The High Court of New Zealand has promptly rejected an appeal from a decision of the Assistant Trade Marks Commissioner to remove the trade mark Ocean Queen on the grounds that the mark had not been used. In dismissing the appeal, Justice Collins held that the trade mark owner Manhaas Industries (2000) Limited ("MIL") could not establish "special circumstances" which explained why it was not able to use the Ocean Queen mark in relation to fish or other goods covered by the registration during the relevant non-use period.
Defending a non-use revocation action in New Zealand requires "special circumstances"
An "aggrieved party" may apply to have a trade mark registration removed in New Zealand if the mark has not been used for three years following its registration under s66 of the Trade Marks Act 2002, as unused marks are considered to be "abandoned vessels in the shipping lanes of trade".1
If the revocation applicant has established a case for removal of an unused New Zealand trade mark registration, the trade mark owner may be able to defeat the action if it can establish that its non-use "is due to special circumstances that are outside the control of the owner of the trade mark", as provided in s66(2) of the Act. Whilst the United Kingdom and Australia have similar provisions, each of those jurisdictions has adopted a less onerous test than that required in New Zealand.
Justice Collins identified this distinction under New Zealand law and noted that unlike Australia and the United Kingdom, New Zealand is the only country that seems to require proof of special circumstances if the owner of an unused trade mark seeks to avoid having its mark deregistered.
In order to establish special circumstances to defeat a non-use action in New Zealand, a trade mark owner must establish that:
- The circumstances are "peculiar or abnormal" and arise through "external forces as distinct from the voluntary acts of the registered owner of the mark";
- The "circumstances" made it impractical in a business sense" to use the trade mark;
- There is a causal link between the special circumstances and the non-use of the trade mark.
These factors are based upon the judgment of Justice Drummond in Woolly Bull Enterprises Pty Ltd and Reynolds(2001) FCA 261.
Why MIL could not maintain its trade mark registration
MIL's attempts to source fish appeared to be relatively casual and "far from convincing", especially as other traders did not appear to have any difficulty in accessing similar fish stock during the relevant non-use period. Justice Collins held that as sourcing fish is part of MIL's regular business, any difficulties that it may encounter with supply and quality are routine challenges for businesses and are not "special circumstances". MIL also had the ability to seek fish stock from other sources over a greater period of time than attempted during the relevant non-use period.
MIL sought the Court's discretion to maintain its Ocean Queen registration. However, Justice Collins found that the importance of maintaining the integrity of the Trade Marks Register, the clear absence of any evidence of use of the identical trade mark by MIL and the need by a competitor to use the same mark all weighed heavily against the exercise of such discretion.
As MIL failed to establish that there were any special circumstances to explain why it could not use the Ocean Queen mark during the relevant non-use period, Justice Collins held that the appeal was dismissed and that the registration should be revoked.
Factors for New Zealand trade mark owners to consider
This case is an important one for the owners of trade marks that have been registered in New Zealand for more than three years, as those registrations are now vulnerable to a potential action for removal on the grounds of non-use.The case is a reminder that in New Zealand the owner of a registered mark needs to establish "special circumstances" if it has not been using its trade mark in New Zealand and would like to maintain the trade mark registration in New Zealand in the face of a non-use action.
There are some important points which the owners of New Zealand trade mark registrations should consider:
- Owners of New Zealand trade mark registration should bear in mind that those marks will become vulnerable to removal on the grounds of non-use reasonably quickly, in light of the speed with which a trade mark can proceed through to registration in New Zealand.
- Once the revocation action is lodged against the New Zealand trade mark registration, the onus to attempt to establish "special circumstances" is high, and significantly more difficult than relevant provisions in Australia or the United Kingdom.
- If a trade mark owner wished to take steps to address this risk then it may need to consider reapplying to register the mark in New Zealand, to take advantage of a three year grace period following registration during which the mark is not vulnerable to removal on the grounds of non-use.