John Hackettof AJ Park takes an in-depth look at the impact of three high-profile trademark-related cases which have recently been tried in New Zealand's High Court:
"In the first case of its kind in the country, the High Court has found that using a competitor’s trademark as a Google AdWord is not trademark infringement."
New Zealand doesn’t have a reputation for being particularly litigious. However, three trademark-related cases tried in the country’s High Court in recent months have reinforced to intellectual property rights owners the importance of having a strong legal framework within which to enforce those rights.
In this brief article, we review these cases and the lessons learned. Notably, all three involve well-known, long-established New Zealand brands and trademarks.
In the first case we learn that using a competitor’s trademark as an “invisible” Google AdWord keyword does not constitute trademark infringement.
The issue of “genericism” sits at the heart of the second case.
And in the third, New Zealand’s “most trusted brand” Whittaker’s, is successful in winning a trademark registration opposition brought by Cadbury.
New Zealand’s High Court ruling on ‘Invisible’ AdWords
In the first case of its kind in New Zealand, the High Court has found that using a competitor’s trademark as a Google AdWord is not trademark infringement.
The case between InterCity Group (NZ) Limited v Nakedbus NZ Limited, is the culmination of years of fierce competition between the parties. Both InterCity Group (ICG) and Nakedbus operate long-haul passenger coach services throughout New Zealand. Since entering the market in 2006 Nakedbus had targeted competitors’ brands, including ICG’s INTERCITY trademark. Matters came to a head in 2012 when ICG discovered that searches for the term ‘inter city’ on Google were generating Nakedbus sponsored advertisements. These advertisements contained the words “inter city” and linked through to the Nakedbus website.
Under New Zealand law, for there to be trademark infringement the allegedly infringing mark must be used in a manner likely to be taken as being use as a trademark. This is assessed from the perspective of relevant consumers; in this case “a significant number of normally informed and reasonably attentive internet users”. While Google Adwords are invisible to everyone except Google and the advertiser, the judge held that if the use could not be seen by the consumer it could not be “taken as” anything, let alone ‘taken as being used as a trademark’.
While there was no trademark infringement, Nakedbus did not escape liability. It had used “inter city” in the text of its Google advertisements triggered by the keywords, and on its website. The judge held that this use of “inter city”
was trademark infringement, and constituted passing-off and breach of the Fair Trading Act. Nakedbus has appealed this finding.
Using a competitor’s trademark as a keyword for Google AdWords is not trademark infringement in New Zealand. However, using a competitor’s trademark as part of a Google AdWords campaign (or indeed in any advertising campaign) should be done with great caution.
‘Generic’ trademark disputed in New Zealand’s High Court (Tasman Insulation Ltd v Knauf Insulation Ltd)
The issue of whether a trademark had become generic was recently tested in Tasman Insulation Ltd v Knauf Insulation Ltd (Tasman and Knauf respectively). Although there were a number of questions at issue the most significant were those concerning genericism and trademark infringement.
Under the New Zealand Trademarks Act 2002 a registered trademark can be removed from the register where, as a result of the owner’s acts or inactivity, a trademark becomes the common name for that type of product used by the public. In other words, the trademark has ceased functioning as a trademark capable of signifying brand origin.
In this case, Tasman issued proceedings for trademark infringement of its trademark registration BATTS for insulating materials. Tasman has been the owner of the BATTS trademark in New Zealand since 1973. In return, Knauf applied to revoke Tasman’s trademark on the grounds that owing to the acts or inactivity of Tasman, BATTS had become a common name for rectangular pieces of insulation. Additional Fair Trading claims were added along the way, the most significant of which was in relation to Knauf’s EARTHWOOL insulation product.
The judge disagreed with Knauf’s argument that the word “batts” had become a common name in general use by the public in New Zealand owing to Tasman’s acts or inactivity. The judge also found that the defendants had fallen “significantly short” of establishing that it was the acts and inactivity of Tasman that caused the trademark to become a common name in general use.
On Tasman’s claims of trademark infringement for use of the words ‘batts’ and “batt” on installation instructions and packaging of the EARTHWOOL product, the judge ruled that the public would not perceive the way the word was being used as a trademark and as a result this use did not amount to trademark infringement. However, use of the word “batt” in the website’s code did infringe the plaintiff’s trademark because if this was viewed by a consumer this use would be seen as a trademark as it was being used to direct internet traffic in search of a particular brand to that website.
In relation to Tasman’s claim that EARTHWOOL gave the misleading impression to consumers that Knauf’s products are substantially made of natural wool when they are in fact made of recycled glass, the judge found that the EARTHWOOL name and brand was misleading and deceptive. As a result the judge ordered that the defendants were restrained from using the EARTHWOOL name or brand, except where it is printed immediately alongside the words ‘glasswool’ or ‘glass insulation’ in the same font and size. The judge also made a declaration that some marketing of the EARTHWOOL product on the ecoinsulation.co.nz website and earthwool.co.nz website breached the Fair Trading Act, and that a newspaper advert which Knauf took out also contained a misleading statement and breached the law.
However, Tasman lost one of the more minor Fair Trading Act claims against it. This related to Tasman’s ‘titanic test’ which involved Tasman putting its product and EARTHWOOL in water to show the latter sank first. The judge found that the presentations gave rise to misleading or deceptive distinctions regarding the products’ respective qualities.
Launching a new product in New Zealand (Whittaker’s v Cadbury)
J H Whittaker & Sons Limited (Whittaker’s) won in New Zealand’s High Court against Cadbury UK Limited (Cadbury) for the right to call one of its chocolate products BERRY FOREST. This is the second time that Cadbury has lost its fight to stop Whittaker’s from using or registering the trademark BERRY FOREST.
Cadbury’s concern is that the trademark BERRY FOREST is too close to their BLACK FOREST trademark and that consumers would likely be confused or deceived as to the source of the goods bearing the BERRY FOREST trademark.
Neither the Assistant Commissioner of Trademarks nor Her Honour Justice Denningham accepted Cadbury’s concern. Cadbury has been using BLACK FOREST as a trademark in New Zealand since 1992. When it launched its product, steps were also taken to register BLACK FOREST as a trademark. It is one of Cadbury’s core products and has been in the top 10 best sellers out of all chocolate products, of all brands in New Zealand, since 2006.
In December 2010, Whittaker’s decided to launch a new chocolate product, and filed the trademarkBERRY FOREST. To date, Whittaker’s has not used the trademark BERRY FOREST. Cadbury opposed registration of the Whittaker application but did
not succeed on any ground of the opposition, so Cadbury appealed the decision. In the recent appeal, therewere four grounds that the judge took into consideration in regards to Whittaker’s filing the trademark BERRY FOREST.
A trademark must not be registered if:
•its use would be likely to deceive or cause confusion;
•its use would be contrary to New Zealand law or would otherwise be disentitled to protection in any court;
•it is similar to a trademark that belongs to a different owner and that is registered; or
•it is, or an essential element of it is, identical or similar to, or a translation of, a trademark that is well known in New Zealand.
The judge found for Whittaker’s on each of the four grounds and dismissed the appeal.
The judge concluded that when read as a whole, there were insufficient similarities between BLACK FOREST and BERRY FOREST, including the concepts and ideas that they bring to mind, to risk confusion or deception among the purchasing public.