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High Court of New Zealand Decisions |
Last Updated: 1 June 2012
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2011-485-002448 [2012] NZHC 1134
UNDER the Trade Marks Act 2002
IN THE MATTER OF an Appeal from the decision of the Assistant Commissioner of Trade Marks dated 25 October 2011 (T37/2011)
BETWEEN NUTRAMARKS, INC.
Appellant
AND NATURE'S LIFE NZ LIMITED Respondent
Hearing: 8 May 2012
Appearances: M C Hayes for Appellant
R Wallis and A Kingston for Respondent
Judgment: 25 May 2012
(RESERVED) JUDGMENT OF ANDREWS J
This judgment is delivered by me on 25 May 2012 at 4pm pursuant to r 11.5 of the High Court Rules.
..................................................... Registrar / Deputy Registrar
Solicitors: A J Park, DX CP 21527, Auckland
Baldwins Law Limited, DX CP 24055, Auckland
NUTRAMARKS, INC. V NATURE'S LIFE NZ LTD HC AK CIV 2011-485-002448 [25 May 2012]
Introduction
[1] The appellant, Nutramarks, Inc (Nutramarks) has appealed against the decision of the Assistant Commissioner of Trade Marks, delivered on 25 October
2011, upholding the registration of a trade mark submitted by the respondent, Nature’s Life NZ Ltd (Nature’s Life) (the Assistant Commissioner’s decision).1 The grounds of appeal are that the Assistant Commissioner erred in concluding that Nutramarks had failed to establish an awareness of its trade marks in the New Zealand market, and had then erred in concluding that it was not necessary to consider the grounds of opposition to registration raised by Nutramarks.
Background
[2] On 12 June 2009 Nature's Life applied to register the trade mark set out below (the Nature’s Life mark) for a range of products sold in New Zealand, comprising propolis capsules, squalene capsules, colostrum tablets, and Rotorua thermal mud masks (the Nature’s Life products):
Registration was sought in Class 3: lanolin cream with placenta and vitamin E all for skin care use; and Class 5: colostrum tablets, sheep placenta capsules, squalene capsules, propolis capsules, all for health care use.
[3] On 24 May 2010, Nutramarks filed a notice of opposition, opposing registration on the grounds that it had used a range of trade marks (the Nutramarks marks) incorporating the words “Nature’s Life”, for products sold in New Zealand since at least 2001 (the Nutramarks products). The three Nutramarks marks were:2
(1) NATURE’S LIFE
1 Nature’s Life NZ Ltd v Nutramarks, Inc IPO T37/2011, 25 October 2011 [Assistant
Commissioner’s decision].
(2)
(3)
[4] Nutramarks claimed that any use of the Nature's Life mark was likely to deceive or cause confusion, and that any use of the mark would be in breach of the Fair Trading Act 1986, or give rise to an action for passing off.
[5] Evidence was filed on behalf both Nutramarks and Nature's Life, and a hearing was held before the Assistant Commissioner on 16 September 2011.
The relevant legal test
[6] Section 17(1) of the Trade Marks Act 2002 (the Act) sets out circumstances in which a trade mark must not be registered. As relevant to this appeal, s 17(1) provides:
17 Absolute grounds for not registering trade mark: general
(1) The Commissioner must not register as a trade mark or part of a
trade mark any matter—
(a) the use of which would be likely to deceive or cause confusion; or
(b) the use of which is contrary to New Zealand law or would
otherwise be disentitled to protection in any court; ...
[7] In opposing registration of the Nature's Life mark, Nutramarks relied on both ss 17(1)(a) and 17(1)(b). Counsel focused in their submissions on s 17(1)(a), it being agreed that if Nutramarks did not succeed in opposing registration on that basis, it could not succeed under the more stringent test under s 17(1)(b).
[8] Counsel agreed that the correct approach to considering an application which is opposed under s 17(1)(a) is set out in the judgment of Richardson J in the Court of
Appeal in Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Ltd (Pioneer).3 In his judgment Richardson J said:4
It was accepted by both counsel ... that, while the onus of establishing absence of a likelihood to deceive or cause confusion was on the applicant for registration, it was necessary for the opponent to establish a sufficiently substantial reputation in the New Zealand market to lead to the possibility that goods covered by the proposed trade mark would be identified with the opponent. ...
For myself I prefer to use a more neutral term such as “awareness” or “cognisance” or “knowledge” and on that basis to ask: having regard to the awareness of the opponent’s mark in the New Zealand market for goods covered by the registration proposed, would the use of the applicant’s mark be likely to deceive or cause confusion to persons in that market[?]
[9] His Honour went on to say:5
In assessing the awareness of the market of the respondent’s mark regard should be had both to the number of persons involved in that market and to the significance in that market of purchases by those who are in a substantial way of business. What is a substantial number or significant proportion depends on the nature and size of the market and is relative both to the number of persons involved and to their impact on the market.
[10] In its judgment in N V Sumatra Tobacco Trading Company v British American Tobacco (Brands) Incorporated (N V Sumatra),6 the Court of Appeal said, regarding the equivalent provision to s 17(1)(a) in the Trade Marks Act 1953:7
It has long been accepted that the purpose of s 16 is not to protect competitors but rather to protect the public interest by refusing to accord monopoly rights to a mark, the use of which is likely to deceive or confuse those in the markets for goods (or) services. The practical application of s 16 was explained in detail by Richardson J in this court in Pioneer, in ten propositions, which Richardson J regarded as “clearly settled”.
It is common ground that the onus is upon the applicant for registration to show that its proposed marks do not fall foul of s 16. However, it was also accepted that there is an initial evidential onus upon an opponent to establish the basis for, or a source of, deception or confusion: Pioneer. ...
(footnotes omitted)
3 Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Ltd [1978] 2 NZLR 50 (CA).
4 At 62 – 63.
5 At 74 – 75.
6 NV Sumatra Tobacco Trading Company v British American Tobacco (Brands) Incorporated
[2010] NZCA 24, (2010) 86 IPR 206.
[11] The Court went on to say:8
We accept Mr Brown’s submission that Clifford J set the evidential onus too high. While Richardson J did say [in] Pioneer that an opponent must first establish a “sufficiently substantial reputation”, it is clear ... that this is a relatively low threshold. All that an opponent needs to show is “awareness”, “cognisance”, or “knowledge” of the mark. This means that the opponent will first have to identify the relevant market, then point to evidence showing that a substantial number of persons in that market have awareness, cognisance or knowledge of its mark: Pioneer. What is a substantial number of persons depends on the nature and size of the market and is relative both to the number of persons involved in and their impact on that market: Pioneer.
Clifford J required [the respondent] to prove a substantial reputation among a substantial number of persons (as against mere awareness or cognisance of the marks among a substantial number of persons). This is not the Pioneer test and is wrong in principle ... The focus of s 16 is protection of consumers from being deceived and confused, and it is apparent that deception and confusion might arise even where the reputation of the opponent’s mark falls short of being “substantial”.
(footnotes omitted)
[12] There are, therefore, two issues to be addressed in determining whether a trade mark should be registered, when it is opposed under s 17(1)(a):
(a) Is there an awareness or reputation of the opponent’s trade marks in
the New Zealand market? For this issue, the onus is on the opponent.
(b) Is use of the applicant’s mark likely to deceive or cause confusion amongst a substantial number of persons? For this issue, the onus is on the applicant.
[13] Both assessments are to be made on the balance of probabilities. The assessments are to be made as at the date the trade mark application was filed (the relevant date).
The Assistant Commissioner's decision
[14] After summarising the affidavit evidence for Nutramarks and Nature's Life, the Assistant Commissioner turned to the first issue, which was whether Nutramarks
had established that there was an awareness of Nutramarks’ marks in the relevant New Zealand market. She first defined the market, referring to the judgment of Richardson J in Pioneer:9
It is in relation to commercial dealings with goods that the question of deception or confusion has to be considered, and the persons whose states of mind are material are the prospective or potential purchasers of goods of the kind to which the applicant may apply his mark and others involved in the purchase transaction.
[15] The Assistant Commissioner defined the market as follows:10
However, having regard to the goods covered by the opposed mark on a notional fair use basis, I consider that the relevant market in New Zealand will consist of the general purchasing public, and businesses, that are interested in natural health remedies, medicines, supplements, and other similar products. I consider that purchasers of these kinds of goods will be discerning. I also consider that these kinds of goods are likely to be sold in health stores and outlets such as pharmacies or supermarkets that have areas set aside for such products.
[16] Regarding the “awareness” issue, the Assistant Commissioner said:11
On the evidence before me, I find that, at the relevant date, the opponent has not established the relatively low threshold of awareness referred to in [N V Sumatra] for any of the opponent’s marks in the relevant market for the opposed mark.
(citation omitted)
[17] The Assistant Commissioner set out her reasons, as follows:12
[A]t the relevant date, ten types of the opponent’s NATURE’S LIFE
products (opponent’s products) were sold in New Zealand ...:
[T]he major retailer of the opponent’s products in New Zealand is Ponsonby Health Shop Limited (PHS) ... . No information has been provided concerning other retailers of these products in New Zealand:
[P]HS sells the opponent’s products through its one shop located at 125
Ponsonby Road, Ponsonby, Auckland and through its online store at the PHS website ... . The sales of the opponent’s products through the PHS website appear to have occurred towards the end of 2006 ...:
9 Pioneer, above n 3, at 61.
10 Assistant Commissioner's decision, above n1, at [22].
11 At [26].
12 At [26.1] – [26.7].
[S]ales figures of the opponent’s products in New Zealand for each year in the period 2004 to 2009 have been provided, but they are confidential ... . I consider that the sales figures are low:
[S]ince 2004, PHS has sold approximately 7,222 of the opponent’s products in New Zealand ... . I consider that this number of units does not readily reconcile with the confidential sales figures and the retail price for the opponent’s products, which range from $18 to $79.85 ... even if the confidential sales figures are wholesale figures. There is no information concerning how many customers this number of units represents – i.e. were there repeat customers, for example. I consider that this number of units over a period of six years and over the whole of the relevant market is negligible:
[T]he opponent has two websites: ... . However, there is no evidence concerning whether, when, and the extent to which, members of the relevant market accessed these websites:
[T]he opponent has periodically sent out catalogues of the opponent’s products to customers ... . However, no details concerning the number of New Zealand customers, geographical distribution, and distribution dates, have been provided.
(references omitted)
[18] The Assistant Commissioner then recorded her finding that Nutramarks did not succeed on its opposition under s 17(1)(a), because it had not established that, at the relevant date, there was an awareness of its mark.13 Having found that Nutramarks did not succeed under s 17(1)(a), the Assistant Commissioner recorded that she did not need to consider Nutramarks’ opposition under s 17(1)(b), as a higher threshold of “confusion” was required to establish passing off or a breach of the Fair Trading Act than is required under s 17(1)(a).14
[19] Accordingly, the Assistant Commissioner directed that the Nature's Life trade mark was to be registered after the expiry of the appeal period, if there was no appeal against the decision.15
Appeal principles
[20] Counsel were agreed as to the relevant legal principles applying to this appeal:
13 At [27].
14 At [30].
15 At [33].
(a) The appeal is by way of rehearing.
(b) In determining the appeal, the Court may confirm, modify, or reverse the Assistant Commissioner’s decision, and may exercise any powers that the Assistant Commissioner could have exercised in the matter.16
(c) The appeal is heard on the basis of the material that was before the Assistant Commissioner.17 No leave was sought for further material to be put before this Court.
(d) This Court has the responsibility of arriving at its own assessment of the merits of the case, and must reach its own opinion, even where that involves an assessment of fact and degree and entails a value judgment.18
(e) The Assistant Commissioner’s reasons may be of assistance to this Court in reaching its own conclusion, but the weight placed on those reasons is a matter for this Court.19
Definition of the market
Submissions
[21] On behalf of Nutramarks, Mr Hayes submitted that the Assistant Commissioner defined the relevant market as “the general purchasing public”,20 and in doing so cast the size of the market too broadly. He submitted that the Assistant Commissioner had overlooked evidence and submissions for both Nutramarks and Nature's Life, which pointed to a much smaller market size. Accordingly, he submitted, the Assistant Commissioner failed to identify correctly the nature of
Nutramarks’ goods and the market they occupy in New Zealand.
16 Trade Marks Act 2002, s 173.
17 Section 172.
18 See Austin Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 (SC)
at [3] – [5], [13] and [16].
19 Ibid, at [17].
20 Assistant Commissioner's decision, above n 1, at [22].
[22] Mr Hayes further submitted that had the Assistant Commissioner correctly identified the relevant market as the specialised, or niche, skin and health care products market, she would then have concluded that the evidence presented by Nutramarks was sufficient to establish awareness.
[23] Mrs Wallis, on behalf of Nature’s Life, supported the Assistant Commissioner’s definition of the relevant market. She noted that it had been submitted on behalf of Nature's Life before the Assistant Commissioner that the relevant market for Nature's Life goods comprised consumers interested in health products, particularly overseas tourists and consumers of Asian origin. In answer to a submission made by Mr Hayes, Mrs Wallis confirmed that Nature's Life did not seek to say that the relevant market for its products was limited to Asian tourists.
Discussion
[24] As recorded earlier, the Assistant Commissioner defined the relevant market as:21
... the general purchasing public, and businesses, that are interested in natural health remedies, medicines, supplements, and other similar products.
[25] The Assistant Commissioner further said of the relevant market:22
I consider that purchasers of these kinds of goods will be discerning. I also consider that these kinds of goods are likely to be sold in health stores and outlets such as pharmacies or supermarkets that have areas set aside for such products.
[26] I do not accept Mr Hayes’ submission that the Assistant Commissioner defined the relevant market as “the general purchasing public”, and I do not accept his submission that the remainder of [22] of the Assistant Commissioner's decision does not adequately qualify the general words at the beginning of the paragraph.
[27] I am satisfied that the Assistant Commissioner defined the market so as to comprise only those members of the purchasing public, or businesses, who are
interested in natural health remedies, medicines, supplements, and the like. With that
21 At [22].
22 Ibid.
qualification, the relevant market is far from being “the general purchasing public”.
It is, in fact, the type of specialised, niche, market contended for by Mr Hayes.
[28] The Assistant Commissioner expanded on the definition of the market by noting that purchasers of Nature's Life’s goods (that is, people interested in natural health remedies, medicines, supplements and the like) would be discerning, and that these kinds of goods were likely to be sold in health stores and outlets such as pharmacies or supermarkets that have areas set aside for such products. That expansion serves to highlight the specialised nature of the goods and the market. The market is for particular products bought by particular, discerning purchasers who have a particular interest in those products, and buy them from specialised retail outlets, or specific areas of more general outlets.
[29] I conclude that the Assistant Commissioner did not err in defining the relevant market.
Awareness of the Nutramarks marks
Submissions
[30] Mr Hayes submitted that the Assistant Commissioner erred in finding that Nutramarks had not established a sufficient awareness of its marks at the relevant date. He submitted that the evidence of awareness is as follows:
(a) Ten Nutramarks products, carrying the Nutramarks marks, have been sold in New Zealand since January 2001, well before the relevant date of 12 June 2009 when Nature’s Life’s trade mark application was filed.
(b) Nutramarks’ major retailer of these products in New Zealand is Ponsonby Health Shop Ltd in Auckland, and products are also sold by a number of other outlets that purchase products from Nutramarks’ distributors.
(c) The annual value of sales of Nutramarks’ products: evidence of sales between 2004 and 2009 was provided to the Assistant Commissioner, and to this Court, on a confidential basis.
(d) Since 2004, Ponsonby Health Shop has sold approximately 7,222 units of Nutramarks products.
(e) The Nutramarks products are advertised through two websites which have been accessible throughout the world, including New Zealand, since well before 12 June 2009.
[31] Mr Hayes submitted that the strongest evidence of awareness was from sales over the six-year period before 12 June 2009, of products that featured the Nutramarks trade marks. He submitted that this evidence justified the statement by a witness for Nutramarks, Mr Neuberger, that Nutramarks’ marks are “well-known ... in New Zealand”.
[32] Mr Hayes further submitted that the Assistant Commissioner was wrong to express doubt as to reconciling Nutramarks’ sales figures, and to conclude that the number of units sold over the six-year period from 2004 to 2009 was negligible. In particular, he submitted, the Assistant Commissioner had made no reference to any bench-mark or basis on which to put the unit sales into context, in order to conclude that sales were “negligible”.
[33] Mrs Wallis submitted that the Assistant Commissioner was right to conclude that Nutramarks had not established awareness. In particular, she submitted that the Assistant Commissioner was right to conclude that the annual sales figures for the ten Nutramarks products sold in New Zealand were low.
[34] Mrs Wallis further submitted that the evidence given for Nutramarks as to sales was scant and inconsistent, in that it lacked volume figures, breakdowns of volume for particular products, or any detail as to the claimed sales from “other” outlets. She submitted that there was no evidence as to the size of the market, or
what would comprise a “substantial number of persons” in the market, in order for there to be a finding as to awareness.
[35] Mrs Wallis further submitted that such reputation as Nutramarks has in New Zealand (which, she submitted, is confined to products sold by Ponsonby Health Shop) is limited to the particular products sold. She submitted that the ten Nutramarks products are principally mineral supplements such as iron, magnesium, and selenium, unlike the Nature's Life products, which, with one exception (Rotorua thermal mud masks), are animal-based. She submitted that none of the Nutramarks products come within the Class 3 specification for which Nature's Life sought registration, and none of the Nutramarks products were the same as, or competed with, the Class 5 products for which Nature's Life sought registration.
Discussion
[36] Mr Hayes was critical of the Assistant Commissioner, and Mrs Wallis, for focussing on what was not in the evidence for Nutramarks, rather than what was. However, I am satisfied that that focus was appropriate, because it demonstrates that Nutramarks has not discharged its onus of proving awareness by a “substantial number of persons” in the relevant market.
[37] As the Court of Appeal said in N V Sumatra,23 Nutramarks (given that its marks were not registered in New Zealand) needed to point to evidence showing that a substantial number of persons in the market have awareness, cognisance or knowledge of its mark. The Court of Appeal went on to say that what is a “substantial number of persons” depends on the nature and size of the market, and is relative both to the number of persons involved in, and their impact on, that market.
[38] The affidavit evidence for Nutramarks was that it has products for sale in New Zealand, and that there have been sales of its products, to the extent referred to in the evidence. There was also evidence that Nutramarks’ products are advertised on two websites that can be accessed in New Zealand. There was no evidence as to
the size of the market comprising those (discerning) members of the purchasing
23 N V Sumatra, above n 6, at [77]–[80].
public, or businesses, who are interested in natural health remedies, medicines, supplements, and the like. Nor was there any evidence as to how the sales figures for Nutramarks’ products fit into the actual market.
[39] Such evidence was required in order to prove awareness of Nutramarks’ marks in the relevant market by a substantial number of persons in that market. It is clear from the judgments in Pioneer24 and N V Sumatra25 that evidence is required as to the nature and size of the market so that an assessment can be made as to whether there is awareness by a significant number or significant proportion of persons involved in the market.
[40] Mr Hayes was also critical of the Assistant Commissioner for not setting out the bench-mark used in her assessment that sales of Nutramarks’ products were “negligible”. However, it was for Nutramarks to give evidence as to the size of the market, so as to establish a “bench-mark”, as part of discharging its onus of proving awareness.
[41] The affidavit evidence for Nature’s Life included a statutory declaration by Qiang Li, who is marketing manager of a company which launched a range of health care products into the New Zealand market in 2003. He identified those products as evening primrose oil, Omega-3 capsules, propolis capsules, colostrum powder and tablets, royal jelly capsules, sheep placenta capsules, and squalene capsules. He said that he had never seen or heard of the Nutramarks marks in the health products industry within New Zealand. There was no challenge to that evidence, either as to the facts set out, or as to whether it was disinterested. In the light of Mr Li’s evidence, I am satisfied that the Assistant Commissioner did not err in finding that sales of Nutramarks’ products were “negligible”.
[42] Accordingly, I am satisfied that the Assistant Commissioner did not err in finding that Nutramarks had not established awareness of its marks in the relevant
market.
24 Pioneer, above n 3, at 74.
25 N V Sumatra, above n 6, at [77].
[43] That conclusion is sufficient to dispose of the appeal, in favour of Nature’s Life. However, in case I should be wrong in that conclusion, it is appropriate to consider, briefly, whether use of the Nature’s Life mark is “likely to deceive or cause confusion”.
Confusion and deception
[44] Counsel were agreed as to the relevant legal principles, which may be summarised as follows:
(a) The words “deceive” and “confuse” were discussed in Pioneer.26 In the present case, where confusion or deception is alleged as to the source of goods, “deceived” means being misled into thinking that goods bearing the Nature’s Life mark come from some other source, and “confused” means being caused to wonder whether that might not be the case.
(b) To assess whether there is a likelihood of confusion or deception, it is necessary to compare the marks. The marks must be judged by their look and sound; consideration must be given to the nature of the goods to which the marks are to be applied, and the nature and kind of customer who is likely to buy them; and consideration must be given to all the surrounding circumstances and what is likely to happen if the Nutramarks and Nature’s Life marks are each used in a normal
way as a trade mark for their respective goods.27
(c) The comparison of the marks is not a side-by side comparison. The overall impression of the marks as a whole must be considered,
making allowance for imperfect recollection.28
26 Pioneer, above n 3, at 62.
28 See De Cordova v Vick Chemical Coy (1951) 68 RPC 103 (PC) at 106, per Lord Radcliffe, and
Polaroid Corp v Hannaford & Burton Ltd [1975] 1 NZLR 566 (CA) at 571.
[45] There are, clearly, differences between the look of the two marks. The Nature’s Life mark is green and white, in a circular form, with a “koru”-like design in it. The Nutramarks marks are in an oblong format, and are either yellow and orange, or purple, red and yellow, and feature a “sun” design. Orally, they are likely to be described either by their predominant colour (as the “green” mark, or the “red/yellow” mark), or by their design (as the “koru” or “sun” mark).
[46] Both feature the words “Nature’s Life”. In the Nature’s Life mark and one of the Nutramarks marks, those words are written in a cursive font, with capital letters at the start of each word, and an elongated “f” in the word “Life”. Notwithstanding the minor differences pointed to by Mrs Wallis, there is little, if any, difference in the appearance of the written words in the two marks.
[47] As noted earlier, it is the overall impression that must be compared. I am satisfied that the overall impression of the Nature’s Life and Nutramarks marks is different. This is as a result of the different colouring and design.
[48] I turn, then, to the goods to which the marks are to be applied, the customers likely to buy them, and the surrounding circumstances. I accept Mrs Wallis’s submission that the goods to which the Nature’s Life mark is to be applied are quite different from those to which the Nutramarks marks are applied. The Nature’s Life goods are (with the exception of the Rotorua thermal mud masks) animal-based creams and tablets/capsules, while the Nutramarks’ products are vitamins and minerals.
[49] I do not accept Mr Hayes’ submission that the goods are identical, or at least very similar, by reason of their being used as natural health remedies, medicines, and supplements, being likely to be sold via the same or similar trade channels (in particular, specialty heath stores) either in competition or in combination with each other, and the physical nature of the goods (vitamins or supplements sold in tablet or capsule form). Mr Hayes’ submission is at too generic a level. Both Nutramarks and Nature’s Life are selling particular products, with particular qualities and, as noted earlier, the purchasers of the products will be discerning as to what they are buying.
[50] I also accept Mrs Wallis’s submission that the target market for the respective products is different. It is clear from the affidavit evidence filed for each side that the Nature’s Life products are targeted at consumers of Asian origin (with the products being sold in souvenir shops aimed at Asian tourists), while the Nutramarks target market consists of purchasers buying from Ponsonby Health Shop or online.
[51] Taking all of the above matters into consideration, I am satisfied that it is not
likely that use of the Nature’s Life mark would deceive or cause confusion.
Result
[52] The appeal is dismissed. Nature’s Life is entitled to costs on a 2B basis.
Andrews J
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