A seriously flawed approach
Over the years a practice has developed in proceedings before the Assistant Commissioner of Trade Marks (IPONZ proceedings) pursuant to which the pleadings have to a large extent contained merely a recitation of the particular sections of the Trade Marks Act 2002 relied upon, with no particularisation of the parties' respective cases.1
Until relatively recently such a practice had also been prevalent in the United Kingdom. For example, in Lifesavers  RPC 563 the Hearing Officer said that in his view:
"...the substantive issues in this case and therefore the areas of contention between the parties have not yet been clearly defined. That is not surprising because it is only in the evidence rounds that the nature and areas of conflict are clarified".
Such an approach is seriously flawed. It was strongly criticised in the United Kingdom - where it has been noted that trade mark notices of opposition and statement of grounds are in effect pleadings and it is the function of such to define the issues between the parties.2
It has now also been roundly criticised by Justice Woodhouse in Chettleburgh v Seduce Group Australia  NZHC 2563, where His Honour held that a decision of the Assistant Commissioner of Trade Marks to allow a party to argue a ground that had not been pleaded and of which inadequate notice had been given amounted to a breach of the principles of natural justice.
The decision in the case clearly indicates that considerations of justice and fairness combine to make it necessary for the pleadings of parties in IPONZ proceedings to clearly outline each of the grounds upon which they rely and to state the case relied upon in support of those grounds.
In other words, the judgment is a very important one for intellectual property practitioners, as it indicates that they and their clients will no longer be able to get away with pro forma pleadings in IPONZ proceedings.
Instead, they will be required to clearly set out in a particularised way, the parties' respective cases in the same way that pleadings filed in a High Court proceeding must.
The factual background
Justice Woodhouse's judgment in Chettleburgh related to an appeal by Mr Chettleburgh from a decision of Assistant Commissioner in which she declared his registration of the mark SEDUCE invalid.
Her decision was founded on s 32(1) of the 2002 Act which, in effect, provides that an application for registration of a trade mark must be made by a person who is the owner of the trade mark. The Assistant Commissioner decided that when Mr Chettleburgh applied for registration in January 2006, the true owner of the trade mark in New Zealand was Seduce Group, not Mr Chettleburgh.
However, the s 32(1) ground (i.e. the ownership issue) had not been pleaded by Seduce Group.
In fact, the first reference to it by Seduce Group in any document was a reference in the written submissions which Mr Chettleburgh's counsel received on the day of the hearing. To make matters worse, at the hearing:
Mr Chettleburgh's counsel raised with the Assistant Commissioner the fact that there had been no prior statement by Seduce Group that it was seeking to rely on s 32(1);
the Assistant Commissioner did not overrule what amounted to an objection that there was very late notice; and
- the Assistant Commissioner did not indicate that argument should be developed for Mr Chettleburgh on the point, or that he was in any way at risk on the point.
In reaching her conclusion based upon s 32(1), the Assistant Commissioner said that Seduce Group was not required "to expressly plead [s 32(1)] in order to put the ownership of the relevant mark in issue" and that Mr Chettleburgh's counter-statement, some of his evidence and submissions on his behalf indicated that he "understood that ownership of the relevant mark on the basis of prior use was a live issue".
Mr Chettleburgh's appeal was based on a number of grounds, which included, importantly, for present purposes:
that Seduce Group had given inadequate notice of the allegation that it, not Mr Chettleburgh was the true owner of the trade mark in New Zealand prior to the hearing; and
there was substantial unfairness to Mr Chettleburgh in the way this issue was dealt with in the course of the hearing before the Assistant Commissioner.
Justice Woodhouse's conclusions regarding the allegations of inadequate pleading and unfairness
His Honour considered that the Assistant Commissioner had been wrong to hold that Mr Chettleburgh had been given adequate notice of Seduce Group's intention to claim that it was the true owner. His Honour considered Regulation 107 of the Trade Marks Regulations 2003 to be decisive. That regulation prescribes in mandatory terms the information required to be included in an application for a declaration of invalidity. It requires such a pleading to contain "the grounds for a declaration of invalidity".3
Nor was Woodhouse J persuaded that there was material in Mr Chettleburgh's own pleadings, evidence or submissions from which it could be concluded that he apprehended that s 32(1) was in issue.
Importantly, His Honour accepted that if the question of true ownership had been clearly pleaded, the approach adopted by Mr Cheetleburgh including the evidence that would have been adduced on his behalf and decisions on cross-examination of Seduce Group's witnesses would have been likely to have been different.
His Honour also considered that the way in which the hearing proceeded had resulted in substantial unfairness to Mr Chettleburgh. In essence, His Honour found that the Assistant Commissioner's determination of the matter on the basis of a non-pleaded ground that was only raised on the day of the hearing amounted to a breach of natural justice. On this topic, His Honour said:
 I am satisfied that there was unfairness to Mr Chettleburgh to an extent that, for this separate reason, the relevant issues should be reheard. If authority is needed for that proposition it is contained in s 27(1) of the New Zealand Bill of Rights Act 1990 – the right to the observance of the principles of natural justice.
Accordingly, the point was remitted to the Assistant Commissioner for a new hearing on the question of ownership.
What will be required going forward?
The decision in Chettleburgh is to be welcomed. It highlights the importance of adequate and fully particularised pleadings in IPONZ proceedings.
It is to be expected that His Honour's reference to natural justice and s 27(1) of the New Zealand Bill of Rights Act 1990 will now see IPONZ take a more rigorous approach to matters of pleading and consequently IP practitioners practising in this area will need to lift their game.
Clearly mere recitation of the sections of the Act relied upon will no longer be sufficient. Parties in such proceedings and their legal advisors will need to ensure that there is a sufficient degree of particularisation for the parties and the Assistant Commissioner to have a clear view of the nature of the dispute and have sufficient detail of, for example, earlier trade marks or earlier rights relied upon.
In what can often be important and valuable adversarial proceedings, no less is to be expected.
First published in NZ Lawyer, 2 November 2012.