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Possible changes to the Trade Marks Act on the horizon

The Ministry of Business, Innovation and Employment (MBIE), the government agency responsible for New Zealand's IP policy and laws, is proposing a review of New Zealand's IP laws.

The proposal is to draft an "omnibus" bill - the Intellectual Property Laws Amendment Bill - covering multiple IP Acts and Regulations to make "technical" amendments. This process is not intended to be a full policy review of the legislation.

As part of the development of the Intellectual Property Laws Amendment Bill, MBIE has released a discussion paper which flags the possible types of amendments to the IP legislation that are on the table. This article looks at the possible amendments to the Trade Marks Act 2002 (the Act).

The discussion document considers possible amendments which will impact on both the application and examination (or pre-registration) process for trade marks as well as oppositions and post registration disputes (third party disputes).

Pre-registration

Series applications

A series application includes multiple versions of a trade mark within a single application.

If a trade mark owner uses their trade mark in different colours it can be useful to cover all colour variations in a single application. It is currently possible to register series applications in Australia and the UK.

MBIE is looking to clarify and in turn simplify the criteria for valid series applications, or to completely remove the ability to register series applications.

We would support clarification of the criteria but consider it unnecessary to remove the ability for an applicant to obtain registration of a series trade mark.

Prior continuous use

During the examination process the Commissioner examines applications on both relative and absolute grounds.

If a prior registered trade mark is raised as a citation it may be possible to overcome the citation on written arguments, with the written consent of the owner of the prior registration or by showing honest concurrent use. However, the Commissioner does not believe that the phrase "other special circumstances" in the Act provides for the registration of the later filed application on the basis of prior continuous use.

The Australian Trade Marks Act 1995 specifically provides for registration on the basis of prior continuous use as a means to overcome a citation.

MBIE is proposing to take the same approach as set out in s 44(4) of The Australian Act to provide for registration on the basis of prior continuous use.

We would support this amendment as the true owner of a trade mark is the first party to first use or register a trade mark. An applicant with prior use should be able to rely on that use to overcome the citation of a later filed trade mark.

Amendments to bring the examination of national and international applications into line

MBIE is considering two amendments that would align the practice relating to the examination of NZ national applications and international applications designating NZ (IRDNZ).

i) Requirement that specifications of goods and services be clear

Currently the Commissioner can object to wording in the specifications of New Zealand national applications which is not sufficiently defined to be correctly classified. However, the Commissioner will not object to such unclear wording in the specifications of an IRDNZ as the International Bureau (IB) would have already determined the classification of the goods or services of the International Application (IR).

To avoid the registration of IRDNZs with unclear specifications MBIE proposes to amend the Act to require that specifications are clear.

We support this proposal as the IB cannot make an applicant amend their irregular specification and in the absence of a response to the objection the IR will proceed with the unclear wording. This has led to vague and even incomprehensible specifications for IRDNZs.

ii) Partial refusals for national trade mark applications

Another inconsistency between how IRDNZ and NZ national applications are examined is caused by the option of a partial refusal for an IRDNZ but not for a national application. This means that even in the absence of a response to the objection the IRDNZ will proceed for the goods/services to which the objection does not relate. Whereas the applicant of the NZ filed application has to file a response to avoid the abandonment of the application.

MBIE proposes amending the Act to provide for the same approach to partial refusals for both national and international applications. We support this amendment.

Clarify scope of acceptable memoranda

The Act allows for the entry of memoranda on the Register, in certain circumstances, at the owner's request.

There has been a difference of opinion between what attorneys and the Commissioner consider to be allowable memoranda.

In the absence of any guidance in the Act, MBIE is considering different options ranging from allowing any additional information to be entered as a memorandum through to repealing the provision so that no memoranda can be entered.

MBIE's preferred option is to limit memoranda to those that affect the scope and nature of the rights associated with a registration.

We consider that MBIE's stated preferred option is unduly restrictive. There is certain information that the public and potential assignees may benefit from having notice of that should be endorsed on the registration.

Third party disputes - oppositions and removal actions

Contrary to law

One of the grounds of opposition and invalidity is that the Commissioner must not register a trade mark if its use would be contrary to law.

The policy intention of this provision is to prevent registration of a trade mark that may be contrary to an Act other than the Trade Marks Act - for example the Flags and Emblems Act.

To clarify that this provision does not include use that is contrary to the Trade Marks Act, MBIE is considering whether the provision should be amended to make it clear that the term "New Zealand law" does not include the Trade Marks Act.

While we agree that the contrary to law provision does not self-refer to the Trade Marks Act, we do not consider that such an amendment is necessary. The Commissioner has already ruled that the provision does not encompass the Trade Marks Act (see for example Kiwilicious Cake Company Limited v Bluebird Foods Limited [2014] NZIPOTM 4 (29 January 2014)). On the basis of that decision, the Hearing Office should as a matter of practice rule that the ground is not valid when serving the Notice of Opposition or Application for Declaration of Invalidity on the trade mark owner.

False claims to ownership

Due to the structure of the Act, there is an inconsistency in the available grounds for an application for invalidity compared with an opposition.

While under both types of proceedings it is possible to claim that the application was made in bad faith, the Act does not specifically provide for a declaration of invalidity on the basis that the registered proprietor was not the true owner of the trade mark.

The High Court has construed the Act in such a way that a registration may be declared invalid on this ground (Chettleburg v Seduce Group Australia Pty Ltd [2012] NZHC 2563). MBIE proposes amending the Act to make this explicit.

This term has been given a broad and liberal interpretation and in the usual course of events is not a high hurdle for the applicant to overcome. The reason for inclusion of this requirement was to discourage busy bodies. In reality the requirements and costs of pursuing such proceedings is sufficient to discourage such busy bodies!

The aggrieved person status is not required for an opposition, and is not required for revocation or invalidity proceedings in Australia, Singapore or the UK.

It is to be noted that there are separate, and to date under utilized, provisions in the Act that allows the Commissioner or a Court to refuse applications for revocation or invalidity that are vexatious.

MBIE proposes removing the requirement for an applicant for revocation or invalidity to establish that they are an aggrieved person.

We consider there are sufficient safeguards in place that requiring the applicant to prove that it has locus standi (standing) to bring the proceedings is not required. The removal of this requirement will remove the need for the applicant to file evidence and make submissions on this point. It will also bring New Zealand's law in line with other of our Common Law cousins.

Undefended non-use revocation proceedings

Under the Act the onus is upon the owner of the trade mark to prove use of the trade mark during the alleged period of non-use to defend the application and save the registration. This is done by the owner filing a counter-statement and evidence of use.

In more than half of all non-use proceedings the owner does not file a counter-statement and evidence meaning the non-use application is undefended. The Commissioner of Trade Marks then has to determine the matter on the papers filed by the applicant.

From the discussion paper it appears that MBIE is divided on whether and how this provision should be amended.

The requirement for the Commissioner to consider the papers filed and issue a decision, which is then subject to an appeal to the High Court, is significantly delaying the finalization of undefended proceedings.

Given the Supreme Courts view that a trade mark owner should "use it or lose it" and that unused trade marks should be removed from the Register, we consider that a move to provide for the automatic revocation of the registration the subject of an undefended non-use proceedings is a welcome amendment (Crocodile International Pte Ltd v Lacoste [2017] NZSC 14). This would bring New Zealand practice in line with Australia's practice.

However, it may be appropriate for some consideration to be given to any necessary safeguards for an owner simply missing a deadline rather than deciding not to defend the proceedings. Under the Act, the Commissioner cannot grant an extension of time if the deadline for seeking the extension has passed.

By contrast, the Australian Act specifically provides for an extension of time and filing of the notice of opposition (similar to the NZ Counter-statement) even after the registration has been removed.

Next steps

We welcome the review of the Trade Marks Act by MBIE and largely support the types of amendments that are currently under discussion.

The issue of the discussion paper is the first of many steps in the path to enactment of the amendments. Following the consideration of the submissions in response to the discussion paper, MBIE will make recommendations to the Government as to what changes should be made to the Act. The Amendment Bill will then be drafted and will progress through the usual legislative process which will include an opportunity for public submissions on the Bill.

We will keep you informed of developments.

Elena Szentivanyi - July 2019