ENERGY BEVERAGES LLC v FRUCOR SUNTORY NZ LIMITED [2020] NZHC 3296

 

High Court of New Zealand

Dobson J

16 and 17 November 2020, 14 December 2020

 

Trade Mark – invalidity – scope of s 75 statutory bar – definition of trade mark – capability for graphic representation – colour marks –  permissible terms for a colour mark –  use of predominant in mark description – umbra and penumbra of the trade mark – strict requirements for the definition of a mark in European jurisprudence unnecessary in New Zealand – Trade Marks Act 2002 ss 3, 5, 17, 18, 73, 75, 89

Trade Mark – revocation – non-use – scanning error – inconsistency between image displayed on register and colour code in written description – interpretation of trade mark register – written description dictates the interpretation – Trade Marks Act 2002 s 66

Facts:

In this appeal from two decisions of the Assistant Commissioner of Trade Marks the appellant, Energy Beverages LLC (“EBL”), sought to revoke and deem invalid a registered trade mark owned by the respondent Frucor Suntory NZ Ltd (“Frucor”) which it used in the marketing of its V energy drink. [1]-[3].

Frucor’s trade mark registration, as displayed on the electronic register of trade marks, depicted a square sample of an emerald green colour, accompanied by the following written explanation: [6]

“the mark consists of the colour green (Pantone 376C), as shown in the representation attached to the application, applied as the predominant colour to the goods, their packaging or labels. Section 18(2) of the Trade Marks Act 2002 applies”.

EBL’s invalidity appeal focused primarily on this written explanation of the trade mark, whereas its revocation appeal took issue with the depiction of the emerald green colour on the register. [39] [40] [76].

The written explanation of Frucor’s mark had been approved by IPONZ when it was lodged in August 2008, and reflected terms proposed by the chief examiner. The extent of Frucor’s proven use of Pantone 376C on energy drinks prior to the date of application was sufficient for the colour mark to have acquired a distinctive character enabling the mark to be registered. At the time of EBL’s challenge to the mark’s validity, Frucor’s mark had been registered for more than seven years. [4] [7].  

Presumably due to the limited capabilities of the scanner used, when the physical colour swatch attached to Frucor’s trade mark application had been scanned by IPONZ on to the electronic database of trade marks, a discrepancy emerged between the colour as represented on the register (in the emerald colour), and the lime shade of green known as Pantone 376C actually used by Frucor on its energy drink products. Although the original swatch Frucor had physically filed was Pantone 376C, the result of the scan and upload process by IPONZ meant that the image on the register was not.  Following digitisation of the register IPONZ had destroyed the original application, including the swatch of the correct colour. [8] [92].  Frucor was able to produce a duplicate of the original application held by its trade mark attorneys.

In its first appeal EBL sought a declaration of invalidity on the basis that the use of the word ‘predominant’ in the written description meant that what appeared on the register was not a ‘trade mark’ (as that term is defined in s 5), because it was too imprecise to constitute “a sign….capable of graphic representation”. [39] [46] [54]-[59].

EBL sought leave to make this invalidity argument via s 73 using s 18(1)(a) (which states that the Commissioner must not register a sign that is not a trade mark). [17].

Leave was necessary because before the Assistant Commissioner EBL had made its submissions under s 17(1)(b) (use contrary to law) rather than s 18(1)(a). Frucor resisted the grant of leave for reasons including prejudice. [16] [18].

Although s 17 is exempt from the statutory time bar in s 75 (which operates to prevent validity challenges to trade marks which have been registered for longer than seven years), s 18(1)(a) is not. [14].

In order to overcome the statutory time bar in s 75 which would be an obstacle if leave were granted for its s 18(1)(a) argument, EBL submitted that it was clear from its drafting that s 75 was only intended to apply where what was registered was a ‘trade mark’ within the s 5 definition. It argued that marks that did not meet the s 5 definition ought therefore to be challengeable under ss 73 and 18(1)(a) indefinitely. [19].

In support of its argument that Frucor’s mark was incapable of graphic representation, EBL sought to rely on a line of authority from the United Kingdom, and Europe. [46].

In particular EBL relied on the decision of the Court of Appeal of England and Wales in Société des Produits Nestlé SA v Cadbury UK Ltd [2013] EWCA Civ 1174, [2014] 1 All ER 1079. In that case the use of the word ‘predominant’ in a similar context  was said to make the proposed trade mark “too subjective, too imprecise, and inadequately clear and intelligible, to be capable of registration.” [48].

EBL suggested that the same approach should be taken in New Zealand, and that Frucor’s mark therefore fell short of the s 5 definition of trade mark referenced by s 18(1)(a). [54].

EBL’s position was that Frucor’s mark could not be represented graphically because its description admitted of numerous alternative representations accommodating the part of the packaging not presented in the predominant colour. [54].

In its second appeal, EBL sought to revoke Frucor’s trade mark for non-use on the basis that, although Frucor was using Pantone 376C (being the written description of the mark) it was not making use of the emerald green colour depicted on the register, as the ‘image’ of the registered trade mark. [76] [77].

Held (dismissing both appeals):

Invalidity

Regarding the scope of the statutory time bar in s 75:

    (i)        The legislative history supported an interpretation that confined the exceptions to s 75 to just those s 17 grounds explicitly cited in it.  The legislature should be taken to have intended consistency of approach between ss 73 and 75 of the Act. Both should be interpreted as treating the status of registration as what, first, can be challenged under s 73 but, second, what is protected by s 75 after a period of seven years. An explicit legislative purpose was to simplify procedures, and it would instead add complexity if the concept of registration was to be used distinctly in ss 73 and 75. [28] [29] [33].

Bohemia Crystal Pty Ltd v Crystalite Bohemia SRO [2015] NZIPOTM 25 considered.

  (ii)        The provisions of s 75, read in the context of the purpose of the Act, therefore supported an approach where a mark on the register obtained status as a ‘trade mark’ because the effect of registration was to convey that it had. [31].

 (iii)        For seven years from the date of deemed registration, a registered trade mark’s status was able to be challenged on the ground that the Commissioner erred in treating the sign as capable of being represented graphically (ss 5, 18(1)(a)). However the trade mark would thereafter be secure from challenge on grounds that contended an error by the Commissioner. A challenge advanced under s 18(1)(a) of the Act could not be brought after the expiration of seven years from the deemed date of registration of the trade mark. [31] - [33]. There was therefore no basis on which to grant leave for EBL to advance a challenge to the validity of the trade mark under s 18(1)(a) of the Act. [33].

Regarding the requirements for graphic representation in s 5:

 (iv)        Given EBL’s invalidity challenge was time-barred, its s 5 arguments were moot, but should be considered in the interests of completeness. [36].

  (v)        The approach of the English and European authorities in the line of cases EBL cited did not contemplate acceptance of a mark that was described in less than entirely exhaustive detail, in part at least because that would enable non-material details to be present in more than one form. That reasoning would require every detail of the mark as sought being identical in every form, and all being aspects of what renders its use distinctive. [67]. The strict requirements for the definition of a mark in the English and European jurisprudence were neither necessary nor appropriate in the context of the New Zealand Act. [66].

Société des Produits Nestlé SA v Cadbury UK Ltd [2013] EWCA Civ 1174, [2014] 1 All ER 1079; Glaxo Wellcome UK Ltd (t/a Allen & Hamburys) v Sandoz Ltd [2017] EWCA Civ 335; Frucor Beverages Ltd v The Coca-Cola Company [2018] FCA 993 distinguished.

 (vi)        Frucor’s mark description was capable of providing a sufficiently certain definition for a colour trade mark. [66].

(vii)        Even if jurisdiction existed for a challenge to the trade mark under s 18(1)(a) of the Act, the Assistant Commissioner was correct that grounds for it could not be made out. [75].

Revocation

(viii)        Arguably, Frucor ought not to be held to account for an error made by IPONZ when digitising the registered trade mark. [87]

 (ix)        Observers of the register would likely be misled into thinking that Frucor’s trade mark was for the predominant use of the emerald colour that was incorrectly represented on the electronic register, and misled into thinking that that colour was Pantone 376C. That was an unsatisfactory situation. [89].

  (x)        Equally unsatisfactory was Frucor’s predicament. Having made out the justification for a colour mark by virtue of the distinctive character of its use of it, the register represented a colour mark which was materially different from the colour Frucor was using on its goods and the extent of the use of which justified the registration of the mark in the first place. [89]

 (xi)        A weighing of the relative unfairness to Frucor and EBL’s opposing interests was not determinative in resolving which of them ought to bear the adverse consequences of an error in the maintenance of the register. [89]

(xii)        The nature of the statutory regime was, however, a factor in the approach adopted to the interpretation of the scope of the protection afforded by the trade mark. The wording in the trade mark’s description ought to dictate the interpretation of what was subject to trade mark protection. The need for precision in a written description of the colour was reflected in IPONZ guidelines for such applications. Other things being equal, that suggested a primacy should be given to the code of colour and the written description of that colour nominated in the application. Competitors wishing to be certain of the particular shade of green might be expected to check the Pantone coding. [90] – [92].

Levi Strauss & Co v Kimbyr Investments Ltd [1994] 1 NZLR 332 followed.

(xiii)        The transposition of other shades of colours that were distinguishable from the Pantone colours cited in the related application appeared to be a systemic problem within IPONZ. The preferable solution to such a problem was to correct the register in those cases rather than have errors by IPONZ deprive the registered owners of their property rights in the trade marks that registration entitled them to assume existed. [94] [95].

(xiv)        The Assistant Commissioner was correct to find that non-use of the mark could not be made out. [96].