BRANDS LIMITED & OTHERS v BED BATH ‘N’ TABLE LIMITED & ANOTHER
In the High Court of New Zealand
25 July - 12 August 2022, 7 July 2023
 NZHC 1766
Registered trade mark - Invalidity application – grounds brought under ss 25(1)(b) and (c), 17(1)(a) and (b) Trade Marks Act 2002 (NZ) – descriptive features – effect of disclaimer in plaintiff’s registered trade mark – s25(1)(b) ground of invalidity not established – s25(1)(c) ground added nothing – s 17(1)(a) ground not established – use of defendants’ mark not likely to lead to substantial consumer confusion.
Honest concurrent use exception – Pirie factors endorsed – exception established in relation to s 25(1)(b) ground – as a matter of law honest concurrent use not available as an exception to s 17 grounds - Trade Marks Act 2002 (NZ) s 26.
Trade Mark infringement – not established – not likely to deceive or cause confusion – upholding of validity of defendants’ registered trade mark meant s 93 Trade Marks Act 2002 (NZ) precluded infringement.
Own name defence not available to companies – Trade Marks Act 2002 (NZ) s95.
Passing off – Fair Trading Act 1986 (NZ) ss 9 and 13 - no misrepresentation – defence of honest concurrent use made out in respect of passing off – not available under FTA but relevant to relief under FTA – no damage to goodwill.
This was an application by the plaintiffs seeking a declaration of invalidity in respect of the defendants’ registered trade mark Bed Bath ‘N’ Table, together with a claim for trade mark infringement, passing off and breaches of the Fair Trading Act 1986. The defendant parties pleaded the defence of honest concurrent use to the invalidity proceeding and a number of positive defences to the infringement, passing off and FTA claims.
For over 15 years the plaintiff New Zealand companies, trading as Bed Bath & Beyond (collectively ‘BBB’) had been competing with the defendant Australian-owned companies, trading as Bed Bath ‘N’ Table (collectively ‘BBT’) in the New Zealand manchester and homewares market.
(BBB was not connected with the North American company Bed Bath & Beyond US (‘BBBUS’) which had been operating in the United States and elsewhere for over 50 years.)
Relevant Trade Marks:
BBB had been registered owner in New Zealand of the trade mark Bed Bath & Beyond (the BBB 1994 trade mark) since 1994. The registered trade mark contained a disclaimer, i.e. “registration of this mark shall give no exclusive right to the exclusive use of the words ‘Bed’ and ‘Bath’”. BBB had another identical registered trade mark with a deemed registration date of 9 June 2014 (the BBB 2014 trade mark) in classes 20, 21, 24 and 25.
BBT had been the registered owner of Bed Bath ‘N’ Table trade mark in Australia since 1976 and in New Zealand since 4 June 2014 in classes 20, 24 and 35 (the BBT 2014 trade mark).
The parties were no longer willing to tolerate each other’s existence in the New Zealand market.
Action by BBB:
BBB sought invalidation of BBT’s 2014 registration on four separate grounds. If successful, BBB sought a finding that, from the outset, BBT’s use of its mark infringed BBB’s registered trade marks. Additionally, BBB asserted that BBT’s use of its trade mark constituted passing off and breaches of the Fair Trading Act 1986 (FTA).
Action by BBT:
As well as refuting these claims and advancing a number of positive defences, BBT counterclaimed that (in the event the Court concluded that BBB and BBT were confusingly similar) the BBB registered trade marks were invalid.
During 1996 and 1997, an existing company, Linen for Less, owned by interests associated with BBB began to rebrand 11 stores under the Bed Bath & Beyond trade mark. This rebrand was complete by around 2005 .
By 2006, BBT had already established 40 stores across Australia and was looking to expand to New Zealand. BBB approached BBT with an offer to sell the BBB business which by then operated 22 stores in New Zealand -. No sale eventuated and BBT owned its first New Zealand store in March 2007.
As at 2014 :
(a) There were 29 BBT stores in Australia and nine in New Zealand.
(b) BBT launched its online store in Australia in November 2013 but at this point did not deliver to New Zealand.
(c) BBB had 51 stores open in New Zealand and a website for online sales.
Steps taken in Australia by BBT to successfully oppose BBBUS and to warn off BBB
In 2015, the US owners of the BBBUS trade mark applied to register BBB in Australia. That application was opposed by BBT. After a defended opposition hearing, the registration of the BBBUS trade mark was refused in Australia on the grounds of BBT’s significant reputation in Australia and that use of the BBB US trade mark in Australia would be likely to deceive or cause confusion .
BBB subsequently applied to register BBB in Australia. BBT’s lawyers wrote to BBB in October 2017 asserting that any use in Australia would constitute trade mark infringement. In 2018, BBT opposed this application. BBT’s managing director gave evidence of concerns as to consumer confusion and actual examples [37 – 41].
BBB commences invalidity action in New Zealand
In December 2018, BBB filed a without notice application in the High Court seeking the invalidity of BBT’s 2014 registered trade mark in New Zealand. In June 2020, BBB added claims for trade mark infringement, passing off and breaches of the FTA against BBT .
At the time of the hearing, BBB was operating over 50 physical stores across New Zealand (including Auckland, Wellington, Christchurch and Hamilton) and an online store. There were standard retail stores and larger home stores. BBT was operating 15 stores across New Zealand, including Wellington, Christchurch and Hamilton.
In its invalidity claim, BBB relied on ss 17(1)(a), 17(1)(b) (absolute grounds) and ss 25(1)(b) and (c) (relative grounds).
BBT pleaded the honest concurrent use exception or defence (s 26 Trade Marks Act 2002 (‘TMA 2002’). It also relied on ss 93 and 95 as precluding a claim for trademark infringement.
BBB asserted that the honest concurrent use exception was, as a matter of law, unavailable where a trade mark is unregistrable on s 17 grounds .
Held, dismissing BBB’s invalidity application and its actions for trade mark infringement, passing off and breaches of the Fair Trading Act 1986.
Which of the 2014 registrations had priority?
- BBT was not able to rely on s 36 TMA 2002 (the Paris system) to claim priority for its 4 June 2014 registration. Any such priority would need to have been applied for within six months of BBT’s first application in Australia in 1995 (which had not occurred) .
- BBT was able to rely on priority for its 4 June 2014 registration via s 199A TMA 2002 which gave effect to the Madrid Protocol in New Zealand. It was a generally accepted presumption of statutory interpretation that Parliament did not intend primary legislation to be suspended, amended or repealed by statutory regulation – except where Parliament enacted an express empowering clause (known as a ‘Henry VIII clause’) . The better view was that s 199A was a Henry VIII clause . To interpret s 199A as not authorising application of the Madrid Protocol would fly in the face of its clear purpose and would be inimical to New Zealand’s international standing and obligations .
Zaoui v Attorney-General  1 NZLR 577 (SC) at  referred to.
Admissibility of survey evidence of confusion or deception
- BBB’s survey evidence was found not to be admissible. For reasons relating to the potential for priming of respondents, question order effects, question wording effects, the absence of controls and the survey population, the survey was found not admissible. The Court did not consider the survey results were capable of constituting facts that were sufficiently reliable to form a proper basis of evidence of the kind sought to be given by BBB’s experts .
Section 25(1)(b) Ground
Did BBT’s trade mark relate to goods and services the same as or similar to those covered by BBB’s 1994 trade mark?
- Because of the Court’s conclusion about the relevant priority dates, it was only BBB’s 1994 trade mark that was relevant for the purposes of analysis .
- Services of the kind specified in both BBT’s 2014 trade mark and BBB’s 1994 trade mark would be provided in the same or similar ways, the respective users of the services were likely to be the same or similar and the services could therefore reasonably be seen as competitive .
British Sugar Plc v James Robertson & Sons Limited  RPC 281, 296-7 referred to.
- BBT’s 2014 trade mark registration covered a number of categories of goods that might be expected to be the subject of retailing or wholesaling services specified in BBB’s registration . A number of specified goods in the BBT 2014 registration could fairly be said to be similar to the services in BBB’s 1994 registration . The remainder of goods and services covered by BBT’s 2014 trade mark registration for services relating to furniture and kitchenware were not similar . This meant that :
(a) A more limited class of goods and services provided the context for discussion of confusing similarity.
(b) The invalidity of the BBT trade mark (and any infringement) would not extend to the trade mark insofar as it related to any dissimilar goods and services.
- The issue of confusing similarity involved asking whether a substantial number of persons in the market for the relevant goods and services were likely to be confused by the use of BBT’s mark. This required an assessment of the fair and notional use of BBT’s mark with the fair and notional use of BBB’s mark . A global approach to similarity and likely confusion should be adopted with the analysis structured under the headings (a) simple similarity; (b) the disclaimer and the price of non-distinctiveness; (c) evidence about confusion .
- As to similarity, the inescapable conclusion was that the BBT 2014 mark was similar to the BBB 1994 trade mark .
- In relation to the disclaimer, the words “Bed” and “Bath” were highly suggestive (“elliptically descriptive”) of the character of the retail services of the kind BBB provided and the relative products they sold . “Bed and “Bath” fell close to the descriptive end of the spectrum.
- The very fact of descriptiveness mitigated or lessened the relevant confusion that might be expected to arise from the fair and notional use of the same words by another trader .
JW Spear & Sons Limited v Zynga Limited  EWCA Civ 290;  1 All ER 226; Office Cleaning Services Limited v Westminster Window and General Cleaners (1946] 1 All ER 320; (1946) 63 RPC 43; Reed Executive Plc v Reed Business Information Limited  EWCA Civ 159;  RPC 40 referred to.
- The use in a trade mark of descriptive/non-distinctive words lessened the risk of vitiating or fatal confusion – notwithstanding the higher likelihood of similarity with other marks – because :
(a) Some confusion must be expected and tolerated as the price for using such words; and
(b) The use of such words diminished the capacity of the relevant marks to signify the relevant origin of the goods or services to which they related; and so
(c) Reasonable consumers confronted with such marks would recognise the descriptive allusions for what they were and understand that they were less likely to signal a connection with the particular proprietor of the mark or the proprietor’s goods and services;
(d) Small differences – such as the “&” and the “N” or “Beyond” and “Table” here – may well suffice to distinguish the marks.
- As to evidence of actual confusion, some of the evidence could probably be taken as evincing some actual confusion of the relevant kind . But the Court was far from clear that such confusion was as widespread as BBB claimed .
- BBB had not established the ground of validity in s 25(1)(b) . Notional fair use of both marks in the relevant market was likely to result and probably had resulted in some confusion among some customers as to the origins of the retail services being provided and goods supplied by BBB and BBT. However, the considerable similarity between the marks was largely a function of their incorporation of non-distinctive or descriptive words. So, some of the confusion arose as the price to be paid for BBB’s choice of the words. Most reasonable customers were unlikely to see the similarities as signifying a connection between their respective proprietors and would pay attention to small differences between the marks: “&” and “N” and “Beyond” and “Table” . When viewed in the context of all customer interaction, the examples of actual consumer confusion were relatively few .
Section 25(1)(c) Ground
- S 25(1)(c) was likely to be relied on where:
(a) The well-known trade mark (trade mark D) was unregistered but the brand was very well known; and/or
(b) The goods and services offered by party A were dissimilar to those offered by trade mark owner D.
Neither of these circumstances existed in this case and this ground added nothing useful or material to s 25(1)(b) ground. BBT’s mark was similar to BBB’s mark but the Court did not consider that it would reasonably be taken as indicating a connection between BBB’s goods and services and those of BBT .
Honest Concurrent Use: s26 TMA 2002
- The five principles (the Pirie factors) that have traditionally guided the assessment of honest concurrent use continue to provide a useful structure for assessing honest concurrent use under the TMA 2002 [185-6].
In the matter of an Application by Alex Pirie & Son Limited (1933) 50 RPC 147 at 159 (HL) at 159-160 applied.
The extent of pre-existing use
- The relevant period of honest concurrent use was logically focused primarily on the time before June 2014. Use since that date might be relevant to the exercise of the Court’s discretion.
VB Distributors Limited v Matsushita Electric Industrial Co Ltd (1999) 53 IPR 466 (HC) applied.
- The Court was prepared to accept that BBT had a limited but not significant reputation in New Zealand before its physical arrival in New Zealand as a result of use of its trade mark in Australia. That was not “use” for the purpose of honest concurrent use but had some relevance to the question of honesty .
Dominion Rent a Car Limited v Budget Rent a Car Systems (1970) Limited  2 NZLR 395 referred to.
Degree of confusion likely to ensue
- As to the degree of confusion likely to ensure, there was always going to be some likelihood of confusion arising from use of the BBT mark .
Honesty of use
- As to honesty of use, BBT had developed and used its BBT trade mark in Australia since 1976 and by 2000, when it entered the New Zealand market, BBT was undoubtedly an established brand with its own significant reputation in Australia . There was no question that BBT had honestly developed and used its BBT mark for a period of over 30 years before bringing it to New Zealand. The choice of using its own name, which already had a degree of recognition in New Zealand, was commercially obvious . BBT had no intention of deceiving people. The risk of confusion was something that BBT itself faced. The risk of deception and confusion was one that seemed to have been borne equally and oppositely by both BBB and BBT .
- Although BBT could fairly be taken to have corporate knowledge of BBB’s 1994 trade mark and to have read correspondence referring to BBB having 22 stores in New Zealand , that knowledge was not dispositive of [dis]honesty. The pre-June 2014 use by BBT of its trade mark was honest in the relevant and necessary sense  because:
(a) BBT had its own brand in Australia and it made sense to use it in New Zealand. Any suggestion that the decision to use BBT involved some dishonest intention to deceive or confuse New Zealand consumers made no sense .
(b) The negotiations between BBB and BBT in 2006-7 meant that BBB was well-aware in advance of BBT’s intended entry into New Zealand. Yet there was no demur either then or in the next seven years .
(c) BBB was operating more at the “budget” or “discount” end of the relevant market. Consumer confusion was likely to benefit the retailer of the lower quality goods and do harm to the retailer of higher quality goods .
(d) The Court proceeded on the basis that BBT knew of the disclaimer of “Bed” and “Bath” in BBB’s 1994 trade mark registration. This formed a basis on which BBT might reasonably have believed that it did not infringe the BBB marks .
(e) By June 2014, the date of BBT’s international application, BBT had opened nine stores in New Zealand, including some in close proximity to a BBB store .
(f) The Court regarded statements by BBT’s executive in Australia as to similarities between BBB US and BBT and its concerns as to confusion as being no more than a neutral factor. The scenario between BBB US and BBT in Australia was of a different order to that which existed in New Zealand in 2014 when BBT obtained registration of its trade mark in this country. BBT had been actively competing with BBB in the New Zealand market for seven years without objection.
Proof of confusion
- BBB had established a degree of consumer confusion, although the Court declined to regard it as “substantial” .
- This factor favoured the exercise of discretion in favour of BBT because, by the time the proceedings were initiated, BBT had 15 outlets spread throughout New Zealand and the website generating extensive online sales . The cost of rebranding and advertising to consumers would be significant . The public inconvenience of rebranding would be substantial .
- BBT had established honest concurrent use of its own trade mark as at 2014 and would have been able to successfully defend its application for registration .
Section 17(1)(a) Ground
Reputation of BBB as at June 2014
- The Court was satisfied that the BBB mark had more than sufficient reputation in terms of s 17(1)(a) as at the relevant date .
Deception or confusion
- It was necessary to consider (a) the market and the circumstances of trade in which BBT’s mark was to be regarded as notionally and fairly in use, and (b) the likelihood of deception or confusion arising from such use, judged by reference to BBB’s existing reputation .
Relevant market and circumstances of trade
- The market in which the fair notional use was to be assessed (the 2014 market involving the retailing of manchester and other products for bedroom and bathroom) was one in which BBB had an established reputation. But BBT also had an established reputation in this market. The relevant market was one in which many consumers had already been exposed to BBT’s mark .
Likelihood of deception or confusion by a substantial number of persons
- BBB’s use of descriptive terms in its trade mark necessarily diminished the reputation it could otherwise claim in those words .
- The assessment of likely deception or confusion must take into account BBT’s existing reputation in the same market at that date. BBT’s existing use was not causing deception or confusion, or at least not at a level that was of any apparent concern to BBB . Having regard to BBB’s undoubted reputation in the existing market in 2014, the Court was unable to conclude that normal and fair use of BBT’s trade mark after that date was likely to lead to substantial consumer confusion . Therefore, the claim based on s 17(1)(a) failed .
Section 17(1)(b) Ground (Contrary to Law)
- This pleading added little to BBB’s claims – particularly in light of the Court’s later findings that there had been neither passing off nor breach of the Fair Trading Act 1986 .
Is Honest Concurrent Use Available in Respect of the Section 17 Ground
- A common law defence of honest concurrent use to the s 17 grounds did not survive the passing of the Trade Marks Act 2002 and its statutory scheme [251-3], , . Obiter observations had been made by the Court of Appeal that the honest concurrent use defence did not apply to s 17 cases .
NV Sumatra Tobacco Trading Company v New Zealand Milk Brands Limited  NZCA 24, (2010) 86 IPR 206 at ; Pharmazen Limited v Anagenix IP Limited  NZCA 306, (2020) 157 IPR 198 referred to.
Trade Mark Infringement: Section 89(1)(c) TMA 2002
- The claim to trade mark infringement failed:
(a) The BBT sign was similar to the BBB mark;
(b) BBT was using its BBT sign in relation to goods and services that were similar to the services specified in the BBB 1994 trade mark registration;
(c) BBT’s use was not likely to deceive or cause confusion to the requisite level or amongst the requisite number of people.
Section 93 TMA 2002 precluded infringement action
- The Court’s earlier finding that BBT’s 2014 trade mark was not invalid meant that s 93 TMA 2002 precluded an infringement action under s 89(1)(c) .
Own Name defence section 95 TMA 2002 not available to companies
- The wording of s 91 TMA 2002 meant that companies were excluded from the s 95 own name defence [301-302].
- If this legal finding was wrong, the defence would have been made out as BBT’s use of its name was in accordance with honest practices .
Passing Off and Breaches of Section 9 FTA 1986
- It was unclear whether BBB was seeking to establish goodwill before 2014 . There was no difficulty in establishing that BBB could establish goodwill as at that date .
- The Court did not understand BBB to be claiming that the descriptive words used in its name had acquired a secondary meaning .
- The respective logos were not especially similar and, if anything, detracted from any suggestion of a relationship between the two groups’ operations .
- There was no misrepresentation. BBT had done no more than represent that its own mark and get-up were associated with its own business .
Habib Bank Limited v Habib Bank AG Zurich  1 WLR 1265, 1275 referred to.
- (Obiter) because BBT was honestly using its own mark to do no more than signify a connection with its own business, the Court would have found that it had made out the defence of honest concurrent use in respect of passing off [343-4]. Although honest concurrent use is not a defence to breach of the Fair Trading Act, this finding militated against any grant of relief under the Fair Trading Act .
- As there was no misrepresentation, there was no damage to BBB’s goodwill .