Facts

On 16 January 2006, Chettleburgh applied for registration of the trade mark SEDUCE in class 25 for (inter alia) “women’s fashion clothing”.  The mark was registered in July 2006.  In October 2008, Seduce Group sought a declaration of invalidity in respect of this registration. 

At the first instance hearing, the grounds on which invalidity was alleged included a claim under s32(1) that Seduce Group was the true proprietor of SEDUCE in New Zealand in respect of women’s fashion clothing.  Seduce Group produced evidence that it had made sales into New Zealand of women’s clothing under the SEDUCE mark between June 2001 – June 2003 and from March 2006 (the latter date being after Chettleburgh’s application).  Seduce Group asserted that at no time had it intended to cease trading in New Zealand under the trade mark.

The Assistant Commissioner held that Seduce Group had not succeeded in other grounds on which invalidity was alleged, namely s17(1)(a) and (b), s17(2) (bad faith) and s25(1)(c) (well-known mark).

The Assistant Commissioner dismissed Chettleburgh’s claim that the proprietorship ground had not been expressly pleaded so that he had had no proper notice.  She held that Seduce Group was the true proprietor and granted the declaration of invalidity. 

Chettleburgh appealed. On appeal the key issues were:

(a)  Was Seduce Group an “aggrieved person”?;

(b)  In determining an application for a declaration of invalidity, could the Court or Commissioner rely on the proprietorship ground under s32(1)?;

(c)  Was Seduce Group the owner of the mark SEDUCE as at 16 January 2006?;

(d)  Was there a discretion under s73 to decline to make a declaration of invalidity notwithstanding findings in favour of the applicant?;

(e)  Had there been adequate notice of the proprietorship ground to Chettleburgh?

Held, allowing the appeal on a limited basis:

Proprietorship ground

(1)  S73 gave power to the Commissioner or the Court to declare a registration invalid “to the extent that the trade mark was not registrable under Part 2 [of the Act] at the deemed date of its registration”. Although s32, governing proprietorship, was not in Part 2, s13(2) of the Act provided as one of the requirements that:

“(a) An application for the registration of the trade mark must be made in accordance with this Act.”

This meant that, if an application for registration was not made in accordance with the Act, the trade mark would not be registrable. [11]

(2)  S32 prescribed how an application was to be made. The claim to ownership of the mark was not a purely formal requirement but rather must have some substance.  The words in s32(1) “claiming to be the owner” had been added by an amendment in 2005.  S32 could be raised as a ground of opposition to registration under s47.  The section could not have a different meaning depending on whether it was being considered in an opposition proceeding under s47 or an invalidity proceeding under s73. [32], [33], [36], [38]

(3)  The claim to ownership must be one that is capable of being established as valid. The Commissioner or the Court is required to make an assessment of the merit of the claim to ownership.  The mere fact that the bad faith ground under s17(2) provided an indirect means of considering proprietorship did not displace this requirement.  Even if there was a bona fide claim to ownership, it could nevertheless be challenged on the grounds that another person was the true owner. [40], [42] and [43]

(4)  The law which applied under the 1953 Act in respect of the expression “claims to be the proprietor” continued to apply under the 2002 Act. [49]

(5)  The Court was satisfied that Seduce Group had met the onus of establishing that it was the owner of the mark SEDUCE when Chettleburgh applied for it in January 2006.  A small amount of use in New Zealand would be sufficient.

7UP Co v OT Limited (1947) 75 CLR 203 at 211; Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Limited [1978] 2 NZLR 50 at 53, 57, 68-9 applied.

(6)  As to whether Seduce Group had a continuing intention to use the mark after June 2003 or whether the mark had been abandoned, the evidence of Seduce Group was presently unchallenged. [56]

Aggrieved person

(7)  The Commissioner was justified in finding that Seduce Group was an aggrieved person and in inferring that registration of the trade mark in Chettleburgh’s name was an obstacle to Seduce Group in its own application. [3] and [75]

Inadequate notice of proprietorship ground

(8)  It was a mandatory requirement in Regulation 107 for the applicant for a declaration of invalidity to state the grounds on which the application was made.  That requirement might be met by adequate notice to a respondent by means other than the formal application.  The need for a clear pleading was given emphasis by the legal uncertainty (in this case at first instance) as to whether s32 was a ground of invalidity. [64], [66] and [67]

(9)  The case should be remitted back to the Assistant Commissioner for a new hearing on ownership.  Chettleburg had not had adequate notice of Seduce Group’s intention to claim that it was the true owner.  S27 New Zealand Bill of Rights Act 1990 contains a right to the observance of the principles of natural justice. [64] and [70]

Discretion under s73

(10)  Because the matter was to be remitted to the Commissioner, it was inappropriate for the Court to express any concluded view as to this point.  However the Court’s tentative view was that s73(1) did require the Commissioner or Court to consider, as a matter of discretion, whether a declaration of invalidity should be made, notwithstanding the relevant finding in favour of the s73 application.  The grounds for invalidity would range from those in respect of which there would be no real discretion to decline a declaration, to those where the applicant may have established technical grounds for a declaration, but where the underlying merit favoured the respondent who held the current registration. [62] and [63]