Cure Kids v National SIDS Council of Australia Ltd
High Court of New Zealand
16 September 2014, 24 and 25 November 2014, 19 December 2014
 NZHC 3366
Trade Marks – RED NOSE DAY, NOSE, NOSE DAY, and THE RED NOSE DAY - application for revocation on ground of no genuine use – whether mark, as registered, used – whether preparatory steps could amount to genuine use – whether special circumstances existed explaining non-use – existence of a discretion to not order revocation when no special circumstances existed – discretion exercised to prevent revocation of THE RED NOSE DAY – Trade Marks Act 2002 (NZ) ss 66(1), 7(1), 7(3)
Trade mark – deceptive use – preparatory steps cannot deceive public because not directed at public – Trade Marks Act 2002 (NZ) s 66(1)(e)
The appellant (Cure Kids) was the operator of the Red Nose Day charity event in New Zealand. It began Red Nose Day in New Zealand in 1989 to fundraise for research into Sudden Infant Death Syndrome. In 1996, a forensic scientist, Dr Jim Sprott, embarked on a public crusade against Red Nose Day. In response, the appellant decided not to hold a 1997 Red Nose Day appeal. No Red Nose Day event took place again until 2010.
The appellant owned the mark NOSE for class 36, NOSE DAY for class 28, THE RED NOSE DAY for class 41, and RED NOSE DAY with a device for classes 28 and 36.
The respondent (National SIDs Council of Australia Ltd) was the organiser of the Red Nose Day appeal in Australia. It was an Australian public company. Its directors were representatives of state and territory-based charitable associations which provided education and bereavement services to families and others in relation to Sudden Infant Death Syndrome, still birth and the sudden unexpected death of children. Members of the respondent carried out fundraising activities using the mark RED NOSE DAY, under licence from the respondent. There existed in New Zealand SIDs and Kids NZ, which while not formally associated with the respondent, obtained assistance from the respondent. SIDs and Kids NZ owned registrations for the mark RED NOSE DAY in New Zealand for class 9, class 16, class 20, class 24, class 25, class 30, class 35, class 41, class 44 and class 45.
In 2010, the appellant decided to reinstate Red Nose Day in New Zealand. Red Nose Day has occurred annually since. On 29 June 2010, the respondent filed an application under s 66(1) Trade Marks Act 2002 seeking to revoke the appellant’s trade marks. The respondent also applied for revocation on the ground that in consequence of the appellant’s use of the Red Nose Day marks, the marks were likely to deceive or confuse the public. The appellant denied non-use, and alternatively pleaded that there were special circumstances which had prevented it from using its marks.
The Assistant Commissioner ordered that the appellant’s five trade mark registrations be revoked. The Assistant Commissioner held that the Red Nose Day marks had not been genuinely used in the course of trade in New Zealand by the appellant during the relevant period; the Dr Sprott controversy comprised “special circumstances” but it had not prevented the appellant from using the marks during the relevant period; and there were no exceptional circumstances to justify exercising the discretion not to revoke any of the registrations.
The appellant appealed and the respondent cross-appealed.
The appellant’s grounds of appeal were that (a) there was genuine use of the Red Nose Day trade marks during the relevant period; (b) the mark registered for class 41 was used during the relevant period; (c) use of the RED NOSE DAY device marks was use of the RED NOSE DAY word mark under s 7(1)(a) Trade Marks Act; (d) the Assistant Commissioner was wrong to find that non-use during the relevant period was not due to special circumstances; and (e) the Assistant Commissioner was wrong to refuse to exercise her discretion not to revoke the marks.
The respondent cross-appealed on the grounds that the Assistant Commissioner adopted an overly lenient approach in assessing the appellant’s evidence; the Assistant Commissioner erred in finding that the Dr Sprott controversy constituted special circumstances making use of the marks impracticable between 1996 and 2001; and the Assistant Commissioner downplayed the management of the equivalent situation in Australia.
Held, allowing the appeal in part and dismissing the cross-appeal:
A Genuine use
Was the mark, as registered, used?
(i) RED NOSE DAY device mark
The difference between the mark as registered and the mark as used was that the mark as registered contained both the word mark and the device . The device on its own did not convey a particular day when people wear red plastic noses . The combination of the device mark and the word mark conveyed a fun day involving the wearing of a red bulbous nose . The device informed the word mark . The words RED NOSE DAY were not wide enough to include both the word and the device without substantially affecting the identity of the registered mark . The two marks were entirely different . Use of the words RED NOSE DAY without the device was not use of the registered trade mark containing the device .
Elle Trade Marks  FSR 529 referred to; Bud & Budweiser Budbrau Trade Marks  RPC 25 applied; Colorado Group Ltd v Strandbags Group Pty Ltd (2007) 164 FCR 506 applied; E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 86 IPR 224 applied.
(ii) NOSE DAY and NOSE marks
The submission that s 7(3) could not apply where the goods and services were different was rejected. However, s 7(3) was intended to re-enact s 39(2) of the Trade Marks Act 1953, which was aimed at protection of a series registration. NOSE and NOSE DAY were substantially different from each other and from the registered mark THE RED NOSE DAY. They were not part of a series as defined by the Trade Marks Act 2002. Section 7(3) was not intended to apply in a situation where the marks were entirely different, not part of a series, and were merely smaller components of the mark that had been used .
For the purposes of s 7(1)(a), the addition of RED to NOSE DAY altered the distinctive character of the mark as used . RED NOSE DAY was a more refined concept than NOSE DAY. Use of RED NOSE DAY was not use of the mark NOSE DAY. Use of RED NOSE DAY was also not use of NOSE, as the addition of the words “RED” and “DAY” fundamentally altered the distinctive character of the registered mark .
Was the mark genuinely used in the course of trade in New Zealand?
The steps the appellant had taken to use the mark RED NOSE DAY during the relevant period were preparatory in nature. It searched for sponsors for the 2010 Red Nose Day and met with potential sponsors. Some formal discussions about sponsorship occurred.
Preparatory steps could amount to genuine use of a trade mark notwithstanding that there was no actual end use in the consumer market , . Purely internal use could not be genuine use. The appellant’s actions went beyond mere internal use and were significantly more than token . Use of the mark in presentations to external organisations was consistent with the function of a trade mark. The use was not undertaken solely to preserve the rights conferred by the mark. It was also relevant that the preliminary steps were later succeeded by more detailed steps which ultimately led to the successful relaunch of Red Nose Day .
Buying Systems Australia Pty Ltd v Studio SRL (1995) 30 IPR 517 (FCA) referred to; Ansul BV v Ajax Brandbeveiliging BV (C-40/01)  RPC 40 (ECJ) referred to; La Mer Technology Inc v Laboratoires Goemar SA  EWCA Civ 978 referred to and endorsed.
Was the use of the trade mark in relation to the goods or services in respect of which it was registered?
The use of the mark during the relevant period was not in respect of the promotion of education and training of persons for fundraising for charities and other causes . The trade mark was not genuinely used in the relevant period in the course of trade in relation to the goods or services in respect of which it was registered .
B Special circumstances causing non-use
The circumstances of the Dr Sprott controversy were abnormal and peculiar, arising from external events and directly impacting on the appellant’s ability to use its marks . However, these circumstances did not prevent use of the trade marks during the period May 2007 – May 2010 , .
Woolly Bull Enterprises Pty Ltd v Reynolds (2001) 107 FCR 166 applied.
C Exercise of discretion to not revoke the marks
Is there a discretion in s 66(1)?
The submission that the frequency of use of the word “must” elsewhere in the Trade Marks Act 2002 indicated that if the discretion in the 1953 Act was to be removed then Parliament would have used clear words to signal a change was accepted . The change of onus in the Trade Marks Act 2002 so that the owner of the mark had to demonstrate that the mark had been used in the relevant period had no bearing on whether the Act conferred a discretion . The use of the word “may” in s 66(1) did confer a discretion . This was consistent with the New Zealand approach to date .
Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 15 NSWLR 158; Wing Joo Long Ginseng Hong (Singapore) Co Pte Ltd v Qinghai Xinyuan Foreign Trade Co Ltd  SGCA 9,  FSR 13 (CASing); Premier Brands UK Ltd v Typhoon Europe Ltd  FSR 767 (Ch); Friskies Ltd v Heinz-Wattie Ltd  2 NZLR 663 (HC); Manhaas Industries (2000) Ltd v Fresha Export LtD (2012) 96 IPR 560 referred to.
The factors to take into account in the exercise of the discretion under s 66(1) were :
Did the owner intend to abandon the mark?
Were the steps taken to revive the mark bona fide and unrelated to the application for revocation?
During the period of dormancy did the owner, nonetheless, have a residual reputation in the mark?
Has there been a credible and effective use of the mark after the relevant period ended?
Will anyone be deceived or confused or likely to be deceived or confused if the mark remains on the register?
Will the continued ownership of the trade mark block another’s legitimate desire to use the trade mark?
Here, the appellant had not abandoned the mark . The appellant’s continued applications for renewal of its registrations conveyed a clear intention to keep the marks alive . The steps taken by the appellant to revive Red Nose Day were undertaken in good faith, before the application for revocation was filed and were unrelated to that application . The public had strong residual awareness of the mark and brand generally, despite the hiatus in use . There had been credible and effective use of the RED NOSE DAY mark after the relevant period ended . No one would be deceived or confused or likely to be deceived or confused if the mark remained on the register . The continued ownership of the mark by the appellant would not block another’s legitimate desire to use the trade mark. The respondent had not built a significant ongoing reputation in New Zealand during the period of non-use of the mark by the appellant .
It was not necessary for the discretion to be exercised only in exceptional circumstances . It was appropriate to exercise the discretion in favour of the appellant, in relation to the mark THE RED NOSE DAY. An order was made that that mark not be revoked .
D Deceptive use (s 66(1)(e))
The preparatory steps taken by the appellant cannot have deceived or confused the public, because the use of the mark at that time involved third parties and not the public .
If preparatory steps could be considered to be use in relation to the public, then the use was made of the mark to educate its fundraising sponsors about the charitable purpose of Red Nose Day . There was no evidence that the public at large was deceived by the relaunch of Red Nose Day .
The respondent had not demonstrated that sufficient numbers of people within the relevant market were aware of the Australian Red Nose Day event/marks. The threshold test for establishing confusion and/or deception was not reached .
The test in Pioneer was not satisfied by a single reported instance of confusion.
Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Ltd  2 NZLR 50 (CA) referred to.