trade mark that is protected. That is the approach reflected in the Assistant Commissioner’s decision in the present case
[69] I do not accept the various examples cited by Mr Arthur of difficulties created in identifying the boundaries of the trade mark protection that is granted in such cases as a ground for rejecting a formula of words that include reference to the predominant use of an objectively identifiable shade of colour. Certainly, as the Assistant Commissioner acknowledged, determining the line between the umbra and the penumbra may involve a greater level of judgement in the case of a colour mark than is the case with, say, a distinctive three-dimensional logo. However, that is a reflection of the nature of the mark, and whilst the terms of the explanation must still reflect with sufficient accuracy the existing use that makes out its distinctive character, it does not justify confining the permissible terms for a colour mark only to applications where a single specific nominated colour is used to the entire exclusion of others.
[70] Nor do I accept that permitting explanations for a colour mark in such terms necessarily leads to an applicant acquiring rights over a multitude of signs. Rather, the mark prevents use by others of the get up for the relevant class of goods that uses
the specific nominated shade of green predominantly. Use of that formula of words is likely to reduce the scope of the umbra, and require proof of deceptive similarity in the penumbra, but that does not prevent use of this formula of words for a colour trade mark.
[71] The Glaxo decision also reflects a requirement for precision and lack of ambiguity. Because the terms of the trade mark extended to prevent competitors producing inhalers with a different combination of the two shades of purple from that graphically relied upon by Glaxo in its application, it failed the requirement for a lack of ambiguity.
[72] In the present case, there is only a single distinctive feature, namely the predominant use of Pantone 376C in the packaging. That does not create a similar concern over the precision of what is involved, even if judgement calls may be required to determine whether a competitor’s container or packaging indeed makes predominant use of the distinctive colour.
[73] The parallel proceedings in Australia occurred in factually different circumstances. Frucor, as applicant, was itself responsible for a materially inconsistent and consequently confusing explanation for its mark. This arose from its having claimed that the distinctive colour it used was Pantone 376C, and then attaching to the application a swatch of colour that was not that shade of green. That situation is distinguishable. Rejection of the application was appropriate because the application was internally inconsistent, with the applicant being responsible for the consequent ambiguity or confusion arising. In contrast, here the explanation was consistent in that the written description was of Pantone 376C and the graphic swatch referred to in the application was of that same colour.
[74] I address the substance of the second ground for the invalidity appeal, namely the inconsistency between the colour displayed on the register and an accurate representation of Pantone 376C, in dealing with EBL’s revocation appeal below.
[75] It follows that, even if jurisdiction existed for a challenge to the trade mark under s 18(1)(a) of the Act, I would agree with the Assistant Commissioner that grounds for it could not be made out.
The revocation appeal
[76] The second appeal arises out of EBL’s application for revocation of the trade mark on the grounds of its non-use. The essence of this initiative was that the trade mark is to be interpreted as including the darker shade of green shown on the IPONZ register. It being common ground that this shade of green has not been used at all, EBL sought revocation of the trade mark on the grounds of non-use.
[77] This application was made pursuant to s 66 of the Act, the relevant parts of which provide as follows:
66 Grounds for revoking registration of trade mark
(1)The grounds for revoking the registration of a trade mark are as follows:
(a)that at no time during a continuous period of 3 years or more was the trade mark put to genuine use in the course of trade in New Zealand, by the owner for the time being, in relation to goods or services in respect of which it is registered:
…
(1A) For the purposes of subsection (1)(a), continuous period means a period that commences from a date after the actual date of registration and continues uninterrupted up to the date 1 month before the application for revocation.
…
[78] EBL argued before the Assistant Commissioner that the interpretation of the trade mark included the representation of a shade of green that is inconsistent with Pantone 376C, being the darker shade that appears by mistake on the register. That argument was rejected by the Assistant Commissioner who found that the written description, including the reference to Pantone 376C, was determinative of the scope of the trade mark.
The Assistant Commissioner’s reasoning
[79] The Assistant Commissioner adopted the approach of David Williams J in the High Court decision in Levi Strauss & Co v Kimbyr Investments Ltd.30 That litigation involved a potential inconsistency between the written description of a contrasting coloured tab appearing on the rear pocket of pants or shorts, and a pictorial representation of the tab. David Williams J stated:31
The true construction of the trade mark register in this case
Accepting that it is permissible in appropriate cases to enter words upon the register to define a trade mark, the question then becomes whether the words or the pictorial representation govern the delineation of the trade mark in this case. In my view the answer is plain. The opening words of the written description state that “the mark consists of”. In the absence of any other words explicitly stating that the pictorial representation is to govern, those words are decisive.
[80] The Assistant Commissioner accepted the owner’s explanation for the difference being the processes of copying and uploading the colour swatch under the control of IPONZ. However, she considered it not strictly necessary to reach a conclusion as to the reason for the difference because the written explanation prevailed over the representation in the colour swatch. Because the terms of the written explanation of the mark referred expressly to the colour “as shown in the representation attached to the application”, it was the colour as originally presented that was relevant, rather than the different representation of the colour on the register. Adopting that approach, the Assistant Commissioner was satisfied that there had been requisite use.32
Arguments on appeal
[81] Mr Arthur acknowledged the difference for colour marks when compared with more usual forms of trade marks for a word or a device or logo where the subject matter is graphically represented and there is no issue about its scope. With colour marks, a description is required by reg 44(g) of the Trade Marks Regulations 2003 (the
30 Levi Strauss & Co v Kimbyr Investments Ltd [1994] 1 NZLR 332.
31 At 352.
32 The revocation decision at [50]–[55].
Regulations), which requires that an applicant must supply certain information, relevantly:
(g)if the trade mark is a colour or colours, a description acceptable to the Commissioner of the colour or colours;
The requirement for such a description introduces the prospect for issues as to its interpretation.
[82] Mr Arthur submitted that as it constitutes a public register, the interpretation should be from the perspective of a member of the public including trade competitors. He cited the decision in Levi Strauss, in which David Williams J adopted an observation of Lord Diplock about the nature of the proprietorial right of the owner of the mark:33
… although by [the United Kingdom equivalent of s 10 of the New Zealand Act] it is expressed to be an “exclusive right to use the trade mark in relation to those goods”, what is created by registration is not the proprietor’s right to use the mark but a right to prevent other persons from using it as a trade mark or in certain other specified ways. Every member of the public is thus concerned to know what acts on his part will constitute an infringement of a registered trade mark, and one would expect the register, which is open to public inspection, to contain a record of all particulars necessary to enable a person inspecting the register to ascertain this.
[83] Mr Arthur invited analogy with the United Kingdom and European Union decisions in which trade marks have been interpreted by having regard to visual representations, where they had been filed as part of the application. Adopting the perspective of a member of the public searching the register, Mr Arthur submitted that the trade mark was ambiguous because it included reference to a colour that was not the shade described in the reference to Pantone 376C. In this regard, he cited the approach in the Australian Frucor decision where Yates J had found that persons inspecting the register were entitled to assume the colour shown on the register conformed to the description of that colour by reference to a colour system such as Pantone. Those searching the register would not have access to the application, which included the correct shade of green, so the reference in the explanation for the mark to the colour as shown in the representation “attached to the application” was of no use.
33 Levi Strauss & Co v Kimbyr Investments Ltd, above n 30, at 351, citing Svenska Aktiebolaget Gasaccumulator’s Trade Marks [1962] RPC 106 at 113.
[84] In response to Frucor’s point that the inconsistency in the references to colour had occurred without any fault on its part, Mr Arthur submitted nor was it any fault of third parties searching the register who could not be expected to check the conformity between the Pantone 376C reference and the colour swatch appearing on the register. A refinement on this point was a criticism of the alleged inappropriateness of using the suffix “C” after the numbers 376. The C connotes how the colour appears when applied to solid coated or glossy paper. There is no equivalent letter suffix for how the colour appears on glass or metallic surfaces. Arguably, this introduces a further element of uncertainty.
[85] In addition, Mr Arthur submitted that Frucor could not be treated as entirely faultless because it has been on notice for many years that the uploaded colour swatch was not Pantone 376C and has done nothing to correct the confusion that inconsistency is liable to cause.34
[86] Mr Brown supported the Assistant Commissioner’s decision and opposed the appeal, essentially adopting the reasoning that had been applied by the Assistant Commissioner. He invited the Court to reflect on why the jurisdiction to remove a trade mark for non-use existed, suggesting that it is to avoid the register being unnecessarily cluttered with marks that have fallen out of use. This is clearly not such a mark and Frucor had not only established sufficient use to have the distinctive character of its use of the colour recognised under s 18, but has continued to spend substantial amounts ensuring that its products continued to be marketed in terms conforming to the description in its application.
[87] Arguably, Frucor ought not to be held to account for an error made by IPONZ. Frucor has recently made an application under s 76 of the Act and reg 86 of the Regulations to rectify or correct the register, seeking an order that the colour swatch as originally submitted with the application should replace the wrongly reproduced darker shade of green that currently appears on the register. The future of that application must await the judgment on the two appeals, but Mr Brown cited it as the
34 Mr Arthur instanced compliance reports from IPONZ to Frucor’s patent attorneys in April 2009, August and October 2010 and May 2011, from which it was clear that the original swatch had been substituted with a darker and different shade of green.
appropriate response by the owner of the mark to the challenge by EBL that the mark was not being used because of an inconsistency between the swatch on the register and both the colour standard under Pantone 376C, and the swatch originally submitted.
[88] As to the absence of a reaction to the correspondence from IPONZ which suggested they were using a shade of green other than Pantone 376C, Mr Brown submitted that Frucor was entitled to rely on the terms of its application, and the weight of consistent evidence of the colour for which it made out distinctive use.
Analysis
[89] If the competing positions were to be resolved by resort to equitable principles, an interesting weighing of the competing positions would arise. Observers of the register – at least relatively casual ones – would likely be misled into thinking that the trade mark was for the predominant use of the colour that is incorrectly represented there, and that that colour is Pantone 376C. That is an unsatisfactory situation. Equally unsatisfactory is the predicament of the owner of the trade mark. Having made out the justification for a colour mark by virtue of the distinctive character of its use of it, the register currently represents a colour mark which is materially different from the colour the owner is using on its goods and the extent of the use of which justified the registration of the mark in the first place.
[90] A weighing of the relative unfairness to those with opposing interests cannot be determinative in resolving which of them ought to bear the adverse consequences of an error in the maintenance of the register. The nature of the statutory regime is, however, a factor in the approach adopted to the interpretation of the scope of the protection afforded by the trade mark.
[91] Adopting the approach from Levi Strauss, I consider that the wording in the description ought to dictate the interpretation of what is subject to trade mark protection. The need for precision in a written description of the colour is reflected in IPONZ guidelines for such applications. Consistently with the requirement in the
regulations for an application to contain a clear representation of the trade mark,35 the IPONZ practice guidelines include the following comments:36
4.3.1Colour marks
Where an applicant seeks to register a colour or colours as a trade mark, the applicant will be required to file with the application either:
• a representation of the colour(s), or
• a description of the colour(s) using a widely known and readily available colour standard (such as the colour indexing scheme of the Pantone ® colour system).
The description of the trade mark should also include information on how the colour(s) are being used, or are to be used, in relation to their goods or services, such as in this example:
The mark is the colour blue (Pantone xxx) as shown in the representation attached to the application, applied to the exterior surface of the goods.
…
[92] Other things being equal, that suggests a primacy being given to the code of colour and a written description of that colour nominated in the application. Whilst casual readers of the explanation for the mark may well be misled by the incorrect swatch that has been reproduced, those competitors wishing to be certain of the particular shade of green, use of which is precluded by the trade mark, might equally be expected to check the Pantone coding. I accept Mr Arthur’s point that to do so by reference to the terms of the application for a trade mark would now not be possible, given that IPONZ has destroyed the original application, including the swatch of the correct colour, but that does not preclude independent reference to the Pantone code. His further point is that anyone checking against the Pantone code would then be left confused, which is antithetical to the certainty required for registration in the first place.
35 Trade Marks Regulations 2003, reg 42(1)(b).
36 IPONZ practice guidelines: < See also 9.1.2 of the IPONZ Practice Guidelines on absolute grounds distinctiveness
< distinctiveness/>.
[93] As to Mr Arthur’s submission that it is nonsensical to interpret registration as defined by a document that it is impossible to inspect, the non-availability of the application which is referred to certainly reduces the reliability of the register. However, that is not a justification for exposing the owner of the mark to a claim for revocation for non-use on the ground that it continues to use the distinctive shade of green, the previous use of which justified a finding of sufficiently distinctive character to entitle it to registration, but which is inconsistent with the colour now appearing on the register. That same answer applies to the unsatisfactory aspect of inconsistency that presently exists. It is not a sufficient reason to deprive the owner of the trade mark of the rights it has previously made out.
[94] It appears likely on the details of other colour marks referred to in Mr Brown’s submissions that the transposition of other shades of colours that are distinguishable from the Pantone colours cited in the related application is something of a systemic problem. The preferable solution to such a problem is to correct the register in those cases rather than have errors by IPONZ deprive the registered owners of their property rights in the trade marks that registration entitles them to assume subsists.
[95] It is similarly illogical to hold Frucor as having protection only for a darker shade of green than it has ever intended to use, and in respect of which it has never attempted to make out sufficient use to establish the distinctive character justifying registration. The answer is to correct the register and, depending on the circumstances, for any allegations of infringement during the period in which the register has misled third parties to have regard to the potentially misleading state of the register.
[96] I accordingly agree with the Assistant Commissioner’s conclusion that non-use of the mark cannot be made out, given the consistent use (as admitted) of the mark by Frucor throughout the relevant period, adopting Pantone 376C as a predominant colour.
Costs
[97] Frucor has successfully defended both appeals. It is entitled to costs on a 2B basis for single counsel, as for two one-day appeals, together with necessary disbursements, if necessary to be fixed by the Registrar.
Dobson J
Solicitors:
A J Park, Wellington for appellant Bell Gully, Auckland for respondent
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