Using an abbreviated form of a Registered Trade Mark: Trade Mark infringement or honest practice?

Dr. Victoria Longshaw and Dr. Nigel Parker

A recent case before the High Court of New Zealand, Co-Operative Bank Ltd v Anderson [2014] NZHC 2686, illustrates the enforcement difficulties faced by an owner of a New Zealand Registration for a Trade Mark which relies on an industry-specific descriptive word to impart distinctiveness.

Background

Co-operative Bank Ltd (“TCB”), previously the Public Service Investment Society (“PSIS Ltd”) opened its previously limited membership to the New Zealand public in 1995. It is a co-operative registered with the Co-operative Companies Act 1996. TCB changed its name from PSIS Ltd and registered as a bank in 2011. It is currently the only bank in New Zealand that is registered as a co-operative. TCB registered a logo with the words THE CO-OPERATIVE BANK. However, an Application to register THE CO-OPERATIVE BANK as a word Mark was unsuccessful.

In comparison, the New Zealand Association of Credit Unions (“NZACU”) is a representative industry body cooperatively owned by 17 member Credit unions and Building Societies. However, unlike TCB, NZACU is not a bank, and neither are its members.

NZACU recently underwent a rebranding process, to change its name from the NZACU to Co-op Money NZ. Aspects of NZACU were also changed to include the words “co-op,” such as to change the name FACTS Ltd of its business-to-business trading section to Co-op Services NZ and its insurance service section from Credit Union Insurance Ltd to Co-op Insurance Ltd.

NZACU applied to register logos containing the words CO-OP SERVICES NZ, CO-OP INSURANCE NZ and CO-OP MONEY NZ as Trade Marks (the “Trade Mark Applications”) in New Zealand. When the Trade Mark Applications were accepted for registration, TCB filed opposition proceedings against their registration, as well as an application for an interim injunction to restrain the trustees of NZACU from using, or asserting a right to use, names that include the words “co-op.” NZACU postponed its rebranding efforts pending the outcome of the dispute.

The Dispute

TCB did not object to the use of the descriptor “co-operative” by NZACU, but only to the use of the words “co-op.” TCB argued that NZACU’s proposed use of these words would be deceptively similar to TCB’s name, “The Co-Operative Bank”.

An interim injunction was sought to prevent NZACU from using, and from claiming any right to use, Marks using the words “co-op” on the basis of passing off, Trade Mark infringement, and breaches of the Fair Trading Act 1986.

NZACU argued that “co-operative” and “co-op” are generic descriptive terms in the financial services sector, that they are entitled to use these words, and that the balance of convenience would be against the grant of such an injunction. They asserted that there was no serious question to be tried.

The Decision

Passing off

The Court held that NZACU would not be passing itself off as TCB if it uses the word “co-op.” Although TCB successfully established that limited goodwill existed in its name “The Co-Operative Bank,” and that a significant group of customers associated the use of the word “co-op” with TCB, it failed to persuade the Court that any secondary meaning attached to the words. Since NZACU was not yet publicly using any of its new brands, TCB also failed to show that there would be a misrepresentation by NZACU to the public if the new marketing strategy proceeded. The Court regarded it as unlikely that there would be any confusion that would lead to any significant damage to TCB’s goodwill.

The Court considered the word “co-op” is a widely used abbreviation of “co-operative”, both terms being regarded as descriptive. Furthermore, the convenient short form of “co-operative” was considered to be a different word, diminishing the similarities between the TCB and the NZACU names, and reducing the risk of confusion. The Court was unsympathetic to TCB, stating that “even if there is going to be some confusion in the marketplace when NZACU re-brands, it is the sort of confusion that parties who choose to use descriptive names have to tolerate.”

Breach of the Fair Trading Act 1986

Since TCB had failed to prove that there would be any misrepresentation by NZACU or a likelihood of confusion, the Court also held that there was no breach of Sections 9, 11 or 13 of the Fair Trading Act 1986.

Trade Mark Infringement

The Court found there was no exact similarity of words between the Marks of TCB and NZACU. The only overlap was “the use of the word ‘the’ and the use of part of ‘cooperative’ being ‘co-op’. The get-up of the Marks and their visual appearance were regarded as very different. The Marks were not considered to be similar or likely to cause deception or confusion and, as such, no infringement was found. The use of the word “co-op” was considered to be a fair presentation of the nature of the entities involved and the services offered. Accordingly, the Court considered Section 95(c)(i) of the Trade Marks Act to apply. This Section provides that a person does not infringe a registered Trade Mark if that person uses the Mark in accordance with honest practices in industrial or commercial matters to indicate a kind, quality, quantity, or other characteristic of the goods or services.

The balance of convenience was also held in favour of NZACU, and the application for an interim injunction was dismissed.

Take Home Message

This case is a useful reminder that the New Zealand Court is unsympathetic to parties seeking monopolies on descriptive words, particularly those that are widely used in the industry concerned. A party choosing to use a descriptive word to distinguish their goods or services from other traders will be expected to tolerate any small risk of confusion in the marketplace.

Thus, even though a party may have registered Trade Mark Rights to a Mark, if that Mark relies on a full descriptive word to impart distinctiveness, it may be difficult to enforce such a Registration in New Zealand against a party using an abbreviated or shortform version of the Mark.

Owners of registered Trade Marks which rely on descriptive words would be well advised to be pro-active in protecting their existing Trade Mark portfolio and pursue Trade Mark Rights for the abbreviated or shortform version of the Mark, even if they are descriptive. Abbreviations of Marks may still be registrable as Trade Marks in New Zealand as long as they can be shown to have acquired distinctiveness through use. For comprehensive protection, it is important to include Registrations for possible abbreviations of a Mark in a Trade Mark portfolio so as to prevent a competitor from filing future Trade Mark Applications using the abbreviation and from unauthorised use of the abbreviation.

When Opposition Proceedings get hijacked by the Registrar’s discretion to revoke acceptance

Dr. Victoria Longshaw and Dr. Jim Onishi

In Australia, the Registrar has the discretion to revoke acceptance of an Application for registration of a Trade Mark in terms of Section 38 of the Trade Marks Act 1995 (“the Act”) if he or she is satisfied that the Application (a) should not have been accepted and (b) that it is reasonable to revoke the acceptance, taking into account all of the circumstances.

 

It is worth bearing this discretionary power of the Registrar in mind in Opposition Proceedings against a Trade Mark Application, particularly in circumstances where the accepted Mark is contained wholly within an earlier registration.

 

An example of a typical circumstance in which Section 38 is applicable arose in recent Opposition Proceedings at the Australian Trade Marks Office against Trade Mark Application No. 1597007 (“the Application”) for TASMAN, which was filed in the name Endeva Pty Ltd (“the Applicant”).

 

The Facts

 

The Application was filed in Class 25 for apparel (clothing, footwear, headgear), and claimed a priority date of 18 December 2013. After examination, a clear report issued on 16 January 2014 indicating that the Application had been accepted. Acceptance was advertised on 8 May 2014. Winterworth Pty Ltd (“the Opponent”) filed a Notice of Intention to Oppose on 8 July 2014, followed by its Statement of Grounds and Particulars on 8 August 2014.

 

In the meantime, a Notice of intention to revoke the acceptance of the Application (“the Notice”) was sent to the Applicant on 9 July 2014, stating that the Examiner had not taken into consideration an earlier registration, Trade Mark No. 1452777 (“the earlier registration”):

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The earlier registration included the term TASMAN, and was considered to claim the same or similar goods in Class 25 to that of the Application. Accordingly, the Registrar considered revocation of acceptance to be reasonable, in view of the earlier registration and the surrounding circumstances. The matter proceeded to a hearing.

The Decision

Since the hearing related to the Notice, only the Applicant (and not the Opponent) was required to provide submissions. However, the Delegate was not persuaded by any of the Applicant’s arguments, and revoked acceptance of the Application. The Delegate also directed that the Application undergo re-examination once the period for appeal had expired.

 

Exercising the discretion to revoke acceptance

 

The discretion of the Registrar to revoke the acceptance of an Application for registration is defined in Section 38 of the Act as requiring two factors.

First limb of the test: Was there a valid ground for rejecting the Application?

 

After reviewing the examination file of the Application, the Delegate concluded that the search strategy used by the Examiner should have located Trade Mark No. 1452777 and extracted it for consideration. However, there was no record that this had been done by the Examiner.

 

The earlier registration included the word TASMAN and was filed for similar goods in Class 25. The Delegate considered that there was a valid ground for rejecting the Application during the examination process in that the Mark was substantially identical with, or deceptively similar to, the earlier registration in terms of Section 44 of the Act.

 

The Applicant argued that TASMAN was sufficiently different to the early registration, which included the term “UGG” in prominent and distinctive font. It was submitted that the recognisability of the term “UGG” in Australia was such that it overshadowed the other components of the Mark of the earlier registration. The Applicant also argued that the use of the term TASMAN in the earlier registration was likely to suggest a geographical origin of the products.

 

In contrast, the Applicant argued that TASMAN was a “portmanteau” word. That is, the Mark was a compounded word made up of the shortened version of “Tasmania” and “man.” It was also brought to the Delegate’s attention that a number of Trade Marks containing the word TASMAN already co-exist on the Registrar so that there could be no deceptive similarity of the respected Marks.

 

The Delegate was not persuaded by these arguments and stated that she was satisfied that a likelihood of confusion existed. The additional components in the earlier registration were not considered to be sufficient to differentiate the Marks from each other.

 

Second limb of the test: is it reasonable to revoke acceptance?

 

Taking into account the search strategy of the Examiner that failed to locate the earlier registration, the Delegate took the view that information had been overlooked that, had it been properly considered, would have resulted in a valid ground for rejection being raised.

 

The Applicant argued that the dispute between the parties would be better served in the forum of opposition proceedings. The Delegate did not accept this view and, on balance, considered that it would be preferable to exercise the discretion under Section 38 as the matter was still in its early stages.

 

Take-home message

 

There are not many instances in which the discretion under Section 38 has been applied. Circumstances in which Section 38 may be applicable include: where the Application has been accepted due to an administrative error or oversight by an Examiner of the Australian Trade Mark Office during the examination process, such as (a) the appropriate research not being carried out, (b) an inappropriate search strategy being used, or (c) where an application is accepted because a citation was missed due to an indexing error.

 

Many of these circumstances are outside of the control of the Applicant. However, in arguing against a Notice to revoke acceptance, an Applicant needs to put forward arguments for both limbs of the test. That is, that no valid ground to reject the application existed at the time of acceptance, but also that it is not reasonable to revoke acceptance in the circumstances. Arguments against a Section 38 Notice include where the basis of the revocation merely amounts to a change of opinion or where the balance of convenience favours the Applicant.