Tasman Insulation New Zealand Limited v Knauf Insulation Limited

[2012] NZHC 552

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-8141

CIV-2011-404-7656 [2012] NZHC 552

BETWEEN  TASMAN INSULATION NEW ZEALAND LIMITED

Plaintiff

ANDKNAUF INSULATION LIMITED Defendant

Hearing:         23 March 2012

Counsel:         K McLeod and J Miles for Plaintiff

B Cain and G Hazel for Defendant

Judgment:      23 March 2012

ORAL JUDGMENT OF MILLER J

[1]      Knauf Insulation moves for a trial of a separate question under r 10.15.

[2]      At  issue  is  Tasman  Insulation’s  trade  mark  registration  number  105507

BATTS.  That trade mark has been held in New Zealand since 1973, and it is held in respect of insulating materials.

[3]      Knauf  Insulation  is  a  subsidiary  of  a  German  company  and  a  major manufacturer of glasswool insulation products worldwide.   It entered the New Zealand market around December 2010.   Some of the packaging on its product displays the word “batt” or “batts” in installation instructions.   Knauf Insulation believes that the word is a generic term, and not only in New Zealand.   There is evidence that glasswool insulation becomes a batt then it is cut into a rectangular

piece during installation for fitting between ceiling joists or wall studs.

TASMAN INSULATION NEW ZEALAND LIMITED V KNAUF INSULATION LIMITED HC AK CIV-2011-

404-8141 [23 March 2012]

[4]      Tasman Insulation took issue with Knauf’s use of the word “batts” around October 2011.   In November it took steps to halt a shipment of insulation from Australia on the grounds of trade mark infringement.

[5]      Knauf  Insulation  filed  an  application  to  revoke  the  trade  mark  on  21

November 2011.  The application was brought under s 66 of the Trade Marks Act

2002.   Specifically, it relies on ss (1)(c), which provides that the registration of a mark may be revoked where “in consequence of acts or inactivity of the owner, the trade mark has become a common name in general public use for a product or service in respect of which it is registered”.   The Court granted Knauf Insulation leave to pursue that application by way of originating application on 8 December.

[6]     On 19 December 2011 Tasman Insulation responded with a separate infringement proceeding.  In its defence and counterclaim filed on 19 January, Knauf Insulation  claimed  for  a  declaration  that  its  use  of  the  word  “batts”  does  not constitute infringement and/or a declaration of the mark is not valid, and damages. The damages claim relates to the actions which Tasman Insulation has taken to stop the importation of insulation bearing the word “batts” anywhere and presumably the costs of complying with the mark in the meantime.

[7]      The two proceedings have been consolidated.  That was done on 3 February. At the same time the Court scheduled a hearing on the present application.

[8]      It is well settled that r 10.15 aims to expedite proceedings by limiting or defining the safe of the trial in advance or obviating a need for a full trial.[1]   Relevant considerations are whether it will be difficult to demarcate the issues to be addressed at the first and second trials, whether the separate question will bring the proceedings to  an  end,  what  potential  time-saving  does  a  separate  question  offer,  how  will appeals be dealt with, and whether there are any practical considerations tending one way or the other.[2]

[1] Innes v Ewing (1986) 4 PRNZ 10.

[2] Haden v Attorney-General HC WN CIV-2010-485-002380, 4 November 2011.

[9]      The question which Knauf Insulation poses is:

Has Trade Mark Registration No. 105507 (for the word “BATTS”), in consequence of acts or inactivity of Tasman Insulation New Zealand Limited (the owner of the Trade Mark), become a common name in general public use for a product n respect of which it is registered?

[10]     Mr McLeod takes issue with this formulation, saying that Knauf Insulation should identify the specific product in respect of which it is said that the word batts has become a common name in general public use.  I am inclined to the view that the question is sufficiently clear.  If Knauf can make out its case in relation to glasswool insulation cut in rectangular shapes, that would seem enough to defeat the mark.

[11]     Tasman Insulation is on much stronger ground, however, when it comes to the question whether the issue is discrete, such that it can safely be tried separately. Knauf Insulation focuses only on the question whether the mark has become generic. In order to defeat the mark, however, it is also necessary to show that it has become so in consequence of acts or inactivity of the owner.  That puts in issue the history of the mark and its use or non-use by Tasman Insulation since 1973.  It follows that it is not the case that the separate question is susceptible to a summary hearing involving little discovery, and evidence confined to the question of the use presently made of the word.

[12]     Mr McLeod also  takes  the point that  this will be the first time in  New Zealand that s 66(1)(c) has been addressed at a full trial.   It differs from previous law, although to what extent is debateable.  Certainly it raises important questions of fact and there is something in his point that the issue ought not to be examined without a full factual context.

[13]     The next question is whether the separate question will conclude the case.  It would determine the infringement proceedings  only if Knauf Insulation were to succeed on the separate question.  The defence to the infringement action alleges that Knauf Insulation’s use of the word is purely descriptive and not used as a trade mark.  That is to say, the word is used only in instructions, and not to market the product.   That issue would remain live.   There is also the question of Knauf Insulation’s counterclaim, although Mr Hazel indicated that given success on the preliminary question it might well not be proceeded with.

[14]     The revocation issue will certainly be appealed, but there is no reason to suppose that there will be multiple appeals.  The only issue that might be appealed separately would be the question whether the use of the mark by Knauf Insulation is descriptive.  All of the issues raised by s 66(1)(c) would properly form the subject of one appeal which could be taken as far as necessary.

[15]     Delay is an important consideration.  I am given to understand that Knauf is in the New Zealand market, which is an important consideration.  It has changed its installation instructions. But the more important point for present purposes is that is not  the  case  that  a  separate  question  could  be  tried  more  quickly  than  an infringement action.  I accept that a trial that addresses revocation and infringement, but not damages, would require one to two weeks.  The trial of a separate question would not take significantly less time in my opinion, and it could not be held earlier. The indications from the Registry are that unless urgency can be established, the trial would not be held until February next year.  I accept the question to be tried would also delay the overall resolution of the case including any appeals.

[16]     For these reasons I am not satisfied that the interests of justice require that a separate question be stated.   The better course is to timetable the revocation proceeding and the infringement action for trial, leaving the question of damages for a separate hearing if that is the parties’ preference.

[17]     The application is accordingly dismissed.   I direct that the proceeding be called in the next list to timetable it for hearing.

[18]     Tasman Insulation will have costs of the present application on a 2B basis with provision for two counsel.

Miller J

Solicitors:

A J Park, Auckland for Plaintiff

James & Wells, Auckland for Defendant