Court of Appeal rules on similarity of marks and “relevant market” for MR ZOGS SEX WAX goods

In a decision on a trade mark opposition, the New Zealand Court of Appeal (Sexwax Incorporated v Zoggs International Limited [2014] NZCA 311) has held that the opposed trade mark ZOGGS is confusingly and deceptively similar to the MR ZOGS SEX WAX logo. The Court also held that the opponent’s trade mark had acquired a sufficient reputation for surfboard wax and surfing gear, which meant that any use of the ZOGGS mark for apparel and swimwear would lead to deception or confusion.

Background

The opponent, Sexwax Incorporated (“Sexwax”), coined the trade mark MR ZOGS SEX WAX in California in around 1972. The mark was not registered in New Zealand, but there was evidence of use from at least as early as 1981 in the following form:

The MR ZOGS SEX WAX mark is used in relation to surfboard wax and products such as t-shirts, sweatshirts, rash guards, swimwear and towels.

The applicant, Zoggs International Limited (“Zoggs”), coined its ZOGGS trade mark in Australia in around 1992 and there was evidence of its use in New Zealand from 1994 in relation to swimming goggles. Later, Zoggs introduced swimwear under the ZOGGS mark.

In December 2009, Zoggs applied to register ZOGGS for various class 25 goods including clothing and swimwear.

Sexwax opposed the ZOGGS application. The opposition was based on section 17(1)(a) of the New Zealand Trade Marks Act 2002 which is a“public interest” provision:

The Commissioner must not register as a trade mark or part of a trade mark any matter—

(a) theuse of which would be likely to deceive or cause confusion”.

The Assistant Commissioner of Trade Marks ruled in favour of Sexwax. However, on appeal to the High Court, the opposition was rejected. The Judge held that use of the ZOGGS trade mark was unlikely to deceive or cause confusion as the mark was “quite dissimilar” to the MR ZOGS SEX WAX mark. The judge said that the concept of “sex wax” was “attention grabbing” and that the words MR ZOGS were not a prominent feature of the logo.

The Judge said that he would also have found that there was an insufficient reputation in the MR ZOGS SEX WAX mark. The Judge endorsed the Assistant Commissioner’s finding that the relevant market for the ZOGGS class 25 goods was the general purchasing public and others involved in purchases of these goods, such as retailers, and that Sexwax needed to prove a substantial reputation in this market.

Sexwax successfully appealed to the Court of Appeal.

Correct approach to section 17(1)(a)

The Court of Appeal affirmed that the correct approach to section 17(1)(a) is:

i) to begin by determining whether or not the opponent has a reputation in New Zealand at the relevant date. (This enquiry is inextricably linked to thenature of the goods in question); and then

ii) to make the fact-specific assessment of the likelihood of deception or confusion against that reputation, considering the fair, notional use of the goods bearing the applicant’s mark. The likelihood of deception or confusion must be assessed in relation to some or all of the applicant’s goods.

The Court said that in an opposition based on use of an earlier mark there was a misconception that an opponent must establish a reputation in its trade mark amongst consumers of the goods covered by the opposed application. The correct assessment should be of the level of awareness of the opponent’s mark amongst purchasers of goods to which the opponent’s mark is applied.

Findings

Sexwax’s trade mark was a “complex” logo comprising the phrase “MR ZOGS SEX WAX” (with the SEX WAX element in larger script) and the slogan “THE BEST FOR YOUR STICK”. The Court of Appeal found that rights existed in the logo as a whole and that there was no need for Sexwax toestablish that the MR ZOGS element enjoyed an independent reputation. The Court held that the MR ZOGS element is acentral and essential part of the MR ZOGS SEX WAX logo, and a significant part of the reputation generated by the logo, because the logo would be recommendedor remembered by reference to the MR ZOGS element. The relevant comparison was between the ZOGGS mark and the MR ZOGS SEX WAX logo in its totality.

The Court held that the presence of the MR ZOGS element in the MR ZOGS SEX WAX logo was enough, if the ZOGGS mark were used, to “spark a connection in the minds of consumers” causing them to wonder whether there is some connection between the two marks.

The Court held that Assistant Commissioner of Trade Marks and the High Court had erred in determining that the relevant market in which Sexwax must establish a reputation was “the general purchasing public” (being the potential market for goods sold under the opposed mark). It is important not to conflate the test for establishing a reputation with the test that a substantial number of people are likely to be deceived or confused.

Sexwax was found to have a reputation in relation to surfboard wax and associated surfing merchandise. This is not thesame market as swimwear. However, as both marks relate to watersports, there is a “connection”. Given the reputation which existed in the MR ZOGS SEX WAX mark, and given the potential use of the ZOGGS mark (based on the scope of its specification of goods), the Court held that there was a sufficient number of individuals who are aware of MR ZOGS SEX WAX mark and potentially exposed to the ZOGGS mark.

The next question was whether or not those individuals would be likely to be deceived or confused.

The Court held that Zoggs had not discharged its onus of establishing that the useof its ZOGGS mark would not be likely to cause deception or confusion. The application was refused, although the Court suggested that Zoggs could file a new application for its mark for specific goods and support that application with evidence of its use of the mark in New Zealand.

Barbara Sullivan and David Moore - September 2014

MoST Content Management V3.0.6374