Pharmazen Ltd v Anagenix IP Ltd
[2020] NZCA 306
•23 July 2020 at 11.30 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA348/2019 [2020] NZCA 306 |
| BETWEEN | PHARMAZEN LIMITED |
| AND | ANAGENIX IP LIMITED |
| Hearing: | 29 April 2020 |
Court: | Brown, Dobson and Nation JJ |
Counsel: | J V Ormsby and B J Entwistle for Appellant |
Judgment: | 23 July 2020 at 11.30 am |
JUDGMENT OF THE COURT
A The appeal is dismissed.
BThe appellant must pay the respondent costs for a standard appeal on a band A basis and usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Brown J)
The respondent (Anagenix) is the registered proprietor of the trade mark ACTAZIN for goods and services in classes 5 and 29, in particular kiwifruit extract powder as a dietetic substance or ingredient for medical use. The appellant (Pharmazen) applied to register its trade mark ActiPhen in respect of what are accepted in this Court to be similar goods. The decision of the Assistant Commissioner of Trade Marks declining that application[1] was upheld on appeal by the High Court.[2]
[1]Pharmazen Ltd v Anagenix IP Ltd [2018] NZIPOTM 27 [Assistant Commissioner’s decision].
[2]Pharmazen Ltd v Anagenix IP Ltd [2019] NZHC 1520 [High Court judgment].
On this appeal Pharmazen challenges the finding that ActiPhen is similar to ACTAZIN and the conclusion in the context of s 25(1)(b) of the Trade Marks Act 2002 (the Act) that the use of ActiPhen is likely to deceive or confuse.
Registrability of similar trademarks
The focus of this appeal is the interpretation and application of s 25(1)(b) of the Act. Section 25 relevantly states:
25 Registrability of identical or similar trade mark
(1) The Commissioner must not register a trade mark (trade mark A) in respect of any goods or services if—
(a) it is identical to a trade mark (trade mark B) belonging to a different owner and that is registered, or has priority under section 34 or section 36,—
(i) in respect of the same goods or services; or
(ii) in respect of goods or services that are similar to those goods and services, and its use is likely to deceive or confuse; or
(b) it is similar to a trade mark (trade mark C) that belongs to a different owner and that is registered, or has priority under section 34 or section 36, in respect of the same goods or services or goods or services that are similar to those goods or services, and its use is likely to deceive or confuse;
…
(2)Section 26 overrides subsection (1).
Section 26 states:
26 Exceptions
The Commissioner must register trade mark A if—
(a) the owner of trade mark B, trade mark C, or trade mark D (as the case may require) consents to the registration of trade mark A; or
(b) the Commissioner or the court, as the case may be, considers that a case of honest concurrent use exists, or other special circumstances exist, that, in the opinion of the court or the Commissioner, makes it proper for the trade mark to be registered subject to any conditions that the court or the Commissioner may impose.
Mr Ormsby’s argument for Pharmazen also placed significant reliance on s 17(1)(a). Section 17(1) states:
17 Absolute grounds for not registering trade mark: general
(1) The Commissioner must not register as a trade mark or part of a trade mark any matter—
(a) the use of which would be likely to deceive or cause confusion; or
(b) the use of which is contrary to New Zealand law or would otherwise be disentitled to protection in any court; or
(c) the use or registration of which would, in the opinion of the Commissioner, be likely to offend a significant section of the community, including Māori.
…
Given the nature of the argument to be considered, it is also convenient to note the jurisdiction to remove a trade mark registration on account of the owner’s non-use.
66 Grounds for revoking registration of trade mark
(1) The grounds for revoking the registration of a trade mark are as follows:
(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.
(2)However, there are not grounds for revoking the registration of a trade mark for its non-use if its non-use is due to special circumstances that are outside the control of the owner of the trade mark.
(3)Subsection (1)(a) does not apply if the owner commences or resumes genuine use of the trade mark in the course of trade in New Zealand after the expiry of the 3-year period and before the application for revocation is made.
(4)Any commencement or resumption of use referred to in subsection (3) after the expiry of the 3-year period but within the period of 1 month before the making of the application for revocation must be disregarded unless preparation for the commencement or resumption began before the owner became aware that the application may be made.
Relevant to the present case the definition of trade mark use in s 7 includes:
7 Meaning of use of trade mark
(1) In this Act, unless the context otherwise requires, use, in relation to a trade mark, includes—
…
(b) applying the trade mark to goods or services or to materials for the labelling or packaging of goods or services in New Zealand solely for export purposes; and
(c) the application in New Zealand of a trade mark to goods or services to be exported from New Zealand, and any other act done in New Zealand in relation to those goods or services that, if done in relation to goods or services to be sold or otherwise traded in New Zealand, would constitute use of a trade mark in relation to those goods or services for which the use is material under this Act or at common law;
…
Relevant background
Because this appeal is concerned solely with s 25(1)(b) the facts can be briefly stated.
The Anagenix group of companies as described by its managing director is a collective of New Zealand nutraceuticals companies with an interest in natural products relating to digestive health, including kiwifruit powder. Anagenix develops ingredients for supplements and has also developed some finished products for sale.
The trade mark ACTAZIN, coined by Anagenix in 2007, was registered in New Zealand with an effective date of registration of 27 October 2009 in respect of the following goods:
Class 5: kiwifruit extract powder as a dietetic substance or ingredient adapted for human health and medical use including dietary, health and nutritional supplements, medical food and functional foods and beverages;
Class 25: kiwifruit extract powder as a dried fruit ingredient in the manufacture of food and chilled dairy products, including drinking yoghurts.
The managing director of Anagenix deposed that the first syllable, ACT, originated from the botanical name for kiwifruit, Actinidia, and the name of the enzyme Actinidin, although he acknowledged that “not everyone is aware of this fact.”
ACTAZIN was the trade name for the first product developed by Anagenix, a kiwifruit powder concentrate produced from New Zealand green kiwifruit. Since the first sales in 2009 in the United States, Anagenix has sold its ACTAZIN product primarily to businesses overseas. The product was sold in New Zealand for a number of months commencing in February 2012 but in mid-2012 Anagenix ceased selling ACTAZIN products in New Zealand because of the potential infringement of a recently granted patent. The managing director of Anagenix deposed that, while Anagenix did not accept the validity of that patent, a business decision was taken to sell ACTAZIN products only outside New Zealand while the patent is in force.
Pharamazen develops, manufactures and markets specialised nutritional ingredients for human and animal dietary supplement products. Its product branded ActiPhen comprises 100 per cent kiwifruit powder consisting of both flesh and skin and contains no artificial additives. The chief executive officer of Pharmazen explained that the trade mark is a combination of Acti and Phen where:
“(a)“Acti” is the designated abbreviation for “Actinidin” being the protease enzyme unique to kiwifruit and also representing actinidia deliciosa, the botanical name for green kiwifruit; and
(b)“Phen” is a reference to the phenolic compounds of ActiPhen. Phenolic compounds are phytonutrients — naturally occurring compounds in plants that are generally there to provide protection against adverse factors like UV radiation and infection, amongst other things. Research has shown that these compounds have health promoting benefits.”
On 4 May 2016 Pharmazen lodged its application to register the ActiPhen trade mark in relation to the following goods in class 5:[3]
Food preparations adapted for medicinal purposes; pharmaceutical preparations; pharmaceutical preparations containing enzymes; pharmaceutical preparations to support gut health and digestion; dietary supplements for humans and animals (for medicinal purposes); antioxidants (dietary supplements); kiwifruit powder for use as an ingredient in dietary supplements (medicinal purposes); kiwifruit powder (not for medicinal purposes) for use as an ingredient in dietary supplements; kiwifruit powder (not for medicinal purposes) for use as an ingredient in animal feed supplements.
[3]The application also sought registration in respect of class 16 goods such as printed material relating to class 5 goods.
Anagenix opposed the application on three grounds:
(a)ActiPhen is similar to Anagenix’s trade mark registered in respect of goods that are the same or similar to Pharmazen’s goods, and use of ActiPhen by Pharmazen is likely to deceive or confuse (s 25(1)(b));
(b)use of ActiPhen would be likely to deceive or cause confusion (s 17(1)(a); and
(c)use of ActiPhen is contrary to law because it would amount to a breach of ss 9, 10 and 13 of the Fair Trading Act 1986 (s 17(1)(b)).
The Assistant Commissioner’s decision
Addressing first the s 25(1)(b) ground of opposition, the Assistant Commissioner identified three key issues:[4]
(a)whether the goods were similar;
(b)whether the trade marks were similar; and
(c)whether the use of ActiPhen would be likely to deceive or confuse.
[4]Assistant Commissioner’s decision, above n 1, at [51].
By reference to the factors relevant to the assessment of similarity recognised in British Sugar Plc v James Robertson & Sons Ltd[5] the Assistant Commissioner concluded that there could not be any real doubt as to the similarity of the respective goods, accepting Anagenix’s submission that there was a considerable overlap between them.[6]
[5]British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281 (Ch) at 296–297.
[6]Assistant Commissioner’s decision, above n 1, at [53].
The Assistant Commissioner considered that the two marks were visually similar and that, while not phonetically identical, there was a substantial degree of similarity in their likely natural pronunciation.[7] On the evidence available the Assistant Commissioner concluded that a significant numbers of persons in the relevant market looking at the ActiPhen mark in the absence of the ACTAZIN mark would be likely to be caused to wonder whether the ActiPhen mark was the same as, or related to, the ACTAZIN mark.[8]
[7]At [60].
[8]At [71].
While upholding the objection under s 25(1)(b), the Assistant Commissioner determined that there was insufficient evidence of awareness of the ACTAZIN mark in the relevant New Zealand market to satisfy the reputational threshold under s 17(1)(a) in the circumstances where Anagenix had not sold or marketed ACTAZIN in New Zealand since 2012.[9] The lack of awareness was also dispositive of the Fair Trading Act grounds advanced by the respondent through s 17(1)(b).[10]
The High Court judgment
[9]At [75]–[76].
[10]At [82].
On appeal Pharmazen contended that the Assistant Commissioner’s decision on s 25(1)(b) was wrong and inconsistent with the conclusion that registration of ActiPhen would not contravene s 17(1)(a).
Addressing the same three issues as the Assistant Commissioner, Cull J agreed that there could not be any real doubt as to the similarity of the parties’ respective goods.[11] On the issue of similarity between the marks the Judge concluded:
[58] I find there are both visual and aural similarities of the marks. Accepting the fair and notional use of the marks as they might be represented (as ACTAZIN and ACTIPHEN), I find the marks look similar, and I consider most New Zealanders would be likely to pronounce the words as “ACT-i-fen” and “ACT-i-zin”, which would make them phonetically extremely similar, with the only difference being “f” as opposed to “z”.
In the Judge’s view the placement of “ACT” at the beginning of each of the marks would be the focus of a person’s recollection of the product and, with the monophthong vowel following the syllable “ACT”, made the final syllable of lesser importance. The Judge considered that the descriptive nature of the prefix “ACT”, as being derived from the botanical name for kiwifruit, was not commonplace or common knowledge and there was no conceptual meaning to either mark, making it more difficult to distinguish them as they do not imply any specific meaning.[12]
[11]High Court judgment, above n 2, at [39].
[12]At [60]–[61].
On the third issue Pharmazen submitted that as Anagenix’s ACTAZIN product was not in the New Zealand market, there was no possibility that ActiPhen could be confused with Anagenix’s mark and therefore the s 25(1)(b) test could not be satisfied. This was said to be consistent with the Assistant Commissioner’s finding under s 17(1)(a) that there was no likelihood of confusion or deception because Anagenix did not have a reputation in the New Zealand market.
Referring to this Court’s decision in Anheuser-Busch Inc v Budweiser Budvar National Corp,[13] Cull J identified the key principle to be that, when a trade mark holder is relying on s 25(1)(b), its own actual use and reputation are not relevant and consequently the Court was not required to consider the actual use of Anagenix’s trade mark.[14] Hence the Assistant Commissioner’s finding rejecting Anagenix’s ground of opposition under s 17(1)(a) was not inconsistent with the conclusion on s 25(1)(b).[15]
Issues on appeal
[13]Anheuser-Busch Inc v Budweiser Budvar National Corp [2003] 1 NZLR 472 (CA).
[14]High Court judgment, above n 2, at [74].
[15]At [78]–[79].
An agreed list of issues was filed in the following terms:
The legal test
1 Whether or not the High Court and the Commissioner were wrong to conclude that the assessment under s 25(1)(b) only involved consideration of notional fair use of the respective trade marks and instead ought to have considered:
(a) Whether or not use of the appellant’s trade mark was likely to deceive or confuse within the actual New Zealand market;
(b) Whether or not there was a likelihood of use by parties in an actual New Zealand market wherein a considerable section of the public would be likely to be deceived or confused.
2 Did the High Court err in finding that the key principle when a trade mark holder is relying on s 25(1)(b) is that its own actual use and reputation are not relevant and, therefore, finding that the Assistant Commissioner was not required to consider the actual use of the respondent’s mark?
3 Did the High Court err by:
(a) finding that it was irrelevant that the respondent had no product in the New Zealand market?
(b) failing to consider the evidence that the respondent had no product on the New Zealand market at the relevant date?
(c) failing to assess whether the evidence established that the respondent was unlikely to ever have any product available on the New Zealand market and, if so, failing to consider that evidence?
(d) placing too much weight on the respondent’s registration and on any export market?
The comparison of trade marks
4 Whether or not the High Court and the Commissioner were wrong to conclude that the marks are both visually and orally similar so that the use of the appellant’s trade mark is likely to cause deception or confusion for the purpose of s 25(1)(b) of the Trade Marks Act 2002 …?
5 What is the likely pronunciation(s) of the trade marks and are the trade marks orally similar? Whether or not the High Court erred in concluding that most New Zealanders would be likely to pronounce the trade marks as “Act-i-fen” and “Act-i-zin”?
6 Whether or not the High Court correctly assessed the visual, aural and conceptual similarities of the trade marks including any notional fair use? Did the High Court place too much weight on the notional fair use of ActiPhen in uppercase letters?
7 How significant is the common first syllable ACT? Did the High Court and the Commissioner err in fact by placing too much weight on the syllable “ACT” and finding that “ACT” is not commonplace or common knowledge?
8 Did the High Court fail to adequately consider other differences alleged by the Appellant in respect of the trademarks?
9 Did the High Court and the Commissioner err by concluding that the appellant had failed to satisfy the onus of proving, on the balance [of] probabilities, that the use of ActiPhen would not be likely to cause deception or confusion under s 25(1)(b)?
However we will consider the parties’ arguments by reference to the following broad questions:
(a)Is use by the registered owner of trade mark C a prerequisite for a successful opposition under s 25(1)(b) to an application to register trade mark A?
(b)Is ActiPhen similar to ACTAZIN?
(c)Given the registration of ACTAZIN, has Pharmazen demonstrated on the balance of probabilities that its use of ActiPhen is not likely to deceive or confuse?
Is use by the registered owner of trade mark C a prerequisite for a successful opposition under s 25(1)(b) to an application to register trade mark A?
Pharmazen’s contention
The thrust of this aspect of the appeal is a challenge to Cull J’s statement:[16]
[74] The key principle is that when a trade mark holder is relying on s 25(1)(b), its own actual use and reputation are not relevant. The Court is therefore not required to consider the actual use of Anagenix’s trade mark.
[16]High Court judgment, above n 2.
Emphasising the reference in s 25(1)(b) to “[the trade mark’s] use is likely to deceive or confuse”, Pharmazen’s submission stated:
12[Pharmazen invites] the Court to conclude that while a distinguishing feature of s 25(1)(b) is the assessment of use of the mark in a normal and fair manner, so that “reputation” is not necessarily relevant to deception and confusion; that assessment of notional fair use cannot be so wholly divorced from statutory language to result in a finding that the market will be “likely to be” deceived and confused in circumstances where the opposing party does not, and has no intention of, participating in the relevant market.
13In other words, this appeal invites the Court to conclude that the statutory language will not be overridden by a pure hypothetical analysis that assumes market participation, when the evidence is that such participation did not exist at the relevant date (and will not exist in the future).
Mr Ormsby submitted that a comparison of ss 17(1)(a) and 25(1)(b) reveals no discernible difference between them based on the language deployed by Parliament. Hence actual use was relevant to the analysis in relation to both.
However for at least 75 years it has been recognised that the antecedents of ss 17(1) and 25(1)(b) involve different tests. As the Privy Council observed in a New Zealand appeal, Hannaford & Burton Ltd v Polaroid Corp, with reference to ss 16 and 17 of the Trade Marks Act 1953:[17]
Turning now to the merits of the appeal, the questions for decision were conveniently stated by Mr Price, adapting the form of questions posed by Evershed J in Re Smith Hayden & Co Ltd’s Application (1945) 63 RPC 97, 101, as follows:
(1)Having regard to the actual use of “Polaroid” in October 1966 is the court satisfied that “Solavoid” if used in a normal and fair manner in connection with sunglasses would be reasonably likely to deceive or cause confusion among a substantial number of persons? and
(2)(Under s 17(1)) assuming use by the respondent of its trade mark “Polaroid” in a normal and fair manner for sunglasses, is the court satisfied that there would be reasonable likelihood of deception or confusion among a substantial number of persons if “Solavoid” was used in a normal and fair manner also for sunglasses?
[17]Hannaford & Burton Ltd v Polaroid Corp [1976] 2 NZLR 14 (PC) at 18. Sections 16 and 17 of the Trade Marks Act 1953 equate to the current ss 17 and 25 respectively.
Notwithstanding his submission that there was no discernible difference between ss 17(1)(a) and 25(1)(b), Mr Ormsby confirmed that he was not challenging the approach in Polaroid so far as it went. Rather his point was that neither Polaroid nor any subsequent case had been required to confront the scenario presented by the current case where there had been no actual use by the registered proprietor of the trade mark. In such a case he contended that the Polaroid principles were not definitive.
He argued that it is not part of the notional fair use assessment to import a level of market participation which does not exist:
… the High Court and Assistant Commissioner wrongly assessed the similarity of the marks being used in a normal and fair manner and also interpolated market participation of ACTAZIN that ostensibly did not exist at the relevant date for assessment and is unlikely to exist at any time. An assessment of use of the marks in a normal and fair manner must be considered against the backdrop of the actual relevant market.
Observing that the legislation is protective, existing to prevent confusion in the relevant market, Mr Ormsby submitted:
… when Parliament chose the words “its use is likely to deceive or confuse”, it intended that the actual use of the mark (under any fair and notional assessment) would actually cause deception or confusion to real persons in an actual market in New Zealand.
On any reading of the evidence, such deception or confusion is not “likely” because in Pharmazen’s submission there is simply no market and no use that would cause such confusion.
Thus Mr Ormsby’s argument treads a fine line between acknowledging that s 25(1)(b) involves a notional use of trade mark C for the confusion analysis while simultaneously contending that the analysis necessitates an actual market in which there is actual use of trade mark C.
Discussion
Under pt 2 of the Act, which concerns the registrability of trade marks, registration of an application may be refused either on absolute (subpt 2) or relative (subpt 3) grounds. Section 17 specifies absolute grounds whereas s 25 is in subpt 3. The distinction between the two sections was helpfully explained by Clifford J in British American Tobacco (Brands) Inc v NV Sumatra Tobacco Trading Co (in the context of the equivalent provisions, ss 16 and 17 respectively, of the Trade Marks Act 1953):[18]
[36] Both sections, as can be seen, use the phrase “likely to deceive or cause confusion”. In s 16(1), that is one of the grounds which makes it not lawful to register a mark. In s 17(1), that is the ground on which registration is to be declined.
[37] The two sections, as is well recognised, serve different purposes and work in different ways, although there are considerable similarities as regards determination of the question of the likelihood of deception or confusion.
[38] The purpose of s 16(1) is to protect the public rather than the proprietary rights of traders involved in a dispute as to the use of a particular mark. The public are, as relevant, to be protected from undesirable confusion arising from the registration of a trade mark. The purpose of s 17(1) is, by contrast, to protect a registered mark, and the interest the proprietor of that mark has, from the registration of a potentially deceptive or confusing similar mark. In Pioneer Hi‑Bred, a case under s 16 of the 1953 Act, Richardson J put the position this way:
Whereas s 17 is concerned with the comparison between two rival marks relating to the same goods or description of goods of which one is already on the Register, s 16 is not so limited. It extends to cases where the public is likely to be deceived or confused merely by the mark in question. (at 61).
[18]British American Tobacco (Brands) Inc v NV Sumatra Tobacco Trading Co HC Wellington CIV‑2007-485-2814, 11 November 2008.
That distinction echoed the long-established position under the Trade Marks Act 1938 (UK) where, in relation to the equivalent provisions in ss 11 and 12(1), Lord Upjohn in BALI Trade Mark said:[19]
This is the chief distinction between section 11 and section 12. Section 12 is principally a weapon in the hands of a registered proprietor though it is not necessary that he personally should object. Here no use by the registered proprietor need be shown; it is purely a question of similarity. Section 11 is, as I have said, for the protection of the public and anyone may object, but if he relies only on similarity he must prove the practical likelihood of confusion to the public …
[19]BALI Trade Mark [1969] RPC 472 (HL) at 496.
That the protection afforded by s 25(1)(b) is of the owner’s interest is underscored by the new provision in s 26(a) of the Act which confers on the owner of trade mark C the power of consent to the registration of trade mark A. If the owner of trade mark C consents, then the Commissioner is obliged to accept the application for registration of trade mark A. There is no equivalent power in the context of s 17.
In our view those distinctly different purposes of the two provisions provide the explanation why different parameters apply in the inquiry as to a likelihood of confusion between two marks. In both ss 17(1)(a) and 25(1)(b) the activity under scrutiny is the anticipated normal and fair use of the trade mark for which registration is sought. However in the s 17(1)(a) analysis, the base comparator is the manner in which another trade mark has already been used in fact. By contrast, in the s 25(1)(b) analysis the comparator is an assumed use of an existing registered trade mark (trade mark C), albeit in a normal and fair manner.
As Mr Arthur contended, Pharmazen’s argument erroneously endeavours to introduce s 17(1)(a) reputation considerations into the s 25(1)(b) analysis. It does so by importing consideration of actual use via the identification of the market as an “actual market”.[20] Plainly the comparison of the assumed normal and fair use of ACTAZIN and the anticipated normal and fair use of ActiPhen must be undertaken in the context of a market comprising the likely purchasers of the trade marked products. But in the s 25(1)(b) analysis that market is itself notional. We agree with Mr Arthur that introducing the concept of a so-called “actual market” into the s 25(1)(b) analysis would leave no space for the application of a notional use.
[20]See [28]–[30] above.
The approach advocated by Pharmazen would produce inconsistencies with other provisions of the Act. Mr Arthur draws attention to s 7(1)(b) and (c) which have the effect of deeming the application of a trade mark to export goods to be use of the trade mark in New Zealand.[21] However the Pharmazen approach would treat such use of the trade mark as irrelevant for the purposes of s 25(1)(b) for the reason that it would not be use likely to cause deception or confusion in a relevant New Zealand market.
[21]At [7] above.
Mr Arthur further submitted that extrapolating Pharmazen’s reasoning would result in conflict with the infringement provision in s 89(1)(c) which provides that a registered trade mark is infringed if a similar trade mark is used on goods similar to the goods in respect of which the trade mark is registered if that use would be likely to deceive or confuse. It is well established that the infringement test postulates notional use of the registered trade mark compared with the actual use of the allegedly infringing trade mark.[22] In the infringement context whether there has been actual use of the registered mark is not relevant.
[22]Anheuser-Busch Inc v Budweiser Budvar National Corp, above n 13, at [87].
We further observe there would be tension between the Pharmazen proposition and s 66 which stipulates the circumstances in which a registered trade mark can be removed for non-use.[23] Provided there is some genuine use of a trade mark during any continuous period of three years, the trade mark will not be vulnerable to removal for non-use.[24] Furthermore revocation will not proceed where there are special circumstances outside the control of the trade mark owner which result in the non‑use.[25] Even if there are no sales in New Zealand of products bearing the trade mark, the application of the trade mark on goods for export recognised in s 7(1) will qualify as use so as to defeat an application for removal.
[23]At [6] above.
[24]Trade Marks Act 2002, s 66(1)(a).
[25]Section 66(2).
The paradox with Pharmazen’s argument is that while, because of Anagenix’s export usage, there could not be a successful application for removal of the ACTAZIN trade mark, Anagenix would nonetheless be deprived of the ground of opposition in s 25(1)(b) afforded to registered proprietors. Upon registration of ActiPhen, Pharmazen would have the infringement defence conferred by s 93.
For these reasons, the answer to the first issue is No. The second limb of the Polaroid formulation[26] applies irrespective of whether there has been use by the owner of trade mark C.
Is ActiPhen similar to ACTAZIN?
Pharmazen’s contention
[26]At [27] above.
Pharmazen focused on five alleged errors in the assessment by Cull J of the similarity of the marks:
(a)the likely pronunciation of the marks;
(b)the focus on similarity of the marks in their uppercase form (under the notional fair use assessment);
(c)the weight placed on the first syllable “Act”;
(d)the failure to recognise the different phonetic, visual and aural structures of the marks; and
(e)the failure to recognise that the marks were not so similar as to cause a real danger of confusion in the relevant market.
In concluding that most New Zealanders would be likely to pronounce the words as “ACT-i-fen” and “ACT-i-zin”, which was different from the view of the Assistant Commissioner, Mr Ormsby contended that the High Court erroneously interposed an entirely different vowel, namely “i”, into ACT-a-Zin. Observing that there was no evidence before the High Court or the Assistant Commissioner that most New Zealanders would pronounce the words in that manner, he submitted that the most likely pronunciation is “Act-Ti-Fen” with the second most likely being “Act‑Te‑Fen”. It was said that the location of the capital “P” in the middle of ActiPhen would place a different emphasis on the last syllable and make it more pronounced.
Secondly, it was submitted that the High Court placed too much emphasis on the notional fair use of ActiPhen in uppercase letters when assessing the similarity of the marks. While acknowledging that a notional fair use assessment involves consideration of any permutations of the mark, it was argued that similarity on one level does not mean the marks are so similar as to create a real danger of confusion. As the High Court had earlier acknowledged, the marks to be visually compared were ACTAZIN and ActiPhen.
With reference to what it described as the prefix “ACT,” Pharmazen submitted that the High Court placed too much weight on the first syllable with the consequence that the marks were compared in their constituent parts in isolation rather than being viewed as a whole. It further submitted that the High Court had failed to consider the nature of the relevant market when deciding that the claimed descriptive nature of the prefix is not commonplace or common knowledge. It was Pharmazen’s contention that the prefix is inherently descriptive in the relevant market comprising manufacturers in the nutraceutical market.
In concluding that the marks were visually and aurally similar, Pharmazen submitted that the High Court failed to consider:
(a)the different length of the marks — ActiPhen (eight letters) and ACTAZIN (seven letters);
(b)the ACTAZIN mark has an epithetic vowel and ActiPhen uses the diagraph “Ph”, thereby creating different visual and aural structures;
(c)the last syllable of ActiPhen contains four letters as compared with ACTAZIN’s three; and
(d)the marks contain very different phonetic, aural and visual structures, namely “Ti-Fen” or “Te-Fen” in comparison to “a-Zin” which, on viewing the marks as a whole, are very different in look and sound.
Referencing the Court of Appeal decision in Polaroid, Pharmazen submitted that it is the totality of impression of the two marks that is of fundamental importance.[27]
Discussion
[27]Polaroid Corp v Hannaford & Burton Ltd [1975] 1 NZLR 566 (CA).
We endorse the High Court Judge’s summary of the relevant principles for the similarity assessment:[28]
(a)the Court should consider the marks in their entirety; the overall or net impression of the marks should be considered;
(b)while differences between two marks may be significant, it is the similarities which are most significant, whether visual, audible, distinctive, or conceptual;
(c)the impression or idea conveyed by the marks is important in assessing how they will be recalled; the idea of a mark is more likely to be recalled than its precise details;
(d)comparison is not of the opponent’s mark with the mark of the applicant when taken side by side, but taking into account imperfect recollection in all the circumstances in which the products might be sold; and
(e)the marks are to be compared as they would be encountered in the usual circumstances of trade.
[28]High Court judgment, above n 2, at [24], derived from the judgment of Winkelmann J in Intellectual Reserve Inc v Sintes HC Auckland CIV-2007-404-2610, 13 December 2007 at [16].
Both trade marks are invented words. Neither has an apparent meaning. Nor does either convey an impression or an idea.
The trade marks are of similar length (seven letters compared with eight) and have three syllables. They share the first syllable “Act” and they conclude with the letter “n”. In our view there is a significant visual similarity between them.
We recognise that where a trade mark incorporates a word that is commonplace for the relevant goods, that part will be less distinctive than other parts of the trade mark.[29] Pharmazen relies on that proposition in support of its contention that the first syllable of ActiPhen is descriptive, given that the botanical name for green kiwifruit is Actinidia deliciosa and that kiwifruit contains the enzyme Actinidin.
[29]See Platinum Homes (NZ) Ltd v Golden Homes (1998) Ltd HC Wellington CIV-2005-485-1870, 11 August 2006 at [20].
However on our review of the declarations there is no persuasive evidence suggesting that ACT is an accepted and recognised abbreviation of Actinidia or Actinidin. We consider that the Judge and the Assistant Commissioner were correct in their conclusions that ACT is not descriptive, generic or a common part of trademarks for the relevant goods.
There was no independent or expert evidence as to the likely pronunciation of the two trade marks. The parties advocated in favour of the following pronunciations:
| ACTAZIN | ActiPhen | |
| Pharmazen | Act-a-Zin | Ac-te-Fen |
| Anagenix | Act-uh-zin | Act-uh-fin |
While considering there was a substantial degree of similarity, the Assistant Commissioner considered the more likely natural pronunciation to be that proposed by Pharmazen.[30] By contrast the Judge concluded that most New Zealanders would be likely to pronounce the words as “ACT-i-fen” and “ACT-i-zin”, with the consequence that the only difference would be “f” as opposed to “z”.[31]
[30]Assistant Commissioner’s decision, above n 1, at [60].
[31]High Court judgment, above n 2, at [58].
In our view invented words such as the two marks in question are likely to generate a variety of pronunciations. That is amply demonstrated by the evidence in this case and the different findings of the Assistant Commissioner and the Judge. Our perception is that the second syllable of ActiPhen would be pronounced “teh” (as in “te reo”) while the third syllable would sound like “fayrn” (as in “fair”). However we consider that, like ACTAZIN, ActiPhen would be uttered with a falling inflexion (like Harrison or episode). Both trade marks would be pronounced with primary emphasis on the first syllable “Act”. As the Judge noted,[32] this Court in NV Sumatra Tobacco Trading Co v British American Tobacco (Brands) Inc[33] drew attention to the observation of Sargent LJ in Re London Lubricants (1920) Ltd’s Application:[34]
… [T]he tendency of persons using the English language to slur the termination of words also has the effect necessarily that the beginning of words is accentuated in comparison, and, in my judgment, the first syllable of a word is, as a rule, far the most important for the purpose of distinction.
[32]At [59].
[33]NV Sumatra Tobacco Trading Co v British American Tobacco (Brands) Inc [2010] NZCA 24, (2010) 86 IPR 206 at [32].
[34]Re London Lubricants (1920) Ltd’s Application (1925) 42 RPC 264 (CA) at 279.
We accept Mr Arthur’s submission that a significant number of people, both consumers and manufacturers, would be likely to pronounce ActiPhen in a manner which involves the same rhythm, structure and sound as the way in which they would pronounce ACTAZIN. Consequently we reach the same conclusion as the Assistant Commissioner and the Judge that the two trade marks are similar.
Subsequent to the decision of the Assistant Commissioner, a decision was released by the Registrar of Trade Marks in Australia on the opposition by Anagenix to Pharmazen’s application for registration of ActiPhen.[35] On the issue of similarity the Registrar’s delegate reasoned:
21.While it is true that the trade marks all contain some similar letters and some letters may potentially be interchangeably mispronounced, I am not satisfied that the Trade Mark is deceptively similar to the opponent’s trade mark, particularly when the trade marks are considered, as they must be, as wholes. The spelling differences between the ‘coined’ terms is significant and even though all the trade marks may share some of the same three letter prefix and end with the letter “n”, the trade marks are likely to be pronounced a number of different ways by the general monolingual Australian consumer particularly when the suffixes of the trade marks are so different. I do not believe that ActiPhen would be pronounced in so similar a fashion as ACTAZIN by a significant number of consumers. The differences in spelling between the trade marks is simply too great.
[35]Anagenix IP Ltd v Pharmazen Ltd [2018] ATMO 142, noted in the High Court judgment, above n 2, at [45].
However we do not find the Australian decision persuasive given that it was made in the context of s 44(1) of the Trade Marks Act 1995 (Cth). In such oppositions the opponent has the onus of showing that there is an existing or pending trade mark in relation to which the opposed trade mark is either substantially identical or deceptively similar. Anagenix was not able to discharge that onus. However in the New Zealand context it is for Pharmazen to establish that its use of ActiPhen would not be likely to deceive or confuse.
Given the registration of ACTAZIN, has Pharmazen demonstrated on the balance of probabilities that its use of ActiPhen is not likely to deceive or confuse?
Pharmazen’s contention
Pharmarzen’s argument hinges on it having succeeded on the first issue. Mr Ormsby submitted that when the issue of deception or confusion of the New Zealand market is assessed holistically, there is no context to consider in the hypothetical scenario under s 25(1)(b) because goods branded ACTAZIN are simply not available. He contended that it is nonsensical to reach a decision that a substantial number of persons in the relevant market could be confused when the market does not exist and is unlikely to ever exist, due to a grant of patent.
Pharmazen also prayed in aid the English decision in Och-Ziff Management Europe Ltd v Och Capital LLP[36] and European Court of Justice decision in O2 Holdings Ltd v Hutchison 3G UK Ltd[37] in support of the proposition that actual trade mark use is relevant. Reliance was also placed on this Court’s decision in Daimler AG v Sany Group Co Ltd, in particular upon the following passage:[38]
The notional use of the Daimler marks does not alter the conclusion that the Sany mark is not similar to the Daimler marks and use of the Sany mark is not likely to deceive or confuse. It is relevant, as Sany submits, that there is still nothing to suggest that Daimler and Sany will find themselves competing in a market where the purchasers or prospective purchasers are not discerning.
[36]Och-Ziff Management Europe Ltd v Och Capital LLP [2010] EWHC 2599 (Ch), [2011] Bus LR 632.
[37]Case C-533/06 O2 Holdings Ltd v Hutchison 3G UK Ltd [2008] ECR I-4231.
[38]Daimler AG v Sany Group Co Ltd [2015] NZCA 418, (2015) 14 TCLR 191 at [48].
Mr Ormsby submitted that not only will Anagenix and Pharmazen not find themselves in a competing market but if they ever were to, they both accept that the relevant market, the New Zealand nutraceutical market, is highly specialised and therefore discernible.
Discussion
Our conclusion on the first issue provides the answer to Pharmazen’s primary contention that, in the absence of actual use of ACTAZIN, there can be no likelihood of deception or confusion by Pharmazen’s use of ActiPhen. The likelihood of confusion or deception in the s 25(1)(b) analysis is not to be assessed by reference to the actual use or reputation of trade mark C as the relevant measure.
Rather, as Gault P explained in Budweiser, the notional comparison contemplates any fair use of the trade marks in relation to any of the goods covered by the registrations. It is useful to set out the paragraph in its entirety:[39]
[66] The comparison of trade marks to ascertain whether there is deceptive or confusing similarity contrary to s 17(1) of the Trade Marks Act so as to establish a ground for removal of registrations is an entirely notional exercise. It contemplates any fair use of the marks in relation to any of the goods covered by the registrations. Opinion evidence that the marks are or are not confusingly similar is of limited value. That is for the Court. Evidence of what actually is occurring in the marketplace reflects particular forms of use and cannot fully answer the question. Evidence of the absence of actual confusion might be explained by reference to particular factors such as additional label features or market circumstances that will not always be present. By way of example, in the present case, when the Judge dealt with the passing-off claim (in which actual usage is at issue) the Judge said that even if he had found the trade marks deceptively similar he could still have rejected passing off because of the distinguishing market factors such as market sectors, likely customers, and promotion strategies. Those factors might explain the absence of confusion but have no relevance in the trade mark comparison by reference to any fair use of the marks.
[39]Anheuser-Busch Inc v Budweiser Budvar National Corp, above n 13.
On a proper analysis there is no authority which supports Pharmazen’s proposition. As Mr Arthur pointed out, both the Och-Ziff and O2 Holdings cases concerned trade mark infringement. They are not authority for the proposition that an owner’s actual use is relevant in s 25(1)(b) oppositions.
We recognise that there is support in the evidence for the proposition that manufacturers who are purchasers of the parties’ products are likely to be discerning with the consequence that the prospects of confusion between the trade marks on the part of manufacturers should be unlikely. Consequently if the demand side of the notional market comprised only manufacturers, then Pharmazen’s argument in reliance on Daimler would likely have traction.
However the issue of confusion and deception is to be determined by reference to any of the goods covered by the registrations. In our view the specification of the class 5 goods in the ACTAZIN registration is sufficiently broad to include retail sales.[40] That conclusion is supported by the evidence relating to the licensed English product, Actazin Kiwi Extract, marketed by Holland & Barrett.
[40]At [10] above.
Similarly, the specification of goods in class 5 for the ActiPhen registration is sufficiently broad to include products for sale directly to consumers. In that regard we draw attention to the reference to “pharmaceutical preparations to support gut health and digestion”. The issue is not whether Pharmazen intends to sell product at retail under the ActiPhen brand but whether to do so would be a fair use of the trade mark having regard to the scope of the registration.
Consequently we agree with Mr Arthur that the notional market would include ordinary consumers buying products from health shops or other outlets for food preparations adapted for medicinal purposes and dietary supplements for medicinal purposes. While we did not understand Mr Ormsby to seek to extrapolate the Daimler proposition to ordinary consumers, there would be no justification in our view for the proposition that, either on the basis of price or sophistication of the product, there should be attributed to ordinary consumers the discernment of a manufacturer when making a purchase with imperfect recollection of a product previously purchased.
Hence we conclude that Pharmazen has not demonstrated that its use of ActiPhen is not likely to deceive or cause confusion with products bearing the ACTAZIN brand.
Result
The appeal is dismissed.
Pharmazen must pay Anagenix costs for a standard appeal on a band A basis and usual disbursements.
Solicitors:
Wynn Williams, Christchurch for Appellant
In-Legal, Wellington for Respondent
6