Frucor Suntory New Zealand Limited v Energy Berages LLC

[2023] NZHC 2433

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2020-485-656

[2023] NZHC 2433

UNDER

the Trade Marks Act 2002

IN THE MATTER

of an application for rectification of the Register of Trade Marks

BETWEEN

FRUCOR SUNTORY NEW ZEALAND LIMITED

Applicant

AND

ENERGY BEVERAGES LLC

Intervener

Hearing:

On the papers

Appearances:

A H Brown KC and T C Goatley for Applicant

G F Arthur KC, R C Watts and A N Birkinshaw for Intervener

Judgment:

31 August 2023

JUDGMENT OF GRICE J

(Costs)

Introduction

[1]                 The applicant (Frucor) was successful in an application for the rectification of the trade marks register, which was contested by the intervenor (EBL), following an error by the Commissioner of Trade Marks in the shade of green shown on the online trade marks register. The shade of green changed from the colour in the applicant’s trade mark application to the colour shown on the online trade marks register when the Commissioner digitised the IPONZ website in about 2009.1

1      Frucor Suntory New Zealand Ltd v Energy Beverages LLC [2023] NZHC 2032 [the rectification decision].

FRUCOR SUNTORY NEW ZEALAND LIMITED v ENERGY BEVERAGES LLC [2023] NZHC 2433 [31

August 2023]

[2]                 The trade mark application was filed in 2008. The provisions of the relevant legislation meant that the final acceptance of the registration of the trade mark occurred sometime later, but registration was backdated to the time of filing.2

[3]                 The green colour in the application and which the applicant sought to protect by the trade mark was a shade of green called Pantone 376C. The darker shade of green was shown on the IPONZ website which acts as the trade mark register.

[4]                 The judgment ordering the rectification of the register followed an application for the rectification and litigation concerning the trade mark between the parties which dated  back   to  2017.    Although  the   application  for  rectification  was  filed  on  3 November 2020, Frucor requested this Court not deal with it pending the outcome of proceedings which in the meantime had been filed by the intervenor in relation to the trade mark.

[5]                 EBL filed with the Commissioner an application for a declaration of invalidity of the trade mark in August 2017. The Commissioner declined that application following a defended hearing in May 2020. EBL then filed further applications for revocation of the trade mark in October 2020. EBL then filed an appeal against the Commissioner’s decisions (dismissing its applications) and the High Court dismissed that appeal in December 2020. EBL then appealed. The Court of Appeal dismissed the appeal in November 2022. The applicant in its submissions on costs indicated that there remained an extant proceeding to invalidate Frucor’s trade mark incorporating the colour Pantone 376C.

[6]                 Against that background, this application for rectification was brought on for hearing following the dismissal of EBL’s appeal to the Court of Appeal on the invalidity/revocation issue. This application was heard by this Court on 28 June 2023 and this Court allowed the application on the terms sought by Frucor in a decision dated 1 August 2023. The Court dismissed all the grounds put forward by EBL against rectification to correct the trade marks register. Counsel agreed the appropriate category and band for costs would be 2B.

2      Trade Marks Act 2002, ss 5 and 57.

[7]                 The applicant seeks costs on a 2B basis following the event. It also seeks certification for a second and subsequent counsel. Each party retained King’s Counsel to argue this matter. EBL agrees that costs on a 2B basis should be awarded in general terms but says that a number of steps were taken before it became formally involved in the rectification application, therefore it should not be liable for costs in relation to those steps. Frucor says while the intervenor did not file its application to intervene until April 2023, it had indicated from as early as November 2022 that it would be opposing the rectification proceeding and in addition it would oppose the rectification proceeding being heard prior to the conclusion of the proceedings concerning this application to invalidate the trade mark which were ultimately dealt with by the Court of Appeal.3

Principles applicable to costs applications

[8]There is no dispute about the principles of costs which are set out below.

[9]                 The aim of the costs regime in the High Court Rules 2016 (the Rules) is to achieve predictability, consistency and expediency in determining costs. Once the skill and time classification has been determined, in this case to 2B, it is usually possible to make the necessary calculation with reference to schs 2 and 3 of the Rules. Frucor has referenced the steps in the schedules of the Rules to calculate the total costs in this case.

[10]             Subject to the provisions of the Senior Courts Act 2016, all matters relating to costs are at the discretion of the Court.4 The general principles applying to the determination of costs contained in r 14.2(1) insofar as relevant to this application are:

(a)the party who fails with respect to a proceeding or an interlocutory application should pay costs to the successful party;

3      Energy Beverages LLC v Frucor Suntory New Zealand Ltd [2020] NZHC 3296; and Energy Beverages LLC v Frucor Suntory New Zealand Ltd [2022] NZCA 536 [the Court of Appeal decision].

4      High Court Rules 2016, r 14.1. However, that discretion is generally to be exercised in accordance with rr 14.2 - 14.10: see Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [19].

(b)an award of costs should reflect the complexity and significance of the proceeding;

(c)costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application; and

(d)so far as possible the determination of costs should be predictable and expeditious.

[11]             In this case costs have been awarded in relation to the proceedings in the High Court and Court of Appeal concerning the application to invalidate the trade mark. There should be no double up on costs awarded. Nevertheless, the fact that the parties have been engaged in litigation related to the trade mark since the application for rectification was filed forms a backdrop and explains the steps which the applicant considered were necessary to be taken in relation to the application for rectification, the subject of the present costs application.

[12]             The steps in dispute here relate to the filing of the application for rectification, memoranda to the Court (to inform the Court of the related invalidity/revocation application), and the need to postpone consideration of the rectification application until the related litigation had been completed. In the rectification decision, I relied on the findings of the High Court and Court of Appeal in the invalidity proceeding decisions to determine the issue of whether the register should be corrected; and if so, what it should depict and whether the date of registration should be deemed to be effective from the date of filing of the trade mark application. The postponement was an appropriate step to take as the Court would not have realistically been in a position to consider the rectification application until the invalidity application had been heard by this Court and appeal rights exhausted.

[13]             I accept EBL’s submission that the rectification application may have been necessary in any event. It was Frucor that requested the Court to hold this rectification application in abeyance until the High Court had issued its invalidity/revocation decision. It was also Frucor that had updated the Court by memorandum as to the

expected delivery of the High Court judgment requesting a rescheduling of the callover. It is arguable that without the intervention of EBL, Frucor may have decided it did not need to rectify the register, despite the error on it. The memoranda to the Court was appropriate in the circumstances to ensure the Court was updated on the progress of the related litigation, which enabled this proceeding to be dealt with more efficiently.

[14]             Nevertheless, the steps were taken before EBL was formally involved in these proceedings. EBL has pointed out it was not served with the application for rectification. I am not in a position to make a determination of what happened to the parties other than as recorded on the Court file. While Frucor acted as a responsible litigant, I do not consider the costs incurred before EBL took formal steps in relation to the application the subject of the judgment in this proceeding should be visited upon it. Accordingly, costs are not allowed in relation to the disputed steps.

[15]             EBL takes no issue with the claim for second or subsequent counsel. I consider that was a responsible position. It is appropriate that certification be given for second and subsequent counsel in view of the complex background to this litigation. The parties both considered it appropriate to brief King’s Counsel, and the issues raised in this application required a comprehensive understanding of all the litigation concerning the trade mark to date. It was apparent from the reliance by senior counsel on their juniors to locate documents and make enquiries in the course of the hearing. Accordingly a certificate is granted for second and subsequent counsel.

Conclusion

[16]I conclude that the steps disputed by EBL, being the first three steps set out in

schedule A to Frucor’s memorandum of costs, are not allowed. In all other respects costs are granted as claimed, including in relation to second and subsequent counsel.

Grice J

Solicitors:

Bell Gully, Auckland Simpson Grierson, Auckland