PHARMAZEN LIMITED v ANAGENIX IP LIMITED
New Zealand Court of Appeal
Brown, Dobson and Nation JJ
29 April 2020, 23 July 2020
 NZCA 306
Intellectual property – trade marks – similar trade marks – registrability – use is likely to deceive or confuse – ss 17(1)(a) and 25(1)(b) – importing the prerequisite of actual use into s25(1)(b) ground improper -Trade Marks Act 2002 (NZ).
This was an appeal from the decision of the High Court (upholding an earlier decision of the Assistant Commissioner of Trade Marks). The decision refused registration of the trade mark ActiPhen under s 25(1)(b) of the Trade Marks Act 2002 (the Act) on the ground that it was similar to the existing registration ACTAZIN for similar goods and use of ActiPhen wound be likely to deceive or confuse.
The respondent, Anagenix IP Limited (“Anagenix”) is a collective of New Zealand nutraceuticals companies with an interest in natural products relating to digestive health, including kiwifruit powder . The trade mark ACTAZIN, coined by Anagenix in 2007, was registered in New Zealand with an effective date of registration of 27 October 2009 in respect of the following goods :
Class 5: kiwifruit extract powder as a dietetic substance or ingredient adapted for human health and medical use including dietary, health and nutritional supplements, medical food and functional foods and beverages.
Class 29: kiwifruit extract powder as a dried fruit ingredient in the manufacture of food and chilled dairy products, including drinking yoghurts.
ACTAZIN is the trade name for the first product developed by Anagenix, a kiwifruit powder concentrate produced from New Zealand green kiwifruit. The first syllable, ACT, was said to originate from the botanical name for kiwifruit, Actinidia . Since 2009, Anagenix had sold this product primarily to businesses overseas. The product was sold in New Zealand for a number of months commencing in February 2012 but in mid-2012 Anagenix ceased selling ACTAZIN products in New Zealand because of the potential infringement of a recently granted patent .
The appellant, Pharmazen Limited (“Pharmazen”) develops, manufactures and markets specialised nutritional ingredients for human and animal dietary supplement products. Its product branded ActiPhen comprised 100 per cent kiwifruit powder consisting of both flesh and skin and contains no artificial additives . On 4 May 2016 Pharmazen applied to register the ActiPhen trade mark in respect of goods in class 5 .
It was accepted by the Court that these goods were similar to the class 5 goods of the ACTAZIN registration .
Pharmazen explained that the trade mark is a combination of “Acti” designating the protease enzyme unique to kiwifruit, “Actinidin” and the botanical name Actinidia deliciosa; and “Phen” designating the phenolic compounds of ActiPhen .
Anagenix opposed the application under ss 25(1)(b), 17(1)(a) and 17(1)(b) of the Trade Marks Act 2002 (“the Act”) .
The Assistant Commissioner’s decision
The Assistant Commissioner considered that the two marks were visually similar and that there was a substantial degree of similarity in their likely natural pronunciation. On the evidence available, the Assistant Commissioner concluded that a significant number of persons in the relevant market looking at the ActiPhen mark in the absence of the ACTAZIN mark would be likely to be caused to wonder whether the ActiPhen mark was the same as, or related to, the ACTAZIN mark .
The grounds of opposition under ss 17(1)(a) and 17(1)(b) failed on the basis that there was insufficient evidence of awareness of the ACTAZIN mark in the relevant New Zealand market .
The High Court judgment
On appeal to the High Court, Pharmazen contended that the Assistant Commissioner’s decision on s 25(1)(b) was wrong and inconsistent with the conclusion that registration of ActiPhen would not contravene s 17(1)(a) . In particular, Pharmazen submitted that as Anagenix’s ACTAZIN product was not in the New Zealand market, there was no possibility that ActiPhen could be confused with Anagenix’s mark and therefore the s 25(1)(b) test could not be satisfied .
On the issue of similarity between the marks ACTAZIN and ActiPhen, Cull J concluded that there were both visual and aural similarities between the marks. The Judge considered that placement of “ACT” at the beginning of each of the marks would be the focus of a person’s recollection of the relevant products. The Judge also considered that the fact that “ACT” was derived from the botanical name for kiwifruit was not commonplace or common knowledge and that there was no conceptual meaning to either mark .
The Judge also upheld the Assistant Commissioner’s finding under s 25(1)(b). Cull J identified that when a trade mark holder is relying on s 25(1)(b), the key principle is that its own actual use and reputation are not relevant. Consequently, the Court was not required to consider the actual use of the ACTAZIN mark under s 25(1)(b) and this approach was not inconsistent with the approach taken under the s 17(1)(a) ground of opposition .
Anheuser-Busch Inc v Budweiser Budvar National Corp  1 NZLR 472 (CA) referred to.
Issues on appeal
The appeal before the Court of Appeal was concerned solely with s 25(1)(b) . The parties’ arguments were considered by reference to the following broad questions :
(a) Was use by the registered owner of trade mark C (ie ActiPhen) a prerequisite for a successful opposition under s 25(1)(b) to an application to register trade mark A (ie ACTAZIN)?
(b) Was ActiPhen similar to ACTAZIN?
(c) Given the registration of ACTAZIN, had Pharmazen demonstrated on the balance of probabilities that its use of ActiPhen was not likely to deceive or confuse?
Held, dismissing the appeal, and refusing registration:
Was use of trade mark C a prerequisite for a successful opposition under s 25(1)(b)?
- Sections 17(1) and 25(1) involve different tests . Section 17 specifies absolute grounds for refusing registration of a trade mark whereas s 25 specifies relative grounds of refusal . Both sections therefore serve different purposes and work in different ways. The purpose of s 17(1) is to protect the public from undesirable confusion arising from the registration of a trade mark. The purpose of s 25(1) is to protect a registered mark, and the interest the proprietor of that mark has, from the registration of a potentially deceptive or confusing similar mark.
Hannaford & Burton Ltd v Polaroid Corp  2 NZLR 14 (PC); British American Tobacco (Brands) Inc v NV Sumatra Tobacco Trading Co HC Wellington CIV-2007-485-2814, 11 November 2008; BALI Trade Mark  RPC 472 (HL), referred to.
- That the protection afforded by s 25(1)(b) is of the owner’s interest is underscored by s 26(a) which confers on the owner of trade mark C the power to consent to the registration of trade mark A . There is no equivalent power in the context of s 17 .
- In both ss 17(1)(a) and 25(1)(b) the activity under scrutiny is the anticipated normal and fair use of the trade mark for which registration is sought. However, in the s 17(1)(a) analysis, the base comparator is the manner in which another trade mark has already been used in fact. By contrast, in the s 25(1)(b) analysis, the comparator is an assumed use of an existing registered trade mark (trade mark C), albeit in a normal and fair manner . In the s 25(1)(b) analysis the market is itself notional .
- Importing the prerequisite of actual use into the s 25(1)(b) analysis would conflict with other provisions of the Act:
- Use under s 7(1)(b) and (c) of the Act, which deems the application of a trade mark to export goods to be use of the trade mark in New Zealand, would be treated as irrelevant under s 25(1)(b) for the reason that it would not be use likely to cause deception or confusion in a relevant New Zealand market .
- In the infringement context under s 89(1)(c), whether there has been actual use of the registered trade mark is not relevant .
- Section 66 of the Act stipulates that as long as there is some genuine use of a trade mark during any continuous period of three years, the trade mark will not be vulnerable to removal for non-use. So, even if there are no sales in New Zealand of products bearing a trade mark, the application of the trade mark on goods for export recognised in s 7(1) will qualify as use so as to defeat an application for removal .
- Therefore, use of trade mark C (ActiPhen) was not a prerequisite for a successful opposition under s 25(1)(b) to registration of trade mark A .
- Both ActiPhen and ACTAZIN are invented words , of similar length, have three syllables, share the first syllable “Act”, and conclude with the letter “n” . There is significant visual similarity between them .
- Where a trade mark incorporates a word that is commonplace for the relevant goods, that part will be less distinctive than other parts of the trade mark . However, there was no persuasive evidence suggesting that ACT is an accepted and recognised abbreviation of Actinidia or Actinidin . The Judge and the Assistant Commissioner were therefore correct in their conclusions that ACT is not descriptive, generic or a common part of trade marks for the relevant goods .
- Invented words are likely to generate a variety of pronunciations . Whatever the pronunciation, both trade marks would be pronounced with primary emphasis on the first syllable “Act”.
NV Sumatra Tobacco Trading Co v British American Tobacco (Brands) Inc  NZCA 24, (2010) 86 IPR 206 referred to.
- Both trade marks were similar; a significant number of people, both consumers and manufacturers, would be likely to pronounce ActiPhen in a manner which involved the same rhythm, structure, and sound as the way in which they would pronounce ACTAZIN .
Issue of confusion or deception
The likelihood of confusion or deception in the s 25(1)(b) analysis was not to be assessed by reference to the actual use or reputation of trade mark C (ActiPhen) as the relevant measure . The notional comparison contemplates any fair use of the trade marks in relation to any of the goods covered by the registration .
Anheuser-Busch Inc v Budweiser Budvar National Corp  1 NZLR 472 (CA) referred to.
The issue of confusion and deception is to be determined by reference to any of the goods covered by the registrations .
The specification of the class 5 goods in the ACTAZIN registration was sufficiently broad to include retail sales . Similarly, the specification of goods in class 5 for the ActiPhen registration was sufficiently broad to include products for sale directly to consumers . The notional market would therefore include consumers buying products from health shops or other outlets for food preparation adapted for medicinal purposes and dietary supplements for medicinal purposes .
Therefore, Pharmazen had failed to demonstrate that its use of ActiPhen would not be likely to deceive or cause confusion with products bearing the ACTAZIN brand .