Target Australia Pty Limited v Target New Zealand Limited
[2019] NZHC 923
•30 April 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2018-485-000436
[2019] NZHC 923
UNDER The Trade Marks Act 2002 IN THE MATTER OF
an appeal from the decision of the Assistant Commissioner of Trade Marks dated 18 May 2018 [2018] NZIPOTM
BETWEEN
TARGET AUSTRALIA PTY LIMITED
Appellant
AND
TARGET NEW ZEALAND LIMITED
Respondent
Hearing: 28 November 2018 Appearances:
D J Chisolm QC & S Wheeldon for Appellant
G F Arthur & C S Fleetwood-Smith for Respondent
Judgment:
30 April 2019
JUDGMENT OF VAN BOHEMEN J
This judgment was delivered by me on 30 April 2019 at 3.00pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Counsel/Solicitors:
D J Chisholm QC, (Waterloo Chambers) Auckland Lee Salmon Long, Auckland
S Wheeldon, (Quay Chambers), Auckland G F Arthur (Clifton Chambers), Wellington A J Park, Auckland
TARGET AUSTRALIA PTY LIMITED v TARGET NEW ZEALAND LIMITED [2019] NZHC 923 [30 April 2019]
Introduction
[1] Target Australia Pty Ltd has appealed a decision by the Assistant Commissioner of Trade Marks in which the Assistant Commissioner:1
(a)Revoked three trade marks registered by Target Australia for use under class 25 of the Nice Classification;2 and
(b)Partially revoked and restricted the use of three other trade marks registered by Target Australia for use under class 24 of the Nice Classification.
[2] Target New Zealand Ltd, whose application to revoke the six trade marks gave rise to the Assistant Commissioner’s decision, opposes Target Australia’s appeal.
Relevant background
[3] Target Australia is an Australian company that operates over 300 department stores in Australia which sell clothing and household items. It is part of the Wesfarmers group, which includes the Kmart stores. Target Australia operates a website through which its products can be purchased on-line by customers in New Zealand as well as Australia.
[4] Target New Zealand is part of a group of companies carrying out franchise, wholesale and retail operations in New Zealand under the trade mark TARGET. Its
1 Target Australia Pty Ltd v Target New Zealand Ltd [2018] NZIPOTM 16, (2018) 8 NZIPJ 188.
2 Clause 3 of the Trade Marks Regulations 2003 provides:
class means a class of goods or services according to the Nice Classification.
Section 5 of the Trade Marks Act 2002 provides:
Nice Classification means the classification of goods and services for the registration of marks published from time to time under the Nice Agreement.
Nice Agreement means the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks adopted at Nice on 15 June 1957, as amended from time to time.
business primarily comprises the retail sale of furniture. It commenced use of the brand TARGET in New Zealand in 1991.
[5] Both Target Australia and Target New Zealand have registered trade marks in New Zealand under the Trade Marks Act 2002:
(a)In 1995, Target Australia registered six trade marks:
(i)Three were registered as class 24 for the goods “textiles and textile goods, not included in other classes; bed and table covers”:
1. 245344: TARGET
2. 245354:
3. 245346:
(ii)Three were registered as class 25 for the goods “clothing; footwear; head gear”:
1. 245347: TARGET
2. 245348:
3. 245349:
(b)In 2004, Target New Zealand registered trade mark 720224 in class 35 for “wholesaling and retailing of furniture and furniture accessories”:
[6] By letter dated 15 May 2015, Target Australia wrote to Target New Zealand concerning changes in Target New Zealand’s branding on its website which featured the Target and circle device marks in white on a red background. The letter referred to Target Australia selling clothing, bed linen and manchester3 in New Zealand and claimed a valuable and exclusive reputation in the trade marks TARGET and the circle device. The letter referred to Target Australia’s registration of those trade marks in New Zealand and Australia, stated that Target New Zealand’s changed branding may result in consumer confusion, requested a written explanation within seven days as to how Target New Zealand proposed to address these concerns, and reserved its rights.
[7] On 29 May 2015, Target New Zealand applied to the Assistant Commissioner of Trade Marks for revocation of the six trade marks registered by Target Australia. Target New Zealand’s application asserted that a continuous period of three years had elapsed prior to 29 April 2015, that is one month before the date of its application, during which the trade marks registered by Target Australia had not been put to genuine use in the course of trade in relation to any of the classes of goods specified.
[8] On 6 July 2015, Target New Zealand filed two applications to register the following trade marks in respect of classes 20, 21, 24, 35, 37, 39:
(a) 1022893:
(b) 1022892: TARGET
[9] The Assistant Commissioner heard Target New Zealand’s application to revoke the registration of Target Australia’s trade marks on 1 May 2018 and subsequently issued her decision.
3As confirmed by the definition of “manchester” in the Concise Oxford English Dictionary (12th ed, Oxford University Press, Oxford 2011), “manchester” in this context means cotton textiles and household linens.
The Assistant Commissioner’s decision4
[10] The Commissioner considered that Target New Zealand was “an aggrieved person” for the purposes of s 65 of the Trade Marks Act 2002 in respect of all six trade marks as at the date of the application.5 The Assistant Commissioner noted that Target Australia bore the onus of proving that it had put its trade marks to genuine use in New Zealand during the three years before 29 April 2015.6
[11] The Assistant Commissioner found that neither the use of the trade marks on the website nor sales to New Zealand consumers via the website amounted to use of the marks in New Zealand.7 She also found that use of the marks on Target Australia’s email newsletter did not amount to use of the marks in New Zealand even if some of the newsletters made their way to New Zealand consumers.8
[12] The Assistant Commissioner also found that the evidence of preparatory discussions during the relevant period between Target Australia and TradeMe regarding the sale of Target Australia branded goods through the TradeMe website in New Zealand was not sufficient to show the use of the marks in respect of any of the class 24 or class 25 goods, even though actual sales later occurred, well after the relevant period. The Assistant Commissioner held that to the extent any use had been established, that use seemed to have been in respect of retail sales.9
[13] The only use that the Assistant Commissioner found to have been established was the use of relevant marks on bedsheets sold through Kmart stores in New Zealand during the relevant period.10 Accordingly, she directed that the registrations in respect of class 24 remain on the register in respect of bed sheets but that the registrations be revoked in respect of all other class 24 goods, and that the registrations in respect of class 25 be revoked.11
4 Target Australia Pty Ltd v Target New Zealand Ltd [2018] NZIPOTM 16, (2018) 8 NZIPJ 188.
5 At [29].
6 At [31].
7 At [82].
8 At [94].
9 At [112].
10 At [86].
11 At [118].
Target Australia’s appeal
[14] Target Australia does not challenge the Assistant Commissioner’s findings with respect to the class 24 registrations. Its appeal is directed only at the Assistant Commissioner’s findings with respect to the class 25 registrations.
[15] In its notice of appeal dated 14 June 2019, Target Australia relies principally on the negotiations it commenced with TradeMe during the relevant period to prove its use of the class 25 registrations but also says that the Assistant Commissioner erred in finding that sales by Target Australia via its website to customers in New Zealand did not amount to use of the trade marks in New Zealand and failed to take into account Target Australia’s use of its trade marks on its website and in its newsletters. In submissions, however, Mr Chisholm said that Target Australia’s case with respect to use of the class 25 trade marks is based solely on its negotiations with TradeMe during the relevant period.
[16]Accordingly, Target Australia’s appeal raises two specific issues:
(a)Was Target New Zealand “an aggrieved person” for the purposes of s 65 of the Trade Marks Act so that Target New Zealand had standing to apply for revocation of Target Australia’s registrations?
(b)If Target New Zealand had standing to apply for revocation of Target Australia’s registrations, did Target Australia put the class 25 trade marks to genuine use through its negotiations with TradeMe during the relevant period?
Nature of appeal
[17] Target Australia has a right to appeal the Assistant Commissioner’s decision to the High Court in accordance with s 170 of the Trade Marks Act. Section 173(1) of the Act provides that in determining an appeal from the Commissioner, the court may confirm, modify or reverse the Commissioner’s decision or any part of it.
[18] It is well-established that an appeal from a decision of the Commissioner is by way of rehearing. The appellant bears the onus of satisfying the court that it should differ from the decision under appeal. However, the court has the responsibility of arriving at its own assessment of the merits of the case. The weight it gives to the Commissioner’s decision is a matter for judgment.12
Was Target New Zealand an “aggrieved person”?
[19]Section 65(1) of the Trade Marks Act provides:
An aggrieved person may apply to the Commissioner or the court for the revocation of the registration of a trade mark
[20]There is no definition of “aggrieved person” in the Act.
[21] Mr Chisholm for Target Australia and Mr Arthur for Target New Zealand are agreed that the term “aggrieved person” is to be given a wide interpretation.13 Mr Chisholm also refers to the leading text, Trade Marks in Practice, which notes that one test of aggrieved status is:14
… whether at the application date there is a reasonable possibility of the applicant for revocation being appreciably disadvantaged in a legal or practical sense.
[22] That passage is an extract from the decision of the Supreme Court of New South Wales in The Ritz Hotel Ltd v Charles of the Ritz Ltd where McLelland J said, of the then similar provision in Australia’s trade mark legislation:15
It is sufficient for present purposes to hold that the expression [“person aggrieved”] would embrace any person having a real interest in having the register rectified, or the trade mark removed in respect of any goods, as the case may be, in the manner claimed, and thus would include any person who would be, or in respect of whom there is a reasonable possibility of his being, appreciably disadvantaged in a legal or practical sense by the register remaining unrectified, or the trade mark remaining unremoved in respect of any goods, as the case may be, in the manner
12Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [3]-[5] and [13]-[16].
13Fareed Khalaf Sons Company Trading as Khalaf Stores v Phoenix Dairy Caribe NV HC Wellington CIV-2002-485-000207, 3 September 2003 at [23].
14 Paul Sumpter, Trade Marks in Practice (4th ed, LexisNexis, Wellington 2018) at 145.
15 The Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 15 NSWLR 158 (NSWSC) at 192.
claimed. In my opinion the concept does not admit of further refinement.
Assistant Commissioner’s decision
[23] In deciding that Target New Zealand was an “aggrieved person”, the Assistant Commissioner said that Target Australia accepted that Target New Zealand was an aggrieved person in respect of the three class 24 registrations. In concluding that Target New Zealand was an aggrieved person in respect of the three class 25 registrations, the Assistant Commissioner had regard to the following considerations:
(a)Target New Zealand had filed its application to revoke the Target Australia registrations in response to Target Australia’s letter of 15 May 2015;
(b)Target New Zealand had filed its applications for registration of its new trade marks on 6 July 2015, five weeks after its application to revoke the Target Australia registrations;
(c)The evidence of Robert Bielby, Target New Zealand’s General Manager, that if Target Australia’s registrations remained on the register it would have an impact on Target New Zealand’s on-going use of its marks in its stores and would prevent Target New Zealand’s ability to expand into complementary goods and services, which would affect Target New Zealand and also its franchisees who are able to make independent decisions about the goods and services they provide.
Contentions of Target Australia
[24] Mr Chisholm says there was no evidence directly connecting Target Australia’s letter with Target New Zealand’s revocation application or its subsequent trade mark applications. He accepts that it could be inferred that the Target Australia letter led to the application for revocation but says even if that is so, that does not make Target New Zealand an aggrieved person because revocation applications are common place and are used for strategic – that is collateral – purposes such as to improve a company’s negotiating position. Mr Chisholm also takes issue with the Assistant Commissioner’s
statement that Target New Zealand clearly believed that the fact of Target Australia’s trade mark registrations was a matter of concern because Target New Zealand had filed no evidence that it had a belief of this kind.
[25] Mr Chisholm says that Target New Zealand’s applications to register its own trade marks cannot give it standing for the purposes of s 65 because an applicant must establish that it was an aggrieved person as at the date of the application – in this case, 29 May 2015. Target New Zealand did not file its applications until 6 July 2015, more than five weeks after the relevant date. Mr Chisholm says the Assistant Commissioner effectively gave Target New Zealand’s application retrospective effect, which she should not have done.
[26] Mr Chisholm challenges Mr Bielby’s assertion that Target New Zealand had used its marks on linen, bedding and clothing and says there was no evidence that Target New Zealand had ever sold clothing in New Zealand prior to 29 May 2015. He also says Mr Bielby said nothing about Target New Zealand having an intention to sell clothing, and that Mr Bielby’s statements about the impact of Target Australia’s registrations on Target New Zealand were vague and provided no proper foundation for finding aggrieved person status in relation to class 25 goods.
Analysis
[27] I do not accept that there was no evidential basis for the Assistant Commissioner’s finding that Target New Zealand’s actions in seeking the revocation of the Target Australia trade marks and in applying for the registration of its own marks were a response to the letter sent by Target Australia on 15 May 2015. I consider there was ample evidence from which the Assistant Commissioner could find that there was a reasonable possibility of Target New Zealand being appreciably disadvantaged in a practical sense if the Target Australia class trade marks remained on the register.
[28] In its letter of 15 May 2015, Target Australia described its business (“an iconic Australian retailer specialising in the sale of a diverse range of products including fashionable women’s, men’s and children’s clothing … the latest designs in homewares, including Manchester, bed linen, electrical appliances …”) and the business of Target New Zealand (“We understand your company operates a furniture
business …”). Target Australia also said in that letter said that since the 1960s it had been trading under the name Target and using a suite of trade marks including a circle device in red and white and had registered these marks in Australia, New Zealand and elsewhere. It also asserted in the letter that Target New Zealand’s recent use of the word “Target” and the circle device in red “… may result in consumer confusion between our business and yours” and asked for a written explanation from Target New Zealand within seven days.
[29] Whether deliberately or not, the phrase “may result in consumer confusion” is similar to the language used in s 25 of the Trade Marks Act which requires the Commissioner not to register trade marks that are identical or similar to trade marks held by another person where the use is likely to deceive or confuse.16 Target New Zealand had not at that stage taken any steps to register any new or amended trade mark but the evident purpose of the letter was to dissuade Target New Zealand from using the word “Target” and the circle device in red because of Target Australia’s registration of trade marks using this term and device.
16 Section 25(1) of the Trade Marks Act provides:
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; or
(c)it is, or an essential element of it is, identical or similar to, or a translation of, a trade mark that is well known in New Zealand (trade mark D), whether through advertising or otherwise, in respect of those goods or services or similar goods or services or any other goods or services if the use of trade mark A would be taken as indicating a connection in the course of trade between those other goods or services and the owner of trade mark D, and would be likely to prejudice the interests of the owner.
[30] Regardless of how revocation applications may be used in other situations, and regardless of whether the Target Australia letter is seen as a threat to enforce Target Australia’s trade mark registrations, as submitted by Mr Arthur, or as a request for an explanation, as submitted by Mr Chisholm, there can be little doubt that the revocation application and Target New Zealand’s registration applications were both a response to the Target Australia letter. The close proximity in time and the related subject matter of the three events give rise to the obvious inference that Target New Zealand’s application to revoke the Target Australia trade marks and its applications to register its own trade marks were made in response to the Target Australia letter. I consider the Assistant Commissioner was entitled to draw that inference irrespective of whether or not Target New Zealand filed evidence to that effect.
[31] In drawing that inference, the Assistant Commissioner was not giving retrospective effect to Target New Zealand’s application to register its own trade marks. From the moment Target New Zealand received the Target Australia letter it had a real interest in having the Target Australia trade marks removed from the register and so was an interested party at the time it applied for the removal of those marks.
[32] It is implicit in the third argument that Mr Chisholm advances that a party can be “aggrieved” for the purposes of s 65 only if it can show it has been using or planning to use a trade mark in respect of the same class of goods as that for which it seeks revocation. If that is Mr Chisholm’s submission, I do not accept it. That proposition would not be consistent with the scheme of the Act or with the authorities in New Zealand or other relevant jurisdictions.
[33] Section 65 is cast in broad terms: “… an aggrieved person may apply … for the revocation of the registration of a trade mark.” The language is not linked to the particular class or classes in respect of which a trade mark has been registered. The task of deciding who may be an aggrieved person is left to the Commissioner or the Court to decide who is an aggrieved person on a case by case basis. It is relevant that s 25 requires the Commissioner not to register trade marks that are identical or similar to trade marks held by another person where the trade mark is in respect of the same goods and services or in respect of similar goods and services where the use is likely to deceive or confuse. That is, the inquiry under that section is not solely on a class
basis. While s 25 is not directly relevant to the present case, it confirms that registration and, by inference, revocation should not be considered solely by reference to the class of goods or services in respect of which a trade mark is registered.
[34] That conclusion is reinforced by the passage from the Ritz Hotel quoted at [22] which makes it clear that the question to be considered in assessing whether an applicant for revocation is an aggrieved party is whether the applicant is disadvantaged in a legal or practical sense (emphasis added). A solely class-based inquiry might capture those disadvantaged in a legal sense but would not include an applicant which seeks revocation of a trade mark in respect of a different class from the class in which it provides goods or services but which would nonetheless be disadvantaged in a practical sense if the mark remained on the register.
[35] In Crocodile International Pte Ltd v Lacoste, Mallon J reviewed British and Australian authorities on the meaning of “aggrieved person” and concluded that they establish that whether an applicant is an “aggrieved person” will depend on the particular circumstances, in the light of the purpose of the requirement that a party must be “aggrieved” before it can seek revocation of a trade mark and the public interest in the integrity of the register. She concluded that the “aggrieved person” test should not be construed in a way that prevents the party most likely to be interested in whether the mark has been used from having those grounds considered.17
[36] That passage is apposite to the present case where, as I have held, Target New Zealand’s application to revoke Target Australia’s trade marks and its own application for registration of trade marks were made in response to the letter dated 15 May 2015 from Target Australia. In that letter, Target Australia’s complaint about the risk of consumer confusion was stated generally and was not limited to the classes of goods in respect of which the Target Australia’s trade marks were registered. Target Australia cannot now seek to deny Target New Zealand’s response to that complaint on the technical ground that Target New Zealand had not sold class 25 goods and services.
[37] In terms of whether there was a reasonable possibility of Target New Zealand being appreciably disadvantaged in a legal or practical sense by Target Australia’s
17 Crocodile International Pte Ltd v Lacoste [2013] NZHC 2265 at [34]-[36].
trade marks remaining on the register, the point is made in the Target Australia letter itself where it is said that there is a risk of consumer confusion if both sets of trade marks are in use. If so, that applies to Target New Zealand as well as to Target Australia and regardless of whether they are selling goods in the same classes. In that respect, it does not matter whether or not Target New Zealand was selling clothing prior to 29 May 2015 – on which the evidence is unclear. The risk of consumer confusion arose regardless. Given the low bar that both sides agree applies with respect to “aggrieved party status” that risk of consumer confusion means there was a reasonable possibility of Target New Zealand being appreciably disadvantaged in a practical sense by Target Australia’s trade marks remaining on the register.
[38] For these reasons, I am satisfied that the Assistant Commissioner did not err when she found that Target New Zealand was an aggrieved party in terms of s 65 and had standing to apply for revocation of the Target Australia class 25 trade marks.
Did Target Australia put the class 25 trade marks to genuine use?
[39] Section 66(1)(a) of the Trade Marks Act provides that the registration of a trade mark may be revoked if 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 in relation to goods or services in respect of which it is registered.
[40] Section 66(1A) provides that “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.
[41] Section 67 of the Trade Marks Act provides that the onus for proving use of the trade mark for the purposes of s 66(1)(a) lies on the owner of the mark.
[42] As observed by Brown J in Tasman Insultation New Zealand Ltd v Knauf Insultation Ltd and by Lang J in Metalman New Zealand Ltd v Scrapman BOP Ltd, the philosophy underpinning the Act is one of use it or lose it.18 Once an application
18Tasman Insultation New Zealand Ltd v Knauf Insultation Ltd [2014] NZHC 960, (2014) 108 IPR 162 at [72]; Metalman New Zealand Ltd v Scrapman BOP Ltd [2014] NZHC 2028, [2014]
for revocation of a trade mark based on non-use of the trade mark under s 66(1)(a) has been filed, the owner or authorised user of the trade mark is required to prove that the mark has been used during the three year period ending one month before the application for revocation was filed. If such genuine use is not proved, the Court is required to revoke the trade marks. It has no discretion in the matter.19
[43] There is no dispute that the relevant period in the present case is the three year period ending on 29 April 2015. In order to successfully resist Target New Zealand’s revocation application, Target Australia must prove it put the marks to genuine use in that period.
Relevant authorities
[44] As Lang J recalled in Metalman, in the related field of patent law the Court of Appeal has observed that the Courts of New Zealand are operating in an international environment where consistency of approach is important and for these reasons the Courts of New Zealand should be “wary of indigenous common law developments unless they are clearly required”.20
[45] In Pasticceria e Confetteri Sant Ambroeus SRL v G & D Restaurant Associates Ltd, the European Court of Justice summarised the “legal learning” that flows from earlier decisions of that Court and the UK Court of Appeal on the meaning of “genuine use”:21
(a)Genuine use means actual use by the proprietor or a third party with authority to use the mark;
NZAR 1393 at [9]. See also Crocodile International Pte Ltd v Lacoste [2017] NZSC 14, (2017) 131 IPR 511 at [51].
19 Crocodile International Pte Ltd v Lacoste [2017] NZSC 14 at [94]-[97].
20 Metalman New Zealand Ltd v Scrapman BOP Ltd [2014] NZHC 2028, [2014] NZAR 1393 at [13], citing Smith Kline & French Laboratories Ltd v Attorney-General [1991] 2 NZLR 560 (CA) at 563.
21 Pasticceria e Confetteri Sant Ambroeus SRL v G & D Restaurant Associates Ltd [2010] RPC 28. See also Ansul BV v Ajax Brand Beveiliging BV [2003] RPC 717; La Mer Technology Inc v Laboratoires Goëmer SA [2005] EWCA Civ 978, [2006] F.S.R. 5; Silberquelle GmbH v Maselli-Strickmode GmbH Case C-495/07 [2009] E.T.M.R. 28; Paul Sumpter Trade Marks in Practice, (4th ed, LexisNexis, Wellington, 2018 at 153.
(b)The use must be more than merely “token”, which means in this context that it must not serve solely to preserve the rights conferred by the registration;
(c)The use must be consistent with the essential function of a trade mark, which is to guarantee the identity of the origin of the goods and services to the end-user by enabling the end-user, without any possibility of confusion, to distinguish the goods and services from others which have another origin;
(d)The use must be by way of real commercial exploitation of the mark on the market for the relevant goods and services, i.e. exploitation that is aimed at maintaining or creating an outlet for the goods and services, or a share in that market;
(i)An example that meets this criterion: preparations to put goods or services on the market, such as advertising campaigns;
(ii)Examples that do not meet this criterion:
1. Internal use by the proprietor;
2. The distribution of promotional items as a reward for the purchase of other goods and services to encourage the sale of the latter;
(e)All the relevant facts and circumstances must be taken into account in determining whether there is a real commercial exploitation of the mark, including, in particular, the nature of the goods and services at issue, the characteristics of the market concerned, the scale and frequency of use of the mark, whether the mark is used for the purpose of marketing all the goods and services covered by the mark or just some of them, and the evidence that the proprietor is able to provide;
(f)Use of the mark need not always be qualitatively significant for it to be deemed genuine. There is no de minimis rule. Even minimal use may qualify as genuine use if it is the sort of use that is appropriate in the economic sector concerned for preserving or creating market share for the relevant goods or services. For example, use of the mark by a single client which imports the relevant goods can be sufficient to demonstrate that such use is genuine, if it appears that the import operation has a genuine commercial justification for the proprietor.
[46] While the Court of Appeal of England and Wales has cautioned that judgments of the European Court of Justice should not be read or applied too literally because of the wider context in which they take place – namely, the continuing conversation between the Court of Justice and national courts – the decisions of the Court of Justice are nevertheless persuasive authorities, as noted by Lang J in Metalman.22 Both counsel in the present case referred to the Pasticceria summary of propositions in their written submissions.
[47] In considering what constitutes genuine use, it is also relevant to note three decisions where the Federal Court of Australia have considered whether actions taken in preparation for the commercial use of a trade mark can constitute use of the trade mark: Buying Systems (Australia) Pty Ltd v Studio SRL, Woolly Bull Enterprises Pty Ltd v Reynolds, Dick Smith Investments Pty Ltd v Ramsey.23 In Buying Systems, which was concerned with an application for registration of a trade mark rather than an application for revocation of a registration, and in Dick Smith Investments, the Court held that use short of actual trade or an offer to trade in goods could nonetheless amount to use of the trade mark.24
22 La Mer Technology Inc v Laboratoires Goëmer SA [2005] EWCA Civ 978, [2006] F.S.R. 5 at 55, 56; Metalman New Zealand Ltd v Scrapman BOP Ltd [2014] NZHC 2028, [2014] NZAR 1393 at [16].
23 Buying Systems (Australia) Pty Ltd v Studio SRL (1995) 30 IPR 517; Woolly Bull Enterprises Pty Ltd v Reynolds [2001] FCA 261, (2001) 107 FCR 166; Dick Smith Investments Pty Ltd v Ramsey [2016] FCA 939.
24 Buying Systems (Australia) Pty Ltd v Studio SRL (1995) 30 IPR 517 at 520; Dick Smith Investments Pty Ltd v Ramsey [2016] FCA 939, (2016) 120 IPR 270 at [156]-[157].
[48] In Woolly Bull, however, the Court was not satisfied that the actions taken in that case amounted to use of the mark sufficient for the purposes of the Trade Marks Act 1995 (Cth). Nonetheless, the Court said that for there to be use of a mark it was not necessary that there be actual trade in the sense of offering goods with the mark for sale, provided the owner had acted to show that it had gone beyond planning to use the mark and had got to the stage where it could be seen objectively to have committed itself to using the mark, i.e. to carrying its intention to use the mark into effect.25
[49] The three decisions of the Federal Court of Australia all referred to an earlier decision of the High Court of Australia in Moorgate Tobacco Co Ltd v Philip Morris Ltd where the High Court had held, albeit in a somewhat different context, that to establish use of a trade mark it is not necessary that there be actual dealing in goods bearing the trade mark before there can be a local use of the mark. However, the High Court noted that in cases where such use not amounting to dealing had been accepted, it had been possible to identify an actual trade or offer to trade in goods bearing the mark or an existing intention to offer or supply goods bearing the mark in trade. The High Court held that on the facts before it in that case, there had not been, at any relevant time, any actual trade or offer to trade or any existing intention to offer to supply goods bearing the mark in trade. There had been merely preliminary discussions and negotiations about whether the mark would be so used.26
[50] The Courts in Buying Systems and Dick Smith Investments held that the facts before them differed from those in Moorgate because, in Buying Systems, there had been actual use of the trade mark on correspondence and business cards exchanged with third parties and, in Dick Smith Investments, there had been a public use of the trade mark in television and radio programmes that distinguished the prospective product, Ozemite, from the products of others, even though the product was still under development and had not been offered for sale.27 By contrast, the Court in Woolly Bull held that discussions and correspondence between a party seeking to register the Raging Bull trade mark and a potential manufacturer of “Raging Bull” products, where
25 Woolly Bull Enterprises Pty Ltd v Reynolds [2001] FCA 261, (2001) 107 FCR 166 at [40].
26Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) [1984] HCA 73, (1984) 156 CLR 414, (1984) 3 IPR 545 at 557.
27Buying Systems (Australia) Pty Ltd v Studio SRL (1995) 30 IPR 517 at 519-520; Dick Smith Investments Pty Ltd v Ramsey [2016] FCA 939 at [156]-[157].
the discussions and correspondence referred to Raging Bull and Raging Bull products but did not use the registered trade mark, did not amount to use of the mark because there had been no objective commitment to the use of the mark.28
[51]Counsel also referred me to a number of New Zealand authorities, notably:
(a)Metalman, already mentioned, where the licenced holder of a trade mark successfully resisted an application for revocation on the grounds of non use, based on the use of the trademark in a single advertisement;29
(b)Cure Kids v National SIDS Council of Australia Ltd, where the holders of the RED NOSE DAY trademark successfully resisted an application for revocation of the registration of the trade mark on the grounds of non use, based on preparatory steps they had taken during the relevant period to prepare for a RED NOSE DAY, which included using the RED NOSE DAY trademark in a powerpoint presentation to key partners.30
Assistant Commissioner’s decision
[52] Target Australia’s position at the hearing was that it had put the class 25 trade marks to genuine use in negotiations it began with TradeMe in March 2015 and which culminated in Target Australia selling Target branded clothing through TradeMe from January 2016. Target Australia’s evidence in support of that position was a statutory declaration of Graeme Jenkins, the Chief Financial Officer of Target Australia, made on 4 August 2015 under the Oaths and Declarations Act 1957. Annexed to the declaration as exhibits were three emails exchanged between staff at TradeMe and Target Australia in the period 26 March 2015 to 13 April 2015 and which Mr Jenkins said in his declaration discussed proposed commercial terms. The emails were
28 Woolly Bull Enterprises Pty Ltd v Reynolds [2001] FCA 261, (2001) 107 FCR 166 at [40].
29Metalman New Zealand Ltd v Scrapman BOP Ltd [2014] NZHC 2028, , [2014] NZAR 1393 at [16].
30 Cure Kids v National SIDS Council of Australia Ltd [2014] NZHC 3366, [2015] 3 NZLR 90.
redacted to remove commercially sensitive and confidential information, and attachments referred to in the emails were not provided in evidence.
[53] In his declaration Mr Jenkins said Target Australia “is engaged” in commercial negotiations with TradeMe to sell “Target-branded products” through the TradeMe website into New Zealand and that those negotiations had commenced in March 2015, and were focused on a first phase launch of the sale of apparel, with potential for further categories to be added later. Under the proposed agreement, TradeMe would pay Target Australia the revenue it received from “all Target-branded goods” purchased through the TradeMe website minus an agreed commission. Mr Jenkins’ evidence is that the negotiations “are well advanced”, that “provisional terms have been agreed”, and that Target Australia aimed to launch sales through the website in September 2015.
[54] In fact, as stated in a declaration sworn on 26 July 2016 by Mark Scatena, the Chief Financial Officer of Target Australia, sales through the TradeMe website did not commence until 20 January 2016.
[55] The first and third of the three emails attached to Mr Jenkins’ declaration were from Conrad Bain of TradeMe to Martin Price and Elissa Baker at Target Australia. The second email was from Ms Baker to Mr Bain. The contents of the emails were as follows.
[56]In his first email dated 27 March 2015, Mr Bain:
(a)Thanked Mr Price and Ms Baker for their chat that morning and said it was great to hear that Target Australia were “so keen to get moving on TradeMe” and that wheels were in motion at TradeMe’s end;
(b)Gave a “quick overview” of what had been discussed under the headings Commercials, Payments, Stores Extra, Fulfilment, Duties / Tax, Promotional Support;
(c)Under the heading “Commercials”:
(i)Stated that a commission would be paid on successful sales only and that there would be no fixed or store fees and no commission charged on shipping;
(ii)Said other identified fees would not be charged;
(iii)Included a table with columns headed “Sale price” and “Success fee” but with entries blacked out.
(d)Under the heading “Payments”, explained the Pay Now on TradeMe payments system used by customers making purchases on the TradeMe website and said TradeMe would transfer Target Australia’s TradeMe revenue to an overseas bank account;
(e)Under the heading “Promotional support”, said TradeMe saw this as a key driver “to ensure a successful launch onto TradeMe for Target”, and that “[o]nce live and scaled and systems tested”, TradeMe would undertake various steps to promote Target, including putting a spotlight on “the Target store” in a “new to TradeMe” section in the TradeMe newsletter;
(f)Attached a blank contract for Target Australia’s legal team to look over;
(g)Under the heading “Next steps”, said:
(i)All international sellers were approved to sell on site and asked the Target Australia people to fill out and return a seller checklist;
(ii)Once the checklist had been ticked off, there would need to be a formal contract for which he would need information that he specified in the email.
[57] In her reply email dated 8 April 2015, Ms Baker said that Target Australia was “working through everything TradeMe” at their end but, “to get things started”, she
provided the responses to the International Seller Checklist. Under Response 9 of the checklist were the names “Dannii Minogue, Giaan by Spalding, Bonds, Dr Rey, Hot Options, Piping Hot, AFL, Disney, Hard Yakka, King Gee, Maxx & Mooks”.
[58] In his email dated 13 April 2015 to Ms Baker and Mr Price and copied to Jennifer Lim, Mr Bain:
(a)Thanked Ms Baker for sending through the checklist and introduced Ms Lim as Target Australia’s account manager and point of contact at TradeMe;
(b)Reaffirmed TradeMe’s keenness to expose Target to some additional promotional activity and to that end asked two questions seeking information that TradeMe’s marketing manager had told Mr Bain it would be useful for TradeMe to know, while noting that it would be no problem if Target Australia felt there was some information that was too sensitive to share:
(i)What were Target Australia’s “top selling products” and “top selling brands” they would be selling with TradeMe;
(ii)What was the customer mix/demographics of Target Australia’s biggest customer segments to allow TradeMe to find similar customers on its database who would have a high propensity to buy “Target products”;
(c)Reiterated the information specified in the first email that TradeMe required for the contract with Target Australia;
(d)Said TradeMe was keen to start planning Target Australia’s promotional activity and said that typically TradeMe would like a seller to be “on site and scaled” for 4-6 weeks before TradeMe started promotions.
[59] After reviewing the declarations of Mr Jenkins and Mr Scatena and the emails, the Assistant Commissioner said that it was not clear when Target Australia entered
into a contract but presumed that it must have happened at some stage given Mr Scatena’s evidence that Target Australia began selling Target-branded goods through the TradeMe website on 20 January 2016. She observed that there was no evidence about what had been happening during the nine months between the expiry of the relevant period and the commencement of website sales or why the commencement of sales had taken so long.
[60] The Assistant Commissioner said the evidence provided by Target Australia showed that the negotiations with TradeMe related to the retailing of clothing but did not make it clear that there was an intention to use the Target Australia trade marks in relation to Target-branded items of clothing or other goods. The Assistant Commissioner had two reservations about Mr Jenkins’ statement that Target Australia “is engaged” in commercial negotiations with TradeMe to sell “Target-branded products”. The first reservation was that the statement had been in the present tense and had been made in August 2015, after the expiry of the relevant period. The second was that, although the phrase “Target-branded products” in the context used seemed to refer to goods that bore a Target Australia trade mark, when referring to “the proposed agreement” Mr Jenkins also used the phrase in a manner that suggested he might have been using it to refer to all goods sold by Target Australia, whether or not they were Target-branded goods.
[61] For these reasons, the Assistant Commissioner had some doubt on the issue, especially given the unexplained list of third party brands in Response 9 of the completed International Seller Checklist response that did not include the Target brand. The Assistant Commissioner held that an “equally plausible” explanation was that Mr Jenkins had used the phrase “Target-branded goods” loosely to mean any goods from Target Australia. Accordingly, the Assistant Commissioner found that the evidence of the negotiations with TradeMe was not sufficient to show use of the marks in respect of the class 25 goods and held that to the extent any use had been established, that use seemed to have been in respect of retail services.
Contentions of Target Australia
[62] Mr Chisholm says the Assistant Commissioner made two important errors in respect of the above findings. These are that the Assistant Commissioner:
(a)Failed to take into account Mr Jenkins’ clear statements that the goods were Target-branded and there was no basis for the Assistant Commissioner’s finding that the evidence relating to the period ending 29 April 2015 did not make it clear that there was any intention to use the trade marks in relation to Target-branded clothing or other goods.
(b)Placed an unjustified and wrong interpretation on Response 9 to TradeMe’s International Seller Checklist. Mr Chisholm says, in effect, that the Assistant Commissioner incorrectly formed the view that Response 9 comprised a full and exclusive list of the brands of clothing that Target Australia intended to sell through the TradeMe website and that because the Target brand was not listed, Target Australia did not intend to sell Target branded clothing through TradeMe. Mr Chisholm says there was no evidence for the Assistant Commissioner to reach that view.
[63] Mr Chisholm submits that, contrary to the Assistant Commissioner’s findings, the evidence shows that Target Australia had objectively committed itself to using the class 25 trade marks in New Zealand during the relevant period. In support of that submission, Mr Chisholm refers, in particular, to the statement in Mr Jenkins’ declaration of 4 August 2015 that negotiations with TradeMe were “well advanced”.
Analysis
[64] Mr Jenkins’ declaration is evidence of what Target Australia was doing and of its intentions in the final months of the relevant period. I am satisfied that the declaration establishes that Target Australia was engaged in commercial negotiations with TradeMe to sell “Target-branded products” through the TradeMe website into New Zealand and that the negotiations were focussed on a first phase launch of the sale of apparel. I accept, on the balance of probabilities, that the declaration
establishes that Target Australia intended, at least in a subjective sense, to sell Target- branded goods on the TradeMe website, and that this included an intention to sell class 25 goods given that class 25 includes clothing, i.e. apparel. On the other hand, I note that, as the attachments to Mr Scatena’s declaration indicate, Target Australia sells apparel products with other brand names through the TradeMe website.
[65] While Mr Jenkins’ declaration establishes Target Australia’s intention to sell Target-branded goods on the TradeMe website, it does not establish that Target Australia used the class 25 trade marks in the relevant period in the senses described in the Pasticceria summary of principles. Mr Jenkins’ declaration does not describe any actual use of the trade marks that was consistent with the essential function of a trade mark, that is to guarantee the identity of the origin of the goods to the end-user, or which was by way of real commercial exploitation of the mark on the market for the goods. Use in the above senses requires a use of the trade marks in relation to a third party. As Neuberger LJ observed in La Mer Technology Inc v Laboratoires Goëmer SA:31
… once the mark is communicated to a third party in such a way as can be said to be “consistent with the essential function of a trade mark as explained in [36] and [37] of the judgment in Ansul, it appears to me that genuine use … will be established.
[66] Taken by itself, the Jenkins declaration is a statement of TradeMe Australia’s intentions to put class 25 goods on the market at some future point. It is not a communication to a third party. Regardless of the tense used in Mr Jenkins’ declaration, even if it is accepted that Target New Zealand had the subjective intention during the relevant period of negotiating with TradeMe concerning the sale of apparel on the TradeMe website, Target Australia has not provided any objective evidence of putting the class 25 trade marks to use during the relevant period.
[67] Target Australia puts considerable emphasis on the statements in Mr Jenkins’ declaration that Target Australia was engaged in commercial negotiations with TradeMe to sell Target-branded products through the TradeMe website, and that the negotiations were well advanced and that provisional terms had been agreed as establishing its commitment to offer class 25 goods for sale on the TradeMe website.
31 La Mer Technology Inc v Laboratoires Goëmar SA [2005] EWCA Civ 978, [2006] F.S.R. 5 at 63.
It has not provided any evidence of what the final terms of its agreement with TradeMe were and how those final terms may have related to the negotiations under way during the relevant period. The only documentary evidence of those negotiations are the three emails attached to Mr Jenkins’ declaration.
[68] Mr Jenkins says in his declaration that the emails discussed proposed commercial terms. Analysis of the emails, however, suggests that the issues under discussion in the emails were largely preliminary in nature and that the parties were still some distance from agreeing final terms or even what products and what brands would be offered for sale through the TradeMe website:
(a)Despite the redaction of some figures, the information provided in Mr Bain’s first email appears for the most part to be a description of generic arrangements that TradeMe makes with other international sellers rather than a specific proposal. This is borne out by Mr Bain’s introductory remark that he was pleased to hear that Target Australia was keen “to get moving on TradeMe”, by the generic description of how the Pay Now on Trade Me payments system worked, by the inclusion of a blank contract, by the request to Target Australia to complete the International Seller Checklist, and by the statement that a contract would need to be in place once TradeMe had completed the checklist.
(b)Ms Baker’s email in which she says she is sending the completed responses to the International Seller Checklist information “to get things started” is a further indication that discussions were at an early stage.
(c)The questions passed on from TradeMe’s marketing manager in Mr Bain’s second email and the acknowledgement that some information may be too sensitive to share, as well as the reiteration by Mr Bain in his second email of the information that TradeMe required for its contract with Target Australia, also suggest that negotiations
were at a preliminary stage as at 13 April 2015 – some 16 days before the expiry of the relevant period.
[69] Significantly, there was no specific reference in any of the emails to “Target- branded” products. Mr Bain’s first email concerns the company, Target Australia, selling goods on TradeMe and refers to “the Target store” but not to Target brands or Target-branded products. The only brands referred to in Ms Baker’s email are not Target brands. Mr Bain’s second email continues the theme of his first email: how Target Australia, the company, can best be promoted on the TradeMe website. At the request of TradeMe’s marketing manager, the second Bain email seeks information on the “top selling Target products” and the “top selling brands” that Target Australia would be selling on the TradeMe website.
[70] The clear inference to be drawn from that question is that at the date of the email, 16 days before the expiry of the relevant period, there was no agreement or even clear understanding between Target Australia and TradeMe on what products, Target-branded or otherwise, Target Australia would be selling on the TradeMe website.
[71] It is noteworthy that there was no reference to Target Australia’s own brands in the list of brands in Response 9 to the International Seller Checklist. Without knowing the question to which Ms Baker was responding, the Court cannot draw any conclusions about the omission of Target’s brands from Response 9. But the fact that Target Australia has chosen not to provide the question that led to Response 9 or to provide any other external evidence showing clearly that Target Australia had manifested a clear intention to TradeMe or to another third party to use those brands in its TradeMe sales means that the Court is left with some doubt about whether Target Australia had objectively committed itself, during the relevant period, to using the class 25 trade marks.
[72] Even on the approach to preparatory use taken in Buying Systems and Dick Smith Investments, I consider that Target Australia has fallen some way short of demonstrating use of the class 25 trade marks of the kind found in those decisions. As already noted, in Buying Systems there had been actual use of the trade mark on
correspondence and business cards exchanged with third parties. In Dick Smith Investments, there had been a public use of the trade mark in television and radio programmes.
[73] The New Zealand authorities on genuine use do not assist Target Australia’s case either. In Metalman, the decisive factor in the Court holding that there had been use of the trade mark in the relevant period was that the licenced holder of the trade mark had placed the trade mark as an advertisement in the local newspaper which Lang J held constituted actual use in the relevant field of trade.32 In Cure Kids, among the preparatory steps that the Court accepted as establishing that there had been genuine use of the trade mark during the relevant period was the promotion of the Red Nose Day appeal to potential sponsors and the use of the trade mark in presentations to external organisations.33
[74] In the present case, there is no reference to or manifestation of the trade mark by Target Australia in its correspondence with TradeMe. The only references to “Target products” are in the second email of Mr Bain – a TradeMe person – and are made in the context of questions to Target about its best-selling products and brands. That cannot amount to a use by Target of its marks.
[75] Accordingly, even if I accept, as I have, that Target Australia had a subjective intention during the relevant period to sell goods bearing the class 25 trade marks on the TradeMe website, I am not satisfied that, during that period, Target Australia had got to the stage where it could be seen objectively to have committed itself to using the marks. The negotiations with TradeMe were still at a preliminary stage, there were discussions under way with TradeMe as to what products and brands Target Australia would offer for sale on the TradeMe website, and Target itself had not used those brands or the trade marks in its correspondence with TradeMe.
[76] For these reasons, I have concluded that Target Australia has not discharged the onus under s 67 of the Trade Marks Act of providing proof of use of the class 25 trade marks in the relevant period. While I have reached this conclusion for different
32 Metalman New Zealand Ltd v Scrapman BOP Ltd [2014] NZHC 2028 at [50].
33 Cure Kids v National SIDS Council of Australia Ltd [2014] NZHC 3366 at [89]-[105] and [118].
reasons from those of the Assistant Commissioner, our conclusions are nonetheless the same.
Result
[77] I dismiss the appeal by Target Australia and confirm the directions made by the Assistant Commissioner in paragraphs 118 and 119 of her judgment regarding the revocation of Target Australia’s class 25 trade marks.
Costs
[78] Target New Zealand is entitled to costs on a 2B basis. If the parties cannot agree costs, Target New Zealand may apply by memorandum of no more than four pages filed and served no later than 30 May 2019. Target Australia may reply by memorandum of no more than four pages filed and served no later than 20 June 2019.
G J van Bohemen J
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