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Inferences insufficient to indicate use in non-use case, and a warning that costs not automatically awarded to successful appellant

In August the New Zealand High Court overturned the Assistant Commissioner’s decision not to revoke the trade mark FEEL ALIVE. The court affirmed the onus was on the trade mark owner to show on the evidence that there had been genuine use of the trade mark and that the owner controlled and authorised the use of the trade mark. Claims of trade mark use must be supported by tangible evidence such as sales of goods and advertisements promoting the trade mark.

Now the High Court’s further decision on costs serves as a reminder that a successful appellant may not be awarded costs when the defendant does not participate in the appeal and advises that it will abide by the Court’s decision.

Background

New Zealand’s High Court has overturned the Assistant Commissioner’s decision and directed that a trade mark registration be revoked in its entirety for non-use. This affirms the strictness of New Zealand’s approach to non-use and the importance of good evidence.

Before the Assistant Commissioner, Globeride, Inc. was successful in partially revoking the trade mark FEEL ALIVE. Its appeal to the High Court, in Globeride, Inc. v. Morris, NZHC 2234 (Aug. 9, 2024), focused on the volume, nature, and credibility of the evidence of use the trade mark owner filed and the weight the Assistant Commissioner had given this, including its inferential value.

The judge held that the owner’s evidence was insufficiently clear and that the onus was on the trade mark owner to show genuine use. While the Assistant Commissioner was sympathetic to the trade mark owner and drew inferences based on the evidence filed, this was insufficient to show genuine use in the eyes of the High Court.

The judge held the following:

The Assistant Commissioner erred in drawing the inference that there had been a use of the FEEL ALIVE trade mark in the non-use period. I consider the evidence produced by Ms Morris [the trade mark owner] falls well short of the requirement to establish compelling and conclusive evidence of use during the non-use period.

Unsupported assertions of use are not adequate. Tangible examples of use from within the relevant period are required, such as advertisements using the trade mark or sales of goods bearing the trade mark.

The judge cited from the recently published Trade Marks in Practice (Batty, Rob & Glover, Kevin, 5th ed., LexisNexis, Wellington, New Zealand, 2024), stating:

A distinction may be drawn between actual use and evidence of that use. It is the latter that is determinative. Bald assertions in evidence statements on behalf of the owner that a mark has been used are given little weight by the Court or by Assistant Commissioners.

It is also notable that even if the judge had held that there was use in the non-use period sufficient to preserve the registration, this was use by the company Feel Alive Ltd and not the trade mark owner Ms. Morris. There was no evidence of the exercise of control by Ms. Morris over alleged user Feel Alive Ltd, so the registration could not have been saved^[1].

Costs decision

In an interesting addendum to the substantive non-use decision the successful party, Globeride, applied to the Court for its costs, these being expected to follow the result as usual. The costs decision can be seen here: Globeride, Inc v Morris [2024] NZHC 2931 (9 October 2024).

The decision on costs had originally been reserved by Gordon J. While Ms Morris was content to abide the decision of the Court and accordingly took no part in the appeal, she had sought leave to be heard on costs should it be necessary.

Ms Morris opposed the award of any costs, submitting that she bore no responsibility for any costs incurred by Globeride, either in the appeal or the IPONZ proceeding.

Following delivery of the judgment, Ms Morris had made an offer, described as on a without prejudice save as to costs basis, to settle the issue of costs. Globeride did not respond to the offer.

In these circumstances, Ms Morris submitted that it was appropriate for the Court to dismiss Globeride’s application for costs.

In relation to the IPONZ decision, Ms Morris submitted that she had simply filed a counterstatement to allow evidence of what use had been made of the trade mark to be put before the Assistant Commissioner and had not filed submissions.

Gordon J did not agree, considering that the evidence filed and the stated nature of this being “in opposition to the application for revocation of the Trade Mark on the basis of non-use” showed Ms Morris’s involvement in the proceeding before IPONZ. With Globeride having been successful on appeal, Her Honour found that they were entitled to costs before IPONZ. However, in relation to the costs before the Court, Gordon J referred to the High Court Rules at part 14 and the broad discretion they provide regarding costs.

Ms Morris submitted that it would be unfair and unjust to award costs against her in circumstances where she took no steps in relation to the appeal and advised the appellant and the Court of this at the earliest possible opportunity.

Globeride submitted that there was nothing to displace the presumption that the costs of the appeal should follow the event.

Gordon J followed earlier High Court authority in holding that: “The error which necessitated the appeal was that of the Assistant Commissioner. I do not consider Ms Morris contributed to that error. Ms Morris took no part in the appeal, advising the Court of her position at the earliest opportunity. Accordingly, I consider costs should lie where they fall in the High Court.”

Takeaways

This is an interesting decision to be kept in mind when considering an appeal from an IPONZ decision, especially in circumstances where the respondent intends to abide the Court’s decision.

Perhaps more importantly, this is a reminder to trade mark owners and their agents to take care that registered trade marks stand in the name of the right party, and if a party other than the registered owner is using the trade mark to ensure that the use is authorised by and under the control of the registered owner. Further, it would pay for trade mark owners to keep records showing the use and promotion of the trade mark in New Zealand.

Please contact us should you have questions about your IP strategy in Australia or New Zealand.

Jesse Strafford - Henry Hughes IP

[1] This update was first published in the INTA Bulletin, 30 October 2024: NEW ZEALAND: Court Rejects Inferences to Support Genuine Use of Trademark as Insufficient - International Trademark Association