Sea World LLC v Sea World Management Pty Ltd

[2018] NZHC 1995

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE

CIV-2018-485-139

[2018] NZHC 1995

BETWEEN

SEA WORLD LLC

Appellant

AND

SEA WORLD MANAGEMENT PTY LTD

Respondent

Hearing:	2 July 2018
Appearances:	L Carter and P Moodley for the Appellant B P Cain for the Respondent
Judgment:	7 August 2018

JUDGMENT OF COOKE J

Table of Contents

Assistant Commissioner’s Decision  [4]

Delays in the case  [9]

Arguments for Sea World US  [14]

Arguments for Sea World Australia  [18]

Issues not in dispute  [23]

Section 16 confusion – consistency of approach  [28]

(1)Nature of reputation  [34]

(2)Prominence of the words in the design marks  [37]

(3)Implications  [42]

Is there confusion?  [47]

Ensuring geographical limitation  [59]

Honest concurrent use  [63]

Summary and result  [66]

[1]                   Sea World LLC (Sea World US) is a corporation based in the United States of America. It has operated marine mammal amusement parks in San Diego and other locations in the United States. At the time of its application it was a well-established business, with a well-established reputation.  Sea World Management Pty Ltd (Sea

SEA WORLD LLC v SEA WORLD MANAGEMENT PTY LTD [2018] NZHC 1995 [7 August 2018]

World Australia) is an Australian based company which has offered a similar marine mammal amusement park on the Gold Coast in Queensland, Australia. At the time of its application it was also a well-established business with a well-established reputation.

[2]                   Both parties had used the name “Sea World” in association with their marine mammal amusement parks for many years in their respective countries. Both parties promoted their parks as tourist destinations to New Zealanders within New Zealand. On 27 May 1994, Sea World US’s predecessor submitted an application for registration of the word mark SEA WORLD in New Zealand. Sea World Australia’s predecessor lodged a notice of opposition in November 2001. On 1 May 1996, Sea World Australia’s predecessors submitted  an  application  for  the combined  mark  in New Zealand. Sea World US’s predecessor lodged a notice of opposition on 23 August 1999.

[3]                   The contested applications were consolidated, and evidence was filed by the parties at various dates between 2000 and 2002, although some of the evidence dates back as far as 1994. Following those initial steps, a large number of extensions of time were sought and obtained by consent over many years. Ultimately, on 26 May 2016, the Intellectual Property Office of New Zealand (the Office) advised that there would be no further delays noting that it was “strongly against the public interest, irrespective of the situation between the parties”. Ultimately the disputes between the parties were subject to a decision made by Victoria Casey QC, Assistant Commissioner of Trade Marks, on 26 January 2018.1 This was some 24 years after the first application had been filed. In the meantime, the Trade Marks Act 2002 (the 2002 Act) had been passed. It is accepted that the transitional provisions apply to the applications, and they were accordingly addressed under the terms of the Trade Marks Act 1953 (the 1953 Act).

Assistant Commissioner’s Decision

[4]                   The Assistant Commissioner dealt first with the Sea World US’s application, which had been filed first in time. She rejected the argument that Sea World US had

1      Sea World LLC v Seaworld Management Pty Ltd [2018] NZIPOTM 4.

no intention to use its trade mark on the basis that the inference of a genuine intention to use a mark at the time the application was lodged was not displaced. She also rejected the argument that the trade mark lacked distinctiveness on the basis that the mark was sufficiently distinctive to refer to identifiable marine amusement parks, noting the evidence from travel agents that Sea World was recognised as referring specifically to particular marine amusements parks either in Queensland or in the United States.

[5]                   The Assistant Commissioner nevertheless upheld the objection based on s 16 of the 1953 Act, which provides:

16   Prohibition of registration of deceptive, etc, matter

(1)It shall not be lawful to register as a trade mark or part of a trade mark any scandalous matter or any matter the use of which would be likely to deceive or cause confusion or would be contrary to law or morality or would otherwise be disentitled to protection in a Court of justice.

[6]                   The key reason for that conclusion was that the Sea World Australia mark had reputation in New Zealand and that the identical words and sounds of the marks, and the similarity in meaning and idea behind the marks, would inevitably lead to confusion such that registration would be contrary to s 16.

[7]                   In relation to the Sea World Australia application, she rejected the contention that Sea World Australia was not the owner of the trade mark. Whilst it was unclear which party first used the words Sea World in New Zealand and thereby obtained ownership, there was no dispute that Sea World Australia owned the mark . In terms of the application of s 16, the Assistant Commissioner concluded that the evidence was sufficient to show that Sea World US had the necessary reputation to engage s 16, but only in relation to the particular highly stylised marks that Sea World US used, and not in relation to the words “Sea World” on their own. Then in relation to the highly stylised marks that each party used, she held that the visual differences between them were sufficient to alert consumers and those in the travel industry that they indicated different trade origins such that s 16 confusion would not arise. She also rejected a further argument that a Sea World US trade mark referred to in written

submissions was sufficiently similar to Sea World Australia’s trade mark to engage   s 17(3)(c).

[8]                   In accordance with s 66 of the 1953 Act, Sea World US appeals the Assistant Commissioner’s decision to this Court. It is a general appeal to which the approach referred to in Austin, Nichols & Co Inc v Stichting Lodestar applies.2 Section 66(3) also provides that this Court on appeal has the same discretionary powers as the Commissioner.

Delays in the case

[9]                   Before proceeding to address the arguments made on the appeal, it is appropriate to record a concern arising from the delays associated with the proceedings.

[10]               It seems somewhat surprising that applications filed in 1994 and 1996 can appropriately be delayed for decision until 2018. As I understand it, whilst the trade marks applied for would not have the protection of full registration, once an application had been made the fact of the application is apparent, and any third party would have been aware that any subsequent successful registration could lead to enforcement proceedings arising from any infringement of the trade mark in the interim. So allowing for delays might be in the tactical best interests of both the parties.

[11]               Given the delays I issued a minute before the hearing to understand the approach that was being applied that had led to this outcome. The parties clarified the position with the Office, and supplied information to the Court, including further information that I requested be provided following the hearing. On the basis of this material I understand that the Office previously allowed applications of this kind to be delayed in this manner. In addition, the approach has been adopted that the Office can subsequently grant an extension to a trade mark when it is ultimately granted, even if the period of its initial registration has passed. In the present case, the initial seven- year period of registration under s 29(1) of the 1953 Act would have expired for these

2     Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.

particular trade marks in May 2001 and in May 2003. It is said that such registrations can nevertheless be treated as having been renewed under s 29(2) of the 1953 Act for a further 14 years until May 2015 and May 2017, and then further renewed under s 58 of the 2002 Act. It is also said that such extensions would be granted even though the original registration periods have passed, provided that the extension fees that would have been payable are all paid.

[12]               It might be questioned whether this approach is truly consistent with what Parliament would have intended. Parliament may not have contemplated that extensions could be granted so many years after the application has been made where the initial registration period has passed. I accept, however, that it is not appropriate for me to reach any conclusion, or make any finding to that effect. The practice of the Office has apparently been to the effect described above for many years, and parties have presumably acted in reliance on that approach. Similar delays are apparent from other cases dealt with by the Courts.3 I am advised that the Office is no longer as lenient in relation to extensions of time. I take it from that that, prospectively, there is little risk of cases with such extraordinary delays reoccurring.

[13]               This background does lead to a peculiarity with the present case. The Assistant Commissioner, and this Court, have been called on to make the judgments required under the (now repealed) 1953 Act on the basis of evidence from 16–24 years ago in relation to the state of the relevant knowledge in the market of the marks in 1994 and 1996. There is also no information before the Court on what has happened over the last 16 or more years. In the present case, the difficulties of that exercise are increased because, as the Assistant Commissioner found, the evidence that was filed at the time was very limited on some of the key issues.

Arguments for Sea World US

[14]               By way of summary, on appeal Sea World US contends that its trademark application should have been registered, and Sea World Australia’s rejected.

3      See, for example, Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Ltd [1978] 2 NZLR 50 (CA) where the Court of Appeal in 1977 dealt with an application made in 1963.

Alternatively it argues that both applications could have been granted with appropriate limitations to reflect 30 years of concurrent use.

[15]               It argued that the Assistant Commissioner erred in concluding that Sea World US’s trademark would give rise to confusion in under s 16 because of the Sea World Australia mark. Based on the approach in Pioneer Hi-Bred Corn Co,4 NV Sumatra Tobacco Trading Company v British American Tobacco (Brands) Inc5 and Sexwax Inc v Zoggs International Ltd,6 it argued that the full circumstances bearing on the likelihood of confusion had not been addressed, including the fact that there was no evidence of any actual confusion between the marks. It argued that the power to limit the specification of services could have been used to deal with any remaining concerns.

[16]               It further contended that the principle of honest concurrent use, as recognised in General Electric Co v General Electric Co Ltd7 and VB Distributors v Matsushita8 should have been applied given the period of concurrent use, and notwithstanding that it had not been pleaded. It said that the Assistant Commissioner erred in not allowing the argument to be raised.

[17]               In terms of the challenge to the registration of the Sea World Australia trade mark, it contended there was an inconsistency in the approach of the Assistant Commissioner in identifying stylisation differences in the marks as a basis to allow the Sea World Australia registration, but not allowing the Sea World US registration. None of the evidence of the travel agents referred to such stylisation as being significant. Nor had the Assistant Commissioner limited the scope of registration to avoid confusion.

4      Pioneer Hi-Bred Corn Co, above n 3.

5      NV Sumatra Tobacco Trading Company v British American Tobacco (Brands) Inc [2010] NZCA 24, (2010) 86 IPR 206.

6      Sexwax Inc v Zoggs International Ltd [2014] NZCA 311, [2015] 2 NZLR 1.

7      General Electric Co v General Electric Co Ltd [1973] RPC 297 (HL) per Lord Diplock at 326.

8      VB Distributors v Matsushita (1999) 9 TCLR 349 (HC).

Arguments for Sea World Australia

[18]               By way of summary, Sea World Australia generally supported the Assistant Commissioner’s decision on the Sea World US’s applications. It objected to the unpleaded argument of honest concurrent use, relying on the potential prejudice arising from allowing the argument to be raised at such a late stage, a factor regarded as important by the relevant authorities.9

[19]               It supported the Commissioner’s finding on the reputation associated with the Sea World Australia design mark, and argued further that it would be illogical to find it had a reputation in the design mark but not the name, particularly given the prominence of the name, its oral use, and the use of the word in the written material.

[20]               Sea World Australia further argued that it was significant that neither of the marks incorporated reference to the physical location of the parks, which would mitigate the likelihood of confusion. In terms of oral use of the marks consumers would simply say the word Sea World. Moreover the category of services involved was identical.

[21]               In terms of the evidence relevant to that question, it submitted it was clear that travel agents distinguished between the operations on the basis of the location of the respective parks, so that the use of the simple words without geographic limitations would be likely to cause confusion. It further emphasised that it was the likelihood of confusion at the relevant date, rather than actual evidence of confusion that was important. It said that the Commissioner was accordingly right to reject the Sea World US application given that the words were a key feature of the Australian trade mark. It said that the outcome was similar to that found in Schuhhaus Dielmann GmbH & Co KG v Office for Harmonisation in the Internal Market (OHIM) with respect to trademarks using the word “Carrera”.10

9      Such as Paper Reclaim Ltd v Aotearoa International Ltd (further evidence) (No 2) [2007] 2 NZLR 124 at [15]; and Saunders v Project Management Agreement and Associates Ltd [2018] NZCA 18 at [57].

10     Schuhhaus Dielmann GmbH & Co KG v Office for Harmonisation in the Internal Market (OHIM)

T-600/11 (2014), [2014] All ER (D) 14 (Feb).

[22]               In terms of the Sea World Australia application, in addition to supporting the Commissioner’s reasoning, Sea World Australia argued that Sea World US had not established a reputation in the more stylised logos and devices. It further argued that the knowledge of geographical limitation of the respective operations was not treated by the Commissioner as determinative.

Issues not in dispute

[23]               Before addressing the key issues relevant to the appeal, it is important to identify certain matters that have arisen in the proceedings which are no longer in dispute.

[24]               First, when rejecting the argument that the Sea World US mark was not distinctive, the Assistant Commissioner held:11

(1)Applying these principles to the present application, I consider that the word mark SEA WORLD is sufficiently distinctive that it is capable of acting as a trade mark to signify the trade origins of marine amusement park services.

(2)The evidence filed by Seaworld Australia appears to confirm that position. Mr Menzies’ evidence is consistent with the view that as far back as the 1970s the phrase SEA WORLD was regarded as sufficiently distinctive to refer to identifiable marine amusement parks. The evidence from the various travel agents similarly confirms that “Sea World” is recognised as referring specifically to particular marine amusement parks either in Queensland or the US. This is not consistent with the words being generic across marine amusement parks or similar services generally.

[25]               This finding is not disputed. It is important as it demonstrates there is a market reputation for marine park amusement services associated with the word Sea World for both Sea World Australia and Sea World US.

[26]               Secondly, in the context of Sea World Australia’s application, the Assistant Commissioner noted that the evidence was unclear on who first started using the words Sea World in New Zealand to obtain ownership of the mark. Before me neither party really disputed that the state of the evidence is unclear on that point. The evidence

11     Footnotes omitted.

simply demonstrates that both parties began using those words in describing their amusement parks some time before 1987.

[27]               Finally Sea World Australia no longer pursues its argument that Sea World US had no intention to use its trade mark, and Sea World US no longer pursues its argument under s 17(3)(c) in relation to another of its trade marks.

Section 16 confusion – consistency of approach

[28]               The Assistant Commissioner considered whether Sea World Australia’s mark had sufficient reputation in New Zealand at the relevant date to engage s 16, and she concluded that it did. She then considered whether registration of the Sea World US mark would likely lead to confusion of the type contemplated by s 16 in light of that reputation. She held:

39.The two marks use the words SEA WORLD: this is the full content of the mark in 237315 and a key feature in Seaworld Australia’s mark. The addition of the marine animal above the words and the general stylisation in the latter mark is not in this case sufficient to distinguish the two. Those differences do not off set the identical words and sounds of the marks, and the similarity in meaning and idea behind the marks. Both marks bring to mind marine amusement parks and associated goods and services. In the context of application 237315, a consumer or person in the trade familiar with Seaworld Australia’s mark   who then encountered the simple word mark SEA WORLD, would inevitably be caused to wonder whether there was a trade connection between the two.

40.This ground of opposition is made out. Registration of Sea World US’s trade mark SEA WORLD would be contrary to section 16 of the Trade Marks Act 1953.

[29]               The Assistant Commissioner was also required to conduct a similar analysis in relation to the application of s 16 to the Sea World Australia application. In this context, she found that Sea World US had failed to demonstrate the required reputation in the word mark SEA WORLD. She held:

63.While it could be inferred that substantial numbers of New Zealanders were aware of the existence of the Sea World theme parks in the US at the relevant date, this is not the same as people identifying the words SEA WORLD on their own as a trade mark belonging to that brand specifically. In my view, it is more likely that for both those in the travel industry and end consumers, the words SEA WORLD appearing on their own would be taken as referring to either the US or the Australian

theme parks as a destination, and not the US theme parks specifically. It would only be the more stylised representations used by each party in their promotional material would have been recognised as the trade marks belonging to each brand.

64.On that basis, I find that on the evidence before me Sea World US did not at the relevant date have sufficient reputation in New Zealand in the bare words SEA WORLD to engage section 16.

65.This may, however, not be the end of the matter. The pleadings and evidence in these two applications are not particularly clear and tend to merge the concepts of market recognition of the marine amusement parks with market recognition of particular trade marks. It may be that Sea World US relies not only on its reputation in the word mark SEA WORLD (which I have found is not supported by the evidence) but also on its reputation in the more stylised logos and devices that appear in the brochures and other promotional material put forward in its evidence, described above. There is support in the evidence for a level of market awareness in New Zealand of those marks at the relevant date. It is also a reasonable assumption that New Zealand visitors to the parks were also exposed to these marks at the time. Overall, this evidence is sufficient to meet the low threshold for a sufficient reputation to engage section 16, but only in relation to those particular, highly stylised, marks.

[30]               The Assistant Commissioner then closely considered the particular, highly stylised, trade marks used by each of the parties including the following Sea World US trade marks:

[31]The Assistant Commissioner then held:

67.Adopting the approach set out above to assessing the similarities between the marks, I conclude that a fair notional use of Seaworld

Australia’s mark in relation to these services is not likely to deceive or cause confusion.

68.Of particular note is the absence of any wave pattern in the US marks, which is a strong feature of the Australian mark. The stylised marine mammal in the first US mark is also very different visually from the more realistic dolphin in the Australian mark. The second US mark with its more realistic killer whale image is distinguished from the Australian mark because of the circular impression (as opposed to the linear form of the Australian mark), the splash of water and the very stylised writing below it, especially the swirl on the W letter. Similar points of difference arise with the third mark, where the circular device replaces the letter ‘o’ in World.

69.While the marks all have the same idea, and clearly relate to marine amusement parks, the visual differences between them are sufficient to alert consumers and those in the travel industry that they indicate different trade origins. This is particularly so given the evidence demonstrating a general understanding in the market at the relevant date that there are two different Sea World brands operating, one based in the US and one based in Australia. People aware of both would therefore be likely to exercise a level of attention to the differences between their associated trade marks.

[32]               Accordingly, the Assistant Commissioner concluded that the registration of the SEA WORLD mark would likely cause confusion with the    mark, but the registration of the     mark would not cause confusion with the SEA WORLD mark. The different approach arises from the Assistant Commissioner’s findings in relation to the reputation existing (or not existing) in the more simple word mark.

[33]               I accept the submissions advanced by Ms Carter that this involves an erroneous approach. That is so for two related reasons.

(1)Nature of reputation

[34]               First, the Assistant Commissioner erred when considering the nature of the reputation arising from Sea World US’s use of the name Sea World. In the leading case of Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Ltd, the Court of Appeal was dealing with a situation having some factual similarities with the present case.12 An Australian company had used the trade mark HY-LINE for its live chicken and poultry services. An American company, Pioneer Hi-Bred Corn Company, used the identical name in its trade mark for its similar products in the United States. The Australian

12     Pioneer Hi-Bred Corn Co, above n 3.

company applied to register a trade mark for the simple words in New Zealand in association with conducting business here. The American company had never conducted business in New Zealand, but had a business reputation here, and it opposed registration. There was no cross-application for a trade mark by the American company. The Court of Appeal upheld the Supreme Court decision that the Australian application should be denied because of s 16.

[35]               When addressing the enquiry under s 16, the Court emphasised that the relevant focus was on the confusion arising from the knowledge of the mark of the opposing party, even when the opposing party could not establish a proprietary right in that mark. Richardson J held:13

It must be remembered, too, that the object of s 16 is not to protect competitors and potential competitors of the applicant so, the likelihood of damage to the trade of the opponent is not a relevant consideration under s 16 (Hack’s Application, pp 106-107). The object is to protect the public interest by refusing to accord monopoly rights to a mark, the use of which is likely to deceive or confuse those in the market for the goods. The concern is with the protection of the relevant New Zealand buying public, not with the protection of the applicant’s competitors. Therefore, consideration in narrow terms of questions as to whether the opponent has as established business goodwill in New Zealand, which is important in a passing off action (Alain Bernardin et Compagnie v Pavilion Properties Ltd [1967] RPC 581), is not helpful in an inquiry under s 16. Indeed, by diverting attention from the real issue, it may mislead or at any rate unnecessarily complicate the issues under s 16. And a test framed in terms of the “user” of the opponent’s mark in New Zealand has undesirable overtones of proprietorship. For myself I prefer to use a more neutral term such as “awareness” or “cognisance” or “knowledge” and on that basis to ask: having regard to the awareness of the opponent’s mark in the New Zealand market for goods covered by the registration proposed, would the use of the applicant’s mark be likely to deceive or cause confusion to persons in that market.

[36]               For the same reasons, it seems to me that the Assistant Commissioner’s approach was diverted, or unnecessarily complicated, by a focus on the reputation associated with the word mark as a trade mark. It does not matter that Sea World US is not able to establish a reputation in the word mark SEA WORLD of a kind that gives it a proprietary interest in such words as a trade mark. All that needs to be established is that there was relevant awareness, cognisance or knowledge of that mark in the New Zealand market. And having an awareness of a “mark” in this context means no more

13     At 63.

than awareness of a business name being used for the relevant services. On that question, the evidence is that significant parts of the relevant New Zealand market were well aware of the marine mammal amusement park operating under the name Sea World in the United States and promoted in New Zealand. That was essentially what the Assistant Commissioner had found at [27] and [28] of her decision when concluding that the words Sea World were distinctive of marine mammal amusement park services in Australia and the United States. The fact that there was a knowledge of use of the name Sea World for such parks in the United States by the New Zealand market is sufficient in itself to engage s 16, even if the market was also aware of the use of the words Sea World in relation to the park in Australia. Indeed, the fact that there is knowledge of such services being offered by both the American and Australian businesses is precisely the type of problem that s 16 is directed to. So the Assistant Commissioner’s finding at [63] that the words Sea World on their own were more likely to be known to refer to either the Australian or US theme parks, rather than the US parks specifically, means that a s 16 issue arose, rather than meaning it did not.

(2)Prominence of the words in the design marks

[37]               There is a second, and closely related point. To the extent the Assistant Commissioner found that there was no confusion in the New Zealand market because any such confusion did not arise because of the particular features of the more stylised design marks used by each party, then I do not accept that that finding is correct. The words “Sea World” dominate the visual presentation of each of the more detailed design marks. The relevant marine parks are known as “Sea World”. On an objective basis, I do not accept that relevant consumers would recognise only the design details, and not the key striking similarity arising from the use of exactly the same words in the design marks.

[38]               This is consistent with the evidence that was filed, which did not suggest that the different design details were the focus of consumers and industry experts. For example, Mr Glenn Ormsby, who was the New Zealand manager of the Queensland Tourist and Travel Corporation in 1997, said in his declaration:

AUSTRALIA is a more affordable holiday destination for New Zealanders than the United States. I believe many prospective holiday makers would be aware that there is a SEA WORLD organisation in San Diego, Southern

California but I do not think it is nearly as well known as the SEA WORLD in Australia’s Gold Coast. I expect that is partly because more New Zealanders head for Queensland than to the United States so that they are more familiar with Australia’s Gold Coast attractions than those in other countries and towns such as San Diego.

I have no doubt at all from my experience that very many New Zealanders are aware of the Australian SEA WORLD and certainly far more than would be aware of the US SEA WORLD.

[39]               As this says, there was market knowledge of Sea World Australia and Sea World US. Mr Ormsby was contending that Sea World Australia was better known. But he accepted that Sea World US was known to the market. That arose from the use of the words Sea World in connection with the marine mammal amusement parks in the United States. This evidence is consistent with the evidence of other witnesses.14

[40]               A similar point arises from the Assistant Commissioner’s comparison between the two sets of design marks. The features of those marks she concentrated on do indeed demonstrate distinctive differences between the more detailed designs. But when comparing the marks, she did not address the one key feature that makes them similar. That is that they both use the words Sea World as the central feature. Her analysis focuses on the differences, without taking account of the thing that is the same. It may be possible for the design details to be so significant that they effectively distinguish between two trade marks that use exactly the same name. But those details would need to overwhelm the key point of similarity.

[41]               It is unrealistic to suggest that is so here. First, such design detail differences only arise in relation to the visual display of the mark. When describing the services orally, such design features would not be present. A travel agent, or a traveller, would simply be describing the experience they had, or were hoping to have, at “Sea World”. Secondly, even in the visual representation of the trade marks, the Sea World name dominates. As the Commissioner held when dealing with the Sea World US application the “differences do not off set the identical words and sounds of the marks, and the similarity in meaning and idea behind the marks”.15

14 See [49]–[53] below.

15     Sea World LLC v Seaworld Management Pty Ltd, above n 1, at [39].

(3)Implications

[42]               For these reasons, there is an inconsistency in the findings made by the Assistant Commissioner on the two applications. The different treatment does not legitimately arise from a finding that there is no reputation established by Sea World US in the bare SEA WORLD mark. The evidence, and the Assistant Commissioner’s earlier findings, recognise there was knowledge of the words Sea World associated with the Sea World US marine mammal assessment parks that were promoted in New Zealand. That is sufficient to trigger s 16. Confusion under s 16 would also not be avoided by the particular design features of the parties’ respective marks.

[43]               It is accordingly necessary to consider the implications of these findings for the two applications. Does this mean that both should have been granted, or that both should have been declined?

[44]               This situation is again similar to that considered by the Court in Pioneer Hi- Bred Corn Co. There the Australian company was applying for New Zealand registration of the word mark HY-LINE. It had obtained such a registration in Australia, but it also used trade marks with that word in conjunction with design features.16 The American company had an American trade mark with the words “HY- LINE” in a design mark.17 When denying the Australian company the registration, Richardson J noted that it did not matter that there may be confusion even without registration. He held:18

… But under s 16 it is not a matter of whether, in the absence of registration, the relevant public are likely to be uncertain whether goods marketed in New Zealand under the HY-LINE mark are associated with the appellant or the respondent. The use of an unregistered mark may be likely to deceive or cause confusion. Section 16 is concerned with something different; with the likelihood of deception or confusion arising from the use of a registered mark. Moreover, it is sufficient if a considerable section of those in the New Zealand market are likely to think that, in buying goods under a New Zealand registered mark, HY-LINE, they are buying a product of or associated with the American company. It is not relevant that, because of awareness of the appellant's activities, some others in the market would not be misled or confused. There may be very special cases in which no-one may be able to register a mark. That is where there is a significant section of the market which

16     Pioneer Hi-Bred Corn Co, above n 3, at 59.

17     Pioneer Hi-Bred Corn Co, above n 3, at 58.

18     At 77.

associates goods under that mark with one firm and there is another significant section of the market which associates goods under that or a similar mark with another source. It seems to me entirely reasonable in the public interest that in that situation neither firm should have the monopoly rights in New Zealand conferred by registration and thereby benefit from the misleading or confusing use of the mark…

[45]               Following that approach, it does not  matter  that  some  sections  of  the  New Zealand market associated Sea World solely with the Australian company. All that matters is that some sections of the market associated the word Sea World with the American company, or that the market associates Sea World with both. If so, it is not appropriate to give the Australian company the monopoly.

[46]               A key question in this case, therefore, becomes whether we are within the very special category of case described by Richardson J. Given that both companies have operated in their respective countries for some time, and both have promoted their services in New Zealand using the word Sea World, is this a case where both should be denied registration because there is inherent confusion arising from either of them obtaining a trade mark incorporating the words Sea World? Or put another way, is this a case where both should be denied registration, or a case where both registrations should be allowed? The answer to this question may lead to consideration of honest concurrent use under s 17(5) of the 1953 Act.

Is there confusion?

[47]               The answer to the above question turns on whether there is the likelihood of confusion in the manner contemplated by s 16. This may also involve the possibility of confusion as addressed by s 17(3) of the 1953 Act as the Sea World US application was first in time.

[48]               In her decision, the Assistant Commissioner correctly set out the principles that would apply to that question. One of the principles from the case law, as summarised by Richardson J in Pioneer Hi-Bred Corn Co, is:19

(5) In considering the likelihood of deception or confusion all the surrounding circumstances have to be taken into consideration, including the circumstances in which the applicant's mark may be used,

19     Pioneer Hi-Bred Corn Co, above n 3, at 61.

the market in which his goods may be bought and sold and the character of those involved in that market.

[49]               One of those considerations arising from the circumstances, which to my mind is critical to the outcome of this case, is the clear geographic separation between Sea World US and Sea World Australia. In Pioneer Hi-Bred Corn Co, the Australian company was selling goods within New Zealand that could be confused with the American products. But here Sea World Australia offers marine mammal amusement park services solely in Australia, and Sea World US offers marine mammal amusement park services solely in the United States. Consumers will know which services are involved because they are location based services. Consumers will also need to travel to the specific countries to have access to the services, and such consumers know which country they are travelling to when accessing the services. Any initial uncertainties would be clarified in the processes involved in making decisions about services to be accessed during international travel such that there would be no real confusion.

[50]               The position is accurately identified in the evidence that was filed, particularly the evidence from Sea World Australia. Mr Graeme Manson, who was the New Zealand Manager of Tourism Queensland in 2002, said:

I am not at all confused between the Australian Sea World theme park, and the Sea World theme parks operated in the USA under the same name.

…

I do not believe that when booking a visit to the Sea World theme park a New Zealand holiday maker would be likely to be either confused or deceived as to their destination. America and Australia are two totally geographically opposed destinations.

[51]               Similarly, Mr Ralph Levinson, who was the Managing Director of Travelworks New Zealand Limited in 2002, said:

I am not at all confused between the Australian Sea World theme park, and the US Sea World theme park. They are separate businesses, in different countries. If it is necessary to differentiate between the two, I use the terms “Sea World Australia” or “Sea World San Diego”, as appropriate, qualifying the words “Sea World” by the appropriate geographical location for the theme park.

[52]               Mr William Mabey, who was the Managing Director of Tours and Travel (Newmarket) Limited in 2002, said:

If a client was to tell me that he or she wished to visit Sea World, I would immediately make enquiry of that client as to which Sea World they wanted to visit. Because the Sea World theme park in Queensland is in a different direction to the Sea World theme parks in the USA, clients will always know which of the Sea World theme parks they wish to visit, as these visits are normally part of a bigger tour schedule, involving other attractions in the relevant geographical location.

Therefore, I identify each of the Sea World theme parks by reference to their individual locations. I am not confused between the theme parks because of their wide geographical separation, and I am not aware of any customers ever having been confused between Sea World Queensland on the one hand, and the Sea World theme parks in the USA, on the other.

[53]               And Ms Carol Kirkley-Newton, who was a Business Development Manager of Sea World Australia in 2002, said:

I am unaware of any reports from within my Company or from our New Zealand travel wholesalers or agents of any confusion between my Company’s Trade Mark and any “Sea World” trade mark owned by Sea World, Inc. …

[54]               That evidence is consistent with the circumstances surrounding the use of these marks. It is highly unlikely that there will be any confusion in the minds of the relevant consumers of any material kind. We are dealing with two distinct travel locations for New Zealand travellers. Any initial potential misunderstanding or confusion will be resolved when consumers attend to the more detailed analysis of their travel plans. On that basis both trade marks can be utilised within New Zealand to promote the respective marine mammal amusements parks in the respective countries without real confusion arising.

[55]               Notwithstanding this evidence, which was filed by Sea World Australia, the Assistant Commissioner upheld Sea World Australia’s objection that registering the Sea World US trade mark would cause confusion. I accept the Assistant Commissioner’s view that the evidence does not deal with the critical date associated with the period leading up to the actual applications for the trade marks in 1994 and 1996. But this evidence is nevertheless relevant to an assessment of the character and circumstances of the use of a trade mark at the relevant date. In reality, the evidence related to the earlier period was little more than evidence that the parties promoted

their respective trade marks in the New Zealand market at that stage. The evidence relevant to the subsequent period gives a fuller picture of the character of the trade marks, and the circumstances of their use in the New Zealand market. That evidence is appropriately considered when assessing the application of ss 16 and 17 at the relevant period.

[56]               There remains possible confusion on the basis that consumers might think that there is a business connection between Sea World Australia and Sea World US. It may be that the Assistant Commissioner was referring to that possible confusion at [39] of her decision. Such confusion has not been referred to anywhere in the evidence. Indeed, this hypothetical confusion is not consistent with the evidence I have referred to. Given that the marine mammal amusement parks operate in different countries that are geographically distinct, I think it unlikely that this possible confusion of this kind would operate in any material way.

[57]               Accordingly, I conclude that the Assistant Commissioner erred in reaching the conclusion expressed at [39] and [40] that there was s 16 confusion that meant that the Sea World US trade mark should not be registered. It is not a case that falls within the special circumstances described by Richardson J. Rather it is a case where both the unregistered trade marks in use can now be duly registered. The appropriate outcome for the applications, therefore, is that both should be granted. That is subject to one qualification, which I turn to next.

[58]               Before addressing this qualification, I should make express what is implicit in these findings. Subject to any different evidence being provided, and to the qualifications outlined below my conclusions mean that Sea World Australia would also be entitled to register a Sea World name mark, and that Sea World US would be entitled to register its design marks.

Ensuring geographical limitation

[59]               In addressing this potential outcome during the hearing, I asked Mr Cain to explain what the key difference was between Sea World US obtaining registration of a word mark, and Sea World Australia obtaining registration of a design mark. He responded by saying that a word mark was a more significant right in the hands of the

registered party. He argued that Sea World US would have a more powerful weapon. A design mark might adapt over the years such that the originally registered mark would no longer protect what was being used. But a word mark would retain its registration notwithstanding any such adaptions over time. The rights in a word mark exist for all manifestations of a word. He further emphasised these points in the written submissions that I gave him leave to file following the hearing. These included examples of the advice given, including by the Office, that word marks provide rights of greater significance because of such factors. And he argued that a trade mark in the words could be used by Sea World US to prevent Sea World Australia ever using the words “Sea World” in its promotional material, as this by definition would infringe the Sea World US word mark.

[60]               I put to Mr Cain that that the scenario of Sea World US preventing Sea World Australia using the words Sea World would not arise if the specification for the Sea World US trade mark was limited to a trade mark protecting marine mammal amusement park services solely in the United States. That would give Sea World US the monopoly right over use of the word Sea World in the New Zealand market, but only in relation to such services in the United States. This would mean that Sea World Australia could continue to use those words in connection with such services in Australia. Such qualifying words could qualify both marks, so that Sea World Australia’s trade mark would similarly be limited to such services in Australia. And such limitations would also be required for future registrations.

[61]               Mr Cain accepted that that may well be the case, whilst emphasising there would be residual risk. Given the findings of this judgment I see no material residual risk. Mr Cain was unable to identify any other inappropriate prejudice arising to Sea World Australia if that step was taken either at the hearing, or in the subsequent written submissions.

[62]               It seems to me that such qualifications on each trade mark would be appropriate in any event given the remaining potential area of consumer confusion identified at

[56] above. That remaining possible confusion is further protected against if the trade marks are overtly limited to use in association with the services offered by Sea World Australia and Sea World US in their respective jurisdictions. I asked the parties to

confirm the relevant wording limitations in the specifications should this be the Court’s ultimate conclusion, and they duly did so in a joint memorandum dated 23 July 2018. Sea World US’s specification will accordingly be for “marine amusement park services within the United States of America”, and Sea World Australia’s specification will accordingly be for “travel services in the nature of providing of information to travellers and vouchers for tours abroad inclusive of entry into amusement parks within the Commonwealth of Australia”.

Honest concurrent use

[63]               Given the above conclusions, it is not necessary to address the further argument of Sea World US that honest concurrent use under s 17(5) arose, which would allow both trademarks to be registered. Had it been necessary to decide that matter, I may have allowed the argument to be advanced, and may have held that the section applied.

[64]               There is an issue whether s 17(5) applies to confusion covered by s 16. It clearly does with respect to the type  of  confusion  arising  under  s  17,  but  in  New Zealand confusion arising as a result of the use and existence of two trademarks has been  addressed under s 16 as well as s 17.   In my  view the better view is that    s 17(5) applies notwithstanding s 16 if the relevant question arises purely from confusion between two trademarks. That is more consistent with the purpose of the provisions.

[65]               Sea World Australia objected to s 17(5) being raised when it had not been pleaded, and the Assistant Commissioner accepted that objection. It is certainly raised very late. I may nevertheless have been inclined allow the argument to be advanced. The parties appear to have filed complete evidence on the use of the trademarks by each other at the time. It is unclear what further evidence could have been provided on honest concurrent use.  Moreover, this seems to be the very type of situation that  s 17(5) is directed to. It does seem to be a case where there has been honest concurrent use by both parties in a manner meeting the requirements of the subsection as recognised by the authorities. But, given that my conclusions on the other issues, it is not necessary to reach concluded views on this point.

Summary and result

[66] For the above reasons, I conclude that the Assistant Commissioner erred when applying s 16 by concluding that the market knowledge of the Sea World US trademark was limited to its highly stylised design marks, and by concluding that the stylistic differences between the Sea World Australia and Sea World US design marks meant there was no s 16 confusion. I have found that there was market cognisance of the use of the word “Sea World” by Sea World US, and the use of those words in the design marks creates obvious similarity between those marks, and accordingly the potential for confusion. But I further find that the clear geographic limitation associated with each of the business operations, and accordingly of the trademarks, means that no s 16 confusion arises when the full circumstances are considered. It follows that both marks can be registered. The geographical limitation should nevertheless be reflected in the amendments to the schedule referred to at [62] above.

[67]               The Assistant Commissioner was accordingly correct to allow the Sea World Australia application, but erred in declining the Sea World US application. The appeal is accordingly allowed in part.

[68]               As to costs my preliminary view is that the appellant has succeeded with one of its arguments, but failed on the other. In those circumstances it seems to me that the appropriate order is that costs should lie where they fall. That outcome would also be consistent with the result of the proceedings generally. If costs cannot be agreed, a memorandum from the appellant is to be filed within 15 working days of the release of this judgment, and a memorandum from counsel for the respondent within 10 working days of receipt of the appellant’s memorandum. Both memoranda are to be no more than 10 pages.

Cooke J

Solicitors:

A J Park Law, Wellington for appellant James & Wells, Hamilton for respondent