Decision regarding effective date of revocation of trade mark for non-use impacts on strategy

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Christopher Young
MinterEllisonRuddWatts, Auckland
Christopher.young@minterellison.co.nz

Matt Toulmin
MinterEllisonRuddWatts, Auckland
Matthew.toulmin@minterellison.co.nz

Decision regarding effective date of revocation of trade mark for non-use impacts on strategy

On 15 October 2020, the Supreme Court of New Zealand issued a decision discussing the interpretation of New Zealand’s Trade Marks Act 2002 (the ‘Act’) in International Consolidated Business Proprietary Limited v SC Johnson & Son Incorporated [2020] NZSC 110. The decision explored, in particular, the provisions relating to applications for revocation for non-use and the effect of revocation on subsequent applications for registration.

In New Zealand, the common approach taken towards trade mark registration strategy has been to ‘apply first, and to sort out issues arising from the register later’ – that is, secure priority on the register and then deal with any marks cited against the application for revocation in due course. The Intellectual Property Office of New Zealand’s (IPONZ) current examination practice is very quick compared to most countries which assists this approach, as does the ensuing 12 month period to overcome objections.

When it is known at the time of application for registration that an identical or very similar mark already exists on the register, the traditional approach has been to apply for registration first and then to file an application for revocation for non-use of the existing mark.

One of the intentions behind this strategy is to secure priority so that, if the existing mark is revoked, the client’s application for registration is next in line and can proceed to registration.

In a contested revocation action, this strategy has the advantage of avoiding the owner of the existing mark applying for a new registration, as well as obtaining fresh priority before the applicant for registration has done so. In these circumstances, with the likelihood (in the absence of a successful challenge that the filing was made in bad faith) that this new application once registered will provide a period of a further three years before a non-use challenge is viable.

These strategies are well known in New Zealand trade mark circles, both under the Trade Marks Act 1953 and continued under the 2002 Act. IPONZ’s online guidance also reflects it.

The aforementioned Supreme Court’s decision comes in the context of competing claims for the trade mark ‘ZIPLOC’. International Consolidated Business Proprietary Limited (ICB) owned a registration that had fallen into non-use and SC Johnson & Son Incorporated (SCJ) sought registration of the mark. On 19 April 2013, SCJ applied for registration of ZIPLOC and on 22 April 2013 – three days after applying for registration – SCJ applied to revoke ICB’s trade mark on grounds of non-use.

ICB’s mark was duly revoked. However, the Assistant Commissioner declined to allow SCJ’s application to proceed to registration on the basis that at the time of applying for registration, ICB was still the owner of the ZIPLOC mark by virtue of being the registered proprietor, and it was not permissible to have two identical marks on the register at the same time.

SCJ’s claim that there were ‘special circumstance’, justifying registration under section 26 of the Act, was not, in the Assistant Commissioner’s view, enough to overcome ICB’s ownership created by its existing registration of the mark.

As arguments developed on appeal, the focus shifted onto the effect of revocation for non-use of ICB’s existing mark. This in turn brought section 68(2) of the Act into frame, which provides that revocation of a mark takes effect from the date of application for revocation, or such earlier date as the Commissioner or Court is satisfied that grounds for revocation existed.

SCJ had not pleaded for revocation from an earlier date and so revocation was effective from the actual date of its application for revocation (22 April 2013).

In March 2019, the Court of Appeal, determined that the date for IPONZ to assess the register for identical marks when considering an application for registration was the date on which the new mark was to be actually registered, rather than the original application date which on registration becomes the ‘deemed date’ of registration.

Accordingly, by that time there was no identical mark on the register and so SCJ’s application should proceed to registration. In the Court of Appeal’s view, section 68(2) of the Act was not relevant. 

The Supreme Court disagreed. In its view, the register should be considered at both the date of application and at the time of registration, given the retrospective protection afforded to marks back to the date of application by virtue of the ‘deemed date of registration’.

On that analysis, at the date of application of SCJ’s mark, which would become the deemed date of registration, ICB’s mark was still on the register (albeit, by virtue of section 68(2) of the Act, only for a further three days). ICB’s mark was therefore a barrier to registration of SCJ’s mark by virtue of the prohibition in section 25(1) of the Act against registering identical marks.

However, the Supreme Court considered that there were special circumstances under section 26 of the Act and said that section 26 clearly contemplated co-existing identical registered marks. Drawing on the Court of Appeal’s findings, the Supreme Court reasoned that the only claim to ownership for the ZIPLOC mark that ICB had was by virtue of being the registered proprietor – other angles for ICB to argue ownership were no longer available to it on appeal. With revocation of ICB’s mark three days later, there was no ongoing basis for ICB to contest what the Court of Appeal had otherwise found to be SCJ’s legitimate claim to ownership of the ZIPLOC mark. SCJ’s application for registration was therefore allowed to proceed.

The Supreme Court summarised its findings – and gave practitioners in New Zealand strong guidance as to the correct approach, including:

• the register is to be assessed for competing marks as at the date of entry onto the register;

• but the date of the application remains relevant. There cannot be an identical or similar trade mark belonging to different parties on the register at the same time. This means that an application for registration of a trade mark must:

  • not precede the date of application for revocation; or

  • if it does, there must be an application to backdate the revocation to the date of application for registration, or there must be a finding of special circumstances under section 26(b) or one of the other exceptions in section 26 must apply.

The Supreme Court highlighted the availability of IPONZ register search functions to assist applicants for registration to identify potentially competing marks. A fairly common practice of applying for registration of a trade mark without having first done extensive searching of the register for existing potentially competing marks, appears to have been questioned by the Supreme Court’s finding that applications for revocation ought to have been made prior to that application for registration proceeding. 

This presents a range of commercial and practical challenges to applicants, including additional costs of searching, not knowing whether an existing owner has made genuine use of a registered trade mark within the relevant period (thereby defeating a revocation for non-use application), or, even if there was no such use, whether an owner may nonetheless seek to fight the application, thereby introducing cost and delay as relevant factors. In the case of similar marks, the applicant may often wish to try first try to persuade IPONZ through submissions and/or evidence of honest concurrent use of a mark to register the later filed application because of sufficient differences, and may wish to avoid engaging with the owner of the earlier registered mark for tactical reasons early on.

However, the real lesson from the Supreme Court’s decision may be in its discussion about the fact that revoked marks still have legal holding up until the date that they are revoked. By default, this will be the date of the application for revocation but there is express provision in the Act for the application to be backdated.

The Supreme Court’s decision expressly endorses back-dating such applications so that revocation can have effect at an earlier date where the grounds for non-use exist. Expunging the mark from the register at an earlier juncture will obviously be significant in terms of the registration/revocation strategy at issue in this case, but may also have wider implications in seeking to head off at an early point any retaliatory infringement actions that the owner of the revoked mark may seek to advance on the strength of the residual rights in that mark.

Otherwise, the Supreme Court has endorsed an approach where special circumstances could be relied upon to save a registration applied for before an application for revocation of an existing competing mark is made and where backdating is not sought. However, special circumstances will, by definition, not be ordinary and it is clear in this case that ICB did not have any viable basis, other than its registration to claim to be the owner. Other facts may result in considerable debate about each party’s claim to ownership which would make relying on special circumstances a risky proposition.

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