A recent case before the High Court of New Zealand, Co-Operative Bank Ltd v Anderson [2014] NZHC 2686, illustrates the enforcement difficulties faced by an owner of a New Zealand Trade Mark Registration which relies on an industry-specific descriptive word to impart distinctiveness.

Background

Co-operative Bank Ltd (“TCB”), previously the Public Service Investment Society (“PSIS Ltd”) opened up its previously limited membership to the New Zealand public in 1995.  TCB is a co-operative registered with the Co-operative Companies Act 1996. TCB changed its name from PSIS Ltd and was registered as a bank in 2011. It is currently the only bank in New Zealand that is registered as a co-operative. TCB registered a logo with the words “THE CO-OPERATIVE BANK”.  However, an Application to register “THE CO-OPERATIVE BANK” as a word Mark was unsuccessful.

In comparison, the New Zealand Association of Credit Unions (“NZACU”) is a representative industry body that is co-operatively owned by 17 member Credit Unions and Building Societies.  However, unlike TCB, NZACU is not a bank, and neither are its members.

NZACU recently underwent a rebranding process to change its name from the NZACU to Co-op Money NZ.  Aspects of NZACU were also changed to include the words “co-op,” such as to change the name FACTS Ltd of its business-to-business trading section to Co-op Services NZ and its insurance service section from Credit Union Insurance Ltd to Co-op Insurance Ltd.

NZACU applied to register logos containing the words CO-OP SERVICES NZ, CO-OP INSURANCE NZ and CO-OP MONEY NZ as Trade Marks (hereinafter the “Trade Mark Applications”) in New Zealand.  When the Trade Mark Applications were accepted for registration, TCB filed opposition proceedings against their registration, as well as an application for an interim injunction to restrain the trustees of NZACU from using, or asserting a right to use, names that include the words “co-op.” NZACU postponed its rebranding efforts pending the outcome of the dispute.

The Dispute

TCB did not object to the use of the descriptor “co-operative” by NZACU, but only to the use of the word “co-op.” TCB argued that NZACU’s proposed use of this word would be deceptively similar to TCB’s name, “The Co-Operative Bank”.

An interim injunction was sought to prevent NZACU from using, and from claiming any right to use, Marks comprising the word “co-op” on the basis of passing-off, Trade Mark infringement, and breaches of the Fair Trading Act 1986.

NZACU argued that “co-operative” and “co-op” are generic descriptive terms in the financial services sector; that they are entitled to use these words; and that the balance of convenience would be against the grant of such an injunction.  They asserted that there was no serious question to be tried.

The Decision

Passing-off

The Court held that NZACU would not be passing itself off as TCB if it uses the word “co-op.”  Although TCB successfully established that limited goodwill existed in its name “The Co-Operative Bank,” and that a significant group of customers associated the use of the word “co-op” with TCB, it failed to persuade the Court that any secondary meaning attached to the words.  Since NZACU was not yet publicly using any of its new brands, TCB also failed to show that there would be a misrepresentation by NZACU to the public if the new marketing strategy were to proceed.  The Court regarded it as unlikely that there would be any confusion that would lead to any significant damage to TCB’s goodwill.

The Court considered that the word “co-op” is a widely-used abbreviation of “co-operative”, both terms being regarded as descriptive.  Furthermore, the convenient short form of “co-operative” was considered to be a different word, diminishing the similarities between the TCB and the NZACU names, and thus reducing the risk of confusion.  The Court was unsympathetic to TCB, stating that “even if there is going to be some confusion in the marketplace when NZACU re-brands, it is the sort of confusion that parties who choose to use descriptive names have to tolerate.”

Breach of the Fair Trading Act 1986

Since TCB had failed to prove that there would be any misrepresentation by NZACU or a likelihood of confusion, the Court also held that there was no breach of Sections 9, 11 or 13 of the Fair Trading Act 1986.

Trade Mark Infringement

The Court found that there was no exact similarity of words between the Marks of TCB and NZACU.  The only overlap was “the use of the word ‘the’ and the use of part of ‘cooperative’ being ‘co-op’”.  The get-up of the Marks and their visual appearance were regarded as very different.  The Marks were not considered to be similar or likely to cause deception or confusion and, as such, no infringement was found.  The use of the word “co-op” was considered to be a fair representation of the nature of the entities involved and the services offered.  Accordingly, the Court considered that Section 95(c)(i) of the Trade Marks Act applied.  This Section provides that a person does not infringe a registered Trade Mark, if that person uses the Mark in accordance with honest practices in industrial or commercial matters to indicate a kind, quality, quantity, or other characteristic of the Goods or Services. 

The balance of convenience was also held in favour of NZACU, and the application for an interim injunction was dismissed.

Take Home Message

This case is a useful reminder that the New Zealand Court is unsympathetic to parties seeking monopolies on descriptive words, particularly those that are widely used in the particular industry concerned. A party choosing to use a descriptive word to distinguish their Goods or Services from other traders will be expected to tolerate any small risk of confusion in the marketplace.

Thus, even though a party may have a Registered Trade Mark, if that Mark relies on a full descriptive word to impart distinctiveness, it may be difficult to enforce such a Registration in New Zealand against a party using an abbreviated or shortform version of the Mark.

Owners of Registered Trade Marks which rely on descriptive words would be well advised to be pro-active in protecting their existing Trade Mark portfolio and to pursue Trade Mark Rights for the abbreviated or shortform version of the Mark, even if they are descriptive. Abbreviations of Marks may still be registrable as Trade Marks in New Zealand, as long as they can be shown to have acquired distinctiveness through use. For comprehensive protection, it is important to include registrations for possible abbreviations of a Mark in a Trade Mark portfolio, so as to prevent a competitor from filing future Trade Mark Applications using the abbreviation and from unauthorised use of the abbreviation.