Fantech (NZ) Limited v Systemair Aktiebolag
[2017] NZHC 234
•22 February 2017
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2015-485-778 [2017] NZHC 234
IN THE MATTER OF Trade Marks Act 2002 IN THE MATTER OF
An appeal from a decision of the Assistant
Commissioner of Trade MarksBETWEEN
FANTECH (NZ) LIMITED Appellant
AND
SYSTEMAIR AKTIEBOLAG Respondent
Hearing: 6 April 2016 Appearances:
A H Brown QC and S Wheeldon for Appellant
J Mongomery for RespondentJudgment:
22 February 2017
JUDGMENT OF CLARK J
I direct that the delivery time of this judgment is
4:30pm on the 22 day of February 2017
FANTECH (NZ) LIMITED v SYSTEMAIR AKTIEBOLAG [2017] NZHC 234 [22 February 2017]
Introduction
[1] Fantech (NZ) Ltd (the owner or Fantech) appeals against a decision1 of the Assistant Commissioner of Trade Marks who allowed the respondent, Systemair Aktiebolag (Systemair) to amend its application for the revocation of a trade mark registered to Fantech but did not permit Fantech to file a counter-statement or evidence.
Background
[2] Fantech is the owner of trade mark registration No. 780417 for the mark
SYSTEMAIRE.
[3] Systemair applied on 5 November 2014 to revoke Fantech’s trade mark on the basis that it had not been used for three years and that its registration was preventing the registration of Systemair’s trade mark application No. 976707
SYSTEMAIR & device.
[4] The application for revocation contained an error. While paragraph 1 of the application contained the registration number of the trade mark sought to be revoked, in paragraph 7 where the grounds for revocation are to be stated, Systemair erroneously referred to the number of its own trade mark application instead of Fantech’s trade mark registration No. 780417.
APPLICATION FOR REVOCATION Details of the trade mark(s) to which the revocation applies
1. Trade mark number(s) 780417
2. Trade mark(s) SYSTEMAIRE
…
Details of the revocation
…
7.State the grounds on which the application for revocation is made.
Pursuant to Section 66(1)(a) of the Trade Marks Act 2002, and prior to the date 1 month before the date of
1 Fantech (NZ) Ltd v Systemair Aktiebolag [2015] NZIPOTM 17.
this application for revocation, a
continuous period of 3 years [or]
more elapsed following the actual date of registration of registration No. 976707 SYSTEMAIR & device (“Trade Mark”) during which the Trade Mark was not put to genuine use in the course of trade in New Zealand, by any owner for the time being in relation to the goods in respect of which it is registered. For the sake of clarity, the Non-Use Period is identified as 5 October
2011 to 5 October 2014.
8. State the basis on which the applicant claims to be an aggrieved person.
The removal applicant is the owner of New Zealand trade mark application No. 976707
SYSTEMAIR & device in class 11 filed on 12 February 2013. The mark
sought to be removed has been cited against registration of the removal
applicant’s mark and is currently preventing the removal applicant from securing registration of its
mark in New Zealand.
…
[5] Regulation 94(2) of the Trade Marks Regulations 2003 (2003 Regulations) requires the Commissioner, as soon as practicable after receiving an application for revocation, to send a copy to the owner of the trade mark. The owner may oppose an application for revocation by filing a counter-statement and evidence within two months of receipt of the application.2
[6] Fantech became aware of the application for revocation after the two-month time period for filing a counter-statement had elapsed. The revocation application had been sent to an address which Fantech contends was out-of-date. In a lengthy exchange of correspondence with the Intellectual Property Office of New Zealand (the Office), Fantech contended that the Office had failed to properly serve the revocation application.
[7] On 11 March 2015 Fantech requested that the revocation application be
placed in abeyance while it considered lodging an appeal against the Office’s
2 Trade Marks Regulations 2003, reg 96(1).
maintenance of its view that the revocation application had been validly served. The Office did not accept that its service was defective. Its reply of 31 March 2015 advised that it proposed to decline to place in abeyance the application for revocation. As this proposed refusal amounted to an exercise of the Commissioner’s discretion Fantech was advised it could request a hearing under reg 123 of the 2003
Regulations.
[8] Mr Brown QC for the appellant provided a detailed chronology and presented full submissions relating to the service issue and how it came about. The service issue is not raised as a ground of appeal although the appellant does identify it as part of the factual background and context. Because the appellant had the opportunity of a hearing before the Commissioner but elected not to pursue that course, and because the service issue is not raised for determination on this appeal, it is necessary only to record the facts leading to the outcome of the service dispute between Fantech and the Office.
[9] In a letter of 14 April 2015 Fantech’s agents declined the offer of a hearing. Fantech accepted that this meant the revocation application would be determined on the papers but Fantech’s position was that the application “must be refused” because the application contained no grounds on which registration No. 780417 could be revoked. The error in the application constituted a fundamental flaw.
[10] Fantech copied its letter to Systemair’s agents on 14 April 2015 and on the same day Systemair wrote to the Office with an amended application for revocation. Pursuant to s 194 of the Trade Marks Act 2002 (the Act) Systemair requested amendment of its application “to correct a clerical error and obvious mistake”. Section 194 provides:
194 Amendment of documents other than application
The Commissioner may, at the written request of the person who has made an application (other than an application for the registration of a trade mark), or filed a notice or other document for the purposes of this Act, or, at the written request of the person’s agent, amend the application, notice or document,—
(a) to correct a clerical error or an obvious mistake; or
(b) if the Commissioner is of the opinion that it is fair and reasonable in all the circumstances of the case to do so.
[11] Fantech was unaware of Systemair’s amendment application until it received notice of the Office’s preliminary view, communicated to the parties by a letter dated
5 May 2015, that the amendment application should be permitted. Fantech responded by seeking an opportunity to file an amended counter-statement and evidence in the event the amendment was allowed. It relied on reg 11A(4) of the
2003 Regulations. Regulation 11A(4) permits the filing of an amended counter- statement if the Commissioner intends to allow an amendment to an application for revocation:
11A Request to amend pleadings
(1) In this regulation, pleading means—
(a) a notice of opposition; or
(b) an application for rectification or revocation, declaration of invalidity, cancellation, or alteration; or
(c) a counter-statement.
(2) A request under section 194 of the Act to amend a pleading must, in addition to complying with regulation 11, be made prior to the hearing to which the pleading relates.
(3) If a request to amend a pleading is made,—
(a) the Commissioner must, on receipt of the request, notify the opposite party of the request; and
(b) the opposite party may make submissions on the request within a time specified by the Commissioner; and
(c) the Commissioner must, after considering those submissions (if any), notify the parties of the decision that the Commissioner intends to make on the request.
(4) If the Commissioner intends to allow an amendment to a pleading described in subclause (1)(a) or (b), the Commissioner must give the opposite party an opportunity to file, within a time specified by the Commissioner, an amended counter-statement.
[12] The Office’s response was to the point. It did not intend to invite Fantech to
file an amended counter-statement under reg 11A(4). As Fantech had filed no
counter-statement it followed that it could not file an ‘amended’ version because there was, quite simply, no counter-statement to amend.
[13] In written submissions Fantech opposed the amendment and maintained its stance: that if Systemair were permitted to amend then Fantech should be permitted to file a counter-statement and evidence. The Office’s position remained unchanged. In reliance on s 194 it proposed to allow the correction of the error. Fantech then exercised the option available to it under reg 123 and requested a hearing on the Commissioner’s proposed exercise of discretion. Fantech also requested a timetable for the filing of its evidence.
[14] The Office declined Fantech’s request to file formal evidence because the hearing was confined to whether the proposed amendment was to correct a clerical error or an obvious mistake. Assessing that issue did not involve factual disputes and could be addressed by submissions. In particular there would be no traversing of the service issue in respect of which “the deadline to request a hearing [had] already passed” and upon which Fantech had opted not to seek a hearing.3 The parties filed further submissions and the hearing proceeded on 1 September 2015.
Decision under appeal
[15] In her decision dated 22 September 2015 the Assistant Commissioner allowed Systemair’s proposed amendments to its application for revocation and ruled that the amendment did not entitle Fantech to file a counter-statement or evidence.
[16] The following summary contains the essence of the Assistant
Commissioner’s reasoning:
(a) Systemair’s application for revocation contained an obvious error. It would be “obvious to anyone reading the application” that the reference to registration No. 976707 in paragraph 7 of the application
was a “simple mistake”.4
3 Letter from Intellectual Property Office New Zealand to Fantech regarding Fantech’s request to
file formal evidence (14 July 2015).
4 Fantech (NZ) Ltd v Systemair Aktiebolag, above n 1, at [66].
(b)The purpose of reg 11A(4) is to give a party an opportunity to amend its pleadings in order to respond to changes in the other party’s case. But where, as in this case, Fantech had not filed a counter-statement, there was nothing for it to amend.5
(c) Regulation 11A(4) did not re-set the clock to allow a trade mark owner who had not filed within the two-month timeframe established by reg 96 a second opportunity to do so.6 Nor did reg 11A(4) give to the Commissioner a discretion to make orders to that effect.
(d)The Assistant Commissioner recognised the potential for unfairness in circumstances where a trade mark owner decided not to file a counter- statement to an application for revocation but changed its mind following amendment to the application. Nonetheless, the potential for unfairness was mitigated by the limited circumstances in which amendments are permitted. If a proposed amendment would alter the application for revocation in any significant way, it would be less
likely that the amendment would be allowed.7
(e) Fantech had been candid about the fact that, having been precluded by the service issue from taking further steps in the proceedings, it was seeking a mechanism by which it might defend its trade mark registration.8 But a tactical decision not to pursue a hearing on the service issue (even if influenced by its view that the application was fatally flawed) could not be determinative of the application to amend.9
(f) Having elected not to attempt to vindicate its rights in relation to the service issue Fantech could not assert at the hearing that that election
should affect the rights of Systemair in relation to amendment.10
5 At [108].
6 At [109].
7 At [110]–[111].
8 At [105].
9 At [74].
10 At [80].
The appeal
[17] Fantech appeals against the whole of the decision on the following bases: (a) The Assistant Commissioner erred in law in:
(i)determining that there is no discretion to allow a trade mark owner a further opportunity to file a counter-statement in circumstances where the trade mark owner has not filed a counter-statement within the two-month time limit established by reg 96 of the 2003 Regulations; and
(ii)allowing the respondent to amend its application for revocation without permitting the appellant to file a counter- statement and evidence and so answer the amended pleading because she treated reg 11A(4) of the 2003 Regulations as being dispositive of her discretion under s 194 of the Act.
(b)The Assistant Commissioner erred in the exercise of her discretion by allowing the amendment under s 194 without also permitting the filing of a counter-statement, in particular by:
(i)treating the proposed amendment as a clerical error or obvious mistake but failing to take into account that the amendment would have a substantive effect on the application and the trade mark owner’s rights, the application being fatally flawed prior to amendment.
(ii)failing to take into account that the discretion under s 194 could be exercised to prevent procedural and substantive unfairness to the trade mark owner, while allowing the respondent’s application for amendment.
(iii) finding that the appellant’s decision not to request a hearing
over the defective service issue was influenced by the error to
be amended, but allowing the amendment anyway without permitting the trade mark owner to file a counter-statement.
[18] The appeal raises two key issues for determination:
(a) When granting an application for amendment of an application for revocation does the Assistant Commissioner have a discretion under s 194 of the Act to allow an opposite party to file a counter-statement and evidence where no counter-statement or evidence has been filed with the time prescribed by regulation?
(b)If the answer to the first issue is “yes”, did the Assistant Commissioner err in refusing to permit Fantech to file a counter- statement and evidence when granting Systemair’s amendment application?
Approach to appeal
[19] Under s 170 of the Act a person who is aggrieved by a decision of the Commissioner under the Act may appeal to the court. Such an appeal is determined in accordance with s 173 which provides:
173 Determination of appeals
In determining an appeal, the court may do any of the following things:
(a) confirm, modify, or reverse the Commissioner’s decision or
any part of it:
(b) exercise any of the powers that could have been exercised by the Commissioner in relation to the matter to which the appeal relates:
(c) in the case of an appeal against the registration of a trade mark, permit the trade mark proposed to be registered to be modified in any manner that does not substantially affect its identity. However, in any such case, the trade mark as so modified must be advertised in the prescribed manner before being registered.
[20] In Metalman New Zealand Ltd v Scrapman BOP Ltd Lang J summarised the appellate approach under ss 170 and 173:11
[7] … The appeal proceeds by way of re-hearing on the basis of the record before the Assistant Commissioner, and the Court has all the powers of the Commissioner. The Court is required to come to its own view on the merits, giving such weight as it thinks fit to the Assistant Commissioner’s decision. If it comes to a different view and is of the opinion that the Assistant Commissioner’s ultimate decision is wrong, the Court is required to substitute its own view. (Citations omitted.)
[21] This appeal raises, primarily, questions of law concerning the scope of the
Assistant Commissioner’s discretion under s 194 of the Act and reg 11A of the 2003
Regulations. As the appellant conceded, the second ground of appeal, which concerns the exercise of discretion, only falls to be considered if the appellant prevails on its first ground of appeal. To the extent that the appeal relates to an exercise of discretion it must be determined in accordance with the principles in May v May.12
Is there a discretion under s 194 to permit the filing of a counter-statement and evidence?
Appellant’s position
[22] Fantech’s position is that when exercising her discretion under s 194 to allow the filing of an amended application the Assistant Commissioner should have permitted Fantech to file a counter-statement and evidence as a condition of allowing the amendment application.
[23] Mr Brown submitted that the Assistant Commissioner fettered her discretion under s 194 by considering it to be limited by regulation 11A(4). Yet, he submitted:
(a) the discretion under s 194 is broad;
(b)regulation 11A(4) only partially codifies the procedure for amendments;
11 Metalman New Zealand Ltd v Scrapman BOP Ltd [2014] NZHC 2028, [2014] NZAR 1393, citing Austin Nicols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [3].
12 May v May (1982) 1 NZFLR 165 (CA) at 170. See Blackstone v Blackstone [2008] NZCA 312, (2008) 19 PRNZ 40 at [8].
(c) regulation 11A(4) is simply a “procedural consequence” of a decision to allow amendment and does not “exhaust” the discretion in s 194.
[24] Although Fantech had not filed a counter-statement it had standing as a party to the application. Accordingly, it was entitled to make submissions on any hearing.
[25] Mr Brown emphasised the “highly unusual” circumstances of the present appeal and the effect of the amendment on the revocation application. The effect was said to substantially alter the balance between the parties by validating an otherwise fatally flawed application.
Respondent’s position
[26] Ms Montgomery, counsel for Systemair, presented full written and oral arguments. Ms Montgomery submitted that the discretion under s 194 extends only to deciding whether or not to permit amendments to documents. The Assistant Commissioner had no discretion to allow a counter-statement to be filed under s 194. In any case, the revocation application was not fatally flawed and the amendment did not place Fantech in a worse position than prior to the amendment.
[27] As well, reg 11A(4) does not permit the filing of a counter-statement. It permits only the filing of an amended pleading, in this case, an amended counter- statement.
Analysis
[28] It is clear to me that s 194 does not expressly or impliedly empower the Commissioner to do other than grant or not grant a properly made request to amend a pleading. “Pleading” is defined in reg 11A and includes a counter-statement.13
Section 194 concerns only amendments to pleadings. But amendment is not what Fantech seeks. Rather, Fantech seeks to file out of time the counter-statement which was not filed in the first place and seeks to rely on s 194 as permitting that step. Similarly, Fantech identifies reg 11A(4) as providing a basis for filing a counter- statement.
[29] It seems to me that s 194, and regs 11 and 11A(4) operate together in this way:
(a) First, s 194 confers upon the Commissioner a power to amend a document if the prerequisites in s 194 are met. The Commissioner does not exercise the s 194 power of amendment on his or her own initiative. A written request must be made either by the person who seeks the amendment or by that person’s agent.
(b)Secondly, reg 11 prescribes the content of a request for amendment under s 194. A request to amend a document that is a pleading within the meaning of reg 11A(1) must comply not only with reg 11 but also with reg 11A.14
(c) Thus, and thirdly, where a request is to amend an application for revocation, and the Commissioner intends to allow the amendment, the Commissioner must also give the opposite party an opportunity to file “an amended counter-statement”. That is the effect of reg 11A(4). The assumption underlying reg 11A(4) is that a counter-statement has been filed at some earlier point in time and because the document which it responds to is to be corrected or amended, it may be that, correspondingly, the counter-statement requires amendment. Regulation 11A(4) envisages this sequence and requires and empowers the Commissioner to facilitate it.
[30] Section 194 and regs 11 and 11A together, provide a jurisdiction for amending and correcting a class of documents in closely prescribed circumstances; and, where the Commissioner intends to allow an amendment, reg 11A(4) permits the filing of an amended counter-claim within a time specified by the Commissioner. The enactments do not, individually or together, expressly or impliedly, confer a power that has a broader effect. The power to amend does not import, also, a power to permit an original document to be filed for the first time as though in response to
the amendment. Nor does an amendment pursuant to s 194 have the effect of re-setting the filing deadlines for pleadings and evidence.
[31] Furthermore, legislative indicia against the appellant’s argument can be seen
in the strict two-month time limit established for the filing of counter-statements.15
If an owner or licensee of a trade mark opposes revocation but fails to file a counter- statement and evidence within two months after receiving the application for revocation the effect of the failure is as if the owner or licensee had abandoned all opposition. That is because reg 96(2) requires the Commissioner to determine the application on the basis of the documents filed by the applicant if no counter- statement is filed within the period specified. The Commissioner has no discretion to do otherwise.
[32] In further support of the argument that s 194 creates a broad general discretion as to amendments Mr Brown submitted that if an application for revocation is amended, the evidence in opposition may require amendment and it would be procedurally unfair not to permit the trade mark owner to file amended evidence. The submission, however, does not engage the facts of this case. Fantech filed no evidence. Consequently, neither the potential for filing, nor the need to file, amended evidence arises. Besides, a party wishing to file evidence after the time prescribed in the 2003 Regulations may apply, pursuant to reg 35, for permission to file out of time and the Commissioner may allow the evidence if satisfied of the matters in reg 34(3).
[33] Except where the 2003 Regulations stipulate that time must not be extended the Commissioner has a power to extend time for taking steps in proceedings if satisfied that genuine and exceptional circumstances justify an extension of time.16
[34] As Lang J observed of the time limits in the 2003 Regulations, and of reg 32 in particular, they contain a significant shift in emphasis from the predecessor 1954
Regulations.17 To achieve a tightening-up in terms of taking steps in a timely
15 Regulation 96.
16 Regulation 32.
17 Muir Electrical Company Pty Ltd v The Good Guys Group Ltd HC Auckland CIV-2009-404-
4965, 18 December 2009 at [27].
manner the Commissioner no longer has, under the 2003 Regulations, the power which the 1954 Regulations conferred, to extend time for taking a step where the time has expired.
[35] The comprehensive nature and effect of reg 32 means it is even less plausible to construe s 194 or regs 11 and 11A as implying a discretion to extend time.
[36] Finally, Mr Brown relied on two decisions relating to amendment of pleadings which, he submitted, supported the view that the discretion to allow an amendment under s 194 is very broad and the object is to do justice to the parties and ensure the real controversy is heard.18
[37] In my view neither decision supports the existence of a discretion in s 194 to allow a counter-statement to be filed out of time. Both decisions concerned applications to amend — a counter-statement in Fresh Fruit Juice Company Ltd and a notice of opposition in Schwitters — and both were decided in the context of the Trade Marks Regulations 1954. Importantly, there was no express provision for the amendment of notices of opposition or counter-statements in the Trade Marks Act
1953 or the 1954 Regulations. The jurisdiction to permit amendments was sourced to reg 97 which, in exceptionally broad terms, conferred a power to amend: 19
Any, application, document, … if the Commissioner thinks fit, and upon such terms, … as [the Commissioner] may direct.”
[38] The breadth and generality of that regulation is in stark contrast to the tightly prescribed regulatory environment governing this case. Indeed, as the Assistant Commissioner observed in Schwitters:20
There are no express limits on the Commissioner’s discretionary power in r.97, nor in my view does the scheme of the Act and the Regulations impose any limits on the bounds of this power.
18 The Fresh Juice Company Ltd v Lepionka [2000] NZIPOTM 9 and Schwitters v Horphag
Research M&B Sarl [2001] NZIPOTM 10.
19 Trade Marks Act 1953, s 26(7).
20 At 7.
[39] By contrast the power to amend conferred by s 194 and the 2003 Regulations is bounded, most relevantly by the time-frames in the 2003 Regulations. I conclude that reg 11A(4) provides for the only circumstances in which a counter-statement may be filed following an amendment under s 194 namely, where a counter- statement has previously been filed and the party is given an opportunity to amend that document. Section 194 gives no discretion to the Commissioner to permit the filing of an original counter-statement.
[40] Given my conclusion that there is no discretion under s 194 to allow the filing of a counter-statement in the circumstances of this case it follows that the Assistant Commissioner did not err in refusing to permit Fantech to file a counter- statement in the circumstances before her.
[41] Fantech declined the opportunity for a hearing to contest the issues concerning service. It took the view that the application was fundamentally flawed. The Assistant Commissioner concluded otherwise: the application contained a clerical error, obvious on the face of the document and the error was not fatal to the application itself.
[42] With respect to the Assistant Commissioner I agree with the view expressed in her decision:
Having elected not to attempt to vindicate its rights in relation to the service issue, however, it seems quite wrong for Fantech now to say that its voluntary election in that regard should affect the rights of the other party to the proceeding in relation to a different issue altogether.
Result
[43] The appellant has not established that the Assistant Commissioner erred in her construction of regs 11 and 11A. The Assistant Commissioner declined to exercise a discretion she correctly determined she did not have.
[44] The appeal is dismissed.
[45] The respondent is entitled to costs.
Karen Clark J
Solicitors:
Kensington Swan, Wellington for Appellant
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