Merial v Virbac SA
[2013] NZHC 2773
•22 October 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-485-1388 [2013] NZHC 2773
BETWEEN MERIAL Appellant
ANDVIRBAC SA Respondent
Hearing: 6 June 2013
Appearances: K McLeod and J D Miles for the Appellant
D Marriott and H Cumming for the Respondent
Judgment: 22 October 2013
JUDGMENT OF MALLON J
Introduction
[1] The appellant (“Merial”) sells products for the prevention of fleas and ticks in cats and dogs under the registered trademark FRONTLINE. A competing product in overseas markets is sold under the trademark FIPROLINE. Both the FRONTLINE and FIPROLINE products contain the active ingredient fipronil. The respondent (“Virbac”) applied to register the trademark FIPROLINE in New Zealand. Merial unsuccessfully opposed Virbac’s application.1 It now appeals from the Assistant
Commissioner’s decision which allowed Virbac’s registration of FIPROLINE.2
[2] Although the opposition relied on wider grounds, the parties are agreed that
Merial’s opposition stands or falls on s 17 of the Trade Marks Act 2002. There are
two issues on this appeal:
1 Virbac S A v Merial [2012] NZIPOTM 16.
2 The approach on appeal is that set out in Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [3] and [5]: the High Court is to come to its own view on the merits with the weight given to the decision of the Assistant Commissioner being a matter of judgement.
MERIAL v VIRBAC SA [2013] NZHC 2773 [22 October 2013]
(a) whether the Assistant Commissioner erred in permitting registration of FIPROLINE where the specification is not confined to products containing fipronil;
(b)whether the Assistant Commissioner erred in finding that use of the FIPROLINE mark was not liable to confuse or deceive the relevant market in relation to FRONTLINE.
The background
[3] Merial is an animal healthcare company. It operates in more than 150 countries, including New Zealand. Its customers include veterinarians (“vets”), pet owners, farmers and food animal producers. It has a range of products for the heath, well-being and performance of animals. Those products include FRONTLINE.
[4] FRONTLINE was first launched in 1994. It has significant worldwide sales, for example exceeding US$980,000,000 in 2009 and US$866,000,000 for the period January to September in 2010. In New Zealand Merial sells two FRONTLINE products: FRONTLINE PLUS (New Zealand’s number one flea and tick treatment) and FRONTLINE Spray. Estimated sales of FRONTLINE products in New Zealand exceeded $5 million per year between 2006 and 2010. The products are advertised via television, radio, print media and point of sale promotional materials.
[5] Merial has a large number of registrations around the world with the word
FRONTLINE. In New Zealand it has four registrations: FRONTLINE (10 June
1994); FRONTLINE PLUS (24 July 2002); FRONTLINE ORIGINAL (31 March
2010); and FRONTLINE REGULAR (31 March 2010). All of these registrations are in class 5 for “[p]roducts for veterinary use including anthelmintics, insecticides and anti-parasitic agents” or “[v]eterinary preparations, including insecticides and anti- parasitic preparations”.
[6] In New Zealand FRONTLINE is sold exclusively through veterinary clinics or vet-associated companies. Competing products in New Zealand are sold under the brand names “Revolution”, “Advocate”, “Fiprovet”, “Comfortis”, “Capstar”, “Program” and “Prac tick”.
[7] Virbac provides products and services in animal health and operates in over
100 countries, including New Zealand. It is the eighth largest veterinarian pharmaceutical group worldwide and has been operating for over 40 years. Its products include FIPROLINE (the name being derived from the active ingredient fipronil and the concept of a product or line). Virbac’s evidence is that it commenced selling its product under the FIPROLINE mark in 2008 (Germany and France) and in 2010 (United Kingdom).3 Worldwide sales for FIPROLINE in 2009 were approximately US$2,760,000 and were a similar level in 2010.
[8] Virbac has registered its trade mark FIPROLINE in a number of countries. In some other countries Virbac’s applications for registration of its marks, which Merial oppose, have not yet been determined. There are three countries where FIPROLINE and FRONTLINE are both registered: United Kingdom, France and Germany. Merial says that in these three countries it was not aware of the applications and, if it
had been aware, it would have opposed them.4
[9] In the United Kingdom FIPROLINE is sold by a large pet store chain via the internet. It is also sold alongside FRONTLINE in chemists and supermarkets. In France FIPROLINE sells alongside FRONTLINE in chemists and supermarkets. In Germany FIPROLINE is sold on the internet and also in chemists and supermarkets alongside FRONTLINE. Virbac’s evidence is that customers in these countries have not been confused. Merial refers to an instance where a distributor in France sent a purchase order to Merial for FIPROLINE products. There was other evidence submitted by Merial (including of a survey it had commissioned). However this was
ruled inadmissible as being evidence not strictly in reply to Virbac’s evidence.5
[10] On 1 April 2010 Virbac filed a trade mark application for FIPROLINE in
class 5 covering “veterinary preparations, particularly an anti-parasitic preparation
for external use”. Merial opposed the application because it considers that use of
3 Although Ms Chacornac (who provided evidence for Merial) and the Assistant Commissioner said that the FIPROLINE mark only launched in France in May 2009.
4 Merial also says that in France and Germany the respective trade mark offices do not examine on relative grounds and that therefore the FRONTLINE mark was not cited against the FIPROLINE applications.
5 Merial appealed the ruling that the survey evidence was inadmissible. The appeal was dismissed: Merial v Virbac S A [2012] NZHC 3392.
FIPROLINE as an anti-parasitic treatment for cats and dogs will confuse or deceive consumers into thinking that the goods are connected with FRONTLINE.
[11] In support of this view, Merial filed evidence from four veterinary practices. Each of them gave evidence that:
(a) they sell FRONTLINE as well as some of the competing products;
(b)FRONTLINE is purchased by their customers either through a recommendation from a vet or from a customer selecting FRONTLINE from the products displayed behind the counter in the reception area;
(c) customers “sometimes” or “often” request flea treatments by brand
name;
(d) there is a “lot of”, or a “high” or “strong” level of, awareness of the
FRONTLINE brand amongst the public;
(e) they trust the efficacy of FRONTLINE and their clients do as well (because they continue to purchase FRONTLINE and remain loyal to it);
(f) they would expect FIPROLINE to contain fipronil as the active ingredient and would find it misleading if it did not.
The test
[12] Section 17(1)(a) of the Act provides that the “Commissioner must not register as a trade mark or part of a trade mark any matter ... the use of which would be likely to deceive or cause confusion.”
[13] Deception or confusion under this section may arise in two ways:6
6 Paul Sumpter Trade Marks in Practice (2nd ed, LexisNexis, Wellington, 2011) at 28 cited in The
Scotch Whisky Association v The Mill Liquor Save Ltd [2012] NZHC 3205 at [53].
(a) deception or confusion caused by something intrinsic to the mark (eg. the suggestion that the goods or services have specific characteristics);
(b) deception or confusion with marks belonging to another party.
[14] It is for the court to determine the likelihood of deception or confusion. “Deceived” is equivalent to being misled whereas “confused” is equivalent to being caused to wonder.7 It is necessary to identify the market in which the goods (or services) with the mark will be purchased. Deception or confusion must be likely amongst a substantial number of persons in that market.8 The court is to consider how the words look and sound, the goods to which the marks will be applied, the kind of customer likely to buy the goods, and the surrounding circumstances when the mark(s) are used in the normal way.9
[15] Where the issue is whether deception or confusion is likely in relation to marks belonging to another party, that party must establish a reputation in New Zealand in that market.10 The comparison is between the opponent’s actual use of the mark and any fair use of the applicant’s mark (sometimes called the notional fair use).11 Allowing for the possibility that the goods with those marks will often not be placed side by side, allowance is to be made for imperfect recollection.12
The Tribunal’s decision
The relevant market
[16] The Assistant Commissioner found that the relevant market comprises:13
7 Pioneer Hi-Bred Corn Company v Hy-Line Chicks Pty Ltd [1978] 2 NZLR 50 (CA) at 61 per
Richardson J.
8 At 61-62 per Richardson J.
9 New Zealand Breweries Ltd v Heineken’s Bier Browerij Maatschappij N V [1964] NZLR 115 (SC) at 139. See also Anheuser-Busch Inc v Budweiser Budvar National Corporation [2003] 1
NZLR 472 (CA) at [75] where the test is put this way: “It is necessary to consider how the trade
marks will be regarded and how they will be pronounced and heard by those to whom they will
be presented to in the course of trade”.
10 Pioneer Hi-Bred Corn Company v Hy-Line Chicks Pty Ltd, above n 7, at 62.
11 Anheuser-Busch Inc v Budweiser Budvar National Corporation, above n 9, at [30] cited in TKS SA v Swatch AG (Swatch SA) (Swatch Ltd) [2012] NZHC 2642 at [37].
12 De Cordova v Vick Chemical Co (1951) 63 RPC 103 (PC) at 106.
13 Virbac S A v Merial, above n 1, at [38].
(a) those who sell flea treatments (eg veterinary practices); and
(b)those who purchase flea treatments (ie members of the general public that care for cats and dogs).
[17] As to the characteristics of those in that market, the Assistant Commissioner considered that they would be “discerning and cautious, and may obtain advice from a veterinarian before purchasing these preparations.”14 The Assistant Commissioner also considered that those in the market were likely to be “well informed” noting that the FRONTLINE products are distributed exclusively through veterinary clinics or vet associated companies.15
Awareness of the mark
[18] The Assistant Commissioner found that Merial established that in the relevant market:16
(a) its marks for FRONTLINE and FRONTLINE PLUS are likely to have been well known in relation to flea treatment products for cats and dogs;
(b)there is likely to have been an awareness of fipronil because it is shown as one of the main active ingredients in Merial’s packaging for FRONTLINE.
Comparison of the mark
[19] The Assistant Commissioner said her impression of the totality of FRONTLINE, fipronil and FIPROLINE was that they are “visually, aurally, and conceptually dissimilar”.17 She referred to the dictionary definitions of “frontline”
as “foremost, leading; prominent”.18 She said that it might be perceived as the
“foremost line” in a battle or defence in fighting fleas and that it might be perceived
14 At [38].
15 At [63].
16 At [42].
17 At [46].
18 At [47].
as the “frontline” flea treatment for cats and dogs because it is so well known in the
market.19
[20] The Assistant Commissioner said that FIPROLINE was an invented word. She considered that it was unclear the extent to which the relevant market would perceive the opposed mark as consisting of the combination of “fipro” and “line” or whether they would simply see the mark as a whole without any such division.20
She said that, even if FIPROLINE were perceived as alluding to fipronil and a product (line), then FRONTLINE and FIPROLINE are “conceptually distinct because FRONTLINE does not have either of those meanings.”21 The Assistant Commissioner said that it did not matter whether “line” in FIPROLINE was pronounced as “line or lean” because the “front” in FRONTLINE was aurally distinct and memorable.22
[21] The Assistant Commissioner referred to the evidence that FIPROLINE and FRONTLINE are sold together in chemists and supermarkets in the United Kingdom, France and Germany without confusion arising.23 She said she was not placing any weight on that evidence because she did not have evidence as to whether those markets were similar to here and because FIPROLINE products were launched only at the end of May 2009 in France.24 She also did not place any weight on the one error made by a distributor because this may have arisen from a clerical error.25
[22] On the issue of whether the specification for FIPROLINE should be limited to preparations containing fipronil, the Assistant Commissioner said:26
Fipronil and the opposed mark start with the same first and second syllables. However, in terms of the assessment of the marks as a whole, I consider that Fipronil and the opposed mark are visually and aurally dissimilar. Some persons in the relevant market, in particular, veterinarians, may be aware that Fipronil is an active ingredient in insecticides. Apart from that, I consider that both marks will be perceived as invented words with no obvious meaning. However, I consider that it is unlikely that the marks will be
19 At [49].
20 At [51]-[52].
21 At [52].
22 At [53].
23 At [60].
24 At [61].
25 At [62].
26 At [54] (footnotes omitted).
perceived as being conceptually similar because the marks, when considered as a whole, are visually and aurally dissimilar. I also find that there is no evidence before me that “Fipro” is the known abbreviation of Fipronil and/or that “Fipro” is common to the veterinary preparations trade. Therefore, the specification of goods for the opposed mark need not be limited to veterinary preparations containing fipronil simply because FIPROLINE includes “fipro” at the beginning of it. This approach also appears to be consistent with the specification of goods for FIPROVET set out in the attached Schedule 3, which contains fipronil too.
[23] The Assistant Commissioner concluded that the use of FIPROLINE was not likely to deceive or confuse in the relevant market because:27
(a) FIPROLINE and fipronil are visually, aurally, and conceptually dissimilar; and
(b)FIPROLINE and FRONTLINE are visually, aurally, and conceptually dissimilar.
Confusion in relation to fipronil?
[24] There are two procedural matters and one substantive matter raised under this head. The first procedural matter is raised by Merial. Merial refers to its amended notice of opposition where it alleged that “FIPROLINE is confusingly similar to the commonly used chemical name FIPRONIL, but the Alleged Trade Mark as filed is not limited to goods that contain FIPRONIL”. Virbac did not plead to this allegation by filing an amended counter statement. Merial says that this means there is a deemed admission.
[25] I do not accept this submission because:
(a) Virbac’s counter statement made specific admissions in relation to three paragraphs only. Although it also referred to particular paragraphs that were denied or of which Virbac had insufficient knowledge, this was also its position in relation to “[t]he statements
contained under 1 and 6 generally”;28
27 At [63].
28 The allegation that FIPROLINE was confusingly similar to fipronil was at paragraphs 1.8 to
1.10 of the amended notice of opposition.
(b)the position is distinguishable from VB Distributors Ltd v Matsushita Electric Industrial Co Ltd.29 In that case the counter statement accepted that Matsushita had a worldwide reputation in “Panasonic”, including in New Zealand. VB sought to resile from that at the hearing. It was not permitted to do so because Matsushita could have provided evidence of its reputation in New Zealand if that issue was
to be taken. In the present case there was an omission to plead to specific paragraphs on whether FIPROLINE without fipronil would be confusing, rather than an admission;
(c) it seems that Merial did not proceed on the basis that there was an admission. That is because there is nothing to indicate that this pleading point was raised at the first instance hearing. Counsel could not say whether it was and the Assistant Commissioner makes no comment upon it. The Assistant Commissioner proceeded to deal with the substantive issue of whether there was likely to be confusion
in the relevant market if FIPROLINE did not contain fipronil.30
[26] The second procedural issue is raised by Virbac. It says that the notice of appeal refers only to whether FIPROLINE is confusingly similar in relation to FRONTLINE. It does not refer to whether, if a product which did not contain fipronil was sold under the FIPROLINE mark, that would be likely to cause confusion. However Virbac accepts that it is not prejudiced by this. Accordingly I proceed to consider the substantive issue.
[27] As to the substantive issue, both parties accept that it is relevant to consider the characteristics of those in the relevant market. There is no challenge to the Assistant Commissioner’s view that vets will be discerning or cautious. However
Merial does not accept the Assistant Commissioner was correct to find that the
29 VB Distributors Ltd v Matsushita Electric Industrial Co Ltd (1999) 9 TCLR 349 (HC) at [43].
30 Virbac says that it appears that at the hearing before the Assistant Commissioner it may have been contended that Merial had acquired a trade mark interest in fipronil and that it would be confusing or deceptive for Virbac to use a mark that was similar to fipronil. It is not clear that this was the case. But, be that as it may, the Assistant Commissioner considered whether FIPROLINE was confusingly similar to fipronil. That is the issue on this ground of appeal (irrespective of whether Merial can claim any interest in fipronil).
purchasing public would be “discerning and cautious”. Merial says that there was no evidence that this would be so. Merial says that those who own cats and dogs and buy flea treatment for them will cover a wide range of people, some of whom will be cautious and some of whom will not.
[28] Virbac notes that there was no appeal ground in respect of the Assistant Commissioner’s finding on this point. However, as above, Virbac does not claim prejudice from this lack of specificity in the notice of appeal. Virbac accepts that the purchasing public will cover a range of people, some of whom just want a flea treatment and do not care what it is and some of whom may source the flea treatment by brand name.
[29] The basis on which the Assistant Commissioner considered that the purchasing public would be discerning, cautious and well informed is unclear. The Assistant Commissioner appears to have found it significant that FRONTLINE was sold through veterinary practices. But that alone would not mean the purchasers of FRONTLINE or FIPROLINE would have these characteristics. The evidence from the vets did not go that far. While the vets said in evidence that customers often select flea treatment by brand name or seek advice from a vet, they did not say that was the universal position. I agree that the purchasing public, being those who care for cats or dogs and seek flea treatment for them, will cover a wide range. Some will be cautious and discerning, others will not. Efficacy of the treatment is likely to be important for some. For others, price may also be important.
[30] The more important question under this part of the appeal is whether the relevant market will be aware that fipronil is an active ingredient in flea treatment. As to that, Virbac distinguishes between the purchasing public and vets. It says:
(a) there is no evidence that the purchasing public select flea treatment on the basis of whether they have fipronil as the active ingredient, nor that they would expect any product with the name “fipro” to contain fipronil;
(b)the vets do not say why they would be confused by a product with the name “fipro” which does not contain fipronil when they could be expected to take care to identify the ingredients. Virbac also notes that the vets do not say whether they would be confused if Fiprovet (which has the same specification as FIPROLINE) would be misleading.
[31] The Assistant Commissioner accepted that there was likely to be an awareness of fipronil because it was shown as an active ingredient on the front of Merial’s packaging.31 That finding was not specifically confined to vets. Nor should it be where the active ingredient is highlighted on the packaging under the FRONTLINE brand name. Given that, at least amongst those who have purchased FRONTLINE, in my view it is likely that they will expect a competing flea treatment sold under the name FIPROLINE to contain fipronil. I say that because “FIPRO” is an unusual and distinctive sound - it would therefore seem to be an unlikely
coincidence if FIPROLINE (used for flea treatment of cats and dogs) did not contain fipronil (known to be an active ingredient in another flea treatment for cats and dogs sold under the name FRONTLINE).
[32] It follows that I disagree with the Assistant Commissioner as to whether FIPROLINE and fipronil are visually, aurally and conceptually similar. The two words are so similar in their look (common letters, similarly arranged and in a word of similar length) and sound (same beginning, similar letters at the end and similar length) that it would be odd if they were not related. Indeed, in hearing the appeal and writing this judgment, some effort was required on my part to recall which word was the brand name and which word was the active ingredient. It was no surprise to learn from the evidence that the name FIPROLINE was derived from the name of its active ingredient.
[33] Therefore, in my view, any person who knows that fipronil is an active ingredient in flea treatments is likely to think that FIPROLINE contains fipronil. The evidence from the vets supports this view. They say that they would be
confused if FIPROLINE did not. As Virbac says, the vets do not say why they
31 Actual use of the existing registered mark (here FRONTLINE) is relevant.
would be confused when they might be expected to check the ingredients before recommending/selling the product.32 I agree that, as professionals in animal care, it is likely that they would, at least before first recommending that particular treatment. It is less clear whether they would continue to check the active ingredients for subsequent recommendations.
[34] More significantly, not all those purchasing FIPROLINE will seek advice from vets. A significant number may not. It is not clear that FIPROLINE will be sold through veterinary practices or elsewhere. Even if sold through veterinary practices, many may select FIPROLINE by name without advice, thinking it to contain fipronil and having found that active ingredient to be effective in the past.
[35] I conclude that if the mark FIPROLINE is used to sell products that do not contain fipronil that is likely to cause confusion in the relevant market amongst a substantial number. I consider that, if the registration is to be maintained (which depends on the next ground of appeal), the specification should be narrowed to include the words “that include fipronil as an ingredient”. I acknowledge that the mark FIPROVET is not so limited. However this appeal is concerned with whether use of the mark FIPROLINE is likely to deceive or confuse, not whether other marks are likely to deceive or confuse.
Confusion in relation to FRONTLINE?
[36] The parties are agreed that under this ground of appeal the question is whether the marks FRONTLINE and FIPROLINE are sufficiently similar that confusion in the relevant market is likely. Important in this is the overall impression of those marks.33
[37] Virbac supports the reasons of the Assistant Commissioner in finding that they are not. It submits that the look and sound of the marks is different – they share
only a common first letter and the suffix “line”. It says that the suffix is not in any
32 I do not have evidence of whether there is a legal requirement that flea treatments specify their active ingredients. I expect they do and have proceeded on that basis.
33 I agree with the Assistant Commissioner that the evidence from Virbac as to the absence of confusion in France, Germany or United Kingdom should not be given any weight. The products had not been sold for a long period in those countries. Moreover Virbac asserted that there had been no confusion but how it formed that view is not detailed.
way dominant in the word. It says that in a discerning and cautious market purchasers will differentiate between these words. It also refers to the different idea behind the marks, FRONTLINE being an ordinary word with laudatory connotations and FIPROLINE being an invented word evocative of its active ingredients.
[38] Merial submits that the marks are similar in look and sound – they share a common first letter and suffix, and they are of similar length. It says that there is a prospect that purchasers will mumble or mispronounce FRONTLINE and be given FIPROLINE. Or, on seeing FIPROLINE displayed, there is a prospect that purchasers will imperfectly recall that the product they last used was FRONTLINE and they will then purchase FIPROLINE thinking it to be FRONTLINE. It also says that if FIPROLINE is sold in supermarkets, there is a prospect that purchasers will wonder whether FIPROLINE is a sub-brand or budget line of FRONTLINE.
[39] I am not persuaded that the marks are visually and aurally different. The “F” at the beginning, the “line” at the end and their similar length provide quite strong similarities in my view. Although they are conceptually different, the actual use of FRONTLINE includes reference to fipronil and there is an awareness of that. Allowing for imperfect recollection and the competing products not necessarily being sold side by side, the purchasing public may think that FIPROLINE (which contains the active ingredient fipronil) is, or is associated with, FRONTLINE (which contains the active ingredient fipronil).
[40] The similarities are such that in my view confusion is only likely not to occur if those in the market are discerning, cautious and well informed. As discussed above, in my view the evidence did not support that was the universal position. Vets and many purchasers may have those characteristics. But given the wide range of people who care for cats and dogs, many may not have those characteristics. The attention given to the name of a flea treatment used by those people is unlikely to be
similar to, for example, members of the public purchasing televisions.34 Virbac had
the onus of establishing that use of FIPROLINE was unlikely to deceive or
34 Compare the finding in VB Distributors Ltd v Matsushita Electric Industrial Co Ltd, above n 29, relied on by Virbac where (at [62]) televisions were noted to be “big ticket” items, typically purchased on a one-off basis with consumers taking a close interest.
mislead.35 In my view the Assistant Commissioner erred in finding that it discharged its onus.
Result
[41] The appeal is allowed. The trade mark registration 821899 FIPROLINE is to be removed from the register. Costs should follow the event. Category 2B is appropriate.
Mallon J
35 New Zealand Breweries Ltd v Heineken’s Bier Browerij Maatschappij N V, above n 9, at 138.
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