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A cautionary tale - the importance of filing your trade mark application in the name of the true owner
Under the New Zealand Trade Marks Act 2002 the true owner of the trade mark is the first entity to use or seek to register the trade mark. This article looks at why it is critically important to the validity of a trade mark registration that the application is filed in the correct name.
When filing an application for registration at IPONZ the following standard use statement forms part of the application: “The mark is being used or proposed to be used, by the applicant or with his/her consent, in relation to the goods/services”. This standard entry, made on the register by IPONZ, reflects the requirement of section 32(1) that an applicant must use or intend to use the trade mark.
While the filing of a trade mark application creates a prima facie presumption that the applicant intends to use the trade mark, it is not necessarily proof that the applicant is in fact the true owner of the trade mark1. If the ownership of the trade mark is challenged the applicant has the onus to establish it owns the trade mark. An applicant must not only claim to be the owner, they must also objectively be the owner2.
It is necessary to determine the true owner as of the date of application3. The applicant should be in possession of a proprietary right which if questioned can be substantiated4.
If the applicant is found not to be the true owner of the trade mark as of the date of the application then the application is invalid. That invalidity cannot be cured by assigning the trade mark application to the party who is the rightful owner of the trade mark.
A legitimate claim to ownership needs to satisfy the following5:
- There is no prior use or prior assertion of proprietorship;
- The applicant is using or has a sufficiently definite intention to use the trade mark; and
- There is no fraud or breach of duty.
The prima facie presumption that the Applicant uses or intended to use, the trade mark when the application was filed will be displaced if there is evidence that a person or company other than the Applicant in fact used the trade mark.
It is not enough that the Applicant and the company that actually intended to use the trade mark have a director in common. To accept that the mere fact that two companies have a common director they should be treated as one and the same or interchangeable would be to ignore the different legal personalities of the companies6.
Another scenario when the applicant might not be the true owner is where it is a distributor of the goods. As a mere distributor, the applicant is unlikely to have a valid claim to ownership of the trade mark7. In distributing the goods the benefit of the use accrues to the manufacturer not the distributor, therefore there is a prior use or assertion of proprietorship in favour of the manufacturer. Further, the filing of an application by the distributor is likely to amount to fraud or breach of duty under the third limb of the ownership test.
If the applicant is not the true owner, the application or registration is invalid and trade mark should not be registered. The issue then is whether that invalidity can be cured by assigning the trade mark to the entity that is the rightful owner.
In Australia the Full Federal Court has found that a subsequent assignment of the trade mark could not cure a defect in the claim to ownership of a trade mark. As the applicant (the director of the company in fact using the trade mark) was not the owner of the trade mark he could not assign a trade mark he did not own. Therefore, the purported assignment of the trade mark could not correct the fundamental problem with the trade mark application8.
Given the New Zealand courts’ approach of addressing the claim to ownership at the date of application, and the approach of the Full Federal Court, it has been confirmed in New Zealand that the purported assignment of the application does not resolve the fundamental defect that the applicant could not claim to be the owner of the trade mark as it did not use it or intend to use it9.
Before filing an application, it pays to pause and consider who is the true owner of the trade mark. The true owner will be the legal entity which will use or exercise control over how the trade mark is used. To file in a name other than the true owner potential puts the trade mark at risk of a finding of incurable invalidity.
For more information on the requirements for filing a trade mark application in New Zealand, please click here.
Elena Szentiványi - December 2022
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Footnotes:
1. Effem Foods Ltd v Cadbury Ltd HC Wellington CIV-2005-485-1487, 21 March 2007 at [32] - [34], and Monster Energy Company v Ox Group Global Pty Ltd [2017] NZHC 2393 at [56]
2. Aqua Technics Pool and Spa Centre New Zealand Ltd v Aqua-Tech Ltd [2007] NZCA 90 [Aqua Technics] at [46] and Thunderbird Products Corp v Thunderbird Marine Products Pty Ltd (1974) 131 CLR 592 at 602
3. Chettleburgh v Seduce Group Pty Ltd [2012] NZHC 2563 at [52}, (2012) 98 IPR 306; International Consolidated Business Pty Ltd v SC Johnson & Son Inc [2019] NZCA 61 at [84]
4. The North Face Apparel Corp v Sanyang Industry Co Ltd [2014] NZCA 398 at [21]
5. Newnham v Table for Six (1996) Ltd 44 IPR 269 at 278
6. Gardner NZ Intellectual Property Limited v Corporate IP Holdings Pty Ltd [2022] NZIPOTM 24 (21 October 2022) at [69]
7. Gardner at [89]; North Shore Toy Company Ltd v Charles L Stevenson Ltd [1973] 1 NZLR 562 at 569 - 571
8. Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd (2017) 141 IPR 1 at [14] and [45]
9. Gardner at [88]
