New Zealand Milk Brands Limited v Anchor Foods Pty Limited

[2013] NZHC 11

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-003824 [2013] NZHC 11

UNDER  The Trade Marks Act 2002

AND UNDER                 The Fair Trading Act 1986

IN THE MATTER OF     Trade mark infringement

AND

IN THE MATTER OF      Breach of the Fair Trading Act

BETWEEN  NEW ZEALAND MILK BRANDS LIMITED

First Plaintiff

ANDFONTERRA BRANDS (NEW ZEALAND) LIMITED

Second Plaintiff

ANDANCHOR FOODS PTY LIMITED Defendant

Hearing:         (On the papers)

Counsel:         K W McLeod and M Hayes for Plaintiffs

K Duckworth for Defendant

Judgment:      22 January 2013

COSTS JUDGMENT OF VENNING J

This judgment was delivered by me on 22 January 2013 at 4.30 pm, pursuant to Rule 11.5 of the High

Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           AJ Park, Auckland

Baldwins Law Limited, Wellington

NZ MILK BRANDS LTD & ANOR V ANCHOR FOODS PTY LTD HC AK CIV-2012-404-003824 [22 January

2013]

Introduction

[1]      On 4 October 2012 a number of procedural orders were made by consent. The one outstanding issue was the issue of costs on an application filed by the defendant.  Costs were left to be dealt with by the exchange of memoranda.

[2]      Counsel have exchanged memoranda on costs.  The Registrar has referred the file to me as Duty Judge to fix costs on the basis of the memoranda.

Background

[3]      The defendant applied for a number of New Zealand trade mark registrations

(seven in total). Five of them are currently opposed by the first plaintiff.

[4]      On 9 May 2012 the plaintiffs wrote a cease and desist letter to the defendant advising that they considered that any use by the defendant of its corporate name and/or trade marks would infringe the plaintiff’s registered trade mark rights and would breach the Fair Trading Act 1986.  On 25 June 2012 the plaintiffs wrote again to the defendant threatening legal proceedings.

[5]      On  11  July  2012  the  defendant  provided  a  substantive  response  to  the plaintiffs’ letter of 9 May 2012.  However, the plaintiffs had, in the meantime, filed these proceedings in the Commercial List of the High Court at Auckland.   The proceedings were served on or about 11 or 12 July 2012.

[6]      On 15 August 2012 the defendant filed an interlocutory application seeking orders:

(a)       striking out the plaintiffs’ claim in part;

(b)      staying the balance of the proceeding;  and

(c)       removing the proceedings from the Commercial List.

[7]      The parties filed a joint memorandum on 30 August confirming they were in negotiation.  Counsel then subsequently filed a further joint memorandum in which

they agreed:

the plaintiffs’ statement of claim was to be amended, in particular, the prayer for relief requiring the defendant to withdraw the defendant’s trade mark applications and the allegation that the defendant had not responded to the

plaintiffs were to be deleted;

to an adjournment of the substantive proceeding to 4 October 2013 pending determination by the Commissioner of Trade Marks of five of the defendant’s

trade mark applications;  and

to the proceeding being removed from the Commercial List (but reserving the

right to apply to have it reinstated).

The parties’ positions

[8]      The  defendant  seeks  costs  on  its  applications,  either  on  an  increased  or indemnity basis or to scale on a 2B basis.

[9]      The plaintiffs oppose the defendant’s application for costs.   The plaintiffs seek the costs of commencing the proceedings.  In the alternative they submit costs should be reserved and dealt with as costs in the cause.

Decision

[10]     Having  reviewed  the  file  and  considered  counsels’  memoranda  I  have concluded that in this case no order for costs should be made in favour of either party in relation to the defendant’s applications and that the costs of the substantive proceeding incurred to date should follow the outcome of the proceedings.

[11]     I have come to that view for a number of reasons.  First, the plaintiffs agreed to the proceedings being struck out in part with the balance of the proceedings being

stayed pending determination of the Commissioner of Trade Marks’ decision on the basis of an undertaking provided by the defendant.   That undertaking was not provided until after the proceedings had issued.

[12]     Next,  the  defendant’s  reasons  for  seeking  costs  are  not  made  out.    The defendant says the plaintiffs should not have issued the proceedings in the first instance as there was no evidence of the defendant’s use or imminent use of its trade marks or corporate name in New Zealand.  It says it was not given a reasonable time to respond to the cease and desist letter and that the proceedings should not have been filed in the Commercial List in any event.

[13]     However, as the plaintiffs submit, a trade mark application is not generally valid unless the applicant intends to use the mark in New Zealand so that filing the trade mark applications was prima facie evidence of an intention to use:  Lacoste v Crocodile International Pte Ltd.[1]

[1] Lacoste v Crocodile International Pte Ltd (HC) Wellington CIV-2009-485-2536, 1 March 2011 per France J at [44]–[45].

[14]     Next, I consider the plaintiffs did give the defendant a reasonable time to respond.   The plaintiffs’ letter of 9 May 2012 was not substantively responded to until 11 July 2012, some two months later.   While the reason for the delay in responding is understandable (the unavailability of the defendant’s solicitor) the plaintiffs were entitled to issue proceedings, particularly after the further letter of 25

June 2012.

[15]     The plaintiffs were also entitled to issue the proceedings in the Commercial

List. They are clearly of a commercial nature.

[16]     Next, the defendants say that there is a considerable history to the issue but it was only when the defendant’s trade mark applications were accepted and open for opposition that the plaintiffs threatened proceedings.  That is so, but for the reason given above the plaintiffs’ response was justified.

[17]     The defendants then say the fact the plaintiffs promptly agreed to stay the proceedings demonstrates they were not warranted in the first place.  However, that

overlooks that the stay was agreed on the basis of the formal undertaking provided by the defendant, which was not provided until after the proceedings had issued.

[18]     The  defendant’s  submission  that  the  plaintiffs’ proceedings  amount  to  a strategy designed to interfere with the defendant’s trade mark application is speculative.  It is not supported by the material currently before the Court.

[19]     However, nor do I consider that the costs sought by the plaintiffs should be awarded  to  it  at  this  stage.   The merits  of the  parties’ position  will largely be determined by the outcome of the applications before the Commissioner for Trade Marks.

Result

[20]     I   decline   the   defendant’s   application   for   costs   on   its   interlocutory applications.   Costs are to lie where they fall on those applications.   I reserve the position of the parties in relation to the substantive costs in the proceeding pending

the outcome of the application before the Commissioner.

Venning J