Valley Girl Limited v Hanama Collection Pty Limited HC Wellington CIV 2004-485-2005 [2005] NZHC 1663; 66 IPR 214 (6 April 2005)

Last Updated: 10 July 2020

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2004-485-2005

	UNDER IN THE MATTER OF BETWEEN	the Trade Marks Act 1953 of New Zealand Trade Mark Application No.676133 Valleygirl in Class 35 VALLEY GIRL CO LIMITED
		Appellant
	AND	HANAMA COLLECTION PTY LIMITED First Respondent
	AND	VALLEYGIRL FASHIONS PTY LIMITED Second Respondent
Hearing:	11 March 2005

Appearances: K Duckworth for Appellant
D Marriott & M Lane for Respondents Judgment: 6 April 2005

RESERVED JUDGMENT OF MILLER J

• [1] The respondents own and use the trademark VALLEYGIRL in Australia, in connection with clothing and accessories for which the target market is females aged 13-25 years. The business is a well-established and substantial one in Australia, where the mark has been in use since 1996.

• [2] The sole director of the appellant, Mr Duk Hoon Cho, was a supplier of garments and materials to the respondents until about December 2002. On 26 March 2003, the appellant applied for registration of the VALLEYGIRL mark in New Zealand, in relation to “clothing retail” in Class 35. The two marks are identical.

VALLEY GIRL CO LIMITED V HANAMA COLLECTION PTY LIMITED And Anor HC WN CIV 2004- 485-2005 [6 April 2005]

The obvious inference, which the appellant has not sought to displace, is that this is a case of appropriation of a foreign mark.

• [3] In a decision dated 30 August 2004, Assistant Commissioner Walden directed that the application not proceed to registration. The questions on this appeal are whether the Assistant Commission erred in finding that the respondents had reputation in the VALLEYGIRL mark in New Zealand on or before the application date, that use of the VALLEYGIRL mark by the appellant in New Zealand was likely to deceive and confuse persons in the relevant market, and that the respondents, rather than the appellant, were the true proprietors of the mark.

The evidence before the Assistant Commissioner

• [4] In support of their opposition to registration, the respondents filed five declarations. The appellant filed no evidence.

• [5] For the respondents, Mr Hyuk Sang Ma, a director of the first respondent, explained that the name VALLEYGIRL was chosen for a retail clothing operation established in 1996. The name was intended to evoke fresh, youthful, and feminine qualities. When his declaration was made in March 2004, there were 45 permanent VALLEYGIRL stores in Australia and up to 20 short-term outlets. Around 2,500 different styles of clothing are provided, the aim being that VALLEYGIRL stores are one-stop fashion outlets for the target customers. The brand is a distinctive one, and has earned a number of awards. He said the respondents had been contemplating entering the New Zealand market for ‘a few years now’. However, he deposed to genuine VALLEYGIRL stock having been found in New Zealand stores. The respondents also advertise extensively in media, including ‘Dolly’ Magazine which is available in New Zealand. He explained that Mr Cho was previously a supplier of garments and material to the respondents and is well aware of their business in Australia. The relationship was terminated due to a disagreement.

• [6] Ms Ena Kathy Tipene deposed that she lives in Christchurch but previously lived in Brisbane. She is familiar with the VALLEYGIRL clothing brand. She saw an advertisement saying that a VALLEYGIRL store was opening in a Christchurch

mall and assumed that this was the same VALLEYGIRL brand as in Australia. She checked with the manager of one of VALLEYGIRL’S stores in Brisbane, who knew nothing about a VALLEYGIRL store opening in New Zealand. When she inquired at the mall in Christchurch, she was told that the company was an Australian one. She then contacted VALLEYGIRL’S Sydney office and was told that VALLEYGIRL was not opening a store in New Zealand. Her declaration is dated 31 March 2004, and the events to which she deposed had occurred “recently”.

• [7] Maree Kloppers produced Statistics New Zealand data showing visitor arrivals from Australia of more than 600,000 in 2002, including 13,000 long-term migrants. In the same year there were more than 600,000 New Zealand resident departures to Australia.

• [8] Stephanie Reid deposed that she was aware of a number of Australian clothing brands that are available in New Zealand. They did not include VALLEYGIRL.

• [9] Shona Elizabeth Wilson deposed that she was asked on 1 April 2004 to find out if VALLEYGIRL clothing is available over the internet. She found several results for VALLEYGIRL on www.trademe.co.nz. There were two current listings and nine expired listings, although I infer that some of the expired listings may have been duplicates. There were also nine items found on www.ebay.co.nz for VALLEYGIRL and another 13 VALLEYGIRL clothing items listed under “completed items” on that website.

The decision of the Assistant Commissioner

• [10] The Assistant Commissioner held that the appellant had the overall onus of establishing that its VALLEYGIRL mark was eligible for registration. The respondents have the onus of establishing that there was an awareness of their VALLEYGIRL mark that would be sufficient to cause a likelihood of confusion or deception for the purposes of s.16 of the Trade Marks Act 1953: Pioneer Hi-Bred Corn Company v Hy-Line Chicks Pty Limited [1978] 2 NZLR 50, 61, 63. The

relevant date for determining the parties’ rights was the date of the VALLEYGIRL application, 26 March 2003.

• [11] The Assistant Commissioner accepted that the respondents could rely on spillover reputation from the Australian market. Given the scale of the VALLEYGIRL operation in Australia and the constant travel of people between New Zealand and Australia, it seemed likely that there would have been a substantial number of persons in New Zealand who were aware of the respondents’ mark at the relevant date. Awareness of the mark may also have occurred through circulation of the February issue of ‘Dolly’ magazine, although the Assistant Commissioner was careful not to rely on that evidence alone as establishing the necessary awareness. The evidence of Ms Tipene was also relevant as to awareness of the respondents’ mark and the likelihood of confusion or deception. She referred to VB Distributors Limited v Matsushita Electric Industrial Co Limited [1999] NZHC 848; (1999) 9 TCLR 349, 362 for the proposition that evidence of confusion occurring between the application date and the hearing date is probative of likely future confusion. The Assistant Commissioner also noted that the two marks are identical. Accordingly, the use of the appellant’s mark was likely to deceive or cause confusion.

• [12] Before the Assistant Commissioner, the respondents also relied on s.17(4) of the 1953 Act, which provided that no trademark shall be registered in respect of any services if the trademark is identical or similar to a mark which is “well-known in New Zealand” where use of the first-mentioned trademark would be likely to deceive or cause confusion. The Assistant Commissioner held that the respondents failed on this ground of opposition because the evidence was not sufficient to show that their mark was “well-known” in New Zealand at the relevant date. The Assistant Commissioner considered that that was a higher threshold than is required under s.16(1).

• [13] Turning to proprietorship of the mark, the Assistant Commissioner held that there are three requirements for a legitimate claim to proprietorship: no prior use or prior assertion of proprietorship; the applicant is using or has a sufficiently definite intention to use the mark; and there is no fraud or breach of duty involved: Newnham v Table for Six [1996] 44 IPR 269 at 278. The appellant was not the true

proprietor of the mark in New Zealand. Rather, the second respondent was the proprietor of the mark, which was chosen around 1996 for use in a retail clothing operation in Australia. The mark has been used extensively in Australia since then. In the absence of fraud (which the Assistant Commissioner did not understand the respondents to allege), it was not unlawful for the appellant to apply for registration in New Zealand notwithstanding that the respondents had used it in Australia for identical goods and services. But in those circumstances, the slightest use of the mark by the respondents in New Zealand ahead of the appellant would be sufficient to establish the respondents’ proprietorship of the mark in New Zealand. It was not established that the appellant had ever used the mark in New Zealand, nor had the appellant established that it was the true proprietor of the mark in New Zealand. The respondents, although not trading in New Zealand, could point to the February 2003 issue of ‘Dolly’ magazine as prior use of the mark. Accordingly, the respondents satisfied the Assistant Commissioner that the appellant was not the proprietor of the mark. The appellant was not entitled to apply to the Commissioner under s.26(1) of the Act for registration.

The appeal

• [14] The appellant contends that the Assistant Commissioner erred in fact and law in finding that its mark was likely to deceive or cause confusion under s.16(1), and in holding that the respondents had reputation in the VALLEYGIRL mark in New Zealand at the time of or prior to the application date, and in finding that the appellant was not the true proprietor of the mark in New Zealand. It seeks an order that the mark proceed to registration, and costs.

• [15] The appeal is brought under the Trade Marks Act 1953. It is by way of rehearing. In VB Distributors v Matsushita Electric Industrial Co Ltd (above at 355), Hammond J held:

Section 66 of the Trade Marks Act 1953 provides that, on an appeal, this Court “shall have and may exercise the same discretionary powers as are conferred upon the Commissioner”. The appeal to this court is therefore a rehearing.

In Effem Foods Ltd v Commission of Trade Marks (1996) 7 TCLR 246; 5 NZBLC 104,209, Salmon J said (at p 248; p 104,211):

Despite the fact that this appeal is by way of rehearing, I think it appropriate that I should place great weight on the views of the hearing Commissioner because of his position as an expert tribunal (NZ Breweries Ltd v Heineken’s [1964] NZLR 115, 117 (CA)). Nevertheless, it is clear that I must come to my own decision as to whether the appellant has shown that there is no reasonable probability of confusion (above, at 133).

I would add these observations. An appeal on the basis of a statutory provision of this character is not a case for deference. This Court is required to form its own views. How much (if any) weight should be given to the Commissioner’s views may well depend on what is in dispute. If, for instance, what is at issue is a matter of practice in trade mark applications then the experience of the Commissioner is not lightly to be disregarded. On the other hand, as with all specialist tribunals, there is real benefit in that tribunal’s views being subjected to independent scrutiny from time to time. And to the extent that the determination of likelihood of confusion rests upon a comparison of the marks themselves, the appellate court is in as good a position as the trial tribunal to come to a conclusion.

Whether the respondents had reputation in the VALLEYGIRL mark in New Zealand at the application date

• [16] Section 16(1) of the Trade Marks Act 1953 provided:

It shall not be lawful to register as a trade mark or part of a trade mark any scandalous matter or any matter the use of which would be likely to deceive or cause confusion or would be contrary to law or morality or would otherwise be disentitled to protection in a Court of justice.

• [17] The respondents have the onus of showing that the mark has a sufficient reputation in New Zealand to lead to the likelihood of confusion or deception. Reputation means awareness or cognisance or knowledge of the mark in New Zealand. The reputation must be sufficiently substantial that the use of the appellant’s proposed mark would be likely to deceive or cause confusion to persons in the New Zealand market; Pioneer Hi-Bred Corn Co (above at 63).

• [18] It is not sufficient that someone in the market is likely to be deceived or confused, nor is it necessary to show that everyone is likely to be deceived or confused. It is a question of the significance of the numbers in relation to the market for the particular goods: Pioneer Hi-Bred Corn Co (above at 62).
• [19] It was common ground that the respondents were required to establish cognisance or knowledge of their mark in New Zealand, and that it is not sufficient to point to reputation in Australia: Melco New Zealand Limited v Oasis Corporation (Commissioner’s Decision No T 42/2002, 7 March 2002, Assistant Commissioner Brown). But actual trade or dealing in goods bearing the trademark in New Zealand is not necessary, nor it is necessary that the goods be in New Zealand at the time the mark is used: Council of Ivy Group Presidents v Pacific Dunlop (Asia) Limited (High Court Wellington, AP 42/00, John Hansen J, 3 October 2000). The manner in which the respondent’s mark became known in New Zealand is irrelevant: Pioneer Hi-Bred Corn Co (above, at 57).

• [20] Further, a very small amount of use of the foreign mark in New Zealand is sufficient to establish that it is distinctive of the foreign owner’s goods. In 7-Up Company v OT Limited [1947] HCA 59; (1947) 75 CLR 203, 211, Williams J held:

..... in the absence of fraud it is not unlawful for a trader to become the registered proprietor under the Trade Marks Act of a mark which has been used, however extensively, by another trader as a mark for similar goods in a foreign country, provided the foreign mark has not been used at all in Australia at the date of the application for registration. But the position is different if at that date the mark has become identified with the goods of the foreign trader in Australia because those goods have been brought into Australia by the foreign trader himself or by some importer or in some other manner. The court frowns upon any attempt by one trader to appropriate the mark of another trader although that trader is a foreign trader and the mark has only been used by him in a foreign country. It therefore seizes upon a very small amount of use of the foreign mark in Australia to hold that it has become identified with and distinctive of the goods of the foreign trader in Australia. It is not then a mark which another trader is entitled to apply to register under the Trade Marks Act because it is not his property but the property of the foreign trader.

• [21] The relevant date for the purposes of showing that the respondents had rights in the mark, and that its use by the appellant was likely to deceive or cause confusion is that of the application: Pioneer Hi-Bred Corn Co (above at 61).

Submissions

• [22] Mr Marriott sought to discount all of the evidence relating to awareness of the VALLEYGIRL mark in New Zealand. He contended that Mr Ma’s evidence that genuine VALLEYGIRL stock has been seen in New Zealand is hearsay, and in any

event it appears that the product was seen in New Zealand after the priority date and at only one location. Only the February 2003 issue of ‘Dolly’ magazine pre-dates the priority date of 26 March 2003. Those advertisements are not shown to have circulated in New Zealand; nor is the extent of circulation shown. Accordingly, the advertisements are insufficient to create awareness of the mark. The mark had not been ‘used’ in New Zealand in any event, because the use of a mark in advertising without any goods to offer concurrently with the advertising is not trademark user. The Wilson declaration was irrelevant because it related only to use of the VALLEYGIRL mark after the priority date. The Tipene declaration is insufficient, because it is only evidence of one person: nor did Ms Tipene state that she was aware of VALLEYGIRL in New Zealand before the priority date. The Klopper declaration attempts to establish a likelihood of spillover reputation, but spillover reputation is insufficient for the purposes of s.16, because the essence of trademarks is territoriality: New Zealand Clothing Co v Pinwise (Commissioner’s Decision No.1999/12, 30 June 1999, Assistant Commissioner Frankel). The Reid declaration is irrelevant to the extent of any awareness of the Australian VALLEYGIRL mark in New Zealand, because it does not refer to that mark.

• [23] For the respondents, Miss Duckworth emphasised that spillover reputation can establish the requisite awareness in New Zealand. The evidence as a whole established that a huge number of shoppers had been exposed to the respondents’ mark. At least 7 million items had been sold under the mark, and considerable sums had been spent on advertising. There is evidence that New Zealanders who have lived in Australia are aware of the mark, and the respondents have been approached by New Zealanders seeking to franchise their business in New Zealand. People travelling to and from Australia will be aware of the mark, and there is evidence that the respondents clothing has made it into the New Zealand marketplace, both in Mr Ma’s declaration and in Ms Wilson’s declaration. Evidence of actual confusion after the priority date but before hearing is probative of likely confusion.

Discussion

• [24] Mr Marriott submitted that travel between New Zealand and Australia is not sufficient to establish reputation for purposes of s.16. He referred to Conagra Inc v

McCain Foods (Aust) Pty Limited [1992] FCA 159; [1992] 23 IPR 193, in which Lockhart J held (at

239) that evidence of travel between jurisdictions presents considerable difficulty as proof of reputation, since it is not possible to assess how many travellers would have seen the goods concerned or advertising associated with them. Accordingly, it is not possible to conclude whether a small or large proportion of travellers would be aware of the goods concerned.

• [25] However, that case dealt with frozen foods. The contention was that travellers from the US might have seen them in supermarket freezers or in television advertisements. The mark was “Healthy Choice”, which is a phrase that might be used by anyone marketing to health-conscious consumers.

• [26] In this case, the respondents’ goods are marketed in Australia through a substantial number of VALLEYGIRL Stores, which are distinctively branded using the mark. They are also advertised in catalogues and magazines. The respondents’ presence in Australia is substantial. The two respondents between them had gross sales between 1996 and 2003 of A$210 million. VALLEYGIRL Fashions alone sold over 8 million items between 1999 and 2003. The target market is highly brand- aware.

• [27] The number of travellers between New Zealand and Australia is also very substantial. It is true that the evidence does not establish what proportion of them would be aware of the respondents’ goods in Australia, but it is a reasonable inference that the proportion of travellers who fall into the target market corresponds to the proportion of that group in the population as a whole.

• [28] Much of the evidence, including the Tipene declaration, relates to dates after the priority date. I accept Mr Marriott’s submission that evidence of VALLEYGIRL goods being seen, or sold on the internet in New Zealand after the priority date is not probative of recognition or awareness at the priority date. The only evidence of awareness at that date is the traveller data and the evidence showing the nature and extent of the respondents’ use of the mark in Australia. The evidence establishes clearly that the respondents were operating through branded stores and catalogues well before the priority date.
• [29] I am not prepared to disturb the Assistant Commissioner’s conclusion that the respondents have established the necessary awareness of their mark in New Zealand, based on the nature and extent of its use in Australia and the travel statistics. The Reid and Ma evidence also establishes that competitors in this market use a similar marketing strategy which relies heavily on brand awareness. It is not necessary to rely on the other evidence.

Whether use of mark by the appellant is likely to deceive or cause confusion

• [30] It was common ground that once the respondents have established the requisite reputation, the onus shifts to the appellant to show no likelihood of confusion or deception: Pioneer Hi-Bred (above, at 63). The standard is the balance of probabilities.

• [31] Confusion occurs when a person is caused to wonder whether the services bearing the appellant’s mark come from or are associated with some other source. Deception occurs when a person is misled into believing that this is so: Pioneer Hi- Bred Corn Co (above, at 62). When considering the likelihood of deception or confusion, all the surrounding circumstances must be taken into account, including the circumstances in which the appellant’s mark may be used, the market in which the goods may be bought and sold, and the character of those involved in the market: Pioneer Hi-Bred Corn Co (above, at 61).

• [32] I have held that it was open to the Assistant Commissioner to conclude that the respondents have established awareness of their mark in New Zealand. I agree with the Assistant Commissioner that because the marks are identical, any person who is aware of the Australian mark is likely to be confused or deceived on seeing the appellant’s proposed mark in New Zealand. Evidence of confusion after the priority date may be strongly probative of likely confusion: VB Distributors (above, at 362). The Assistant Commissioner was entitled to regard the Tipene declaration as evidence of the sort of confusion that is likely to arise among travellers from Australia who are familiar with the Australian VALLEYGIRL stores. As was held in Malibu Boats West Inc v Catanese [2000] FCA 1141; (1999) 51 IPR 134 at [28], the Courts view borrowings from abroad with suspicion, and in circumstances where the appellant

appropriated the same mark for goods in the same class, it perhaps easier to draw the inference that the mark is valuable to the appellant precisely because it has some measure of recognition in this country.

Proprietorship

• [33] Section 26(1) of the 1953 Act provides:

Any person claiming to be the proprietor of a trade mark used or proposed to be used by him who is desirous of registering it shall apply in writing to the Commissioner in the prescribed manner for registration either in Part A or in Part B of the register.

• [34] It was common ground between counsel that the test of proprietorship is that set out in Newnham v Table for Six (above at 278).

The requirements for a legitimate claim to proprietorship are threefold:

(i) There is no prior use or assertion of proprietorship.

(ii) The applicant is using or has a sufficiently definite intention to use the mark.

(iii) There is no fraud or breach of duty involved.

• [35] To establish proprietorship, either party must satisfy these three requirements. It was common ground that only one of the parties could be the proprietor, so a finding that the respondents are the proprietors in New Zealand would preclude a claim to registration by the appellant.

• [36] Mr Marriott contended that the respondents have been unable to show use or awareness of the mark in New Zealand, so there is no prior use or assertion of proprietorship for purposes of s.26. He also contended that at the application date, it had a definite intention to use the mark, as shown by the Tipene declaration which referred to a proposed VALLEYGIRL store in Christchurch. Further, there is no fraud or breach of duty involved; if a foreign mark is not being used in New Zealand, then a local person or company may legitimately apply for the mark provided he or she genuinely intends to use it: Phillip Morris (NZ) Limited v Liggett & Myers Tobacco Company (NZ) Limited [1978] 1 NZIPR 195.
• [37] The respondents contended that although they had not commenced trading in New Zealand, they have a sufficiently definite intention to use the mark and held a reputation and awareness of their mark in New Zealand. They also say that the appellant’s application was made in bad faith and that it misappropriated their trademark. A breach of duty is established where an agent or distributor or employee applies to register his principal’s mark. For the latter proposition, Miss Duckworth cited Brown and Grant The Law of Intellectual Property in New Zealand (1989) at 21.

Whether respondents have used or asserted proprietorship of the mark in New Zealand

• [38] The Assistant Commissioner found that the respondents, rather than the appellant, were the proprietor of the mark in New Zealand. She found that they had used the mark, which ruled out proprietorship by the appellant and established that the respondents were the proprietors, citing Malibu Boats (above), Hi-Bred Corn (above, at 68-9), and 7-Up Co Limited v OT Limited [1947] HCA 59; (1947) 75 CLR 203 at 211.

• [39] The only evidence of actual use provided by the Assistant Commissioner was the advertisement in the February 2003 issue of ‘Dolly’ magazine. However, in Malibu Boats West Inc v Capanese [2000] FCA 1141; [2000] 51 IPR 134 at [34], Finkelstein J held:

A use of a mark in an advertisement of goods is a use in the course of trade, and is use in relation to the goods advertised: Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd [1963] HCA 66; (1963) 109 CLR 407 at 422; Moorgate Tobacco at 205. This is because an advertisement is a common method of indicating that certain goods are available for sale and that the vendor is soliciting orders for those goods. That is not necessarily the case when the advertisement is in a foreign publication in circulation in Australia. Many foreign magazines are available in this country covering a wide range of interests. Some of these magazines contain advertisements while others do not. Whether an advertisement is intended to solicit custom in Australia will depend upon a number of things including the nature of the magazine in which the advertisement appears, the contents of the advertisement, the type of goods that are advertised and the location of the vendor. Here I have advertisements that are clearly directed to the United States market, not to the Australian market. In the absence of further evidence, of which there is none, those advertisements do not amount to an offer to trade in the goods in Australia. This conclusion is consistent with the views of the Registrar to the effect that advertising in foreign publications will not, without more, constitute sufficient use to support a claim for proprietorship of a trade mark: see eg Flagstaff Investments Pty Ltd v Guess Inc (1989) 16 IPR 311; Stylesetter International Co Pty Ltd v Le Sportsac Inc (1989) 17 IPR 59;

Nissan Motor Co (Australia) Pty Ltd v Vector Aeromotive Corporation

[1993] ATMO 49; (1993) 27 IPR 296; Agatha Diffusion SRL v Cozzolino (1998) 43 IPR 436.

• [40] In Hi-Bred Corn (above, at 56), Richmond P also held that foreign advertising above would not constitute prior use or an assertion of proprietorship.

• [41] In this case, the advertisements in ‘Dolly’ magazine were clearly directed to the Australian market. They depict goods together with details of price and Australian telephone numbers in which the goods may be ordered. The telephone numbers do not include the Australian country code.

• [42] Miss Duckworth accepted that an advertisement in an Australian publication that, while circulated in New Zealand, is directed to the Australian market, is not sufficient. Accordingly, the Assistant Commissioner’s conclusion that the respondents have established prior use in New Zealand cannot be sustained.

• [43] However, Miss Duckworth contended that it was enough to establish the respondents’ proprietorship that the respondents intended to trade in New Zealand. As a general proposition, I accept that is so in the absence of evidence of prior use or assertion of proprietorship by the appellant at the priority date. However, I am not concerned with an application for registration by the respondents. The question in this case is whether the appellant’s application for registration as proprietor of the mark can proceed. In that regard, the respondents must point to their own prior use or assertion of proprietorship, or absence of evidence that the appellant intends to or is using the mark, or fraud or breach of duty.

• [44] In support of her submission that the respondents had an existing intention to use the mark, Miss Duckworth referred to Mr Ma’s evidence to the effect that the respondents have intended for some time to commence business in New Zealand and Malibu Boats, in which Finkelstein J held (at [27]):

This takes me first to the nature of use that is required for a person to be regarded as the proprietor of a mark at common law. The use must be in relation to goods for the purpose of indicating, or so as to indicate, a connexion in the course of trade between the goods with respect to which the mark is used and that person: see the definition of "trade mark" in s 6(1) of the 1955 Act; Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) [1984] HCA 73; (1984) 156 CLR 414 at 432; Re Registered Trade Mark "Yanx" at 204-205. While

the mark must be used for the purpose of indicating a connexion in the course of trade, this does not mean that any actual trade or dealing in the goods is required. It is sufficient if there is an offer to trade in the goods, or an existing intention to offer or supply goods bearing the trade mark. (Emphasis added)

• [45] The authorities cited by Finkelstein J establish that it is not necessary that there be an actual dealing in goods bearing the trademark before there can be a local use of it. It may suffice that imported goods which have not actually reached New Zealand (in this case) have been offered for sale here under the mark or that the mark has been used in an advertisement of the goods in the course of trade. In such cases, however, it is possible to identify an actual trade or offer to trade in the goods or an existing intention to offer or supply them. In Settef Spa v Riv-Oland Marble Company (Vic) Pty Limited (1987) 10 IPR 402 at 416, McCarthy J held that it was enough if the mark was used in Australia at a time when its proprietor intends to supply goods of that mark in Australia, in the sense of being ready and willing to respond to orders for the goods.

• [46] The respondents’ intention to offer goods in New Zealand at some future time is not sufficient to establish intention to use. There is no evidence that the respondents were ready and willing to respond to orders in New Zealand at the priority date.

• [47] The respondents have failed to establish proprietorship in New Zealand at the application date.

Whether the appellant has established use or intention to use

• [48] Mr Marriott submitted that the evidence shows an intention to use the mark as at the application date. The evidence he relied on was the Tipene declaration. The difficulty with that submission is that, as Mr Marriott was at pains to point out in his earlier submissions on s.16, the declaration was dated 31 March 2004 and referred to an advertisement Ms Tipene had ‘recently’ seen that a Valleygirl store was opening. I will accept that the proposed store was the appellant’s, but the declaration does not establish use or intention to use at the application date. Nor is there any evidence that the appellant has used the mark since the application date. It

appears that Mr Ma learned of the appellant’s claim to the mark because he approached the same New Zealand agent as the appellant had used when Mr Ma sought to set up a registered office in New Zealand.

• [49] I find that the appellant failed to establish use or intention to use, in the sense referred to in Malibu Boats (above, at [27]) and the authorities cited therein. Accordingly, the Assistant Commissioner was correct to conclude that the appellant had failed to establish proprietorship at the application date, but for different reasons.

Whether the appellant’s application is affected by breach of duty, fraud, or bad faith

• [50] Miss Duckworth contended that the appellant’s claim to proprietorship would also be defeated if it can be shown first, that the application involved breach of duty or fraud or, second, that the application for registration was not made in good faith. For the latter proposition, she cited Wham-O Mfg Co v Lincoln Industries [1984] 1 NZLR 641. That was a copyright case, but the Court of Appeal also discussed (at 681-684) the requirements for registration of a trademark. It cited Kerly’s Law of Trade Marks and Trade Names (10^th ed, 1972) at 44 for the proposition that the Court will expunge a registration if the applicant for it could not make a claim to registration in good faith.

• [51] It is true, as Mr Marriott submitted, that Wham-O Mfg Co v Lincoln Industries was a case involving an exclusive distributorship, in which the New Zealand distributor registered its principal’s mark in New Zealand. Accordingly, it can be characterised as a breach of duty case. But the Court clearly intended to speak in general terms when it held that an application for registration that is not made in good faith is disentitled to protection in a Court of justice.

• [52] Miss Duckworth also referred me to Gromax Plastaculture Limited v Don & Low Nonwovens Limited [1999] RPC 367 at 369, a case involving a joint enterprise to market a plastic crop cover. Lindsay J held:

I shall not attempt to define bad faith in this context. Plainly it includes dishonesty and, as I would hold, includes also some dealings which fall short of the standards of acceptable commercial behaviour observed by reasonable and experienced men in the particular area being examined. Parliament has

wisely not attempted to explain in detail what is or is not bad faith in this context: how far a dealing must so fall-short in order to amount to bad faith is a matter best left to be adjudged not by some paraphrase by the courts (which leads to the danger of the courts then construing not the Act but the paraphrase) but by reference to the words of the Act and upon a regard to all material surrounding circumstances.

• [53] I will approach the matter on the basis that the appellant was not entitled to claim proprietorship of the mark in New Zealand if its claim is affected by fraud or breach of duty, or the application was made in bad faith. The New Zealand Act did not refer to bad faith, but I accept that bad faith is not confined to dishonesty. It may be demonstrated by evidence if conduct falling short of reasonable standards of commercial behaviour.

• [54] Turning to the evidence, I accept Mr Marriott’s submission that there is no evidence of any duty owed by the appellant or its agents to the respondents. The evidence establishes only that Mr Cho was a supplier to the respondents until their business relationship ended at the end of 2002. Nor is there any evidence of a breach of duty. It is a proper inference that he decided to appropriate the mark as a result of his dealings with the respondents. But any person who saw the VALLEYGIRL stores or goods in Australia might have made the same decision. There is nothing to suggest that he made use of confidential information, for example.

• [55] Accordingly, I am not prepared to find breach of duty. Nor does the evidence establish fraud. Indeed, I did not understand Miss Duckworth to pursue the latter allegation.

• [56] Turning to the question of good faith, Miss Duckworth submitted that the appellant’s actions fall short of the standards of acceptable commercial behaviour and accordingly amount to a lack of good faith. I accept that the appellant has chosen to appropriate the respondents’ mark. In so doing, the appellant took an opportunity that arose out of Mr Cho’s business dealings with the respondents in Australia. It is a reasonable inference that the appellant hopes to exploit such recognition as the mark has in New Zealand arising out of its use in Australia. The question is whether that amounts to bad faith.
• [57] I am not satisfied that it does. The starting point is that there is no prohibition on a trader registering a foreign mark for use in New Zealand, in circumstances where there has been no prior use of the mark in New Zealand: 7-Up Co v OT Ltd (above, at 211). Accordingly, something more than appropriation of a foreign mark must be shown in order to establish bad faith. Since that is all the respondents can point to, their objection to the appellants’ claim to proprietorship fails so far as it is based on bad faith, fraud, or breach of duty.

Failure to plead reliance on spillover reputation

• [58] Mr Marriott took the point that the respondent had not expressly pleaded reliance on spillover reputation in its notice of objection under s.16. He contended that its opposition was based on the allegation that it was the proprietor of the mark, which it had used in New Zealand.

• [59] I reject this submission. Paragraphs 5 and 6 of the notice of opposition made it clear that the respondent alleged that a substantial number of persons were likely to be deceived or confused, and Mr Marriott accepted that the respondents knew the appellant relied on spillover reputation. I add that the point was not taken before the Assistant Commissioner.

Result

• [60] The appeal is dismissed. The Assistant Commissioner’s conclusion that registration of the appellant’s mark would be likely to cause confusion or deception was open to her, and I uphold it. The appellant also failed to establish proprietorship, but for the reason that there was no evidence that the appellant used or intended to use the mark in New Zealand at the application date and not, as the Assistant Commissioner found, because the respondents had established proprietorship in New Zealand.
• [61] The respondents are entitled to costs on a 2B basis. If costs cannot be agreed, the respondents’ counsel may file a memorandum by 27 April 2005, with any memorandum in response by being filed by 11 May 2005.

Delivered at 3.00 pm this 6^th day of April 2005.







F Miller J

Solicitors:

Baldwins, Wellington for Appellant

James & Wells, Auckland for Respondents