Metalman New Zealand Ltd v Scrapman BOP Ltd
[2014] NZHC 2028
•26 August 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-1032 [2014] NZHC 2028
BETWEEN METALMAN NEW ZEALAND
LIMITED Appellant
AND
SCRAPMAN BOP LIMITED Respondent
Hearing: 20 August 2014 Appearances:
K W McLeod for Appellant
B Cain and I Finch for RespondentJudgment:
26 August 2014
JUDGMENT OF LANG J
[on appeal against revocation of trade mark]
This judgment was delivered by me on 26 August 2014 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
METALMAN NEW ZEALAND LTD v SCRAPMAN BOP LTD [2014] NZHC 2028 [26 August 2014]
[1] This appeal arises out of a dispute between two scrap metal dealers regarding the following trade mark:
[2] Metalman New Zealand Ltd (“Metalman”) is the current registered owner of the trade mark in question. Metalman acquired the trade mark from the original owner, a company called D & R Trucking Limited (“D & R Trucking”), by way of assignment on 7 December 2012. D & R Trucking had been the registered owner of the trade mark since 28 July 2008.
[3] Scrapman BOP Limited (“Scrapman”) applied to the Commissioner of Trade Marks for revocation of the trade mark on the basis that the owner of the trade mark had failed to use it during the three year period prior to its application. Scrapman also applied for an order declaring the registration of the trade mark invalid.
[4] In a comprehensive decision delivered on 3 April 2014, Assistant
Commissioner Glover granted the application to revoke the trade mark on the ground
of lack of use.1 She dismissed Scrapman’s application to have the trade mark registration declared invalid.
[5] Metalman appeals to this Court against the Assistant Commissioner’s decision to revoke the trade mark on the ground of lack of use. Scrapman has not filed a cross-appeal in respect of to the Assistant Commissioner’s decision to dismiss its application to have the trade mark declared invalid.
[6] Metalman also sought to appeal against one of the factual findings that the Assistant Commissioner made in reaching her decision. During the hearing before me, counsel for Metalman abandoned that ground of appeal. The appeal is therefore concerned solely with the Assistant Commissioner’s decision to revoke the trademark on the ground of non-use.
Appellate approach
[7] There is no dispute regarding the approach the Court is required to take in relation to the present appeal. The appeal proceeds by way of re-hearing on the basis of the record before the Assistant Commissioner,2 and the Court has all the powers of
the Commissioner.3 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.4
Relevant principles: issue
[8] Scrapman based its application on s 66(1)(a) of the Trade Marks Act 2002
(“the Act”), which provides as follows:
66 Grounds for revoking registration of trade mark
(1) The registration of a trade mark may be revoked on any of the following grounds:
1 Metalman New Zealand Limited v Scrapman BOP Limited [2014] NZIPOTM 17.
2 Trade Marks Act 2002, s 172(2).
3 High Court Rules, r 20.19 and Trade Marks Act 2002, s 173(b).
4 Austin Nicols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at 146 to
147.
(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.
…
[9] As Brown J recently observed in Tasman Insulation New Zealand Ltd v Knauf Insulation Ltd, the philosophy underpinning the Act is one of “use it or lose it”.5 Once an application for revocation of a trade mark for non-use under s 66(1)(a) has been filed, the owner of the trade mark is required to provide proof that the trade mark in question was used during the three year period ending one month before the application was filed.6
[10] There is no dispute that the relevant period for the purposes of s 66(1)(a) in the present case was that between 20 November 2009 and 20 November 2012. D & R Trucking was the owner of the trade mark throughout this period. Metalman therefore needed to prove that D & R Trucking made genuine use of the trade mark in the course of trade in New Zealand in relation to the services in respect of which it was registered during that period.
[11] Metalman has always accepted that it can only point to one instance in which
D & R Trucking put the trade mark to use during the period between 20 November
2009 and 20 November 2012. This occurred on 11 March 2011, when D & R Trucking published the trade mark as an advertisement in the Waitaki Herald newspaper. This followed an earlier publication of the same advertisement in the Waitaki Herald on 21 May 2008, well before the trade mark was registered. As its name suggests, the Waitaki Herald is a local newspaper circulating in the Oamaru
area where D & R Trucking operated its business.
5 Tasman Insulation New Zealand ltd v Knauf Insulation Ltd [2014] NZHC 960 at [72].
6 Trade Marks Act 2002, ss 66(1A) and 67(a).
[12] The issue the Assistant Commissioner was required to determine was whether the publishing of a single advertisement amounted to genuine use of the trade mark in terms of s 66(1)(a). That is also the sole issue on appeal.
[13] The meaning to be given to the term “genuine use” is obviously central to the determination of this issue. In the related field of patent law, the Court of Appeal has observed that the courts of New Zealand are operating in an international environment where consistency of approach is important. For that reason the courts in this country should be “wary of indigenous common law developments unless they are clearly required”.7
[14] Both counsel agree that an important authority in this area of the law is the ruling of the European Court of Justice in Ansul BV v Ajax Brandbeveiliging BV.8
The following principles can be distilled from Ansul:
(a) “Genuine use” should be understood to denote use that is not merely token, serving solely to preserve the rights conferred by the mark. Such use must be consistent with the essential function of a trade mark, which is to guarantee the identity of the origin of goods or services to the consumer or end user by enabling him, without any possibility of confusion, to distinguish the product or service from others which have
another origin.9
(b)“Genuine use” of the mark entails use of the mark on the market for the goods or services protected by that mark and not just internal use by the undertaking concerned. The protection the mark confers and the consequences of registering it in terms of enforceability vis-à-vis third parties cannot continue to operate if the mark loses its commercial raison d’etre, which is to create or preserve an outlet for the goods or services that bears the sign of which it is composed, as distinct from the goods or services of other undertakings. Use of the mark therefore has to relate to goods or services already marketed or about to be marketed and for which preparations by the undertaking to secure customers were under way, particularly in the form of advertising campaigns. Such use can be either by the trade mark proprietor or by a third party with authority
to use the mark.10
7 Smith Kline & French Laboratories Ltd v Attorney-General [1991] 2 NZLR 560 (CA) at 563.
8 Case C-40/01 Ansul BV v Ajax Brandbeveiliging BV [2003] ECR I-2439.
9 At [36].
10 At [37].
(c) When assessing whether there has been genuine use of the trade mark, regard must be had to all the facts and circumstances relevant to establishing whether the commercial exploitation of the mark is real. This may involve consideration of whether the use in question is warranted in the economic sector concerned to maintain or create a share in the market for the goods or services protected by the mark.11
(d)Assessing the circumstances of the case can include giving consideration to the nature of the goods or service at issue, the characteristics of the market concerned and the scale and frequency of use of the mark. Use of the mark does not always have to be quantitatively significant for it to be deemed genuine, as that depends on the characteristics and market of
the goods or service in question.12
[15] The principles identified in Ansul have been applied in numerous cases in the United Kingdom,13 and also recently by this Court in Tasman Insulation New Zealand Ltd v Knauf Insulation Ltd.14
[16] As the English Court of Appeal explained in La Mer Technology Inc v Laboratoires Goemar SA,15 however, the rulings of the European Court of Justice need to be considered in a wider context. They are not the same as the judgments of national courts that decide cases from which it is possible to discern a ratio. Rather, the Court’s rulings contribute to a body of jurisprudence relating to the interpretation of European Community legislation. This process differs from the common law method of building up a body of case law from binding precedents. The Court does not decide the cases coming before it. Rather, “its judgments are part of a continuing conversation between the Court of Justice and national courts”, in which the legal
learning generated by the process “flows…from the Court of Justice into the national courts of Member States”.16 For that reason the judgments of the Court of Justice should not be read or applied too literally. They are, nevertheless, persuasive
authorities.
11 At [38] and [43].
12 At [39].
13 See for example, La Mer Technology Inc v Laboratoires Goemar SA [2005] EWCA Civ 978, [2006] FSR 5 and Healey Sports Cars Switzerland Limited v Jensen Cars Limited [2014] EWHC
24 (Pat).
14 Tasman Insulation New Zealand Ltd v Knauf Insulation Ltd, above n 5 at [75].
15 La Mer Technology Inc v Laboratoires Goemar SA, above n 13 at 17.
16 At 17.
The Assistant Commissioner’s decision
[17] The Assistant Commissioner observed that there is no de minimis rule regarding the amount of use of a trade mark as long as the use is genuine. She then set out the principles from Ansul summarised above, and also referred to the cases of NODOZ Trade Mark17 and Royal New Zealand Yacht Squadron v Daks Simpson Group Plc.18 She then said:
75. Counsel for the owner submits that the single advertisement on 11
March 2011 must constitute “genuine use” of the relevant mark, because there is no reason to suggest that it was anything other than genuine. The current dispute between the parties to this case had not yet arisen, and so D
& R Trucking Limited could not have been influenced by those circumstances.
76. However, I do not consider that the evidence provided by the owner is sufficient to discharge the onus it bears to demonstrate genuine use of the mark. I agree with the submission made by counsel for the applicant that there is very little information about this advertisement and the context in which it was placed. We do not know, for example, the circulation or readership of the relevant newspaper, whether it was distributed free of charge, whether it was published weekly or monthly, or anything else. The only thing we know about this advertisement is that it was printed on a page.
77. Further, there is no evidence at all regarding the circumstances in which the single advertisement was placed. No reasons are given for the fact that only one advertisement appeared during the entire three-year period.
78. There is no evidence that the specified services (namely, recycling of metals, scrap) were ever actually provided under the relevant mark. There are no statements from customers, and no invoices or other trading records. While I accept that preparatory use of the mark, such as advertising campaigns without evidence of actual sales, can be sufficient to establish “genuine use” in certain circumstances, the difficulty in this case is the lack of evidence on which I can assess whether the use of the mark was “token”, whether it constituted real commercial exploitation of the mark, and whether the use of the mark was viewed as maintaining or creating a share in the market for services protected by the mark.
79. Accordingly, I find that the owner has not discharged the onus it bears to show that there was a genuine use of the mark during the relevant period.
The arguments
Scrapman
[18] Counsel for Scrapman defended the Assistant Commissioner’s decision by relying upon essentially upon the same reasoning. In particular, he argued that the Assistant Commissioner was correct to find that Metalman had adduced insufficient evidence to enable her to conclude that the use of the trade mark in an advertisement on one occasion was sufficient to amount to genuine use. There was no evidence as to the level of circulation of the newspaper in which the advertisement had been placed, or how many people may have read it. Metalman had also failed to explain why, if D & R Trucking was genuinely committed to use of the trade mark, it had only used it in an advertisement on one occasion. It had also failed to provide any explanation as to why D & R Trucking had apparently not used the trade mark in signage on items such as vehicles, buildings, uniforms and stationery. He contended that all of these factors suggested that D & R Trucking had no genuine commitment to use of the trade mark as a badge of origin for its business, and that it should no longer be permitted to retain it.
[19] Counsel for Scrapman did not suggest that D & R Trucking placed the advertisement in the Waitaki Herald for the sole purpose of protecting the trade mark from an application for revocation on the grounds of non-use. That would clearly amount to “token” use of the mark, “serving solely to preserve the rights conferred by the mark”.19 Scrapman’s concession on this point is appropriate given the fact that the advertisement appeared well before the present dispute arose.
[20] Counsel for Scrapman pointed out, however, that the European Court of Justice observed in Ansul that the use of the trade mark must be consistent with the essential function of a trade mark. This is “to guarantee the identity of the origin of goods or services to the consumer or end user by enabling him, without any possibility of confusion, to distinguish the product or service from others which have
another origin”.20 He argued that the placing of a single advertisement during a three
year period constituted token use of the mark.
Metalman
[21] Counsel for Metalman submitted that the Assistant Commissioner had erred by placing too much weight on the fact that the advertisement had only been published on one occasion. He pointed out that the issue of whether or not a trade mark has been put to genuine use is a matter of qualitative rather than quantitative judgment. This is reflected in the fact that, as Ansul confirms, a trade mark will not be revoked merely because the owner has made minimal use of it. The essential issue, he argued, was whether the owner had used the trade mark in a manner showing genuine commitment to it as a badge of origin for the goods or services in respect of which it had been registered. In terms of the principles identified in Ansul, this requires the Court to take into account all of the surrounding circumstances.
[22] Counsel for Metalman pointed out that the first publication of the advertisement that subsequently constituted the trade mark occurred well before the trade mark was registered. He said that this demonstrated the owner’s initial commitment to its use. The subsequent publication on 11 March 2011 was well before the dispute between the parties to this proceeding began. This, too, suggested that the owner of the trade mark published the advertisement in order to promote the trade mark, and thereby its business, to the world at large.
[23] Furthermore, he pointed out that the format of the trade mark demonstrates that it is designed primarily for use as an advertisement for the owner’s business. This is shown by inclusion of the phrases “Call the Scrapman today”, “We will pick up 7 days – from anywhere” and “Phone Ron on 027 644 0464 or Debbie on 434
1546 to arrange pickup”. The format of the trade mark was such that, whilst it was entirely suitable for use as a newspaper advertisement, it was not particularly apt for use as insignia on items such as office stationery and uniforms.
[24] Finally, counsel for Metalman submitted that the placement of the advertisement in the business pages of a local newspaper circulating in the locality of the owner’s business was entirely appropriate. That fact, too, showed that the owner of the trade mark was using it in a genuine manner.
Decision
[25] Although Scrapman did not suggest the Waitaki Herald advertisement was placed for the sole purpose of protecting the trade mark from this sort of application, to a large extent the argument for Scrapman is nonetheless based on the proposition that the use of the trade mark in a single advertisement amounted to “token use” of the trade mark that is insufficient to qualify as genuine use for the purposes of s
66(1)(a) of the Act. It is therefore necessary to consider what the term “token use”
means in this context.
[26] As I have already recorded, the European Court of Justice in Ansul
approached the phrase in this way:21
“Genuine use” must therefore be understood to denote use that is not merely token, serving solely to protect the rights conferred by the mark.
(emphasis added)
[27] This is obviously a very narrow interpretation of the term “token”. Applied to the circumstances of the present case, the use of the advertisement would clearly not be token given the concession made by counsel for Scrapman.
[28] The English Court of Appeal took the same approach to the word “token” in La Mer Technology Inc, although it emphasised that a use may not be genuine even where it cannot be regarded as token in the sense that word is used in Ansul. The Court observed:22
Token use
Token use of a mark does not count as genuine use. Contrary to the tenor of some of his excellent submissions Mr James Mellor, appearing on behalf of La Mer, has never contended that this was a case of token use by Goëmar, “serving solely to preserve the rights conferred by the mark.”
Although token use of a mark is obviously not genuine use, it would be illogical to assert that every case of non-token use qualifies as genuine use. Ansul and the reasoned order in this case are clear that, even if the use is not token, it is still necessary to consider other factors in order to decide whether or not the use of the mark is genuine. For example, internal use by the
21 At [36].
22 La Mer Technology Inc v Laboratoires Goemar SA, above n 13 at [22]-[23].
registered proprietor may not be token or sham, but it will fail to qualify as genuine use because it is internal only.
[29] As I have already recorded, Scrapman does not argue that D & R Trucking placed the advertisement in the newspaper solely to preserve the rights preserved by the mark. For that reason the use of the mark cannot be regarded as token in terms of the interpretation applied to that word in the authorities just discussed. Nor did D
& R Trucking use the mark internally, because the advertisement was published to all members of the local community who read the newspaper on or about 11 March
2011. It is therefore necessary to consider whether, in terms of La Mer Technology
Inc, other factors mean that the use cannot be regarded as genuine.
[30] Although determination of whether there has been genuine use is an objective process, the objectively assessed intention of the user will often be an important indicator as to whether a particular use is genuine in this context. The owner’s intention must be directed to the object of using the trade mark in the course of trade as a badge of origin for the goods or services in respect of which the trade mark was granted. That is why internal use of a trade mark and the use of a trade mark solely to protect its registration are insufficient to meet the statutory test. Neither of those types of use is directed to the required object.
[31] There is no evidence from D & R Trucking as to why it decided to place the advertisement in the newspaper on 11 March 2011. Nor is there any evidence as to why it did not use the advertisement on more than the two occasions identified. In the absence of any evidence to suggest that an advertiser may have an ulterior motive, however, a person who goes to the trouble and expense of placing a business advertisement in the business section of a local newspaper can generally be taken to want to use the advertisement to promote his or her business.
[32] The business that the advertisement promoted in the present case was that of a scrap metal dealer, the precise use for which the trade mark was registered. The advertisement also contained a direct link to the owner of the trade mark, because the name of D & R Trucking occupies a prominent position within the advertisement. Neither the Assistant Commissioner nor Scrapman has been able to suggest any ulterior motive for D & R Trucking using the trade mark in the advertisement on
11 March 2011. This is a strong indicator that its use was genuine for the purposes of s 66(1)(a).
[33] The timing of the use is also obviously important. In the present case it occurred well before the dispute between Metalman and Scrapman arose. It has not been suggested that the trade mark was under challenge by any other party. This, too, suggests that the trade mark was used solely for the purpose of promoting the owner’s business as a scrap metal dealer. The fact that it followed an earlier publication prior to the registration of the trade mark is also significant, albeit to a lesser degree given the length of time between the two advertisements.
[34] Given the nature of the owner’s business, it is also significant that the advertisement was placed in the business pages of a local newspaper circulating in the locality of the owner’s business. The position might be different if the advertisement been lodged, for example, in the sports section of a newspaper circulating in a locality a significant distance away. That might raise questions as to the owner’s motivation in placing the advertisement.
[35] The Assistant Commissioner clearly attached significance to the lack of evidence about the Waitaki Herald. She referred to the absence of evidence about the circulation and readership of the newspaper, and whether it was published free of charge. She was also concerned about the lack of evidence as to the frequency with which the newspaper was published. I do not attach the same significance to those factors. The frequency with which the newspaper was published has little or no relevance, because the evidence in the present case is that publication only occurred on one occasion. The only relevance that the frequency of publication could have is that it may show that D & R Trucking did not take the opportunity to publish the advertisement on other occasions. That fact, however, is an obvious inference to be drawn from the lack of evidence of any other advertisements.
[36] It can be presumed that the newspaper circulates within the Oamaru district, but the actual number of persons who subscribe to it is of little relevance in the present context. Any person who places an advertisement in a local newspaper does so in the hope that it will be read by persons within the community. There is never
any guarantee, however, of the extent to which that will occur, and there is no way of learning the extent to which it has. The position might be different if D & R Trucking knew when it placed the advertisement that the newspaper had an extremely small circulation. That could call into question the genuineness of the use to which the trade mark was being put, but there is no such evidence here. I also fail to see how the issue of whether or not the newspaper was published free of charge could call into question the nature of the use.
[37] The Assistant Commissioner was also concerned that there was no evidence that any of the services for which the mark was registered, namely the recycling of metals and scrap, were ever provided under the mark. She observed that there were statements from customers, and no invoices or other trading records. To the extent that these observations suggest that D & R Trucking may not have been trading as a scrap metal dealer during the relevant period, the evidence does not support that conclusion and I do not consider it was what the Assistant Commissioner was suggesting. Rather, her concern appears to have been that there was no evidence that D & R Trucking had used the mark when it operated its business as a scrap metal dealer.
[38] One difficulty with this line of reasoning is that, as counsel for Metalman pointed out, the mark is in the form of an advertisement. It therefore does not lend itself readily, and would largely be inappropriate for use on office stationery or staff uniforms. Perhaps the only meaningful way in which it could have been used other than as an advertisement was as signage on the company’s premises and vehicles. I accept that D & R Trucking could obviously have made much greater use of the trade mark in that way.
[39] There is therefore force in the argument that D & R Trucking made minimal use of the trade mark. There is nothing in the circumstances surrounding such use as it did make, however, to suggest that D & R Trucking intended to use it for any reason other than the promotion of its business in the course of the trade for which the mark was registered.
[40] It is significant, in my view, that counsel for Scrapman conceded during argument that his client’s application could not have succeeded if D & R Trucking had used the trade mark as an advertisement on a frequent basis. This suggests that the fact that the trade mark was only used once lies at the heart of Scrapman’s argument.
[41] It is clear, however, that the issue of genuine use cannot be determined on a quantitative basis alone. Counsel for Scrapman sought to derive assistance on this point, as did the Assistant Commissioner, from the following passage of the judgment of Wilberforce J (as he then was) in NODOZ Trade Mark:23
I am faced, therefore, with this question: on those documents, on that evidence, ought I to be satisfied that the respondents have discharged the onus of proof which I hold has shifted to them to establish actual user in this country? It seems to me that the position stands in this way. The respondents are relying upon one exclusive act of user, an isolated act, and there is nothing else which is alleged or set up for the whole of the 5 year period. It may well be, of course, that in a suitable case one single act of user of the trade mark may be sufficient; I am not saying for a moment that that is not so; but in a case where one single act is relied on it does seem to me that that single act ought to be established by, if not conclusive proof, at any rate overwhelmingly convincing proof. It seems to me that the fewer the acts relied on the more solidly ought they to be established…
[42] I do not see these observations as taking the matter any further. They merely confirm that, where an owner relies upon a single act of use, the act in question must be established conclusively. In the present case there can be no dispute that the act in question occurred.
[43] Counsel for Scrapman also referred me to the Peter Pan case, a decision by an officer of the United Kingdom Intellectual Property Office relating to an application for revocation for non-use.24 In that case the only evidence of use of a trade mark was the owner’s declaration that the trade mark in question had been used “on a limited scale” throughout the two year period prior to the application. The owner had given no indication as to the quantity or value of sales made under the
mark, and had provided no invoices in support of his evidence as to the use of the
mark. The hearing officer applied the reasoning used by Wilberforce J in NODOZ to
23 NODOZ Trade Mark, above n 17, at 7.
24 Peter Pan (Trade Mark: Revocation) [1998] UKIntelP o15198, 17 July 1998.
conclude that there had been no genuine use of the trade mark during the requisite period. This decision provides little assistance in the present case, however, where the use of the mark on one occasion has been clearly established.
[44] The strongest support for Scrapman’s argument on this point comes from the obiter comments of Ronald Young J in the Royal New Zealand Yacht Squadron case.25 In that case the respondent was the owner of the trade mark “Squadron” in relation to articles of outer clothing for men and women. These included boots, shoes and slippers. The evidence established that during the five year period prior to the application the respondent had sold a total of 11 jackets for men under the
“Squadron” trade mark. There was no evidence that the respondent had sold shoes, slippers or women’s outerwear.
[45] Ronald Young J decided the case under the Trade Marks Act 1953, the predecessor to the current legislation. As the Royal New Zealand Yacht Squadron case demonstrates, the approach taken under that Act was to require the applicant for to establish a prima facie case as to non-use.26 Once the applicant reached that threshold, the owner of the trade mark bore the onus of establishing bone fide use of the trade mark within the five year period prior to the application.
[46] Ronald Young J held that the Assistant Commissioner had wrongly determined that the appellant had established a prima facie case as to non-use. Although the Judge decided the appeal on that basis, he went on to express the view that the respondent had failed to establish there had been bona fide use of the trade mark during the period in question. In this regard the Judge said:
[43] Although not necessary for this decision I consider whether the Respondent’s reply was sufficient to establish bona fide use if the Appellant had established prima facie use. I agree with the view of the Assistant Commissioner that the sale of 11 squadron jackets in five years is not at all bona fide use of a trade mark. Firstly, it had nothing to do with the trade mark for women’s outer clothing, boots, shoes and slippers. Secondly, the use is too infrequent. Here there was one shop in one city of New Zealand selling 11 items of clothing in a period of five years. This is not a description of bona fide use of a trade mark.
25 Royal New Zealand Yacht Squadron Ltd v Daks Simpson Group Plc, above n 18.
26 See also La Chemise Lacoste v Crocodile Garments Ltd HC Wellington AP32/02, 18 November
2002 and Friskies Ltd v Heinz-Wattie Ltd [2003] 2 NZLR 663 (HC).
[47] It is likely that the Judge was influenced in making these remarks by the fact that the respondent had failed to prove any sales of several types of goods in respect of which it held the trade mark. To the extent, however, that the Judge based his remarks on the fact that very few sales had occurred, his reasoning appears to have proceeded on the basis that de minimis use of the trade mark will be insufficient to satisfy the statutory test.
[48] Dobson J took a somewhat different approach in Sambbasivam v Chetty.27
That case, too, was an appeal against a decision by an Assistant Commissioner for Trademarks to revoke a trade mark for non-use. The owner of the trade mark was based in Mumbai, and produced clothing for women. He held two trade marks for goods comprising textiles, saris, headgear and footwear. In opposing the application for revocation, the owner relied upon two isolated sales of saris to customers in New Zealand. Dobson J described the statutory test in the following terms:28
The test as to whether there has been use of a mark focuses on the genuineness of activity involving it, and it will not be sufficient if there has been a pretended use or merely preliminary use. Beyond that, Mr Fogarty emphasised that there is no de minimis rule testing the sufficiency of use before it qualifies as such under the Act, and that in appropriate circumstances, a single use of a mark may be sufficient to qualify under s 66(1)(a)…
[49] Dobson J observed that the two sales would not pass a de minimis test if there was one.29 There was also no evidence the owner had held stock in New Zealand, or that he had premises here or promoted the marks in a conventional manner. Nevertheless the Judge concluded:
[44] There is no evidence as to how Sindhoor Nalli accounted for the proceeds of these sales and one credible inference is that her involvement was arranged to supplement her financial resources in New Zealand. Notwithstanding that reservation, these isolated sales do appear to involve genuine use of the appellant’s mark and they do appear to have been undertaken “for the purposes of trade” as that gloss has been applied to the phrase “in the course of trade” in s 66(1)(a) of the Act.
…
27 Sambbasivam v Chetty (2011) 94 IPR 214 (HC).
28 At [33].
29 At [42].
[46] I consider that the activity qualifies as genuine when such a small number of dealings might in other contexts not qualify as such, because of the nature of the goods in respect of which the mark is used. Two transactions in the space of the relevant 3-year period in other contexts such as, say, a high volume manufacturing business, might be so insignificant as to not justify a finding that the use is genuine. However, business on a very modest scale as an adjunct to a principal business in Mumbai and branches in South Africa, Malaysia, Singapore and Dubai may qualify as genuine without the same minimum level of activity that would be required in other contexts to establish its genuine character.
[50] I take a similar view in relation to the issue raised in the present appeal. All of the evidence in the present case points to the fact that the trade mark was registered by the owner of a small business in a rural town. The use of the trade mark as an advertisement constituted actual use in the relevant field of trade. There is nothing to suggest that D & R Trucking used the advertisement for any purpose other than the promotion of its business as a scrap metal dealer in the locality in which it operated. Nor is there any suggestion that D & R Trucking used large numbers of other advertisements.
[51] Although the use of the trade mark on a single occasion undoubtedly amounted to minimal use during the three year period, on the authorities as they currently stand that is not the statutory test. I have concluded that the use of the trade mark in the newspaper advertisement on 11 March 2011 amounted to genuine use in terms of s 66(1)(a) of the Act. It follows that I respectfully take a different view to that of the Assistant Commissioner regarding this issue.
Result
[52] The appeal is allowed. The revocation of the trade mark is set aside, and
Scrapman’s application for revocation is dismissed.
Costs
[53] Metalman is the successful party and would ordinarily be entitled to an award of costs in its favour. I bear in mind, however, that counsel for Scrapman were obliged to prepare for a second ground of appeal that Metalman ultimately abandoned during the hearing.
[54] My initial impression is therefore that costs should either lie where they fall, or Metalman should receive a reduced award of costs. If counsel cannot reach agreement regarding this issue they should file brief memoranda (no more than 4
pages in length), and I will then deal with the issue of costs on the papers.
Lang J
Solicitors: A J Park
James & Wells
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