Para No
Introduction [1]
The factual background [3]
Statutory scheme [10]
The High Court judgment [23]
The issues [32]
Can a functional mark be a trade mark? [33]
Can the goods be the mark? [39]
Distinctive character acquired by use? [43]
(i) The arguments [43]
(ii) Onus of proof [45]
(iii) Evidence on use [48]
(iv) Analysis of the evidence [55]
Consideration of irrelevant factors? [66]

(i) Scale of use [67]

(ii) Availability of alternative shapes [76]
Was the Klipon a “limping mark”? [79]
Result and costs [83]

Introduction

[1] By judgment of 16 December 2004, now reported at (2004) 65 IPR 653, Venning J dismissed an application made under s 73 of the Trade Marks Act 2002 to have registration of the appellant’s “Klipon” plastic vine tie declared invalid. Fredco Trading Limited (Fredco) appeals against that decision.
[2] The appeal raises issues about the application of s 18 of the Trade Marks Act. Section 18 provides that non-distinctive trade marks are not registrable but recognises that trade marks may acquire a distinctive character through use. In particular, the focus is on whether the vine tie could and has acquired a distinctive character by use.

The factual background

[3] The respondent (or its business predecessors) began selling the Klipon vine tie, a plastic tie used for tying kiwifruit vines to support wires, in early 1980. Over one billion units have been sold since then. The tie is shown in the representation below.
[4] Until the appellant’s vine tie came on the market, the only other product on the New Zealand market performing a similar function was a vine tie manufactured by Illinois Tool Works Incorporated (ITW). The ITW vine tie looks different from the Klipon but the appellant’s vine tie is virtually identical in shape and configuration.
[5] When the appellant started selling its ties in June 2002, the respondent filed an application for trade mark registration for the Klipon vine tie.
[6] The Intellectual Property Office of New Zealand (IPONZ) initially queried whether the mark was distinctive. The respondent provided further evidence on that and, on 7 August 2003, the application was accepted. The trade mark was registered with effect from 25 July 2002.
[7]

The trade mark was registered as:

[8] Apart from the registered trade mark, all other registered intellectual property rights relating to the Klipon vine tie have expired. A registered design expired in 1995 and a registered patent in 1999.
[9] The respondent commenced proceedings against the appellant in August 2002 for passing off, breach of the Fair Trading Act 1986, and infringement of the shape trade mark. Those proceedings are stayed pending resolution of the challenge to the validity of the trade mark registration.

Statutory scheme

[10] The Trade Marks Act 2002 has a number of purposes including to more clearly define the scope of rights protected by registered trade marks; to simplify procedures for registering a trade mark; and to ensure that New Zealand’s trade mark regime takes account of international developments (s 3).
[11] The definitions of “trade mark” and “sign” in Part 1 are critical in this case. A “trade mark” is relevantly defined in s 5(1) as:

(a) ... any sign capable of -

(i) being represented graphically; and
(ii) distinguishing the goods or services of 1 person from those of another person; and ...
[12] The definition of “trade mark” essentially repeats that in the earlier 1953 Trade Marks Act and reflects the well established authority on the function of a trade mark. This Court in Villa Maria Wines Ltd v Montana Wines Ltd [1984] 2 NZLR 422 at 426 observed that the initial (1866) New Zealand statutory definition of a trade mark similarly:

... fasten[ed] on to the essence of the purpose of a mark as recognised at common law – namely as an indication of the origin of the goods.

[13] Reference can also be made to In Re Powell’s Trade-Mark [1893] 2 Ch 388 at 403-404 where Bowen LJ said:

The function of a trade-mark is to give an indication to the purchaser or possible purchaser as to the manufacture or quality of the goods – to give an indication to his eye of the trade source from which the goods come, or the trade hands through which they pass on their way to the market. It tells the person who is about to buy, or considering whether he shall buy, that what is presented to him is either what he has known before under the similar name, as coming from the source with which he is acquainted, or that it is what he has heard of before as coming from that similar source.

[14] A change made by the 2002 Act was to expressly include shapes in the definition of “sign”. Specifically, under s 5(1) a “sign” includes:

(a) a brand, colour, device, heading, label, letter, name, numeral, shape, signature, smell, sound, taste, ticket, or word; and

(b) any combination of signs.

[15] Section 6 provides that, unless the context otherwise requires, the use of a sign in relation to goods is a reference to the use of the sign on, or in physical or other relation to, goods.
[16] The other important provision for this case is s 18 which sets out when a sign or mark is not registrable. Section 18 reads as follows:

18. Non-distinctive trade mark not registrable

(1) The Commissioner must not register –

(a) a sign that is not a trade mark:

(b) a trade mark that has no distinctive character:

(c) a trade mark [ ] that consists only of signs or indications that may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin, time of production of goods or of rendering of services, or other characteristics of goods or services;

(d) a trade mark that consists only of signs or indications that have become customary in the current language or in the bona fide and established practices of trade.

(2) The Commissioner must not refuse to register a trade mark under subsection (1)(b), (c), or (d) if, before the date of application for registration, as a result of either the use made of it or of any other circumstances, the trade mark has acquired a distinctive character.
[17] The Trade Marks Bill initially included (in what became s 18) an additional clause identical in all substantive respects to the equivalent provisions in the Trade Marks Act 1994 (UK) and the Trade Marks Act 1998 (Singapore). Both of those Acts expressly prohibit registration where the sign consists exclusively of:

(a) the shape which results from the nature of the goods themselves;

(b) the shape of goods which is necessary to obtain a technical result; or
(c) the shape which gives substantial value to the goods.

(s 3(2) of the UK Act and s 7(3) of the Singapore Act).

[18] The equivalent clause in the New Zealand Bill was removed on the recommendation of the select committee considering the Bill on two grounds. First, the Committee said there had been difficulties in the interpretation of the clause in both the United Kingdom and Singaporean jurisdictions. Secondly, the Select Committee was concerned that the clause “may unduly restrict and prevent registration of shapes that are distinctive”. (Commerce Committee Commentary to the Trade Marks Bill at page 4; and see also the discussion in Frankel and McLay, Intellectual Property in New Zealand (2002) at [8.2.12].)
[19] The Australian Trade Marks Act 1994 contained a section like that in the United Kingdom and Singaporean legislation, but the provision (s 39) was short-lived. A new Australian Trade Marks Act was enacted in 1995 that did not contain that provision. The New Zealand legislation follows that approach. The New Zealand legislation, therefore, does not expressly prohibit the registration of functional shapes.
[20] In relation to other matters raised on this appeal, the New Zealand approach otherwise reflects that in the United Kingdom, Australia, and Singapore, that is, shapes are registrable but must be capable of distinguishing the goods of one person from those of another. The characteristic of distinctiveness may be inherent or may be acquired by use.
[21] Reference should also be made to s 73 of the Act. That gives the Commissioner or the Court the discretion, on the application of an aggrieved person to:

(1) ... declare that the registration of a trade mark is invalid to the extent that the trade mark was not registrable under Part 2 at the deemed date of its registration.

(2) Despite subsection (1), the registration of a trade mark that has acquired a distinctive character after its registration must not be declared invalid even though the trade mark was not registrable under section 18(1)(b), (c), or (d) at the deemed date of its registration.

[22] Finally, registration is prima facie evidence of validity of the trade mark. This is the effect of s 162 which states:

In all legal proceedings that relate to a registered trade mark the fact that a person is registered as owner of the trade mark is prima facie evidence of the validity of the original registration of the trade mark and of all later assignments and transmissions.

The High Court judgment

[23] The issues before the High Court Judge were whether any of the paragraphs in s 18(1) applied to bar registration and, if so, whether registration was saved by s 18(2). The appellant before the High Court relied on ss 18(1)(c) and (d) as well as ss 18(1)(a) and (b), but neither (c) or (d) is pursued before this Court.
[24] Venning J recorded the appellant’s acceptance that it had the onus of proving the vine tie was not a trade mark or did not have a distinctive character. But Venning J agreed with the appellant that while the registration was prima facie evidence of validity, there was no presumption of validity.
[25] The approach taken by the Judge was to first consider whether the sign for which registration was sought was a trade mark (s 18(1)(a)). That question was to be decided by applying the test of the Court of Appeal in McCain Foods (Aust) Pty Ltd v Conagra Inc [2002] 3 NZLR 40 at [14], that is, does the Klipon vine tie either have an inherent quality about it, or by use or other circumstances is the mark capable of distinguishing the Klipon vine tie from other vine ties? That test is the test of the 1953 legislation. Although the wording and structure of the current Act is different, the test is still relevant. The Judge took the view that both the Klipon and the ITW vine tie carry out the same task and satisfy the same basic requirements. However, the swan-neck hook and to a lesser degree the rectangular shape of the head were features distinguishing the Klipon vine tie from the ITW vine tie.
[26] Venning J attached more significance to evidence that consumers can and do distinguish between the Klipon vine tie and its competitor based on shape. Accordingly, Venning J concluded that the mark met the requirements of s 18(1)(a).
[27] The second step was whether the trade mark was caught by any of s 18(1)(b) to (d). In terms of s 18(1)(b), the Judge took the view that the phrases “distinctive character” and “capable of distinguishing” mean different things.
[28] In this context the Judge considered that there were aspects of shape not solely determined by functional considerations. The examples he gave included the rectangular end of the Klipon tie, as opposed to the ITW tie which has a circle; and that the swan-necked hook/clip on the Klipon was larger than the clip mechanism on the ITW tie. However, Venning J decided that, in the end, the essential shape characteristics of the Klipon vine tie were largely determined by functional considerations.
[29] With reference to the decision in Philips Electronics NV v Remington Consumer Products Ltd [1999] RPC 809 (CA) the Judge concluded that, although the point was a difficult one, the swan-necked rectangular end and other variations of the Klipon vine tie were simply examples of how the same technical result required of a vine tie may be achieved. More was needed to establish distinctive character. Accordingly, the vine tie was prima facie caught by s 18(1)(b).
[30] The final step was whether the registration was saved by s 18(2). On the basis of the evidence, Venning J was satisfied that the Klipon vine tie had acquired a distinctive character through use sufficient to support its registration under s 18(2). There was no evidence, the Judge said, on behalf of the appellant to the contrary.
[31] The Judge also rejected the argument that the shape was a “limping mark” propped up by the use of the Klipon logo. That was on the basis of the evidence that the market uses the shape of the vine ties to relate the ties back to the Klipon brand, rather than the reverse. The market identified the product first by its shape and then related that back to the known attributes of Klipon.

The issues

[32] The appellant’s arguments raise a number of issues, namely:

(a) Whether a functional mark can be a trade mark;

(b) Whether the goods themselves can be the mark;

(c) Was Venning J wrong on the evidence to conclude that the Klipon denoted origin?;

(d) Did Venning J take into account irrelevant matters?; and

(e) Was the Klipon a limping mark?

Can a functional mark be a trade mark?

[33] The appellant emphasises that the function of a trade mark is to convey information about the origin of the goods. In reliance on the approach taken in other, similar jurisdictions the appellant says that while it is theoretically possible for the vine tie to have acquired a distinctive character by use, in reality that is not possible. That is because the shape is functional and cannot act as a mark. Any other position would enable a trade mark to be registered giving the owner a monopoly over functional features.
[34] The respondent submits that the fact a shape may be functional should not act as a bar to registration. For a functional shape to be registrable, all that is required is that the shape has acquired a secondary (trade mark) significance. That significance does not have to displace the descriptive or functional meaning. The test for shape trade marks is the same as for other signs and some effect has to be given to the legislative change to include shapes as signs which may become trade marks.
[35] The appellant’s argument on these aspects is based on overseas authorities. These authorities, to varying degrees, raise issues about the extent to which marks of this sort can acquire a distinctive character. (See, for example, the line of cases in the United Kingdom dealing with the “Philishave” mark for the Philips’ three-headed razor: Philips Electronics NV v Remington Consumer Products Ltd; Dyson Ltd’s Trade Mark Application [2003] RPC 47 (Ch); and Koninklijke Philips NV v Remington Consumer Products Ltd [2005] FSR 17.)
[36] There is room for debate on whether purely functional marks can be registered even in the absence of a specific prohibition as in the United Kingdom. That is apparent from the Australian jurisprudence: Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd [2000] FCA 876; Kenman Kandy Australia Pty Ltd v Registrar of Trade Marks (2002) 56 IPR 30; and see the discussion in Johnston and others Shanahan’s Australian Law of Trade Marks and Passing Off (3ed 2003) at [2.55]; Davison, “Shape trade marks: The role and relevance of functionality and aethetics in determining their registrability” (2004) 15(2) AIPJ 106 at 107-108; Baird “The Registrability of Functional Shape Marks” (2002) 13(4) AIPJ 218 at 225; and Loughlan “The concept of “sign” in Australian trade mark law” (2005) 16(2) AIPJ 95 at 105.
[37] We do not, however, consider it is necessary to decide the point. That is because the finding of Venning J was only that the mark was largely functional, not that it was purely functional. Although the Judge went on to conclude s 18(1)(b) was met, it does not follow from that finding that the mark was solely functional.
[38] We add that it is relevant although not conclusive that in terms of the policy considerations underlying restrictions on registering functional marks, registration does not thereby mean that the respondent completely “corners the market”. In other words, the attribution of a trade mark to the Klipon tie does not stop others from using a vine tie at all. There are other ways of achieving the same functionality.

Can the goods be the mark?

[39] The appellant submits that where the sign is the goods, the mark cannot convey information about the origin of the goods. If the shape was removed, there is nothing left to comprise a mark.
[40] The respondent says the issue is whether the shape of the vine tie is distinctive. In other words, does the mark indicate the source or quality of the product? The respondent says that this is what the evidence shows.
[41] For the reasons given in Kenman Kandy we consider that the goods can be the mark. As French J for the majority put it in Kenman Kandy at [45] (and see also [43]):

... The shape which distinguishes the goods may be their shape taken as a whole. The inclusion of “shape” in the definition of “sign” stands against the suggestion that it can never be an attribute separate from the goods to which it relates. It mandates consideration of shape as a distinctive attribute although not a necessary feature of the particular goods.

[42] Any other approach would not give effect to the statutory recognition that a shape can be a mark. Indeed, the appellant accepts it is conceivable that the shape of the vine tie could acquire a distinctive character by use.

Distinctive character acquired by use?

(i) The arguments

[43] The appellant submits that in reaching the view that the vine tie had acquired a distinctive character by use, the Judge was plainly wrong on the facts. The appellant submits that the relevant authorities support the proposition that in order to be registered a product shape requires more than mere use and recognition of the product by consumers. The relevant inquiry is whether the shape functions as a trade mark by indicating trade origin. All the evidence demonstrates here is product, not brand, recognition and that is not sufficient to show the mark has acquired a distinctive character. The appellant also points out that the existence of the respondent’s patent gave the respondent a monopoly on the supply of the Klipon vine tie for the bulk of that period. The sales of almost one billion units during that time are an indication only of the commercial success of the product.
[44] The respondent submits that there is evidence in this case to support the finding that the shape of the vine tie is distinctive to the target market, that is, consumers rely on the shape to identify the source.

(ii) Onus of proof

[45] Before turning to consider the factual position, we note that there was some debate between the parties about the onus of proof. The appellant accepted it had the obligation of showing it was more probable than not that the mark was not registrable. The appellant says that the effect of the evidence of its expert, Dr Denise Conroy, was to shift the evidential burden to the respondent. The respondent maintained the evidential burden only shifted if there was evidence to overcome the prima facie validity of the registration. The respondent disputes Dr Conroy’s evidence had that effect because she looked at the matter from a theoretical perspective. She did not consider the actual market.
[46] The question of onus is discussed in Kitchin and others Kerly’s Law of Trade Marks and Trade Names (14ed London 2005). The authors state at [10-012-013] that:

With one notable exception, if an application is made for a declaration of invalidity or for revocation, the onus lies on the person making the attack to prove the grounds of invalidity and/or revocation relied upon to the normal civil standard of the balance of probabilities. If one or more grounds are proved, this will automatically overcome the prima facie position provided for by s 72 of the 1994 Act. The rights and remedies, if any, which are then available in respect of the registered mark are subject to the temporal effects of the grounds relied upon.

[47] In this case, we agree that Dr Conroy’s evidence is not, in itself, sufficient to shift the evidential burden. Dr Conroy has a particular expertise in matters such as branding, consumer behaviour, advertising and communication. However, in cross-examination, Dr Conroy accepted she had not studied the market for vine ties and had not had an opportunity to speak to or hear from consumers and or retailers. In other words, her evidence is theoretical. It is not related to use at all.

(iii) Evidence on use

[48] It is common ground that the focus of the inquiry in terms of s 18(2) is on the views of the consumer. The European Court of Justice put it this way in Philips at [63]:

The distinctive characteristic of a sign consisting in the shape of a product, even that acquired by the use made of it, must be assessed in the light of the presumed expectations of an average consumer of the category of goods or services in question, who is reasonably well-informed and reasonably observant and circumspect ... (see also Kerly’s Law of Trade Marks and Trade Names (14ed 2005) at [7-93]; and Brown and Sumpter Intellectual Property 2003 (New Zealand Law Society) at 19).

[49] Before setting out the evidence, we note that from the wording of s 18(2) it may be that “use” must be use as a trade mark. This is supported by reference to cases such as Koninklijke Philips Electronics at [16] where the Federal Court of Australia emphasised the need for the goods to have an existence independent of the trade mark. The respondent argues that there is a softening of the requirement that use resulting in acquired distinctiveness has to be use as a trade mark. The argument is made with reference to cases such as Philips Electronics NV v Remington Consumer Products Ltd [2003] RPC 2 (ECJ), and Unilever PLC’s Trade Mark Applications [2003] RPC 35, 663-666.
[50] Whether or not the respondent is right about this, if the essence of the inquiry is to determine factually whether a functional shape has acquired secondary meaning in the market place which transmits trade source information, then the use of the product itself may be considered. Such an approach is not inconsistent with the legislation as it can be seen to be condoned by “or any other circumstances”.
[51] Turning then to the evidence. The evidence from the respondent came first from Mr Miller, the respondent. Mr Miller filed an affidavit setting out the background to the development of the Klipon vine tie and its sales over the last 20 years. The respondent also filed affidavits by Dr Costley who is an Associate Professor at Waikato Management School in the Department of Marketing and Internal Management; David Innes who is a business consultant; Alexander Munro, a kiwifruit orchardist; Andrew Wood who is a kiwifruit orchardist and contractor; and Arnold Haydon who is a Business Category Manager for Farmlands.
[52] Mr Munro deposes to buying and using Klipon vine ties since around 1984. He makes reference to the very distinct shape commenting that it is a “look and shape that I can recognise”. He went on to say:

I know when I see a vine tie of that shape, either in the store or on a vine, that it is a Klipon vine tie. It is also by this shape that I recognise the Klipon vine tie when I go to buy them each season.

[53] In cross-examination he accepted that other factors like price might be relevant in his decision to purchase but he said that if there was a vine tie that looked the same shape on the market but had different factors associated with it “if it looked like a Klipon and I believed it to be a Klipon, I would buy it as a Klipon I presume if I was told it was a Klipon.” If he was told it was something else he probably would not buy it because he would buy a Klipon. If it had a different brand he would not buy it.
[54] Similarly, Andrew Wood (another consumer) said that he tells the Klipon apart from the ITW vine tie by its shape. He explains that he buys the vine ties in clear plastic bags and that the only change from year to year is in the colour of the vine ties. His evidence is summarised as follows:

The key way that I can identify a Klipon vine tie other than when it’s in its packaging, is by its shape. It is simply by shape alone that I can tell whether a vine tie is a Klipon ... or a Kiwilok.

(iv) Analysis of the evidence

[55] The appellant argues that the evidence shows that the only recognition here is of the product. While the evidence is limited, we consider it does go beyond that. There is an identification by shape and a link to the origin. As Dr Conroy accepted, if consumers use the shape of the vine tie to identify it and no other features, the shape has brand significance.
[56] The matter is summed up in this way in Mr Haydon’s evidence. He explains that Farmlands sell both the Klipon vine tie and the Kiwilok. He says that the vine ties are often sold in clear unmarked bulk bags of 20,000. He concludes that “The Klipon brand and associated vine ties are two of the more valued icons in the industry.”
[57] We agree with Venning J at [52] that the evidence established the following matters:

For approaching 24 years the respondent has been the only party to manufacture and distribute a kiwifruit vine tie having the additional features of shape depicted in the trade mark registration or similar. The only other person to have sought to use a shape with similar features is the [appellant]. The [appellant] only did so for a relatively brief period of approximately a month before the respondent took steps to register the trade mark.

The respondent has sold in excess of one billion units in that shape over the 24 years.

The ITW vine tie is distinguished by consumers as different to the Klipon vine tie.

The shape of the respondent’s vine tie is promoted along with the brand name Klipon. The shape or mark appears on promotional materials. The Klipon vine tie is marketed in such a way that the shape of the goods is used as a determinator by customers to identify the product.

There is evidence before the Court that customers use the shape to identify the product and its source as a Klipon vine tie both before and after sale.

It is possible to use alternative shapes to achieve the same purpose without copying identically the Klipon shape. The ITW vine tie is an example.

There is an aesthetic component to the shape of the Klipon vine tie, the swan-neck.

[58] We need to deal at this point with the appellant’s submission that Venning J was wrong to find that the vine tie had an aesthetic component. It is submitted that this finding is inconsistent with Venning J’s earlier finding about functionality. It is also submitted that the finding there is an aesthetic component is not correct in terms of the evidence. The appellant particularly relies on Mr Miller’s acknowledgement that he has no formal design qualifications and that he designed the vine tie without the assistance of a designer. Further, there was no reference to the “swan-neck shape” in the respondent’s statutory declaration sworn in response to IPONZ’s initial refusal to register the trade mark on the grounds of non-distinctiveness. (We note that there was though a reference to “capricious design features”, including the wire engaging portion which “resemble a duck’s beak”, the slab top head of the distal ends of the vine clip and the protruding reinforced portion for engaging a wire.) Finally, the appellant points to the failure on behalf of Messrs Munro, Wood and Hayden to identify any design features.
[59] Venning J said s 18 envisaged a three-step approach, namely:

(a) Is the sign a trade mark?

(b) If so, does it have a distinctive character?

(c) If it does not have a distinctive character, has it acquired that character by use?

[60] On that approach, there is not necessarily any inconsistency between findings relating to the earlier stages. There is authority to support the respondent’s view that there is no difference between the test for determining whether the sign is “capable of distinguishing” under s 5 and the tests under s 18(1)(b) to (d): British Sugar PLC v James Robertson & Sons Limited [1996] RPC 281 at 305 (Ch), and Philips Electronics NV v Remington Consumer Products Ltd [2003] RPC 2 (ECJ).
[61] Obviously, there may well be overlapping considerations between s 18(1)(a) and (b) and in some cases very little, if any, difference in the inquiry undertaken. However, as Venning J observed, the legislature has used different phrases and on the face of the Act, a staged approach is envisaged.
[62] Section 18(1)(b), as Venning J suggested, is likely to have particular relevance where the trade mark may be capable of distinguishing but does not have inherent qualities that mark it out as of distinctive character.
[63] In any event, as we have said, Venning J’s finding is that the essential shape characteristics of the vine tie are “largely” determined by functional considerations. His Honour’s conclusion that the swan-neck and other variations are “merely examples of how the same technical result required” may be achieved is one made “on balance”.
[64] There is also support in the evidence of Mr Miller for the conclusion that the swan-neck has an aesthetic quality. He states that the unique swan-neck and the rectangular shaped head at the extremity of the swan-neck protrusion were chosen for their aesthetic appeal. There was a sufficient basis for the Court to conclude that there was an aesthetic component.
[65] Overall, the evidence is sufficient to show that the mark is being used as a “badge of origin”.

Consideration of irrelevant factors?

[66] It is necessary then to consider the factors which the appellant says were irrelevant. The two irrelevant considerations identified are, first, the scale of use of the Klipon vine tie for some 24 years and, second, reliance on the availability of alternative shapes.

(i) Scale of use

[67] The first of these factors is the scale of use. On analysis, this is really another way in which the appellant says Venning J was wrong to conclude the shape of the vine tie functions as a badge of origin. That argument has been dealt with. In any event, as the respondent notes there is no error in considering the scale of use as a factor. See: Windsurfing Chiemsee Produktions–und Vertriebs GmbH v Boots– und Segelzubehör Walter Huber [2000] 2 WLR 205 at [51] (ECJ) as confirmed in Société des produits Nestlé SA v Mars UK Ltd C-353/03 at [31] (ECJ); and by the European Court of Justice in Philips Electronics at [60].
[68] The authorities suggest the following matters may be taken into consideration in determining whether a sign has acquired a distinctive character by use:

(a) The market share held by the mark;

(b) How intensive, geographically widespread and longstanding use of the mark has been;

(c) The amount invested by the undertaking in promoting the mark;

(d) The proportion of the relevant class of persons who, because of the mark, identify the goods as originating from a particular undertaking; and

(e) Statements from chambers of commerce and industry or other trade and professional associations.

[69] On this basis, Venning J has not erred in considering the scale of use. While that may not be a deciding factor, it is a relevant consideration. Kitchin and others in Kerly’s Law of Trade Marks (13ed London 2001) make this point at [7-124] observing that:

This type of evidence [of turnover and advertising expenditure] is a necessary part of any attempt to prove acquired distinctiveness, but it cannot do the job by itself.

[70] The other aspect to reliance on the scale of use is the effect of the respondent’s monopoly in the market.
[71] The European Court of Justice in Philips, above, had to consider the following question:

Where a trader has been the only supplier of particular goods to the market, is extensive use of a sign, which consists of the shape (or part of the shape) of those goods and which does not include any capricious addition, sufficient to give the sign a distinctive character for the purposes of Art.3(3) in circumstances where as a result of that use a substantial proportion of the relevant trade and public:

(a) associate the shape with that trader and no other undertaking;
(b) believe that goods of that shape come from that trader absent a statement to the contrary?
[72] The Court’s answer was in these terms at [65]:

... where a trader has been the only supplier of particular goods to the market, extensive use of a sign which consists of the shape of those goods may be sufficient to give the sign a distinctive character for the purposes of Art.3(3) of the Directive [New Zealand s 18(2)] in circumstances where, as a result of that use, a substantial proportion of the relevant class of persons associates that shape with that trader and no other undertaking or believes that goods of that shape come from that trader. However, it is for the national court to verify that the circumstancess in which the requirement under that provision is satisfied are shown to exist on the basis of specific and reliable data, that the presumed expectations of an average consumer of the category of goods or services in question, who is reasonably well-informed and reasonably observant and circumspect, are taken into account and that the identification, by the relevant class of persons, of the product as originating from a given undertaking is as a result of the use of the mark as a trade mark.

[73] Obviously, there may be difficulties at a practical level in establishing that s 18(2) has been met in a monopoly situation. Hence, in Dyson, Patten J at [44] suggested there was a good argument that distinctiveness could only be applied “by discounting the links between the mark and the goods which exist solely because of the monopoly of position and the association it produces.” But it is not impossible to meet the test in that situation as Patten J accepts, to a degree, by deciding to refer a question to the European Court. As the respondent submits, the focus is on the end result. If it is distinctive that is enough and it does not matter whether that was acquired as a result of a monopoly situation.
[74] The respondent also submits it is irrelevant how the mark acquired distinctiveness and there is some support for that in Mars and in the opinion of the Advocate-General prepared for the European Court in Mars. But, in any event, unlike the case in Philips, there is evidence that consumers would assume the identical-looking product was the same as the Klipon. (Mr Munro’s evidence is to this effect.) So this case is stronger.
[75] In our view, while the evidence here is not extensive, the Judge was right to conclude that s 18(2) was met.
(ii) Availability of alternative shapes
[76] The appellant is critical of Venning J’s reference to the availability of alternative shapes to achieve the same result.
[77] The European Court of Justice in Philips at [84] said that the prohibition in the Directive on the registration of functional shapes could not be “overcome by establishing that there are other shapes which allow the same technical result to be obtained.”
[78] It does not follow that the availability of alternative shapes is not a relevant factor. Clearly, it is not determinative and Venning J does not treat it as such. Venning J has not been shown to be wrong on this.

Was the Klipon a “limping mark”?

[79] The appellant submits that the Judge was wrong to conclude this was not a “limping mark”, that is, one which is propped up by the “Klipon” name. The appellant relies on the evidence of Mr Munro who was asked:

Question – So if another product that looked the same shape was on the market but had different factors associate with it you wouldn’t automatically assume it was a Klipon vine tie would you if it came from a different source?

Answer – I have not experienced a different vine tie that looks like a Klipon on the local market sorry, maybe I’m not answering your question.

Question – If there was?

Answer – If it looked like a Klipon and I believed it to be a Klipon I would buy it as a Klipon I presume if I was told it was a Klipon.

Question – But if you were told it was something else?

Answer – I probably wouldn’t buy it because I buy a Klipon.

Question – If it had a different brand for instance?

Answer – If it had a different brand I wouldn’t buy it.

[80] We consider that the respondent correctly categorises this as evidence that the shape in fact conveys evidence about the source of the product. Hence, the respondent says Venning J was right because as Venning J found, “the market uses the shape of the vine ties to relate the ties back to the Klipon brand rather than the reverse.” We agree with that conclusion.
[81] It is also relevant, as the respondent submits, that it is now possible for a mark to acquire distinctiveness even as part of another mark. That was the conclusion of the European Court of Justice in the Mars case. The Court said at [29] and [30]:

The expression ‘use of the mark as a trade mark’ must therefore be understood as referring solely to use of the mark for the purposes of the identification, by the relevant class of persons, of the product or service as originating from a given undertaking.

Yet, such identification, and thus acquisition of distinctive character, may be as a result both of the use, as part of a registered trade mark, of a component thereof and of the use of a separate mark in conjunction with a registered trade mark. In both cases it is sufficient that, in consequence of such use, the relevant class of persons actually perceive the product or service, designated exclusively by the mark applied for, as originating from a given undertaking.

[82] If it is possible, as Mars suggests, for a mark to acquire a distinctive character as part of another mark, the present case is some way off the “limping mark” situation. Again, Venning J was correct in his approach.

Result and costs

[83] Accordingly, for the reasons given the appeal is dismissed. We award costs of $6,000 to the respondent together with usual disbursements.

Solicitors:
Daniel Overton & Goulding, Auckland for Appellant
James & Wells, Auckland for Respondent

NZLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback
URL: http://www.nzlii.org/nz/cases/NZCA/2006/151.html