Fokker Brothers Inc. Ltd v Fokker Brothers Ltd

JurisdictionNew Zealand
CourtHigh Court
JudgePalmer J
Judgment Date11 May 2020
Neutral Citation[2020] NZHC 953
Date11 May 2020
Docket NumberCIV-2019-404-548

[2020] NZHC 953

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE

Palmer J

CIV-2019-404-548

UNDER the Trade Marks Act 2002

IN THE MATTER OF an appeal from the decision of the Assistant Commissioner of Trade Marks dated 28 February 2019, [2019] NZIPOTM 2

Between
Fokker Brothers Inc Limited
Appellant
and
Fokker Brothers Limited
Respondent
Appearances:

M C Hayes for the Appellant

C L Elliott QC for the Respondent

Intellectual Property — appeal against a decision of the Assistant Commission of Trade Marks which declined to revoke the respondent's trade mark because its non-use for three years was due to special circumstances beyond its control (breakdown of a personal relationship between a shareholder and a director of a company) — meaning of “special circumstances” as an exception to revocation — Trade Marks Act 2002

The issue was whether special circumstances existed.

The Court held that was genuine use of the trade mark in the course of trade by the sale of “Fokker Bros gravy”. Regarding the non-use otherwise, the threshold of “special circumstances” in s66 TMA not particularly high. It simply required that there were special circumstances, the non-use of a trade mark was due to those circumstances and the circumstances were outside the control of the owner of the trade mark. The breakdown of a personal relationship between a shareholder and a director of a company, leading to the director assisting another business to develop the same trade mark before being removed, was sufficiently unusual to qualify as special circumstances. The non-use was due to those circumstances, which were outside the owner's control.

There was evidence of Ms Molloy's intentions to use the mark within the relevant period. There was evidence that both Ms Molloy and FBL had financial difficulties after the relationship breakdown. With a closely held company, it was perfectly reasonable to take into account the resources of the sole shareholder in assessing the resources of the company. A reasonable inference was available that the financial difficulties directly contributed to the failure to use the mark within the relevant period

The circumstances were “outside the control of the owner of the trade mark”. FBL was not able to control the marriage breakdown or the actions of Mr Molloy. There was no evidence Ms Molloy was able to control them either.

The appeal was dismissed.

JUDGMENT OF Palmer J

The judgment was delivered by me on Monday 11 May 2020 at 11.00 am. Pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

Summary
1

Ms Ingrid Molloy was the sole shareholder, and her husband Mr Leo Molloy the sole director, of Fokker Brothers Ltd (FBL). FBL registered a trademark over “Fokker Brothers”. Ms and Mr Molloy separated, acrimoniously. Mr Molloy cut off Ms Molloy from involvement in aspects of their businesses. He assisted his sister, Ms Julie Christie, to set up a new business in a company called Fokker Brothers Inc Ltd (FBIL). Ms Molloy removed Mr Molloy as director of FBL and refused to allow FBL to sell the Fokker Brothers trademark to FBIL. FBIL applied to revoke FBL's trade mark on the basis it had not been used for three years, under s 66 of the Trade Marks Act 2002 (the Act). The Assistant Commissioner of Trade Marks declined the application on the basis the non-use of the trade mark was due to special circumstances outside the control of FBL. FBIL appeals.

2

The appeal is governed by the principles usually applicable to appeals by rehearing: I must make my own assessment of the merits. I find there was genuine use of the trade mark in the course of trade by the sale at Harry's Place, Parnell, Auckland, from February to November 2014, of “Fokker Bros gravy” on a roast of the day and duck-fat chips. Regarding the non-use otherwise, the threshold of “special circumstances” in s 66 is not particularly high. It simply requires that there are special circumstances, the non-use of a trade mark is due to those circumstances and the circumstances are outside the control of the owner of the trade mark. I accept that the breakdown of a personal relationship between a shareholder and a director of a company, leading to the director assisting another business to develop the same trade mark before being removed, is sufficiently unusual to qualify as special circumstances. I accept the non-use was due to those circumstances, which were outside the owner's control. I uphold the Assistant Commissioner's decision and dismiss the appeal.

What happened?
The Molloys, FBL and the trade mark
3

Mr and Ms Molloy married in 2000. They operated a number of restaurants and bars. They intended to develop “Fokker Brothers” as a themed hospitality brand. In January 2006 they incorporated FBL for that purpose. In February 2006, FBL applied to register a trade mark for “Fokker Brothers”. It was registered over five classes of goods and services relating to foods and drinks, business services, transport and home delivery services and takeaway and restaurant services. 1

4

Apparently, the brand was envisaged to be used for pizza, complete with “big Fokkers”, and “little Fokkers”, “fat Fokkers” and “skinny Fokkers”. There was even to be a “Mother Fokker”, a “wee jockey Fokker” and a “12” lucky Fokker”. 2

5

By 2008 the concept had evolved into a Fokker Brothers steakhouse and sports bar. Mr Molloy would be the manager of a new company which would run out of Parnell premises leased by his sister, Ms Julie Christie. 3 Mr Molloy entered a Heads of Agreement regarding this but it did not proceed.

6

There was more planning for a Fokker Brothers business in 2013, with the development of a menu, a restaurant and bar operation, merchandising ideas and engagement of a graphic designer. 4

7

In 2014 to early 2015 gravy products and beer were sold under the Fokker Brothers brand in Harry's Place, a restaurant and bar which the Molloys operated in Parnell, Auckland. Fokker Brothers advertisements were also run on three television screens there from February to May 2014.

The Molloys, Ms Christie and FBIL
8

The Molloys' marriage ended in December 2014. Mr Molloy was the sole director of FBL. Ms Molloy was and still is the sole shareholder.

9

Ms Molloy made handwritten notes in April 2015 for ideas for the further development and use of the Fokker Brothers mark. She prepared a business plan for a Fokker Brothers burger bar as part of a proposed application to a bank for finance but it did not proceed.

10

The Molloys were also involved in Cowboys Bar in Queenstown. Ms Latu, the General Manager of Cowboys, gives evidence that Mr Molloy held meetings to discuss plans for a restaurant serving a Big Fokker steak and a Mother Fokker burger. In 2015, Mr Molloy was solely running Cowboys, and he instructed Ms Latu not to allow Ms Molloy into the bar and to trespass her if she turned up. From December 2014 to July 2015, Mr Molloy attempted to persuade Ms Molloy to sell the trade mark to his sister, Ms Christie. She refused, wanting FBL's assets, including the trade mark, to be dealt with as part of an overall settlement of their relationship property. 5

11

In July 2015, Ms Christie incorporated FBIL and is its sole director and shareholder. FBIL applied for a Fokkers Brothers trade mark. But FBL's trade mark was cited against FBIL's application and prevents FBIL's trade mark from being accepted and registered. On 24 July 2015, FBIL applied for revocation of the Fokker Brothers trade mark on the ground it had not been put to genuine use.

12

As director, Mr Molloy did not resist the application for revocation. But on 28 August 2015, as sole shareholder of FBL, Ms Molloy removed Mr Molloy as sole director of FBL and appointed herself in his place. Ms Molloy's evidence is that was because of his failure to properly protect the FBL's assets and act in its best interests. 6 She did resist FBIL's application. Lawyers' letters ensued.

13

Despite that, in September 2015, FBIL opened a Fokker Brothers hamburger restaurant in Market Square, Auckland. Ms Christie's evidence is that Mr Molloy helped with the interior design and menu. 7

Decision by the Assistant Commissioner of Trade Marks
14

On 19 February 2019 Jane Glover, an Assistant Commissioner of Trade Marks, declined the application to revoke FBL's trade mark. 8 She dealt with a variety of evidential objections. She found the relevant period for the alleged non-use of the

trade mark was 24 June 2012 to 24 June 2015. 9 She considered five alleged uses of the mark in the relevant period, holding
  • (a) the preparatory steps in 2013 showed a subjective intention to use the mark but no objective commitment; 10

  • (b) although the mark had been used for “beer” and “gravy” products at Harry's Place in 2014, these were not covered by the registration so FBL had not put it to use;

  • (c) Ms Molloy's actions in 2015 were merely exploratory in nature; 11

  • (d) Mr Molloy's actions in 2015 were not attributable to FBL as he was working to assist his sister to open a Fokker Brothers restaurant; 12 and

  • (e) there is insufficient evidence to attribute use of the mark to either Mr or Ms Molloy, on behalf of FBL. 13

15

However, Assistant Commissioner Glover found that the non-use of the trade mark was due to special circumstances outside the control of FBL. She held that “special circumstances” must relate to external forces, as distinct from the voluntary acts of an owner, and do not need to be trade-related. 14 She found Mr Molloy's actions were external to FBL. 15 She held that “[f]rom December 2014 onwards, the company's actions were seriously hampered by the relationship breakdown between its sole shareholder and its sole director, and the actions that Mr Molloy took after the relationship ended”, in helping a third party competitor get there first. 16 She also found the ability of FBL to...

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  • Fokker Brothers Inc Limited v Fokker Brothers Limited
    • New Zealand
    • High Court
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