Did ANASTASIA MIARAY benefit from a lucky escape in New Zealand after the opponent’s pleadings were not allowed to be corrected?

Did ANASTASIA MIARAY benefit from a lucky escape in New Zealand after the opponent’s pleadings were not allowed to be corrected?

The opposition to the ANASTASIA MIARAY trade mark by the owner of the ANASTASIA BEVERLY HILLS trade mark was unsuccessful¹. Oddly though, you won’t find arguments about the similarity of the marks and the likelihood that consumers will be confused in the Intellectual Property Office of New Zealand (IPONZ) hearings decision.

Much of the decision hangs on the use of the single letter “a” instead of “b” in the statement of a ground of opposition, the relative fairness, justice or prejudice in allowing corrections of pleadings, and the extent to which the parties understood the grounds to be pleaded in the hearing.

This case serves as another warning that pleadings are important for identifying the issues, need to be drafted very carefully and cannot necessarily be amended if an error is noted. It is also another example of an uplift of costs being awarded to the successful party as the Opponent withdrew grounds of opposition late and filed what was considered to be excessive and irrelevant evidence.

However, the outcome was different in the corresponding Australian opposition with the Opponent being successful in its opposition showing that differences in the law and evidence filed can lead to substantial differences in outcomes.

Background to New Zealand opposition

The Applicant, Pias Corporation, applied to register the mark ANASTASIA MIARAY on 15 April 2019 for a range of beauty products and services in classes 3, 8, 21, 41 and 44.

The Opponent Anastasia Beverly Hills LLC, the owner of the ANASTASIA BEVERLY HILLS stylised word mark, opposed registration of the Applicant’s mark, on the basis of the following grounds of opposition:

Use of Mark is likely to deceive or confuse s 17(1)(a)
Use of Mark is contrary to law s 17(1)(b)
Application was filed in bad faith s 17(2)
Registration is prohibited because it is identical or similar to an existing mark for the same or similar goods and/or services and that use is likely to deceive or confuse s 25(1)(a)
Registration is prohibited because the mark, or an essential element of it, is identical or similar to a mark well known in New Zealand, and use is likely to prejudice the interests of the owner of the well known mark S 25(1)(c)

an image of the Opponent's ANASTASIA BEVERLY HILLS trade marks from Schedule 2 of the IPONZ hearings decision

The problem with the above pleaded grounds is that section 25(1)(a) prohibits the registration of the identical trade mark for the same or similar goods or services. In this case, the trade marks were not identical so the pleading should have referred to s 25(1)(b) which prohibits the registration of a similar trade mark for the same or similar goods or services, where confusion is likely.

The IPONZ Assistant Commissioner (AC), determined the s 25(1)(a) ground of opposition was unsuccessful because the mark on which the Opponent relied was not identical to the mark the subject of the application. In relation to s 17(1)(a), the AC did not consider there was sufficient evidence from which to infer there was awareness of the Owner’s ANASTASIA BEVERLY HILLS marks at the time the application to register ANASTASIA MIARAY was filed. Prior to the hearing the Opponent withdrew the grounds of opposition based on sections 17(1)(b), 17(2) and 25(1)(c) of the Act.

Had the Opponent also pleaded a ground under s 25(1)(b)?

At the Hearing, the Opponent contended that s 25(1)(b) was also a ground of opposition, which the Applicant disputed. The AC determined the s 25(1)(b) ground of opposition was not clearly and properly pleaded.

In reaching her decision the AC referred to AFT Pharmaceuticals Limited v Washbar Limited as summarising the principles succinctly as follows²:

An opposing party is entitled to have a clear understanding of the case they have to meet. Otherwise unfairness to the opposing party is a likely consequence. Section 27(1) of the New Zealand Bill of Rights Act 1990 provides that every person has the right to the observance of the principles of natural justice by any tribunal which has the power to make a determination in relation to that person’s rights, or interests protected or recognised by law. Fairness of procedure is a fundamental principle of natural justice. The pleadings define the scope of issues in dispute and serve as important notice to the opposing party as to the live issues in the proceeding. (footnotes omitted)

The pleading at issue, found in paragraph 4.1 of the Notice of Opposition, under the heading “Identical or similar trade mark – Section 25” reads:

The Applicant’s Mark is identical or similar to the Opponent’s Mark registered under No. 1038094, in respect of the same or similar goods and services, and use of the Applicant’s Mark is likely to deceive or cause confusion. The Applicant’s Mark is therefore not registrable under Section 25(1)(a) of the Act.

While the pleading refers to the Applicant’s mark being either identical or similar to the Opponent’s mark, it refers only to s 25(1)(a) and not s 25(1)(b). The distinguishing element between these two subsections is the references to “identical to a trade mark belonging to a different owner” in subsection (a) and “similar to a trade mark that belongs to a different owner” in subsection (b). As both of these distinguishing elements are present in the wording of paragraph 4.1, the AC was of the opinion that it was not clear which of the grounds had been pleaded – arguably it could have been both.

However, Regulation 74(f) of the Trade Marks Regulations 2004 requires that the Notice of Opposition contains “the ground or grounds of opposition and the provisions of the Act to which those grounds relate”. The AC was of the view that this regulation helped to clarify which ground has been pleaded. In her view, the reference to s 25(1)(a) in paragraph 4.1 of the Notice of Opposition could reasonably be taken as confirmation that s 25(1)(a) has been pleaded.

Can this situation be remedied?

At the Hearing, in an attempt to remedy the situation, the Opponent sought to amend the s 25 pleading under reg 164 or s 194.

Reg 164 gives the Commissioner the discretion to waive a requirement in the regulations for information to be provided in any document, if the Commissioner is satisfied that the information is unnecessary. The AC did not consider that it was appropriate to waive the requirement in reg 74(f) that the provision of the Act to which the ground relates be stated, because the pleading itself was unclear as the use of the words identical or similar meant it arguably referred to both ss 25(1)(a) and (b) and any waiver would not render the pleadings clear.

Section 194 allows for amending of pleadings to correct a clerical error or obvious mistake, or if the Commissioner is of the opinion that it is fair and reasonable in all the circumstances of the case to do so. Reg 11 prescribes the process for amendments and reg 11 A requires that such requests be made prior to a substantive hearing, not at or after a hearing. Therefore, in the absence of any precedent allowing an amending to pleadings at the Hearing, the AC found the proposed amendment was time barred.

The opposition based on the Opponent’s prior registered rights, under s 25, failed.

What about the opposition based on user rights?

The Opponent also alleged, under s 17(1) that there was a likelihood of confusion or deception if the ANASTASIA MIARAY trade mark was used by the Applicant in a normal and fair manner.

There is an initial evidentiary onus on the Opponent to establish that it had a reputation, or there is an awareness of the trade mark, in New Zealand at the date of the filing of the Applicant’s trade mark. The AC accepted that the reputation threshold required to engage s 17(1)(a) was “relatively low”. The AC also accepted that the Opponent showed some use of the mark in New Zealand. However, she was not satisfied the evidence established an awareness of the ANASTASIA BEVERLY HILLS trade mark in New Zealand as of the filing date of the application.

The opposition based on the Opponent’s prior use rights, under s 17, failed.

Prior to the hearing the Opponent withdrew the grounds of opposition based on sections 17(1)(b), 17(2) and 25(1)(c) of the Act, so there were no other grounds to consider.

The AC directed NZ Trade Mark No. 1118591 ANASTASIA MIARAY be registered in relation to all the goods and services specified on the application.

Penalty costs awarded

Typically, costs follow the event and the successful party, in this case the Applicant, is entitled to an award of costs in accordance with the IPONZ scale of cost. However, increased costs may be justified where the party paying costs has failed to act reasonably.

In this instance, as if losing the opposition was not enough, the AC awarded increased costs to the Applicant.

The AC considered the Opponent was late in withdrawing grounds of opposition (just over two weeks before the original hearing date), and the number of pages of evidence filed, being more than twice amount in the Trade Mark Hearing Practice guidelines, “exceeded the guidelines… without justification.” The AC found “There are large tracts of evidence from the Confidential Soare declaration which were irrelevant to this proceeding (for instance around 766 pages of exhibits comprised marketing plans that pertained to a period after the Relevant Date)”. Further, the evidence was found to be “insufficiently tailored to reflect market circumstances in New Zealand”.

For those reasons the Applicant was awarded an uplift of 30% on the scale costs.

A different outcome in Australia – Anastasia Miaray not so lucky

A different legal and factual scenario was in play in Australia, with the Opponent being successful on the basis of its prior registered rights (s 44 / reg 4.15A) and also argued the bad faith ground³.

Section 44(1) of the Trade Marks Act 1995 (Cth) provides that:

an application for the registration of a trade mark (applicant’s trade mark) in respect of goods (applicant’s goods) must be rejected if:

(a) the applicant’s trade mark is substantially identical with, or deceptively similar to:

(i) a trade mark registered by another person in respect of similar goods or closely related services; or

(ii) a trade mark whose registration in respect of similar goods or closely related services is being sought by another person; and

(b) the priority date for the registration of the applicant’s trade mark in respect of the applicant’s goods is not earlier than the priority date for the registration of the other trade mark in respect of the similar goods or closely related services.

S 44(2) provides a mirror prohibition for services and Reg 4.15A is identical to s 44 but applies when the opposition is based on a Protected International Trade Mark as was the case for two of the Opponent’s trade marks.

Therefore, the provisions relating to prior registered rights melds the consideration whether the trade marks are (substantially) identical or (deceptively) similar into a single provision compared with the dual prongs of s 25(1) in New Zealand. Therefore, the Opponent did not face the pleading issue it faced in New Zealand.

The Registrar’s Delegate found that the Applicant’s classes 3 and 8 goods to be the same or similar to the Opponent’s classes 3 and 8 goods; some of the Applicant’s classes 21 goods and 44 services the same or similar to the Opponent’s classes 21 goods and 44 services; and the Applicant’s services in class 41 relating to education for beauty and makeup to be closely related to the Opponent’s cosmetic products in class 3.

As was the case in New Zealand, the Delegate did not find the trade marks to be substantially identical but he did find them to be deceptively similar.

The Opponent’s opposition under section 44 and regulation 4.15A was successful in respect of some of the Applicant’s goods and services.

As the opposition based on s 44 / ref 4.15A was not successful for all of the goods and services, the Delegate went on to consider whether the Opponent has established any of the other grounds of opposition in relation to the remaining goods and services of the Applicant’s application. After considering the relevant law in relation to the Opponent’s prior user rights (s 60), ownership (s 58), bad faith by the Applicant (s 62A) and the application being contrary to law (s42(b)), the Delegate did not find for the Opponent in respect of the remaining goods and services.

As the opposition was only partially successful, the Delegate wrote the Applicant advising it that he intended to refuse to register the trade mark unless the Applicant agreed to amend the Applicant’s goods and services to the “remaining goods and services. In the absence of a response, the registration was refused in total. Then the Opponent was awarded costs in accordance with the standard scale.

What about that bad faith allegation?

In comparing the IPONZ decision with that of the parallel opposition before IP Australia, we learned about a previous relationship between the parties and a real connection between the marks. With the Opponent electing to not pursue the bad faith ground in New Zealand there was no need to consider this issue. It is not often that the bad faith ground is given much consideration in a decision as it is a serious allegation and cogent evidence is required to support it.

In pleading bad faith, the Opponent relied upon its long and extensive use of the well-known ANASTASIA BEVERLY HILLS trade mark in Australia (since 1999) and alleged that the Applicant would have been aware of the trade mark and acted in bad faith in filing their application.

Whether the application to register the Trade Mark was made in bad faith requires the Delegate to first consider the Applicant’s knowledge at the time of making the application and then decide whether the Applicant’s behaviour fell short of acceptable commercial standards.

It was evident from the Applicant’s evidence that the Applicant was aware of the Opponent’s Trade Marks having, by its own admission, been a previous licensed trader of the Opponent’s goods and services in Japan. The Applicant’s evidence also disclosed that the ‘Anastasia’ element of the trade mark is derived from the Opponent’s Trade Mark, to reflect the historical partnership between the parties. Finally, it was the Applicant’s evidence that the word ‘Miaray’ was added to the Trade Mark to create a new brand name based on words of Japanese origin.

The Delegate accepted that the existence of a former licensor/licensee relationship between the parties may weigh in favour of bad faith being established. Potentially, the Applicant may have scored an own goal by filing the evidence it did. However, the Delegate considered that there was insufficient evidence of the relationship between the parties with no reference to the agreement or any other dealings between the parties. In these circumstances, it was not possible to draw any conclusions regarding the Applicant’s obligations following the end of the agreement.

Indeed, there was perhaps a pleadings oversight with the Opponent not referring to the prior relationship in their Statement of Grounds and Particulars (the substantive part of the Notice of Opposition).

In relation to the Remaining Goods and Services the Delegate was not satisfied on the balance of probabilities that the application to register the Trade Mark was made in bad faith: “Mere awareness of the Opponent’s Trade Marks, alone, is not a basis for bad faith”.