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High Court of New Zealand Decisions |
Last Updated: 4 October 2018
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IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
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CIV-2017-409-000526
[2018] NZHC 2501 |
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BETWEEN
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AUSTRALASIAN CONFERENCE ASSOCIATION LIMITED
First Plaintiff
NEW ZEALAND CONFERENCE ASSOCIATION
Second Plaintiff
NEW ZEALAND HEALTH ASSOCIATION
Third Plaintiff
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AND
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A LITTLE BIT OF BRITAIN LIMITED
First Defendant
LISA ELIZABETH WILSON
Second Defendant
THE CHIEF EXECUTIVE OF THE NEW ZEALAND CUSTOMS SERVICE
Person Required To Be Served
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Hearing:
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30 – 31 July and 1 August 2018
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Appearances:
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C L Elliott QC and S E Eden for First, Second and Third Plaintiffs K T
Glover and R E Colley for First and Second Defendants
Also in Attendance:
T Bromwich and M Majeed for the Chief Executive of the New Zealand Customs
Service
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Judgment:
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24 September 2018
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JUDGMENT OF GENDALL J
AUSTRALASIAN CONFERENCE ASSOCIATION LIMITED v A LITTLE BIT OF BRITAIN LIMITED [2018] NZHC 2501 [24 September 2018]
Contents
1. Introduction [1]
4. Alleged trade mark infringement [34]
(a) Do the detained goods and the Weetabix products generally imported by
the defendants infringe the Weet-Bix trade mark? [34]
(i) Are the marks/signs Weetabix and Weet-Bix identical? [39]
(ii) Under s 135, is the Weetabix mark/sign, (being a sign similar to Weet-
Bix), used in a way that would be likely to deceive or confuse? [51]
What does ‘use’ in s 135 mean? [52]
Are consumers likely to be deceived or confused? [57]
(iii) Under s 89, does LBB use the Weetabix sign (being a sign similar to
Weet-Bix) in a way that would be likely to deceive or confuse? [62] The authorities on the meaning of “likely to deceive or confuse” [66] What is the relevant market context? [73]
Is deception or confusion likely to occur? [95]
5. Customs detention – did Customs act lawfully? [101]
(a) In determining that the goods should be detained? [107]
(b) In declining to release detained goods? [114]
(c) In deciding to extend time for Sanitarium to serve proceedings with
1. Introduction
[1] Weet-Bix breakfast cereals have been manufactured and sold in New Zealand since 1928. Weet-Bix has been a staple breakfast food of New Zealand households for many years since that time. Material before the Court indicates it is now purchased by 54 per cent of New Zealand households. The plaintiffs are the registered owners and licensees of the trade mark “Weet-Bix”. It is that trade mark registration which is central to this case.
[2] Weetabix is a British breakfast cereal which has been manufactured and sold in the United Kingdom and elsewhere since about 1928. It is a widely known and popular trade-marked brand and product in the United Kingdom.
[3] This case was initially triggered by a decision of New Zealand Customs’ (Customs) in August 2017 to detain at the border 108 cartons of British Weetabix cereal (the detained goods) imported by the first defendant (LBB). This detention was made under a border protection provision in the Trade Marks Act 2002 (the Act). The detained goods are still being held by Customs.
[4] In this proceeding, the plaintiffs (collectively referred to as Sanitarium) seek:
(a) a determination that these detained goods bear a sign, “Weetabix”, which infringes its Weet-Bix trade mark;
(b) a further determination that other Weetabix goods sold by LBB infringe the trade mark;
(c) a permanent injunction to prevent further infringement occurring; and
(d) the forfeiture or destruction of the detained goods.
[5] At issue here is whether the use of the Weetabix sign infringes the Weet-Bix trade mark on the basis that the signs are either identical or, alternatively, that the Weetabix sign is so similar to the Weet-Bix trade mark that it would be likely to deceive or confuse the public and as such infringe its trade mark.
2. Background
(a) The parties and general issues
[6] The Sanitarium plaintiffs are major New Zealand companies owned and operated by a religious charity. Respectively, they are the registered owner, licensee and sub-licensee of the New Zealand trade mark “Weet-Bix” under Registration No. 26231 covering “preparations made from cereals including breakfast cereals” in Class
30. Weet-Bix has long been one of the major and iconic products of the Sanitarium range.
[7] LBB owns and operates a small British grocery specialist business in New Zealand. It has stores in Riccarton and Rangiora under the name “UK Foods” and a website which also sells British groceries within New Zealand. The second defendant Ms Wilson is the sole director of LBB and effectively is the manager of LBB’s business.
[8] In about 2015, Ms Wilson established a website offering for sale in New Zealand a range of British grocery products. Some of these she had sourced in New Zealand from Mr Robert Savage who, through his company Savage Imports Ltd, operated a retail business importing and selling a range of British products, including Weetabix. Subsequently, Mr Savage, after deciding to return to the United Kingdom, sold his Savage Imports business and Ms Wilson, through LBB, purchased it.
[9] This purchase was concluded in 2016 whereupon LBB opened under the name or style “UK Foods” two retail shops in Riccarton and Kaiapoi (since replaced with a new shop in Rangiora) and developed its existing website.
[10] Since that time, LBB has continued to sell a wide range of British grocery lines through its shops and website. Until recently, this included Weetabix and Weetabix lines. In evidence before the Court, it seems that LBB sold about 110 cartons or boxes of Weetabix up to mid-2017. This is a similar amount to the detained goods, which LBB had subsequently ordered for arrival in August 2017.
[11] Given that this case involves allegations of infringement of Sanitarium’s trade mark Weet-Bix by the defendants, it is useful to note at the outset that Sanitarium maintains it does not want to stop customers of LBB in New Zealand buying British products, including Weetabix breakfast cereals, or to prevent LBB importing such products. It says that Weetabix products can be sold in New Zealand but only under a different name and/or over-stickered. Sanitarium says this is exactly what happens in Australia, and indeed also by other minor importers and re-sellers of Weetabix products in New Zealand.
[12] Sanitarium says it has tried to settle this case before filing these proceedings. It claims, first, that this has not been possible because Ms Wilson wishes to continue using in an uncontrolled way what Sanitarium says is an infringing trade mark on Weetabix products. Secondly, Sanitarium claims that it had no real choice, therefore, but to commence these proceedings. Otherwise, it risks losing the benefit of its long- standing and important trade mark.
[13] In response, LBB and Ms Wilson contend this case was actually triggered by Custom’s detention, essentially at the behest of Sanitarium, of the detained goods. The detention occurred under s 149 of the Act, which is in a part of the Act headed “Border Protection Measures”. With each carton containing six packets of cereal, this meant that a total of 648 packets were detained and held by Customs. The detained goods are still being held by Customs but have now passed their “best before” date of 18 January 2018.
[14] There is no dispute between the parties that the goods or products in question here, being breakfast cereal, are the same and, therefore, come within the Class 30 definition I note at [6] above as “preparations made from cereals including breakfast cereals”. An initial issue in this case, however, is whether it can be said that any sales of “Weetabix” by the defendants in New Zealand infringe Sanitarium’s Weet-Bix trade mark. Sanitarium maintains the use of the Weetabix sign on the detained goods or any other Weetabix products infringes the Weet-Bix mark. It reaches this view initially because it says the Weetabix signs are identical with the Weet-Bix mark and so infringe its trade mark. Alternatively, Sanitarium says the Weetabix signs, in any event, are
sufficiently similar to its Weet-Bix mark to deceive or confuse the public. Thus, they infringe the trade mark.
[15] LBB and Ms Wilson in turn deny any infringement. They oppose the orders sought and, in addition, counterclaim for the amount which they say LBB would have received for the retail sale of the wrongfully detained goods.
[16] Although this proceeding essentially concerns a private trade mark dispute between Sanitarium and Ms Wilson and her company LBB, the catalyst for the proceeding was Custom’s detention of LBB’s shipment of Weetabix cereal. The Chief Executive of Customs (the Chief Executive) is not a party to this proceeding but was granted leave to file evidence, appear and be heard in relation to the matters at issue. This included issues over the lawfulness of the detention of the detained goods and the exercise by Customs of its powers under the Act. The Chief Executive was represented by counsel at the hearing before me.
(b) Some background history to this dispute
[17] This matter has some history. It is useful therefore to briefly mention this to provide context.
[18] Mr Savage and his company, as I have noted, were previous operators of the business purchased in 2016 by LBB. They also had a dispute for some years with Sanitarium over his importing of Weetabix. In addition, there were issues over Mr Savage’s importation and sale of another product, British Marmite.
[19] This involved correspondence between Mr Savage’s lawyers, Malloy Goodwin Harford, and Customs over five years ago. In particular, Malloy Goodwin Harford sent a letter on 1 March 2013 relating to these issues which, amongst other things, stated:
Sanitarium – Trade Mark Notices
Trade mark notices
...
Conclusion
21. In our submission there is no likelihood of confusion or deception arising from the word “Weetabix” appearing on the products which our client imports. As a result no such products should be detained by Customs.
[20] As the letter notes, the issue over British Marmite was resolved by Mr Savage agreeing to over-sticker the jar label once the product reached New Zealand and before sale. This was to ensure that, amongst other things, it did not infringe Sanitarium’s trade mark “Marmite”.
[21] It is interesting to note that in her evidence before me, Ms Wilson confirmed that she and LBB have continued this over-stickering of UK Marmite in the importing and sale of this product. Indeed, the evidence shows that the over-stickering occurs when the product arrives in New Zealand by way of a large label covering the British label. The re-labelling also renames the product for New Zealand sale purposes as “Blightymite” in bold lettering. It is under this name that Ms Wilson has offered and continues to offer the product for sale in LBB’s shops and on its website.
[22] Turning to the history of the Weetabix issue, Sanitarium’s initial objection to the importing and sale by Mr Savage’s company of this British product, without redacting or covering the name in some way, was not fully resolved when Ms Wilson acquired the business in 2016. The disagreement continued after Ms Wilson’s purchase, and it is fair to say it has escalated.
[23] In evidence before me, it was confirmed that other parties have been selling UK Weetabix to the public in New Zealand with Sanitarium’s agreement and under a broad licence-type arrangement. This arrangement approves the sale of the product provided the importers and sellers over-sticker the word “Weetabix” on the product boxes before sale. Sanitarium says this is purely for the purpose of protecting its trade mark Weet-Bix. And, as I understand it, all this is occurring quite satisfactorily and with the agreement of these third party sellers.
[24] Sanitarium has offered similar arrangements to Ms Wilson and LBB. Sanitarium confirms that no issue is taken with LBB selling Weetabix in New Zealand. It simply wants stickers to be placed on the products in question over the Weetabix name to ensure they do not infringe the Weet-Bix trade mark.
[25] Ms Wilson, however, says she and her company will not do this. In her evidence, Ms Wilson explained the reason she takes this view is simply that:
I don’t think that Weetabix is a trade mark infringement of Weet-Bix.
And:
...we disagree that it’s a trade mark infringement and that’s why we’re here today to have your opinion on it.
[26] Considerable discussion and negotiation over all this has taken place recently between Sanitarium, Ms Wilson and their respective legal advisors. Sanitarium says that throughout it has wished to resolve this matter amicably. It maintains it has always been perfectly happy for Weetabix to be imported and sold throughout New Zealand. Its concern, confirmed by Mr Elliott, is simply to protect its long-established trade mark and Weet-Bix brand in this country. Mr Elliott before me was at pains to point out too that Sanitarium have a concern that, under broad “slippery slope”
considerations, if it does not make a principled stand with a small business operator like Ms Wilson, it runs the risk that a large operator will import and sell this British cereal product under its disturbingly similar name Weetabix, and thus destroy Sanitarium’s long built up Weet-Bix brand. On this aspect, Mr Elliott drew attention to the major marketing and sponsored community-based events that Sanitarium has instigated over the years involving substantial investments, spring-boarding off what he says is its iconic Weet-Bix brand. These include present New Zealand wide events such as the Weet-Bix Kids TRYathlon and the Weet-Bix All Blacks cards sponsorship.
[27] Despite these discussions and negotiations, however, matters between these parties could not be resolved. This resulted in these proceedings being issued by Sanitarium in June 2017.
[28] Sanitarium say the proceedings were brought at least in part in an endeavour to achieve some final resolution of the dispute as to whether LBB and Ms Wilson, with their sales of Weetabix in this country, were infringing Sanitarium’s Weet-Bix trade mark.
3. Issues
[29] A general substantive issue here is whether the Weetabix sign infringes Sanitarium’s registered trade mark, Weet-Bix. In answering this, the following questions arise:
(a) Are the signs Weetabix and Weet-Bix identical?
(b) If (and only if) the signs Weetabix and Weet-Bix are not identical, do LBB and Ms Wilson use the Weetabix sign, on the basis that it is similar to Weet-Bix, in a way that would be likely to deceive or confuse the public as to its trade origin?
[30] Determining the latter question also requires consideration of the appropriate test, namely, is it only the defendants’ use of Weetabix or the general use that would be likely to deceive or confuse, and is the relevant market in New Zealand general consumers or British expatriate consumers?
[31] A second issue is whether the Weetabix boxes are false and misleading by virtue of their use of the registered trade mark symbol, ®, next to the word Weetabix. Sanitarium claims this wrongly represents that the Weetabix sign is a registered trademark in New Zealand.
[32] A third issue is whether Customs acted lawfully in its detention of the detained goods, refusing to release them, and extending the time for Sanitarium to serve proceedings.
[33] Finally, I must determine, based on my findings on the other issues, what remedies (if any) are available and appropriate here.
4. Alleged trade mark infringement
(a) Do the detained goods and the Weetabix products generally imported by the defendants infringe the Weet-Bix trade mark?
[34] This issue is complicated by the fact that there are two slightly different definitions of “infringement” in the Act, found in ss 89 and 135. Section 89 governs infringement through the use of an allegedly identical or similar sign when used in the course of trade in New Zealand. Section 135 defines an infringing sign in the context of border protection measures. If the Weetabix products are found to be an infringing sign under either section, generally the defendants will have a liability here. However, the remedies available to Sanitarium differ under each section.
[35] The sections, which are in different sub-parts of the “Legal Proceedings” section at Part 4 of the Act, provide:
Subpart 1—Civil proceedings for infringement
...
Acts amounting to infringement
(1) A person infringes a registered trade mark if the person does not have the right to use the registered trade mark and uses in the course of trade a sign—
- (a) identical with the registered trade mark in relation to any goods or services in respect of which the trade mark is registered; or
(b) identical with the registered trade mark in relation to any goods or services that are similar to any goods or services in respect of which the trade mark is registered, if that use would be likely to deceive or confuse; or
(c) similar to the registered trade mark in relation to any goods or services that are identical with or similar to any goods or services in respect of which the trade mark is registered, if that use would be likely to deceive or confuse; or
(d) identical with or similar to the registered trade mark in relation to any goods or services that are not similar to the goods or services in respect of which the trade mark is registered where the trade mark is well known in New Zealand and the use of the sign takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the mark.
(2) Subsection (1) applies only if the sign is used in such a manner as to render the use of the sign as likely to be taken as being used as a trade mark.
...
Subpart 3—Border protection measures
Interpretation
135 Interpretation
...
infringing sign means a sign that is—
(a) identical with a trade mark in respect of which a notice has been given under section 137 and is used on or in physical relation to goods that are identical with goods in respect of which the trade mark is registered; or
(b) identical with such a trade mark and is used on or in physical relation to goods that are similar to goods in respect of which the trade mark is registered, if that use would be likely to deceive or confuse; or
(c) similar to such a trade mark and is used on or in physical relation to goods that are identical with or similar to goods in respect of which the trade mark is registered, if such use would be likely to deceive or confuse.
[36] The assessment of whether the marks Weet-Bix and Weetabix are “identical” is effectively the same under these sections despite the different definitions because context is not generally a part of that assessment. However, when making an assessment of whether they are instead only “similar”, differences are crucial to discerning whether the similarity is likely to cause deception or confusion. A breach occurs in s 89 if the mark is used “in the course of trade... if that use would be likely to deceive or confuse”. However, in s 135, the breach occurs if the sign “is used on or in physical relation to goods... if such use would be likely to deceive or confuse”.
[37] I must therefore determine the following issues:
(a) Are the marks/signs Weetabix and Weet-Bix identical?
(b) Under s 135, is the Weetabix mark/sign (being a sign similar to Weet- Bix) used “on or in relation to goods” in a way that would be likely to deceive or confuse?
(c) Under s 89, does LBB use “in the course of trade” the Weetabix sign (being a sign similar to Weet-Bix) in a way that would be likely to deceive or confuse?
[38] Before me, LBB and Ms Wilson accepted both that the sign Weetabix is similar to Weet-Bix and also that LBB will be using the mark in relation to the same goods (breakfast cereal) as those for which it is registered.
(i) Are the marks/signs Weetabix and Weet-Bix identical?
[39] Sanitarium’s initial submission is that the signs are identical and therefore its trade mark is infringed. This is on the basis of the absolute protection that is granted to registered trade marks where the infringing sign is identical.
[40] The issue of whether a sign is identical to a mark is discussed at some length by the learned author in the leading text in this area, Trade Marks in Practice. The issue is introduced in this way:1
The issue may be problematic for near exact marks, for example where one word is split in two, and composite marks. Device, shape, smell, sound and colour marks may present particular difficulties. The comparison will be between the owner’s mark in the form as registered (but including notional and fair use) and the sign actually used by the defendant.
Because the result of identical marks is an enhanced monopoly (no likelihood of confusion or deception need be proven) a strict interpretation would appear to be appropriate.
[41] New Zealand courts have adopted this strict approach. In Intercity Group (NZ)
Ltd v Nakedbus NZ Ltd, Asher J in this Court noted:2
[173] Absolute protection is granted to a sign that is identical with a registered trade make. The sign said to be identical is the words “inter city” as they appear in the Nakedbus Google advertisement and elsewhere. In contrast, a qualified protection by the Act turning on whether the mark is likely to deceive or confuse is available for a sign that is only similar to the registered trade mark.
[174] The leading authority on identicalness in Europe is LTJ Diffusion SA v Sadas Vertbaudet SA where it was stated that “identity...must be interpreted strictly” and “the very definition of identity implies that the two elements compared should be the same in all respects”...
[178] Given that the New Zealand legislature has not used the words “substantially identical”, which is to be found in the Australian legislation, I do not believe that the concept of “identity” meaning “one and the same” can be unduly softened. A proprietor of a mark can still have protection when a sign is not identical if there is similarity and a likelihood of confusion. I bear in mind that there are serious consequences that follow the application of s [89](1)(a),3 namely the immediate consequence of infringement, rather than a merit based assessment turning on confusion and deception, under s [89](1)(c). The absolute liability that follows a finding of “identical” indicates that the term requires a complete identity with a registered trade mark, and not something that is almost or nearly identical.
2 Intercity Group (NZ) Ltd v Nakedbus NZ Ltd [2014] NZHC 124; [2014] 3 NZLR 177.
[42] The English Court of Appeal held in Reed Executive plc v Reed Business Information Ltd that identity means both visual and aural identity, not simply one or the other:4
It follows, I think, that in the case of any accused sign which has some visual significance, one must take that into account in considering the question of identity. The visual impact may be slight, but it will count even if the marks are identical to the ear. You can only have “identity” if there is both aural and visual identity.
[43] In Leafscreen NZ Ltd v Leafbusters Group Ltd, the Court held (on an interim injunction application) that there was not even a serious case to be tried on whether “leafscreen” and “leafscreener” were identical in a trade mark sense.5
[44] In Origins Natural Resources Inc v Origin Clothing Ltd, it was common ground that “origin” and “origins” were not identical because of the addition of the letter “s”.6
[45] By contrast, cases where identity has been accepted have involved only the addition or removal of a space or hyphen in the sign as compared with the mark, for example:
(a) “Intercity” and “Inter city”;7 and
(b) “WebSphere” and Web-Sphere”.8
[46] There is a sub-category of cases dealing with the situation where the trade mark owner’s mark may be fairly short (for example, one word) and the defendant’s sign is longer but includes that mark with other words.
[47] Such cases, however, are not strictly relevant to the issue before the court here. Instead, they deal with the scenario of an identical sign being used with additional
5 Leafscreen NZ Ltd v Leafbusters Group Ltd (2004) 10 TCLR 967 (HC).
6 Origins Natural Resources Inc v Origin Clothing Ltd [1995] FSR 280 (Ch).
7 Intercity Group (NZ) Ltd v Nakedbus NZ Ltd, above n 2.
8 International Business Machines Corporation v Web-Sphere Ltd [2004] EWHC 529 (Ch).
words, and a defendant arguing that they were no longer identical due to the additional material (e.g. Slow Release Weet-Bix).
[48] In New Zealand (and the United Kingdom) “identical” means precisely that. The test can be contrasted with that in Australia, where the statute uses the words “substantially identical”. In the present case, I find that the mark Weetabix is not identical to Weet-Bix. The words are not only spelled differently, but, significant in my view, they also differ aurally. The word Weetabix is pronounced with three syllables, Weet-a-bix, whereas the word Weet-Bix has only two syllables, Weet-Bix.
[49] Sanitarium’s contention that Weetabix is identical fails. The mark is not identical and thus it is not an infringing mark under this definition.
[50] That is not the end of the matter, however. I now turn to the issue of these signs being “similar” (which all parties appear to accept here) in terms of the infringement definitions in both s 135 and s 89 of the Act. For signs that are not identical but only “similar” a qualified protection is provided by the Act turning on whether the allegedly offending mark is likely to deceive or confuse, as Asher J notes in Intercity Group.9
(ii) Under s 135, is the Weetabix mark/sign, (being a sign similar to Weet-Bix),
used in a way that would be likely to deceive or confuse?
[51] Section 135 defines an infringing mark in the context of border protection measures. Customs is the gatekeeper at the New Zealand border. It has to decide whether to stop imported goods. The purpose of this border protection regime is to prevent goods that may infringe a registered trade mark from entering this country. In fulfilling this gatekeeper role and determining whether a product bearing a sign is infringing in terms of s 135 of the Act (and thus preventing it from entering the country), Customs must follow the requirements of Sub-Part 3 of Part 4 of the Act headed “Border protection measures”. The preliminary issue in this determination is
9 Intercity Group (NZ) Limited v Nakedbus NZ Ltd, above n 2 at [173].
what is meant by the word ‘use’, as this determines the context for assessing whether the sign would be likely to deceive or confuse.
What does ‘use’ in s 135 mean?
[52] Sanitarium submitted that the word ‘use’ in the context of s 135 means the placement of the Weetabix sign on the box or packet. It maintained this is the plain meaning of the word here. Sanitarium noted that there has been no judicial analysis in a case like this of the difference between the tests in ss 89 and 135. Therefore, the matter must be determined through statutory interpretation.
[53] The defendants, however, submitted that ‘use’ here means use in the course of trade. They endeavoured to support this by reference to s 89. As I have noted above, s 89 states that a person infringes a trade mark if they use a sign “in the course of trade” that is identical or similar to the trade mark.
[54] I reject this argument advanced for the defendants. I consider that Sanitarium’s submissions here are correct. In enacting the Trade Marks Act in 2002, Parliament could have defined an infringing sign in the same way for all situations covered by the Act. However, it chose to define that term in a different but important way for the alternate contexts of border protection and civil proceedings for infringement. It could have used the phrase “uses in the course of trade” in s 135, as it does in s 89, but it did not. This appears to be a deliberate distinction. In my view, this makes sense because Customs, confronted with imported goods at the border, are unlikely to know how those goods are going to be used in trade by an importer. Indeed, even if Customs initially thought it had this knowledge, they may be used in different ways. It would not make sense, too, for Customs to have to make inquiries as to how exactly goods were to be used in trade before making a detention or release decision under s 135. Again, this use also could change later.
[55] I do not accept the defendants’ submission that trade context is relevant here and that the test is the same under ss 135 and 89 merely because the Court, when making a determination under s 135, is able to receive evidence on how the goods will be used or sold. The plain meaning of the word ‘use’ in s 135 is the use of the similar
sign on products. The term does not refer to the particular use of the products by their owner, that is, the manner or context in which they are sold.
[56] The real question here, as I see it, is whether the average consumer would see the Weetabix sign on the product box and be deceived or confused as to whether it is a Weet-Bix product.
Are consumers likely to be deceived or confused?
[57] According to the Court of Appeal in New Zealand Breweries v Heineken Bier Browerij Maatschappij NV, ‘deceived’ implies the creation of an incorrect belief or mental impression and causing ‘confusion’ may go no further than perplexing or mixing the minds of the purchasers.10
[58] In Thomson Holidays Ltd v Norwegian Cruise Lines Ltd, the United Kingdom Court of Appeal said the confusion in question was the risk that the public might believe that the goods came from the same, or a linked, source.11 To meet the test, “a substantial number of persons” among the prospective purchasers must be confused or deceived.12
[59] In Berlei (UK) Ltd v Bali Brassiere Co Inc, the House of Lords found that the marks Berlei and Bali were confusingly similar, stating:13
[59] Thus in Rysta Ltd’s Application..., Luxmore LJ expressed the view that “obviously a person who is familiar with both words will neither be deceived or confused. It is the person who only knows the one word and has perhaps an imperfect recollection of it, who is likely to be deceived or confused.” He pointed out that the court should allow for an imperfect recollection and the effect of careless speech pronunciation not only on the part of purchasers but also of shop assistants.
[60] With all this in mind, I find here that a substantial number of the general public would be confused or deceived by the sign Weetabix. Most consumers in
12 New Zealand Breweries v Heineken Bier Browerij Maatschappij NV, above n 10, at 117.
13 Berlei (UK) Ltd v Bali Brassiere Co Inc [1969] 2 ALL ER 812 (HL) at 817.
New Zealand will not be familiar with the British cereal Weetabix and therefore, upon seeing the sign may confuse it with the more familiar Weet-Bix. The words are deceptively similar, their respective get-ups and the visual clues on each of the cereal boxes before the Court are not in any significant way distinctive, and the possibility of confusion, in my judgment, is real. This is especially so, because breakfast cereals are a straightforward, fast-moving consumer product category widely distributed throughout New Zealand. Purchasers of breakfast cereals are ordinary members of the general public buying these goods regularly and they are not always very attentive to what they are taking off the shelf. The risk of confusion or deception is greater too for low-cost goods which consumers are likely to buy casually.14
[61] Therefore, I conclude that Weetabix is an infringing sign for the purposes of border protection measures under s 135(1) of the Act.
(iii) Under s 89, does LBB use the Weetabix sign (being a sign similar to Weet-Bix) in a way that would be likely to deceive or confuse?
[62] The next question, and a central issue in this case, is whether LBB’s use of the Weetabix sign by offering for sale and selling Weetabix is likely to confuse or deceive and thus it infringes the Weet-Bix mark in terms of the general infringement provision set out at s 89(1)(c) of the Act. This definition is more specific than that in s 135. It requires the assessment of whether the sign is similar to be in the context of that sign being used “in the course of trade”.
[63] As to this aspect, Sanitarium’s position is that the words “uses in the course of trade” mean general trade, rather than a specific niche. It contended that the relevant market is the general public who purchase a staple food product such as the breakfast cereal at issue here. The relevant test, Sanitarium said, is the “fair and notional” use of the marks in the ordinary course of trade. Sanitarium highlighted that breakfast cereals are a low-cost product that consumers are likely to buy casually or on impulse, and thus not carefully observing the packaging. Therefore, they may confuse Weetabix with Weet-Bix.
[64] In response, LBB and Ms Wilson submitted that the “use” here only requires an assessment of LBB’s specific use of Weetabix. They argued that the Weetabix sign is not likely to deceive and confuse consumers because the Weetabix products are only sold in LBB’s British speciality stores and from its website, which has a sub-market comprising British expatriate consumers in New Zealand.
[65] Determining this question therefore brings up the issue of what is the context in which the assessment of “likelihood to deceive and confuse” is to be addressed. Is the relevant market the general public who purchase breakfast cereals or is it the sub- market which the defendants say comprises British expats who purchase from LBB’s speciality stores and online from its website?
The authorities on the meaning of “likely to deceive or confuse”
[66] A leading authority in New Zealand on the meaning of “likely to deceive or confuse” is Pioneer Hi-Bred Corn Company Limited v Hy-Line Chicks Pty Ltd.15 Although it is a case relating to the forerunner to s 17(1)(a) of the Act, which deals with the registration of trade marks, it has been applied in the context of infringement.16
[67] In Pioneer, Richardson J set out 10 factors relevant to the assessment of deception or confusion.17 While some factors relate more to the registration context, taken as a whole they reinforce the importance of considering deception or confusion in the particular relevant market. Addressing his point 10, Richardson J held:18
Where goods are sold or may be sold to the general public for consumption or domestic use, the judge or officer making the decision is entitled to take into account his own experience and his own reactions as a member of the public, as well as evidence from other members of the public, when considering whether buyers would be likely to be deceived or confused by use of a trade mark. But where the goods are of a kind not normally sold to the public at large, but are ordinarily sold and expected to be sold in a specialist market consisting of persons engaged in a particular trade, evidence of persons accustomed to dealing in that market as to the likelihood of deception or confusion is essential.
15 Pioneer Hi-Bred Corn Company Limited v Hy-Lyne Chicks Pty Ltd [1978] 2 NZLR 50 (CA).
16 Intercity Group (NZ) Ltd v Nakedbus NZ Ltd, above n 2, at [191].
17 At 61-62.
18 At 62.
[68] LBB and Ms Wilson also rely on decisions of this Court and the Court of Appeal in Geneva Marketing (1998) Ltd v Johnson & Johnson.19 In that case which involved the retail purchase of personal lubricants, the High Court held that there was no likelihood of deception or confusion (concerning the marks SILK and SYLK), taking into account the ways in which the competing products were sold:20
I repeat my findings on the discerning nature of the market. Buyers are by necessity relatively knowledgeable and informed. They are unlikely to perceive the two marks as applying to the same product brand.
[69] This approach was upheld by the Court of Appeal, who stated:21
Given the function of the products, the rather difficult target markets and the discerning nature of purchasers, we see the relevant differences as distinctly more important than the similarities...Since most customers are repeat purchasers the overall proportion of purchases which are affected by confusion must necessarily be a very small percentage of all purchases. The differences in the visual appearance of the marks as used are sufficiently significant to mitigate against the likelihood of substantial confusion due to imperfect customer recollection.
[70] In Specsavers International Healthcare Ltd v Asda Stores Ltd, the UK Court of Appeal confirmed that, in considering infringement, the trial Judge “was bound to consider the accused use [of the mark] in context” – in that case, in the optical sections of Asda stores and online.22 The Court of Appeal upheld the finding that the defendants had not infringed the trade mark on that basis (inter alia).
[71] Before me, as I understand their submissions, Sanitarium disagreed with this approach advanced by the defendants and contended that the appropriate context here is the “fair and notional” use of the Weetabix mark, arguing that this would include the sale of Weetabix to the general public. This phrase could create a degree of confusion as previous cases, such as Berlei (UK) Ltd v Bali Brassiere Co Inc, state that the “fair and notional” use refers to the trade mark owner’s use of its own trade mark.23
20 At [56].
21 Geneva Marketing (1998) Ltd v Johnson & Johnson [2009] NZCA 591 at [35].
23 Berlei (UK) Ltd v Bali Brassiere Co Inc, above n 13, at 818.
Therefore, as this Court mentioned in The Coca-Cola Company v Frucor Soft Drinks Ltd:24
The comparison called for is between the normal and fair use that [The Coca- Cola Company] makes of its registered marks, given the rights granted by the registrations, and the actual use made by Frucor and PepsiCo of their signs.
[72] These authorities indicate that the context in which the products in question are actually sold does have some relevance to whether the use of the mark or sign is likely to deceive or confuse.
What is the relevant market context?
[73] LBB and Ms Wilson contended that the goods in question in this case are only being actually sold to a very small specialist market. This factor, the defendants said, distinguishes the current situation from many of the previous authorities (both where infringement has been found and where it has not been made out). They argued the closest analogy is Geneva Marketing, where customers purchasing personal lubricants were found to be sufficiently discerning to easily distinguish between the marks “SILK” and “SYLK”.25
[74] Although the goods at issue in the present case are consumer goods in a broad sense, being breakfast cereal, the defendants suggested that, in the circumstances, they are of a kind “not normally sold to the public at large”.26 Evidence before the Court noted that LBB sells its Weetabix products in New Zealand for a price around two and a half times the cost of a similar sized box of Weet-Bix. The reality, the defendants argued, is that only British expats or anglophiles will be prepared to pay such a significant premium in New Zealand for these products over other wheat biscuit cereals.
[75] Furthermore, Ms Wilson maintained that, generally, LBB only sells Weetabix products in its speciality British food stores, both physical and online. The evidence indicates, too, that those physical stores are strongly branded with Union Jacks, a red,
24 The Coca-Cola Company v Frucor Soft Drinks Ltd [2013] NZHC 3282 at [156].
25 Geneva Marketing (1998) Ltd v Johnson & Johnson, above n 21.
26 Pioneer Hi-Bred Corn Company Limited v Hy-Lyne Chicks Pty Ltd, above n 15, at 62, point 10.
white and blue colour scheme, and the words “British” and “Britain”. The stores and LBB’s website sell a range of products New Zealanders are generally unfamiliar with. The defendants submitted that it is highly unlikely that an uninformed consumer would wander into the store and be unaware that it only sold British products. They argue, too, that it is unlikely an online shopper would accidentally arrive at LBB’s online store. The URL uses the name “A Little Bit of Britain” and the site makes it clear that it sells British products.
[76] Therefore, the defendants contended the Weetabix products are not competing with Weet-Bix products in the general market of breakfast cereals. They maintained that the relevant context in this case is the sale of the Weetabix products in LBB’s speciality stores, which are primarily aimed at British expats and anglophiles.
[77] I turn now to Sanitarium’s response to these aspects. On this, it is useful, in addition to the comments in Pioneer outlined at [67] above, to note here that the test for confusing similarity in trade mark infringement cases is also expressed authoritatively in another Court of Appeal decision, Mainland Products Ltd v Bonlac Foods (NZ) Ltd.27 The Court said:28
The likelihood of the manner of use of a word being taken as indicating a (not necessarily identifiable) trade connection will depend on all the circumstances
of that use. The normal meaning (if any) of the word will be a primary consideration. The way it is used in relation to the particular goods will be another. Also relevant will be the nature of the market, the kinds of customers and the general circumstances of trade in the goods concerned. These matters are to be discerned from the evidence, including any direct evidence of what the usage has conveyed to relevant members of the trade or public.
(Emphasis added)
The Court went on to say:29
...for trade mark purposes, it is necessary to take into consideration all likely circumstances of trade.
(Emphasis added)
27 Mainland Products Ltd v Bonlac Foods (NZ) Ltd [1998] 3 NZLR 341 (CA). (This statement was quoted in a recent trade mark infringement decision in New Zealand Tasman Insulation New Zealand Ltd v Knauf Insulation Ltd [2015] NZCA 602; [2016] 3 NZLR 145 (CA) at [157].
28 At 345-346.
29 At 348.
[78] Mainland and Pioneer demonstrate that, in a case such as this, what is relevant is all the circumstances of the use of the mark, not simply some circumstances to the exclusion of others.
[79] In considering this confusing similarity point and the normal meaning of the words in question, Sanitarium noted the evidence before the Court of Professor Brodie that the differences between the two marks are immaterial and are unlikely to be picked up by the average consumer. Gault P noted in Anheuser-Busch Inc v Budweiser Budvar National Corporation, however, that opinion evidence that marks are or are not confusingly similar is of limited value.30 Nonetheless, Professor Brodie’s comments as an acknowledged expert in this general area, do provide some limited degree of assistance. The sound of the words is generally similar and visually the only difference between the words is the minor replacement of the hyphen by the letter “a”.
[80] As to the way the mark is used on the goods in question, both products are high volume, low cost, everyday breakfast foods purchased regularly. They are standard fast-moving consumer goods when sold in supermarkets or general food stores. Sanitarium contended too that there is a confusing similarity here in the way the prominent visual features on the Weetabix and Weet-Bix packets appear.
[81] Turning now to consider other factors, such as where the goods in question are sold, the evidence before me showed that Weetabix products had been sold by the defendants in the following ways:
(a) Sales by the defendants in their UK product stores, mainly to retail customers;
(b) Sales at various markets, including the Riccarton Market in Christchurch, to which Weetabix stock was knowingly supplied by the defendants;
30 Anheuser-Busch Inc v Budweiser Budvar National Corporation, above n 14 at [66].
(c) Some wholesale sales, including what is alleged to be an online sale by the defendants to an Auckland dairy or food store proprietor; and
(d) Sales online by the defendants on which, understandably, there can be no reliable evidence before the Court that these were sales to UK expats.
[82] Sanitarium contended that the evidence establishes there is a common market for Weet-Bix and Weetabix. The way the respective parties’ goods are sold is essentially the same and confusion may readily be found to exist.
[83] Turning now to the customers for these type of goods and the impact of this on confusing similarity issues, Sanitarium maintained that potential customers encompass a broad cross-section of the New Zealand public (given particularly that approximately 54 per cent of New Zealand households purchase Weet-Bix).
[84] On this aspect, Sanitarium contended too there is no real evidence before the Court that consumers who access Weetabix through the defendants’ website are well informed British expats who are unlikely to be confused as to the actual source of the two products or at least some sort of trade connection. Although Ms Wilson in her evidence said that “the typical customers are British expats” and under cross- examination this was the “majority”, she also acknowledged that, unless she knew the person personally, she was not able to say whether a customer was an expat, nor did she keep emails to be able to determine this fact.
[85] Sanitarium noted too that, although there is some evidence of loyalty in LBB’s customers, there is no evidence before the Court that those customers were knowledgeable and selective or, indeed, that the relevant consumer market here was one comprising “purchasers of Weetabix who are British expats”.
[86] Next, Sanitarium contended that any assertion by the defendants that their purchasers were “discerning consumers” in the terms outlined in Geneva Marketing is simply wrong. According to Sanitarium, the Geneva decision related to a very unusual
case which turned entirely on its own facts, facts which differed markedly from those here.
[87] Lastly, in relation to issues of confusing similarity and the nature of the market here, Sanitarium said that in addition to the matters outlined above, the defendants’ heavy reliance on the assumption that they supply their Weetabix product principally, if not exclusively, to British expats (who know that it is different to Weet-Bix), is said to be only one limited aspect. Sanitarium submitted that this aspect, in all the circumstances here, must not be blown out of all proportion in relation to the range of factors this Court is required to take into account. The notion of a market, it is accepted, may assist in the enquiry as to whether a substantial number of persons are likely to be confused by the two marks, but it should not be overstated.
[88] As to what evidence is before the Court here as to actual deception or confusion relating to LBB’s use of the Weetabix sign, apart from what were essentially only opinions or submissions, first, from Ms Wilson generally and, secondly, from Professor Brodie, the only other evidence of possible confusion were details of the significant consumer survey commissioned by Sanitarium and carried out by Phoenix Research, a market research company.
[89] As to this aspect, Mr David Fougere, an experienced market researcher and director of Phoenix Research, gave expert evidence regarding the survey, as did Professor Brodie, a professor in the Department of Marketing at the University of Auckland. The survey was completed online by a little over 500 consumers in New Zealand who were selected on the basis that they purchase breakfast cereal and they had lived in the United Kingdom at some point for at least six months over the last 10 year period. Those surveyed were shown the Weetabix sign and then asked who puts it out. Thirty five per cent of participants responded by naming Sanitarium.
[90] The defendants criticised the fact that the survey was online, that it included people who had only at some point lived in the UK, as opposed to those who grew up there, and that only the Weetabix sign and not the overall packaging was used. Mr Fougere gave evidence that the use of the Weetabix sign alone was due to the fact that the focus in this case is on the sign actually used. He noted that further context in
a survey of this type is unusual and that it would produce unreliable results. He also considered that an online survey, which is an industry preferred method, was necessary to gain a sufficient sample size. He stated that any assertion that only individuals who grew up in the UK would visit the defendants’ stores was speculative.
[91] It is true that the Courts have said on a number of occasions recently that survey evidence may often be of only limited assistance. The Court in Intercity v Nakedbus did accept survey evidence (interestingly completed also by Mr Fougere’s company) in what was another trade mark infringement case, but in doing so the Court observed:31
...However, survey evidence on the issue of confusion can often be unsatisfactory. I note that in Mainland Products the survey was described as “unhelpful” and was not relied on, and in Anheuser-Busch Inc v Budweiser Budvar National Corp the survey was rejected as being of little assistance in assessing likely confusion.
[Footnotes omitted]
[92] In a similar vein, the Court acknowledged in The Coca-Cola Company v Frucor Soft Frinks Ltd that “survey evidence has fallen out of favour in recent years”.32 In that case, the Court did not consider the plaintiff's expert evidence regarding the likelihood of confusion or deception convincing, or indeed much more than a personal opinion.
[93] In J W Spears & Sons Ltd, Mattel Incident v Zynga Inc, the UK Court of Appeal dealt with an infringement case.33 Referring to Mattel’s reliance on the contents of two elaborate consumer surveys, the Court said:34
[L]ike so many such surveys, its usefulness was destroyed in cross- examination... the difficulty that such surveys so often encounter is that they do not adequately reproduce real world conditions, and the questions are often posed in such a way as to put things in the consumer’s mind which would not naturally occur to them.
31 Intercity v Nakedbus, above n 2, at [194].
32 The Coca-Cola Company v Frucor Soft Frinks Ltd, above n 24, at [203].
33 J W Spears & Sons Ltd v Zynga Inc (No 2) [2015] EWCA CIV 290.
34 At [162].
[94] But, even with these observations in mind, I must acknowledge that this survey evidence was really the only moderately independent evidence before me. I do accept that the survey was carried out in an abstracted situation, which is very different from the actual situation faced by consumers, in a specialty shop or otherwise, picking out a cereal to purchase. But, in my view, it still has value here and should be given some weight.
Is deception or confusion likely to occur?
[95] As the House of Lords has affirmed, it is obvious that a person who is familiar with both words at issue in the case is not likely to be deceived or confused when perceiving either.35 It could be said therefore that, in the context of a British speciality store if the clientele are principally people who are generally aware of the British brand Weetabix and that it differs from the New Zealand brand Weet-Bix, deception or confusion between the products is not likely to occur.
[96] But here the Court has before it the survey evidence which tends to indicate, with 35 per cent of the selected participants mistaking Weetabix as a Sanitarium brand (presumably Weet-Bix), that the risk of confusion or deception is significant. An online survey, of course, differs from a situation where someone is browsing in a speciality British products store or on its website. A specific market context such as that, may help prime customers to expect to see a British product rather than a New Zealand one. Nevertheless, a significant group of people likely to have some knowledge of British brands was confused by the Weetabix mark.
[97] I cannot ignore the results of this survey and their support from Mr Fougere and Professor Brodie, which provide independent evidence of actual deception or confusion here.
[98] Therefore, I find, but only by a reasonably fine margin, that the proportion of people who would fall into the group of being confused or deceived here does reach
35 Berlei (UK) Ltd v Bali Brassiere Co Inc, above n 13, at 817.
the standard of a “substantial number of persons” or "any considerable section of the public".36
[99] I conclude that, in terms of s 89 of the Act, the defendants have infringed Sanitarium’s registered trade mark Weet-Bix by using in trade the sign Weetabix on products the parties accept are similar, and that use is likely to deceive or confuse.
[100] And, I have found too that in terms of the boarder protection provisions of the Act, the Weetabix sign is likely to deceive or confuse, under 135. The repercussions and interactions of these findings will be addressed later in this judgment when I discuss remedies.
5. Customs detention – did Customs act lawfully?
[101] On 3 August 2012, the Chief Executive accepted a notice from Sanitarium issued pursuant to s 137 of the Act in relation to its Weet-Bix trade mark. Section 137 provides:
137 Notice may be given to chief executive
A person who is the owner of a registered trade mark may give a notice in writing to the chief executive that—
(a) claims that he or she is the owner of a trade mark that is registered in respect of the goods specified in the notice; and
(b) requests the chief executive to detain any goods, on or in physical relation to which an infringing sign is used, that are, or at any time come into, the control of the Customs.
[102] On or about 27 June 2017, the detained goods arrived into New Zealand and were detained by Customs.
36 New Zealand Breweries v Heineken Bier Browerij Maatschappij NV, above n 10, at 117 and 133.
[103] On 14 July 2017, Mr Shaun Martin, a senior customs officer, made a determination under s 146 of the Act that the detained goods appeared to be goods to which Sanitarium’s s 137 notice related.
[104] That same day, Mr Martin sent a notice of determination to Sanitarium and to the defendant. The notice advised that the determination would cease at the close of business on Friday 4 August 2017.
[105] On 4 August 2017, the present proceeding was filed in the High Court by Sanitarium. Once the service copies of the proceeding were obtained from the Court, the proceedings were served on Customs on Monday 7 August 2017, along with a request for an extension of time to serve the proceedings. Customs granted the extension.
[106] The defendants have a number of issues with how Customs has acted. They challenge the lawfulness of the Chief Executive’s decisions in: determining to detain the goods; refusing to release the goods; and granting a retroactive time extension to Sanitarium. I will deal with each of these in turn.
(a) In determining that the goods should be detained?
[107] The defendants submitted that the Chief Executive erred in determining that the detained goods fell under s 146. They argued that the Weetabix sign is not identical to Weet-Bix and the detained goods do not infringe the Weet-Bix trade mark, having regard to the manner in which they will be sold. The Chief Executive has responded, arguing that her determination under s 146 was made lawfully in this case.
[108] Section 146 requires the Chief Executive to determine whether imported goods “appear” to be goods “on or in physical relation to which an infringing sign [as defined in s 135] is used”. If proceedings are subsequently commenced, it is for the Court to determine whether those goods infringe the relevant trade mark at law. The Chief Executive’s determination requires a lower threshold to be met.
[109] Once a determination is made under s 146, notice of this determination must be issued by the Chief Executive and served on the trade mark owner and any other
person with an interest in the goods, such as the importer. Having made a s 146 determination, the Chief Executive must detain those goods until one of a number of specified events occurs.
[110] In order to lawfully detain the goods, the Chief Executive must determine that they appear to bear an infringing sign, as defined in s 135. Therefore, it is not necessary for the signs to be identical. Rather, under s 135(c), the most apposite definition in this case, the Chief Executive needed to determine that it appeared that:
(a) the goods are goods on which a sign similar to the trade mark is used;
(b) the goods are identical or similar to the goods in respect of which the trade mark is registered; and
(c) that the use of the sign would be likely to deceive or confuse.
[111] The Chief Executive, submitted before me that the use of the word “appear” in s 146 indicates that the test for the Chief Executive’s determination requires a lower threshold than that for any determination by the Court. I agree. It is sufficient for the goods to arguably meet the definition.
[112] I find, therefore, that in this case the required level has been reached. The gatekeeper role of the Chief Executive under s 146 is to be a filter for goods that seem to infringe a trade mark. A determination under s 146 then allows the parties and, if necessary the Courts, to make a final determination on whether the goods actually infringe the trade mark.
[113] The Chief Executive did not err in determining that the detained goods should be detained.
(b) In declining to release detained goods?
[114] Section 149(1) requires the Chief Executive to detain goods detained under s 146 until:
- (a) the chief executive is served with an order made in proceedings under section 152 that the notice be discharged; or
(b) the chief executive is served with an order made in proceedings under section 152 that the goods be released; or
(c) any proceedings under section 153 in respect of those goods (including any appeal) are determined by a decision that the goods are not goods on or in physical relation to which an infringing sign is used that have been imported other than for private and domestic use; or
(d) any proceedings under section 153 in respect of those goods, including any appeal, are abandoned; or
(e) 10 working days have elapsed since notice was served under section 147 and the chief executive has not been served with notice of proceedings brought under section 153 by a person other than the importer or consignee.
[115] On the occurrence of any of these events, s 149(2) requires the goods to be released to the person entitled to them. There is a power for the Chief Executive to extend the period under (e) to 20 working days if she considers it appropriate in all the circumstances.37
[116] The Chief Executive provided Sanitarium with the required notice of determination on 14 July 2017, noting it would cease to have effect at the close of business on Friday, 4 August 2017. However, the Chief Executive did not receive Sanitarium’s notice of proceedings under s 153 until Monday, 7 August (one working day later). On that date, the Chief Executive made a decision to grant a retroactive extension of time from 4 August 2017 to 7 August 2017.
[117] Ms Wilson communicated by email and telephone with Customs on both 4 August 2017 and 7 August 2017. In anticipation of the stated deadline and after it had expired, Ms Wilson, on behalf of LBB, requested the release of the detained goods. She said, however, that Customs wrongly refused to release the goods either on 4 or 7 August 2017. Ms Wilson’s evidence is that she told Mr Carmichael, the Chief Executive’s delegate, in the afternoon of Friday 4 August 2017 that she wanted to pick up the goods over the weekend, given that the deadline was expiring on 4 August 2017.
37 Trade Marks Act 2002, s 149(3).
[118] The intransigence of Customs, Ms Wilson alleged, preceded Sanitarium and its advisors subsequently serving proceedings on Customs by email. This did not occur until 2:43 p.m. on 7 August 2017. In doing so, however, Sanitarium asserted it complied with the requirements of s 153 of the Act but that it also sought a retroactive extension of time for this late service in the alternative.
[119] The defendants responded that the Chief Executive was obliged to release the goods once the 10 working day period referred to in s 149(1)(e) had expired. Further, they said as a related point that the failure to serve the proceedings in time was not simply “unfortunate”, as the evidence from the customs officer Mr Carmichael has suggested, but meant that Customs no longer had lawful custody of the goods and under s 150 of the Act was obliged to release them.
[120] LBB and Ms Wilson contended that this was not simply a technical breach based on the defendants adopting a “counsel of perfection” as suggested by Sanitarium. Nor, do they say was the refusal to release based on oversight. They argued that Customs’ powers must be interpreted strictly and that Customs was obliged to release the detained goods immediately once the deadline expired.
[121] The defendants contend that Mr Carmichael acknowledged as much on the afternoon of 4 August 2017:
(a) In an email from Mr Carmichael to Carlow Wan at Sanitarium at 2:24 p.m.:
Today is the final date by which action would need to be taken by the Rights Holder, otherwise the goods will be released.
(b) And in an email from Mr Carmichael to his Customs colleague Sean Fujimoto:
Determination was made, gives them 10 days to start legal action. Ten days is up today.
[122] In the absence of an extension of time under s 149(3), it is clear that the 10 working day period of s 149(1)(e) elapsed at the end of 4 August 2017. Therefore, Customs was obligated to release the detained goods to the defendants on Monday 7
August. The failure to do so was a breach of the Act. However, if the time for serving was properly extended by the Chief Executive on 7 August 2017, this retroactive extension would effectively remedy the error made by the Chief Executive in retaining possession of the goods. This issue therefore rests on whether the extension can be made retroactively.
(c) In deciding to extend time for Sanitarium to serve proceedings with retroactive effect?
[123] The defendants maintained that, in the absence of a provision allowing it, an extension of time under s 149 cannot be made retroactively. They submitted that by this point Customs no longer had lawful control over the goods, so an extension could not be granted. The defendants also said that they should have been consulted about the possibility of an extension which did not happen.
[124] Both Sanitarium and the Chief Executive responded, suggesting that the Act permits retroactive extension because flexibility is crucial to ensure that the purposes of the Act are achieved.
[125] Sanitarium did file proceedings within the timeframe specified in the s 147 notice. They were not able to serve the proceedings on the Chief Executive, however, until one working day later. Mr Carmichael had known at the time that Sanitarium was interested in the matter and was likely to file proceedings. He gave evidence that he attempted to find out whether they had in fact been filed on the Friday but was unable to. He accordingly made no decision until the next Monday.
[126] Mr Carmichael said in his evidence that he would usually advise the goods to be released on the Monday, being the next working day after the elapsed period. However, when he was informed on the Monday morning that proceedings had been filed on the preceding Friday but not served, he felt he needed to take advice. On the basis of that advice, he decided to extend the time frame under s 149(3). His evidence was that he considered, in the circumstances, it was appropriate to grant an extension, particularly because the trade mark dispute had been put before the Court.
[127] The Chief Executive submitted that s 149(3) recognises that some flexibility with respect to the short timeline in s 149(1)(e) is needed for border protection measures to operate effectively. She submitted that a restrictive interpretation of her power to extend time would frustrate the effective operation of that subpart of the Act.
[128] The Chief Executive also argued that it does not materially affect an importer whether the extension is made before or after the ten working day period elapses. She also contended that there is no duty to consult with an importer as part of her decision- making. The Act gives no expectation of such consultation, and the extension of the time period by up to a further ten working days does not, in a case such as this, have a serious impact on the importer. Regardless, Mr Carmichael already had Ms Wilson’s views before him, that the goods should be released immediately. He stated in evidence that he had regard to this when making his decision.
[129] The Chief Executive referenced a number of cases which dealt with whether time could be extended retroactively under other provisions. However, I do not find them particularly helpful here. Rather, this issue must be determined by a close analysis of the particular statutory scheme.
[130] I consider that the decision to extend the time under s 149(3) was lawfully done. The decision was retroactive only in the most limited sense, as it was made one working day following the ten working day period. It is on that day that the defendants would otherwise have been entitled to collect their goods.
[131] The Act does not prohibit the Chief Executive from making her decision after the initial ten day period has elapsed. I accept that, had the detained goods already been released to the defendants, an extension would not have been possible. However, in my view an appropriate interpretation of the Act is one that ensures the Chief Executive is able to carry out her border protection duties effectively.
[132] It would have been preferable for Mr Carmichael, knowing that Sanitarium was likely to file proceedings but not having received service of them, to have granted the extension on the Friday. Nonetheless, I agree that it was appropriate for the very
short extension that was approved to be given, particularly in light of the fact that proceedings had already been commenced in this Court.
[133] I consider it of particular importance that it does not materially affect the defendants whether the extension was made on the Friday or the Monday. The defendants did not need to be consulted about an extension under the Act and, in any case, I agree that Mr Carmichael was sufficiently aware of their views.
[134] I find that the decision to extend the period for serving proceedings under s 149(3) was lawfully done. A proper interpretation of the Act supports the finding that the Chief Executive is able to do so retroactively, as long as the goods are still within Custom’s possession, and the overall 20 working day period specified in s 149(3) of the Act has not expired.
[135] The Chief Executive has not erred in any of the ways alleged by the defendants. The decision to detain the goods was properly made. I have found that the Chief Executive’s decision to extend the time for service was effective despite being made on 7 August 2017. Therefore, none of the circumstances in s 149(1) were made out and the Chief Executive was not required to release the goods to the defendants.
6. Fair Trading Act
[136] Sanitarium’s statement of claim and its reply to the defendant’s affirmative defences appear to rely particularly on ss 9 and 10 of the Fair Trading Act 1986 (FTA). Section 13 is also possibly engaged here. These provisions relevantly state:
No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
No person shall, in trade, engage in conduct that is liable to mislead the public as to the nature, manufacturing process, characteristics, suitability for a purpose, or quantity of goods.
...
13 False or misleading representations
No person shall, in trade, in connection with the supply or possible supply of goods or services or with the promotion by any means of the supply or use of goods or services,—
(a) make a false or misleading representation that goods are of a particular kind, standard, quality, grade, quantity, composition, style, or model, or have had a particular history or particular previous use; or
...
(e) make a false or misleading representation that goods or services have any sponsorship, approval, endorsement, performance characteristics, accessories, uses, or benefits; or
(f) make a false or misleading representation that a person has any sponsorship, approval, endorsement, or affiliation; or
...
[137] Sanitarium’s FTA complaint is that the Weetabix boxes bear the registered trade mark symbol, ®, next to the word Weetabix and this wrongly represents that the Weetabix sign is a registered trademark in New Zealand. Sanitarium said this is false and misleading in terms of the FTA and it sought an injunction to restrain the use of this.
[138] The FTA, particularly s 9, is designed to protect the consumer and the public from being misled or deceived.38 No element of intention is necessary to establish a breach. Rather, there will be a breach where the conduct results in a substantial section of the public being misled or deceived, or where there is a likelihood of people being misled or deceived.39
[139] Wylie J referred to this analysis of misleading and deceptive conduct in The Coca-Cola Company v Frucor Soft Drinks Ltd in the following way:40
Whether the conduct complained of is misleading or deceptive has to be determined objectively, in the context of the particular circumstances, and the circumstances of the person said to be affected. Conduct is likely to mislead or deceive if it might well happen. There must be a real risk of this occurring,
38 Neumegen v Neumegen and Co [1998] 3 NZLR 310 (CA) at 316-317.
39 Bonz Group (Pty) Ltd v Cooke [1996] NZCA 301; (1996) 7 TCLR 206 (CA) at 212-213.
and not a mere possibility. Where the conduct is directed to a wide section of the community, the matter has to be assessed having regard to all who come within the section, including “the astute and the gullible, the intelligent and the not so intelligent, the well educated as well as the poorly educated, men and women of various ages pursuing a variety of vocations”. Consumers may be prone to some looseness of thought; they may not undertake careful analysis and they may be influenced by the overall impression conveyed. However, the Court can assume that they will not be lacking in perception, and that they can be expected to bring a reasonable degree of common sense to their purchase.
[140] The defendants submitted that there is no evidence that the general public know as a technical matter of law that ® denotes a registered trade mark whereas TM denotes a mark that may or may not be registered. They noted that the symbol cannot even be noticed when the products are purchased online. The defendants further submit that the ® symbol would not be perceived as a claim that the trade mark is registered in New Zealand, as it is clear from the context of their sale in a British specialty food shop. They say any trade marks would likely be assumed to be British.
[141] On the evidence before me I do not find that the defendants’ conduct in trade has been, or is capable of being, misleading. Nor have the defendants made a false or misleading representation. Sanitarium did not lead evidence to support these claims. I am not convinced that the public, when purchasing cereal, pays much attention to symbols on the box such as ® and TM. And, given the context the goods are being sold in here, I also consider that the consumers in question would be unlikely to place reliance on the fact that any trade mark registration may or may not refer to a New Zealand registration.
[142] There is no evidence of any person being misled or deceived by the ® symbol in the time that the products have been available in the market place. Nor is there a reasonable likelihood of anyone being misled. Many different goods are imported from overseas bearing such a mark. I do not consider that Parliament would ever intend that all of these products be found to be deceiving or confusing people under the FTA.
[143] I also note that s 186 of the Act establishes an offence relating to false representation of a trade mark. The Weetabix boxes do not fall foul of that section
because the mark is registered as a trade mark in the United Kingdom. Section 186(4) of the Act provides some assistance here when it says:
(4) Subsection (3) does not apply if the relevant reference relates to the registration of a trade mark under the law in force in a country outside New Zealand.
All this supports a conclusion that it is not appropriate to find the use of the ® symbol misleading in such a context.
[144] Accordingly, I find there has been no breach of either s 9, s 10 or s 13 of the FTA.
7. Remedies
[145] Sanitarium sought the following relief here:
(a) A declaration that the detained goods bear an infringing sign and an order directing that they be forfeited or destroyed;
(b) A permanent injunction restraining the defendants from importing or using in the course of trade any cereal or similar goods under the Weetabix trade mark or a trade mark so nearly resembling Weetabix as to cause deception or confusion; and
(c) A permanent injunction restraining the defendants from representing that Weetabix is a registered trade mark in New Zealand.
[146] In considering any such remedies, Sanitarium acknowledged that the Court is also to have regard to other suitable remedies which might be available.
[147] The proposed injunctions are sought under s 106 of the Act. They apply where the Court has found a registered trade mark has been infringed under s 89. As I note at [99] above, I have made this infringement finding but only by a fine margin. I acknowledge the defendants’ contention that there was a reasonable argument here that their use of Weetabix may not have met the definition of an infringing sign under s 89, but only because of the specific context in which LBB sells its Weetabix products
and the resulting discernment of its customers. I did not make that finding however, although, had I made it, s 106 would not apply in this case. Nonetheless, the Court would have had an inherent power to order an injunction where that is necessary to do justice.
[148] Section 154(1) requires that if I decide, as I have, that any goods that are the subject of a determination by the Chief Executive made under section 146 are goods on which an infringing sign is used, and they have been imported other than for private and domestic use, I must make an order that the goods be either forfeited to the Crown, destroyed, or otherwise dealt with as I see fit. In deciding what order to make, I must consider:41
(a) whether other remedies available in proceedings for infringement of a registered trade mark would be adequate to compensate, and to protect the interests of, the claimant; and
(b) the need to ensure that no goods on or in physical relation to which an infringing sign is used are disposed of in a manner that would adversely affect the claimant.
[149] The appropriate remedy in this dispute is a delicate one given the findings I have made. I have concluded that, first, Weetabix products are infringing goods here under the border protection provision s 135 and that, secondly, but only by a reasonably fine margin, they are also infringing goods under the general infringement provision s 89. Notwithstanding this, I have also acknowledged that an argument exists here (though I do not favour it) that the defendants’ sales of Weetabix products do not meet the infringement definition in s 89 because of LBB’s particular limited use of those goods. These conclusions might have meant that I found that LBB was entitled to sell the Weetabix products in its speciality stores, but the application of the border protection provisions meant that it was effectively unable to import those goods for that sale. Such an outcome would reflect the different regimes established under the Act. It might have seemed to result in what from a practical point of view was an
41 Trade Marks Act 2002, s 154(2).
entirely inconsistent situation, but a situation caused by the strict wording of the legislation.
[150] With all this in mind, I consider here that the best solution for all parties in this case is for a conditional injunction to be granted now. Under this, the defendants would be able to import and sell, but only at retail and in their specialist UK products stores and website and not otherwise, Weetabix and Weetabix products, provided they first over-sticker the word “Weetabix” on the product boxes. This over-stickering would need to occur either before importation, or after importation and before sale (with Sanitarium’s agreement here, which it has given, communicated to Customs to allow importation). This is a pragmatic solution and in line with one originally proposed by Sanitarium. I consider it appropriate in this case and sufficient to protect the Weet-Bix trade mark. It is also in line with what LBB has accepted and done for some time with its over-stickering and renaming of the British Marmite product.
[151] Nonetheless, given my finding that the detained goods bear an infringing mark under s 135, I am of the view that it is appropriate to direct that the detained goods be destroyed. Given that they are past their best before date, the defendants would have no use for them even if they were to be over-stickered.
8. Orders
[152] The claim under Sanitarium’s first cause of action fails and is dismissed.
[153] On Sanitarium’s second cause of action:
(a) I make an order under s 153(1) of the Trade Marks Act 2002, that the 108 cartons of Weetabix (the detained goods) imported by the defendants and held by Customs are goods on which an infringing sign is used (being a sign similar to the Weet-Bix trade mark which is likely to deceive or confuse) and that these goods have been imported other than for private or domestic use; and
(b) I further order, under s 154(1)(b) of the Trade Marks Act 2002, that the 108 cartons of Weetabix (the detained goods) be destroyed.
[154] The claim under Sanitarium’s third cause of action seeking an injunction against the alleged breach by the defendants of the Fair Trading Act 1986 with respect to the registered trade mark symbol ® located in proximity to the “Weetabix” sign fails and is dismissed.
[155] The claim under Sanitarium’s fourth cause of action, succeeds and a permanent injunction is now granted restraining the defendants and their agents, servants, employees, associates, and others acting in concert with them directly or indirectly from using in the course of trade, including importing, selling or offering for sale, goods bearing the name “Weetabix”, PROVIDED THAT this injunction shall not relate to or prevent the defendants from importing and/or selling at retail Weetabix or Weetabix products if such sales occur at their specialist UK products stores or pursuant to their specialist UK products website and not otherwise AND PROVIDED
FURTHER that any such product importation or sale will first have the word “Weetabix” over-stickered on the product boxes either before importation or after importation and before sale.
[156] As to the defendants’ affirmative defence and counter claim first, that the detained goods ought to have been released and secondly, that they are entitled to orders both that those goods be released by Customs now and that damages be awarded to the defendants for loss suffered due to the detention of those goods, these fail and they are dismissed.
9. Costs
[157] I reserve the issue of costs. It might be said here that to a point all parties (including Customs) have obtained some positive outcome here, and, in all the circumstances prevailing in this case, it may be appropriate for costs to lie where they fall. I direct counsel to discuss the matter between themselves. If they are unable to agree, they may file (sequentially) memoranda on costs (a maximum of six pages each). These are to be referred to me and, in the absence of either party indicating
they want to be heard on the issue, I will decide the question of costs based on the memoranda filed and the material then before the Court.
...................................................
Gendall J
Solicitors:
Shieff Angland, Auckland
CreateIP Law Limited, Auckland
Barristers:
Clive Elliott QC, Barrister, Auckland Kevin Glover, Barrister, Auckland
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URL: http://www.nzlii.org/nz/cases/NZHC/2018/2501.html