First published in the INTA BULLETIN, October 1, 2014 Vol. 69 No. 18. To see the original article please click here

The Court of Appeal of New Zealand recently confirmed that an ownership-based opposition to registration of a trademark must establish prior use of an identical mark on identical or near identical goods. The decision also demonstrated the risks involved in pursuing a single ground of opposition, as this can limit subsequent grounds of appeal. North Face Apparel Corp. v. Sanyang Industry Co. Ltd, No. CA638/2012,[2014] NSCA 398 (Aug. 15, 2014).

North Face Apparel Corporation opposed registration of Sanyang Industry Company Limited’s S device mark for clothing, footwear and headgear, based on six discrete grounds. At the opposition hearing before the Assistant Commissioner of Trade Marks at the Intellectual Property Office of New Zealand (IPONZ), the only ground pursued was that the trademark was not owned by Sanyang owing to North Face’s prior use of its own S device mark. The respective marks are shown below.

The Assistant Commissioner dismissed the opposition. On appeal by North Face to the High Court, Justice Collins found that North Face’s S device could be “uncoupled” from the composite SUMMIT SERIES mark, but that the neither the S device mark nor the composite mark was substantially identical to Sanyang’s trademark, as Sanyang’s trademark had a metallic appearance and gave the impression of an arrow moving from left to right, while the North Face S device mark was designed to represent the image of a mountain peak. North Face’s appeal to the Court of Appeal was also dismissed.

The Court of Appeal held that North Face had established ownership by prior use of its SUMMIT SERIES composite mark for various types of apparel. However, the Court disagreed with the High Court’s finding that the S device could be “uncoupled” from the words SUMMIT SERIES in the composite mark. The Court said that it was not satisfied that the S device “creates a separate and distinct commercial impression from the words ‘Summit Series.’”

The Court noted that two “qualifying elements” were required to establish prior use:

  1. The use must be public, with the threshold being low (an offer to sell the goods in New Zealand would be sufficient, and an actual sale is not necessary); and
  2. The use must indicate a connection in the course of trade between the owner and the goods.

The Court confirmed that a claim to ownership of a trademark is restricted to goods that are “essentially identical” to those for which the prior mark has been used. However, in this case, although it found that North Face had indeed made prior use of its S device mark in relation to mittens and gloves, the Court held that was insufficient to establish ownership of Sanyang’s trademark for the same goods, as the marks were not identical. The Court of Appeal endorsed Justice Collins’s original finding that the respective marks were not even substantially identical. In doing so the Court confirmed that in New Zealand a party seeking to challenge ownership of a trademark must establish prior use of an identical trademark and not merely one that is “substantially identical.”

North Face’s original Notice of Opposition was based on six discrete grounds. However, at the opposition hearing, its arguments were restricted to a claim to ownership based on its prior use of its own trademark. The Court of Appeal found that it was “most significant” that North Face abandoned its other opposition grounds, including those relating to prior use of a similar mark. The Court concluded that as North Face had abandoned those broader opposition grounds it would be unreasonable if North Face could now raise a ground of “substantial identity” to deny Sanyang ownership of its trademark. This demonstrates the risk involved in limiting the grounds of opposition too early in proceedings. The flow-on effect of having limited the grounds of opposition at the IPONZ hearing was that it was not possible to argue other grounds at the High Court or the Court of Appeal (unless special leave was sought).

Sanyang had cross-appealed the High Court’s finding that North Face had used its S device mark for gloves and mittens within Class 25. As the Court of Appeal found that such use had occurred, this effectively addressed Sanyang’s cross-appeal. The Court noted that if it had found the two marks to be identical, it would have given Sanyang leave to limit its Class 25 specification of goods to exclude “gloves and mittens.”

Although every effort has been made to verify the accuracy of items in the INTA Bulletin, readers are urged to check independently on matters of specific concern or interest.