‘Limited edition’ or a case of trade mark use it or lose it?
Tuesday 13th December 2016
New Zealand summer not only sees the return of sunshine and more hours in the day, but we also often see the return of much-loved consumer products released as ‘limited edition’ or for a ‘limited time only’. In recent years, we have seen the return of some of our most favourite brands, such as the FRUJU TROPICAL SNOW and Coca-Cola’s MELLO YELLOW drink. Limited edition products not only appease consumers but can also protect a company’s trade mark rights.
In New Zealand, if a trade mark is not used for three years or more, it may be vulnerable to revocation for non-use. This is important for both trade mark owners and those who wish to register a new trade mark to keep in mind. Trade mark owners need to ensure their valuable trade mark protection not only reflects their current product or service offerings but also possible future offerings under existing trade marks. Trade mark applicants can also think about using revocation for non-use as a tactic when prevented from registering their trade mark due to an existing trade mark on the register.
What counts as use of a trade mark?
Under the New Zealand Trade Marks Act 2002, a trade mark registration may be revoked where the following circumstances apply:
“That 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, by the owner for the time being, in relation to goods or services in respect of which it is registered”
The meaning of ‘use’ is widely defined in the legislation, with the main criterion being whether the mark is used as a trade mark denoting trade origin. Use is satisfied where the trade mark is used on goods or services in New Zealand or exported overseas. The phrase ‘by the owner for the time being’ also includes a licensee using the trade mark so long as this is under the trade mark owner’s control. The main issue in non-use proceedings often comes down to whether the use is “genuine” during the relevant alleged non-use period.
There are a number of factors that are important considerations as to whether use of a trade mark is genuine, including;
- actual use of the mark by the trade mark owner or by an authorised third party;
- the use must be more than merely token and internal company use, whereby the use does not serve only to preserve the rights conferred by the trade mark registration;
- the use must be consistent with the essential function of a trade mark, which is to denote the origin of the goods or services;
- the use must be by way of commercial exploitation of the mark to the market with the goal of creating an outlet for the goods or services, or a share in the market. This includes in some circumstances, preparatory use, which may amount to genuine use of a trademark notwithstanding the fact there is no actual end use in the consumer market;
- the quantity of use is not significant for it to be determined genuine use, therefore even minimal use may qualify;
- and all other relevant facts and circumstances of the case are important, such as the nature of the goods or services at issue, the relevant market and the type of evidence able to be provided.
In one New Zealand High Court case decided in 2014, the registered trade mark owner could point to one instance of use of the trade mark during the relevant three year period. The use claimed was by way of a newspaper advertisement circulated in the area where the previous owner had run their business. A key question asked in this case was whether the trade mark was intended to be used as a badge of origin. The judge found, despite very minimal use, that there was no evidence the trade mark owner had simply advertised in order to preserve their trade mark registration, and other objectively assessed factors pointed towards genuine use.
More recent court decisions indicate revocation on the basis non-use is an area of law which is discretionary. In Cure Kids v National SIDS Council of Australia Ltd, Moore J confirmed the use of “may” in the relevant section of the Act, rather than “must”, indicated there is a discretion not to revoke the registration of a mark even if the grounds set out in that section are made out. The judge referred to a number of factors to be taken into account in the exercise of the discretion, including whether the owner intended to abandon the mark, whether the owner had residual reputation in the mark and whether anyone will be, or likely to be, deceived or confused if the mark remains on the register? These factors were considered and also applied in favour of the defendant in Bluebird Foods v Griffin’s Foods Limited.
Defence to non-use proceedings
There is a defence to non-use for trade mark owners to be aware of, which applies if any special circumstances exist outside the control of the registered trade mark owner. Overseas cases have determined the obstacle to using of a trade mark must arise from events external to the registered owner, and not brought about by the actions of the owner, such as an abnormal or serious disruption in a particular industry which affects the owner’s business. The obstacle to use must be trade related and not simply a personal issue that affected the trade mark owner such as illness or financial troubles. In the New Zealand case, Manhass Industries Limited v Fresha Export Limited (2012), the judge said the threshold is quite high to establish special circumstances, and the inquiry is a very fact-specific one.
How to protect your trade mark now and in the future
Practical steps both trade mark owners and applicants of new trade marks can follow include -
- Applying for a trade mark in relation to goods and services for which it will actually be used, bearing in mind striking a balance between this and maintaining a good level of trade mark protection
- Thinking about registering a word trade mark first, rather than a logo or device mark, which can ensure that use of the trade mark is maintained despite updates or changes to your logo
- Where registered proprietors of trade marks are authorising others to use the trade marks, carefully drafting licence agreements would be required to ensure that the provisions maintain a connection with and actual control over the use in order to avoid falling foul of non-use provisions
- Keeping sufficient evidence of use of the trade mark or of special circumstances for non-use if these apply, in case you find yourself in need of a defence to non-use proceedings
- Being mindful of the future direction of your company’s offerings under an existing trade mark. Although you may not currently be using a particular trade mark but want the option in the future, make sure the registration is actively maintained and genuinely used within three year periods
Baldwins is experienced and able to advise on all of your trade mark enquiries, including applications, registrations and maintaining these registrations effectively, please contact a Baldwins representative.
This article was written by Rachel McDonald and Vicky Mullins.
 Section 66(1)(a) of the Trade Marks Act 2002
 Cure Kids v National SIDS Council of Australia Ltd
 Metalman New Zealand Ltd v Scrapman BOP Ltd  NZIPOTM 17
 Cure Kids v National SIDS Council of Australia Ltd  NZHC 3366
 Bluebird Foods Limited v Griffin’s Foods Limited  NZIPOTM 9 (9 July 2015)
 Invermont Trade Mark R.P.C. (1997) 114 (4): 125-133.
 Austin, Nichols & Co Inc v Lodestar Anstalt  FCA 39; 202 FCR 462; 90 IPR 310