Merial v Virbac S A
[2012] NZHC 3392
•13 December 2012
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-485-1388 [2012] NZHC 3392
UNDER the Trade Marks Act 2002
IN THE MATTER OF an appeal from the decision of the Assistant
Commissioner of Trade Marks dated 11
June 2012 [2012] NZIPOTM 16
BETWEEN MERIAL Appellant
ANDVIRBAC S A Respondent
Hearing: 14 November 2012
Counsel: S A Fogarty and J D Miles for the Appellant
D Marriott for the Respondent
Judgment: 13 December 2012
JUDGMENT OF ELLIS J
This judgment was delivered by me on 13 December 2012 at 4 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors: A J Park, PO Box 565, Auckland
Counsel: D L Marriott, PO Box 5844, Auckland 1141
MERIAL V VIRBAC S A HC AK CIV-2012-485-1388 [13 December 2012]
[1] Merial has filed an appeal from a decision of Assistant Commissioner of Trade Marks, J Walden, 16 delivered on 11 June.1 The decision relates to an application by Virbac SA (Virbac) for registration of the trademark Fiproline that is opposed by Merial. Merial is the holder of the trademark Firstline. Both Fiproline and Firstline are anti-parasitic preparations used, in particular, to externally treat flea and tick problems in cats and dogs. It is of some relevance that the active ingredient
in Firstline is known as fipronil.
[2] In the course of her decision the Assistant Commissioner ruled that certain of the evidence filed by Merial in reply to evidence filed by Virbac was inadmissible. The principal ground for that ruling was that the evidence was not “strictly in reply” as required by Regulation 85 of the Trade Marks Regulations 2003.2
[3] This interlocutory judgment relates to:
(a) The correctness of that ruling; and
(b)An alternative application made by Merial for leave to adduce the putative evidence in reply as fresh evidence in the appeal under High Court Rule 20.16 or pursuant to its inherent jurisdiction.
Background
[4] The procedure for a trade mark opposition is prescribed in the Trade Marks
Regulations 2003. The relevant steps are the filing of:3
(a) A notice of opposition; (b) A counter-statement;
1 2012 [2012] NZIPOTM.
2 Regulation 85 provides:
An opponent to an application for registration may, if the applicant has filed evidence, file evidence strictly in reply within 1 month after the opponent has received a copy of the applicant's evidence.
3 Trade Marks Regulations 2005, Part 8.
(c) The opponent’s evidence; (d) The applicant’s evidence;
(e) Any further evidence by the opponent which, as I have said, is required to be “strictly in reply”.
[5] It is well established that the onus in such an application lies on the applicant to establish that the use of the opposed mark is unlikely, or will not cause exceptional confusion in terms of s 17(1)(a) of the Trade Marks Act 2002 (the TMA). It is equally well established, however, that there is a preliminary or threshold evidential burden on an opponent to establish that it possesses a reputation in the relevant market. The reason for that threshold is that without such a reputation there can necessarily be no prospect of confusion or deception.
[6] Merial’s opposition to registration of the mark Fiproline was based on all the grounds available under the TMA. But it is the s 17(1)(a) ground (likelihood of confusion and deception) that assumes particular significance in the present application.
[7] In accordance with the procedure outlined above Merial (as the opponent) filed evidence in support of its opposition in December 2010. That evidence consisted of a statutory declaration by Mlle Chacornac (Merial’s legal counsel) in which she expressed her belief that use of the mark Fiproline would be likely to cause confusion or would be deceiving. In support of her belief she referred, in particular, to:
(a) the fact that one of the key ingredients in Frontline was the chemical fipronil and the similarity of the name fipronil and the proposed mark Fiproline;
(b)Frontline’s marketing campaign, which refers to fipronil, the position of Frontline in the market and the fact that the products were likely to be next to each other on the shelf.
[8] Merial also filed evidence from a Mr Lintott (the owner of a veterinary clinic in Hawkes Bay) in which he said, inter alia:
I believe my customers would be confused if the trade mark Fiproline was also used for a flea treatment, because I believe the trade marks Fiproline and Frontline are similar. I say this because they both start with the letter “F”, contain the word “line” and have nine letters in total. ...
I would also expect a flea treatment named Fiproline to contain the ingredient fipronil. This is due to the similarity of the name Fiproline to the generic name fipronil, which is the active ingredient in Frontline.
[9] Both statements of evidence were relatively brief and contained little by way of objective corroboration for the expressions of belief contained in them.
[10] Virbac then filed its evidence in support of its application for registration. That evidence included a statement made by Mr Eric Maree who is Virbac’s CEO. Mr Maree said (inter alia) that:
(a) Virbac has a business presence in New Zealand and has a worldwide reputation for Fiproline;
(b) There was no confusion between the brands Frontline and Fiproline in
France, Germany and the United Kingdom;
(c) Virbac has registrations for Fiproline in a number of countries and has successfully defended oppositions in a number of countries;
(d) The marks are not similar.
[11] It is not, as I understand it, in dispute that Mr Maree’s statements are specifically addressed to the likelihood of deception or confusion and that is plainly so. As will be evident from what I have said above, it was quite clear that that was the key issue to be determined in the application.
[12] Further evidence was then filed on behalf of Merial, purportedly in reply. Central to that evidence was the results of a market survey that had been undertaken by Merial after the filing of the Virbac’s evidence. The object of the survey was to
ascertain the likelihood of consumer confusion caused by the mark Fiproline. Evidence about the survey was given:
(a) by a Mr Wright who:
(i)deposed that his firm had been briefed to do research about customer confusion and brand recognition issues in relation to Frontline and Fiproline;
(ii)outlined the methodology of the survey and the format and questions that were used in the survey; and
(iii) summarised the survey’s findings about the recognition of
Frontline and Fiproline.
(b)by a Professor Thirkell (an expert) who analysed the results of the survey and deposed that:
(i)survey participants had a strong recall of the brand Frontline even though the brand Frontline was not in the list of brands shown to survey participants;
(ii)Fiproline had a much lower recall than Frontline even though Fiproline was in the list of brands shown to survey participants;
(iii) the recall by survey participants of Frontline when considering
Fiproline was relevant to the likelihood of confusion;
(iv)based on the survey results, there was a high risk that consumers would confuse Fiproline and Frontline;
(v)in his opinion Frontline has a high level of recognition and that a significant proportion of pet owners would be confused or deceived by the use of Fiproline.
(c) by Mlle Chacornac (again) who:
(i) referred to the market survey;
(ii)said that Merial had successfully opposed an attempt by a third party to register the mark Fiproline in Argentina and Costa Rica;
(iii)said that Merial takes steps to protect the Frontline mark where it considers there is a risk of deception or confusion;
(iv) said that Fiproline is not well known in New Zealand; and
(v)said that Frontline is well known in New Zealand and again opined that confusion and deception was likely.
[13] Objection was taken on behalf of Virbac to all of this evidence principally on the grounds that it was not evidence “strictly in reply”.4
[14] That objection was upheld by the Assistant Commissioner. She ruled inadmissible all of Professor Thirkell’s and Mr Wright’s evidence and those passages of Mlle Chacornac’s evidence that related to the survey. In doing so she said that:
(a) any evidence purporting to reply to evidence filed by Virbac that was itself in admissible was also inadmissible;
(b)although the survey evidence went to the central issue of the likelihood of deception or confusion, it did not respond to a specific factual matter put in evidence by the respondent;
(c) one of the stated purposes of the survey was to uncover the level of recognition of the trade mark Frontline even although Virbac’s
evidence did not address the awareness issue;
4 There were other aspects of Mlle Charcornac’s reply evidence to which objection was not taken.
(d)the evidence about the position overseas did not relate to the specific countries referred to in Virbac’s evidence.
[15] Those are the rulings now appealed by Merial.
[16] As I have said, an application is also made in the alternative to adduce the evidence excluded by the Assistant Commissioner as fresh evidence in the appeal.
[17] Each will be considered in turn.
Evidence strictly in reply?
[18] Mr Fogarty submitted that the fact that Merial’s reply evidence raised new matters did not mean it was not evidence in reply. He said that it was, in a broader sense, clearly responding to matters raised by Virbac’s evidence and that that sufficed for the purposes of reg 85. He emphasised that the burden of proof lay on the applicant which, he said, suggested that it was up to the applicant to makes it case in the first instance, not the opponent.
[19] Since the hearing before me on 14 November, Kós J has delivered a judgment in the Wellington Registry which deals (in part) with a materially identical issue: The Scotch Whisky Association v The Mill Liquor Save Ltd.5 That judgment was very properly drawn to my attention by counsel for Merial, who understandably (given the outcome) sought to make further submissions in relation to it.
[20] I have carefully read the relevant part of Kós J’s judgment It is quite clear that counsel in that case advanced arguments of precisely the same nature as were advanced fully before me. Both mercifully and happily I am in complete agreement with Kós J’s conclusions. I am able therefore to resolve the issues before me largely by quoting from the most pertinent passages below.
[21] First, Kós J began with the onus of proof. In that respect he said (at [39] and following):
5 The Scotch Whisky Association v The Mill Liquor Save Ltd [2012] NZHC 3205. The judgment also
deals with a substantive appeal from the Assitant Commissioner’s decision.
In Pioneer Hi-Bred Corn Co Ltd v Hy-Line Chicks Pty6 the Court of Appeal made clear that:
(a) The onus throughout is on the applicant to establish that the proposed mark does not offend against s 17 (such onus to be discharged on the balance of probabilities). That is, the onus lies on the applicant to establish the “absence of a likelihood to deceive or cause confusion”.7
(b) Where the alleged deception or confusion relates to the opponent’s mark, the opponent must establish an “awareness, cognisance or knowledge” of that mark in the relevant market, among a “substantial number of persons”. ... 8
[22] Then, at [40] the Kós J addressed the issue that initially caused me to have some sympathy with Merial’s position, namely the relationship between the burden of proof and the order in which evidence is filed. He said:
[40] The primary evidential burden lies throughout on the applicant. The norm in most commercial litigation is that the party bearing the primary onus of proof will file its evidence first, and be able to reply to that filed against it. Norm notwithstanding, the regulations require the s 17 opponent to file evidence first: reg 82. In practice such evidence is not confined to the very limited matters on which the opponent bears the onus. It is normal for detailed evidence in opposition to be given ab initio – i.e. of market deception and confusion. The applicant may file evidence in support of its application within two months of receiving a copy of the evidence of the opponent. Regulation 85 then provides for the filing of evidence strictly in reply from the opponent. ...
(original emphasis)
[23] The learned judge went on:
[42] Regardless of the exact allocation of the onus, the opponent is often in the best position to lead evidence of alleged deception and confusion. In some circumstances it may not need to lead evidence at all. The basis for opposition and non-registration may be self-evident. In most cases evidence will be adduced and the opponent is in the best position to present it. Otherwise applicants have to anticipate the nature of the alleged confusion, in something of a vacuum, without the benefit of seeing the opponent’s substantive evidence. The notice of opposition required by the regulations is not necessarily an articulated account of the complaint.
[43] The applicant does not have a right to file evidence by way of rejoinder after the opponent’s reply evidence. It would not be satisfactory for the applicant to file its evidence of non-confusion, and then be unable to respond to an avalanche of reply evidence which essentially makes out the grounds
6 Pioneer Hi-Bred Corn Co Ltd v Hy-Line Chicks Pty [1978] 2 NZLR 50 (CA).
7 At 61-62 of Pioneer Hi-Bred.
8 NV Sumatra Tobacco Trading Co v British American Tobacco (Brands) Inc [2010] NZCA 29 at [77].
for opposition. That would distort the onus, and give the opponent an unfair advantage. The party bearing the primary evidential onus ordinarily has a right of reply. In this context, it does not. That is why reg 85 is, and must be, restricted to evidence strictly in reply. It is not an opportunity for evidence that could have been adduced at the outset in support of opposition based on s 17(1)(a). That would place the applicant in an invidious position which it cannot fairly be expected to occupy.
[44] Although that requires the party with the least burden to advance its evidence first, which is perhaps not wholly satisfactory, that is what the regulations provide for. They are, as Mr Arthur says, arguably out of step with the disposition of onus. On the other hand, it does give the opponent the benefit of the last word evidentially. That last word is brief and confined. Not an opportunity for loquacity that could have been exercised earlier.
[24] The judge then said that the real test under reg 85 is whether:
(a) The “reply evidence” could have been filed in support of the notice of opposition, pursuant to reg 82; and
(b) the dominant purpose for its being adduced in reply is to support the original notice of opposition, as opposed to responding directly to something said in evidence from the applicant.9
(Original emphasis)
[25] Applying that test to the present case I consider that the Assistant Commissioner was correct in concluding that those parts of Merial’s “reply” evidence summarised above should be excluded. While I accept that the survey evidence did not exist at the time the notice of opposition was filed that was only because Merial did not see fit to commission it at that stage. Merial’s principal reason for adducing it at the reply stage was to support the original notice of opposition, not to respond directly to Virbac’s evidence.
[26] I agree with Mr Marriott that permitting such a course creates the opportunity for opponents in trade mark matters to “game” the system, by keeping their forensic
powder dry until after an applicant has fired its best (and only) evidential shot. It
9 Kós J goes on to note that, while his conclusion arguably differed somewhat from that reached by this Court in Betterware International Ltd v Commissioner of Trade Marks, HC Wellington, CP19/02,
6 May 2002, a wider range of reply evidence was permitted under the predecessor to reg 85. He also said that Betterware turns on its own particular facts and it seemed that, in particular, there had been an apparent misunderstanding at first instance in that case about the nature of the applicant’s evidence.
would, in my view, be fundamentally unfair to allow an opponent to have such a new and substantive “last word”, without the applicant having the opportunity to answer it.10
[27] Lastly, to the extent that issue is taken with the ruling that some of the opponent’s evidence was inadmissible on the grounds that the evidence to which it purported to reply was itself inadmissible, I can see neither error nor unfairness in the Assistant Commissioner’s approach. It was the responsibility of Merial’s legal advisers to make their own judgment about the admissibility of Virbac’s evidence and to decide whether or not a reply was required. To the extent some of that evidence was considered to be inadmissible, they could choose not to reply and object to the evidence. Alternatively they could take a more cautious stance and file a reply regardless. Each approach has its own risks and rewards and having to make decisions based on an assessment such risks and rewards is a commonplace incident of litigation.
Should Merial nonetheless be permitted to adduce the evidence on appeal?
[28] In my view this point can shortly be dealt with. That is because the submission for Merial contains an inherent illogicality which means it cannot succeed. That illogicality is this.
[29] The Assistant Commissioner refused to consider the evidence concerned because she regarded it is in admissible. I have upheld that finding.
[30] Admitting the evidence on appeal on the grounds that it was “fresh” and cogent in terms of rule 20.16 avoids, in a casuistical sense, the basis for the inadmissibility finding (because the evidence would, I suppose, no longer technically
be “reply” evidence). It would mean that the appeal was heard and determined on a
10 Although an applicant may seek to file further evidence under reg 34 he has no right to do so. More specifically, reg 34 states that
The Commissioner must allow the evidence to be filed only if—
(a) the Commissioner considers that there are genuine and exceptional circumstances that justify filing the evidence; or
(b) the evidence could not have been filed earlier.
basis that had been expressly eschewed by the Assistant Commissioner, for reasons that I found to be correct. The paradox in Mr Fogarty’s argument is that it requires rule 20.16 to be applied in a way that means that evidence can be regarded as not being “available” at first instance because it had been ruled inadmissible in that forum.
[31] For the reasons I have given, Merial’s:
(a) appeal against the Assistant Commissioner’s admissibility rulings; and
(b) (alternative) application to adduce further evidence in the appeal - are dismissed.
[32] Costs are reserved.
Rebecca Ellis J
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