In this recent decision, the New Zealand of Appeal found against trade mark infringement by a relatively narrow margin. It also rejected challenges to registration based on earlier rights in the appellant’s mark SYLK.

The appellant, Geneva Marketing, held a trade mark registration for SYLK in class 5 for “pharmaceutical preparations, namely personal lubricants in this class”. The registration had effect from 29 October 1999. Geneva Marketing used this mark in connection with the marketing and sale of a personal lubricant. 

For many years the first respondent, Johnson & Johnson, had manufactured and sold personal lubricants internationally under its K-Y mark. As a result of a rebranding, Johnson & Johnson registered K-Y SENSUAL SILK as a trade mark in class 3 (“massage oils”) and class 5 (“personal lubricants”). The registration had effect from 11 October 2006. Johnson & Johnson had been using its mark - with emphasis on “SILK” in New Zealand since early 2007.

Geneva Marketing issued proceedings in which it alleged infringement of its SYLK registered trade mark. It also sought a declaration of invalidity and a revocation order in respect of the K-Y SENSUAL SILK trade mark registration. At first instance, Harrison J dismissed the claims. Geneva Marketing appealed.

The key facts noted by the Court included the following:

1. Geneva Marketing’s SYLK product was made of natural materials and was targeted at older women although it was also purchased by sex workers. It sold predominantly in pharmacies but also in health stores and by mail order. The Johnson & Johnson product targeted women aged 18-49 and was also sold in pharmacies (as well as supermarkets).
    
2. Prior to the registration of its K-Y SENSUAL SILK trade mark, Johnson & Johnson was selling personal lubricants in New Zealand under the marks K-Y WARMING LIQUID and K-Y ULTRA GEL. Its personal lubricants had an 80% market share in the seven years preceding 2006.
    
3. K-Y SENSUAL SILK and SYLK were direct competitors.
    
4. Consumers of personal lubricants were mainly repeat purchasers and given the nature the product were likely to be discriminating. Purchasers from supermarkets would self-select whereas in pharmacies they may seek assistance.
    
5. While there were some common features - notably similar sized bottles and prominence given to SYLK and SILK - in other respects the get-up of the two products was not particularly similar.
    
6. Market share evidence indicated that the Johnson & Johnson 2007 rebranding exercise did not affect sales of the plaintiff’s SYLK product. 

Geneva Marketing asserted infringement under s89(1)(c) namely that the Johnson & Johnson trade mark was similar to SYLK and was “likely to deceive or confuse”. In return, Johnson & Johnson relied on s93 of the Trade Marks Act which provides that a registered trade mark is not infringed by use of another registered trade mark in relation to the goods and services for which that trade mark is registered. Anticipating this defence, Geneva Marketing sought a declaration that the Johnson & Johnson trade mark was invalid and, in the alternative, that the s93 defence was not open as the infringing sign “SILK” was not being used in its full registered form. 

Geneva Marketing also sought revocation of K-Y SENSUAL SILK on the rather rare ground in s66(1)(e) i.e. that in consequence of the trade mark’s use by the owner, the trade mark “is likely to deceive or confuse the public, for instance as to the nature, quality and geographical origin of those goods or services”.

Confusion or Deception

The Court of Appeal held that the same underlying test of deception or confusion was involved in the infringement action (“would be likely to deceive or confuse”: s89(1)(c)), the grounds of the declaration of invalidity (“would be likely to deceive or cause confusion”: s17(1)(a)) and the ground of revocation relied on (“is likely to deceive or confuse the public”: s66(1)(e)).

However in each case the standpoint from which the test was applied and its subject matter differed depending on the context. For the purposes of invalidity and revocation, the subject matter was the use of the infringed trade mark K-Y SENSUAL SILK. For infringement, the focus must be on the infringed sign i.e. SILK. The Court also noted that for invalidity, the test applied as at the date of application (of the trade mark) whereas for infringement and revocation, the test was applied to circumstances as they developed. The Court noted that SYLK and SILK were visually very similar and aurally identical. The use of SENSUAL SILK must be assessed in light of the reality that the K-Y SENSUAL SILK mark was also used.

Although the issue was closely balanced, the Court agreed with the trial judge and dismissed the appeal. Because this was ultimately a matter of impression, the Court noted that its reasons were “necessarily evaluative and conclusory”. Given the function of the products, the rather different target markets and the discerning nature of the purchasers, the Court saw “the relevant differences as distinctly more important than the similarities, particularly given that K-Y is a very distinctive and well-known brand”. The Court felt that anyone who buys K-Y SENSUAL SILK thinking it was SYLK could be expected to realise the mistake reasonably quickly and vice versa. Since most customers were repeat purchasers, the overall proportion of purchases which were affected by conclusion would necessarily be a small percentage of all purchases. The differences in the visual appearance of the marks used were sufficiently significant to mitigate against the likelihood of substantial confusion due to imperfect customer recollection.

Accordingly the Court found against the appellant on all causes of action.