KEY ISSUES

When has a trade mark becoming generic?

Was a website metatag used as a trade mark?

FACTS

T was the owner of BATTS for insulating materials in class 17 since 1973. (T also owns PINK BATTS.)

K imported insulation materials under the EARTHWOOL name which contained references to “batts” on the packaging and label. The word was also included as a metatag in a website operated by another defendant.

T commenced action against K and others claiming infringement of its mark.  K sought revocation of T’s mark on the grounds that it had become generic (s 66(1)(c)) or that T had ceased to use the mark (s 66(1)(a)).  K also asserted by way of defence under s 95(c) of the Act that it used “batts” in an honest practice to indicate the kind, purpose or characteristics of goods, and therefore no infringement occurred.

T and K made various claims against the other for breach of the Fair Trading Act 1986 (not discussed).

COURT DECISION AND REASONING

Non-use: Even a second or third level sub-brand can function as a trade mark.  T had used BATTS® as an adjective in advertising and brochures to indicate source or origin (that is, trade mark use) including as part of the trade mark PINK BATTS.  K’s non-use claim failed.

Genericism: An applicant asserting that a mark has become generic bears heavy burdens of proof firstly that the descriptive use is widespread and secondly, that such use has arisen from the owner’s acts or inactivity.  While the defendants produced evidence of apparently descriptive use, they had simply assumed it to be descriptive use without properly demonstrating their claim.  On the quality and quantity of evidence before it, the Court was not satisfied that the level of descriptive use was sufficient to justify a finding of genericity.  T was not responsible for descriptive use by others. Inactivity of the owner (T) could only be assessed by reference to unauthorised trade mark use by unrelated parties.  The evidence did not establish a sufficient level of positive acts or inactivity by T to establish the necessary causal element (even if the Court had found that the mark had become generic, which it did not).

Infringement: Assessing infringement involves considering the normal meaning of the word, how it was used, the nature of the market, the types of consumers and general market considerations.  The packaging and label use by K and other defendants involved the word “batts” in lower case without any distinguishing features. The public would not see this as trade mark use but rather descriptive use and therefore no infringement occurred (however such use breached the Fair Trading Act 1986).  The use as a metatag was trade mark use and therefore infringing. Although the use was invisible to most website users, it would be visible to an informed internet user.  An injunction was granted to restrain this use.

K’s s 95 defence: None of the use conveyed information about the kind, purpose or characteristics of the goods and accordingly the defence was not available.  (The defence was not required in relation to most of the use given the court’s finding that there was no trade mark use.)  The metatag use was not honest being solely to divert customers to the defendant.  The defence was accordingly not available.

Both parties have appealed.

KEY LESSONS

The bar to establish that a mark has become generic is set high given the NZ owner action/inactivity element.

Use of a competitor’s mark in a metatag can be trade mark use even though the use is invisible to most.