I promise that I am not just being obsequious when I say that I was extremely impressed by the Court of Appeal decision in International Consolidated Business Pty Ltd v S C Johnson & Son Inc  NZCA 61, which was issued in March this year. It is great to see a tricky and important area of trade mark law heading in a sensible direction.
The decision of the Court was delivered by Brown J, who is obviously very familiar with the many wrinkles of trade mark law and its real-world implications. And no doubt the fact that the decision is of such a high quality was influenced by the experienced counsel appearing for both parties – Greg Arthur and Laura Carter for S C Johnson, and Garry Williams and Lara Mannis (now Lara Steel) for ICB.
Both parties wanted to own the trade mark ZIPLOC in class 16 in New Zealand.
ICB had registered the mark previously, but S C Johnson successfully applied to the Commissioner to revoke that trade mark registration on the basis of non-use. The removal was effective from 22 April 2013, which was the date of the application for removal. There was no appeal from the revocation decision.
Around the same time that it applied to revoke ICB’s trade mark registration, S C Johnson filed its own trade mark application for the mark ZIPLOC. The precise chronology is important. The trade mark application was filed on 19 April 2013, three days before the application for revocation.
Opposition proceedings before Assistant Commissioner
ICB successfully opposed S C Johnson’s trade mark application. It argued that even though its trade mark application was revoked with effect from 22 April 2013, at the date of S C Johnson’s application on 19 April 2013, ICB was still the lawful owner of the mark. S C Johnson was therefore not entitled to register the mark.
The Assistant Commissioner, after a careful review of the case law, considered that she was bound to agree with this submission, despite the odd outcome, i.e. that a party which has managed to have a trade mark revoked for non-use can still be prevented from registering its own mark as a result of the former existence of the mark it had revoked. The ghost of the removed mark haunts the register still.
High Court decision
S C Johnson appealed to the High Court, and that Court quashed the decision of the Assistant Commissioner. No doubt I am doing a disservice to the lengthy decision, but my overall reading of it was that for pragmatic reasons, in order to get to the right result, the Assistant Commissioner should more or less have pretended that the mark was removed from the register on 19 April, not 22 April.
Court of Appeal decision
The date is what it is
The Court of Appeal did not agree that it was open to either the Assistant Commissioner or the High Court simply to treat the effective date of revocation as the earlier date.
But the date of considering the state of the register is the date of entry of a mark onto the register
ICB referred to Singaporean and UK decisions holding that the existence of a subsequently-revoked trade mark on the register at the date of application for another mark was a bar to registration of that later mark.
The Court of Appeal refused to adopt that approach on the basis that those jurisdictions had got it wrong.
Brown J refers to “the long-established practice of filing applications for registration in anticipation of, and conditional upon, a successful application for removal for non-use of a registered trade mark”. In practice, what usually happens is as follows: a party files a trade mark application; it receives an objection to registration from IPONZ on the basis of some other mark; it investigates that other mark and discovers that it doesn’t seem to have been used for some time; and it files a non-use application. In this typical chronology, the trade mark application pre-dates the application for revocation.
The Court of Appeal concluded that while issues concerning the fact and extent of use of a trade mark and the intention to use a trade mark are determined as at the date of filing an application, the critical date for consideration of the state of the register is the actual date of entry on the register. Accordingly, the presence of a subsequently-revoked trade mark on the register as at the date of application is not a bar to registration.
Proprietorship rights can also be lost through non-use
Intriguingly, and I think rightly, the Court of Appeal also held that the first use of a trade mark does not necessarily determine ownership of that mark in perpetuity. As with a registered trade mark, such rights can be lost through non-use.
The statutory non-use period is a modification of the common law doctrine of abandonment of a trade mark. The Court accepted that it is not open to the former registered proprietor of a trade mark that has been removed from the register on the grounds of non-use to seek to rely on its pre-registration use of the mark to found a proprietorship claim. This would frustrate the non-use provision.
In my view, this aspect of the Court of Appeal’s decision has the scope to play out in the most interesting ways going forward. The principle is expressed in a way that is carefully limited to the facts of this case, but it could be applied more broadly. Does it just mean that after a registered trade mark has been removed for non-use, the former proprietor cannot rely on pre-registration use to establish ownership of the mark? Or does it mean that common law ownership is now subject to the same non-use limitations as registered trade marks, whatever the circumstances, and such use doesn’t count if there has been a three-year abandonment?
This decision could easily have led us into a legal quagmire if it had been fudged or botched. The trade mark system is a priority-based system, and any tinkering with that fundamental principle has to be undertaken incredibly carefully. I think the Assistant Commissioner was right not to meddle with it in the first instance, especially in light of the authorities to the contrary.
I am really comfortable with where the Court of Appeal has landed on this one, as it reflects the day-to-day realities of trade mark filing practice but at the same time it hasn’t done any major injury to the overall coherence of the law. Bouquets galore!
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