Tasman Insulation New Zealand Ltd v Knauf Insulation Ltd

• Jurisdiction: New Zealand
• Judge: Brown J
• Judgment Date: 09 May 2014
• Neutral Citation: [2014] NZHC 960
• Docket Number: CIV-2011-404-8141
• Court: High Court
• Date: 09 May 2014

Under The Trade Marks Act 2002

In The Matter of Infringement of New Zealand trade mark registration number 105507

BETWEEN

Tasman Insulation New Zealand Limited

Plaintiff

and

Knauf Insulation Limited

First Defendant

Eco Insulation Limited

Second Defendant

Buildfornextgen Limited

Third Defendant

[2014] NZHC 960

CIV-2011-404-8141

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

Claim for breach of the plaintiff's trade mark “Batt” and “Batts” under s89 Trade Marks Act 2002 (infringement where identical or similar sign used in course of trade) — plaintiff sold insulation under the PINK® BATTS® brand name since 1973 — first defendant manufactured insulation under the name EARTHWOOL® — both insulation were made from recycled glass — first defendant alleged “Batts” was generic and the plaintiff had always used BATTS in conjunction with PINK — whether the plaintiff's trade mark registration was not valid because “BATTS” had become generic s66(1)(c) Trade Marks Act 2002 (“TMA”) (grounds for revoking registration of trade mark — in consequence of acts or inactivity of the owner, the trade mark has become a common name in general public use) — whether evidence of acts or inactivity prior coming into force of TMA could be taken into account in the consideration of whether the trade mark had become a common name in general public use — whether the trade mark should be revoked pursuant to s66(1)(a) TMA (inactivity over a continuous period of three years or more) — whether invisible use of a trade mark in HTML code was an infringement — whether the first defendant's EARTHWOOL® breached s9 Fair Trading Act 1986 (“FTA”) (misleading and deceptive conduct generally) because it conveyed the impression the product was made from animal wool instead of recycled glass — whether first defendant had used “Batts” as a description upon s95 TMA (no infringement for honest practices) — whether plaintiff's proceeding came under s105 TMA (unjustified proceedings).

Counsel:

J G Miles QC, K W Leod and J D Miles for the Plaintiff

C L Elliott QC J G Hazel and B Cain for the Defendants

J G Miles QC, Auckland

C L Elliott QC, Auckland

JUDGMENT OF Brown J

Introduction	[1]
The New Zealand insulation market and participants	[7]
Derivation of the word “batt”	[16]
Summary of events relevant to the claims and counterclaims	[22]
The arrival of EARTHWOOL® insulation into New Zealand	[22]
The marketing of the EARTHWOOL® product	[36]
Tasman reacts	[43]
The www.earthwool.co.nz website	[54]
The www.ecoinsulation.co.nz website	[59]
Pleadings and issues	[64]
Trade mark issues	[65]
Fair Trading Act issues	[70]
Issue 1: Has there been genuine use of the BATTS® trade mark?	[72]
Issue 2: Has the BATTS® trade mark become generic in New Zealand?	[85]
The law	[85]
Decision of Commissioner of Trade Marks of 17 March 1977	[98]
An issue of retrospectivity	[105]
The defendants’ evidence	[112]
Tasman's evidence: the “BATTS” survey	[137]
The causation component	[149]
(Positive) acts	[151]
Inactivity	[157]
Recognition by Tasman of risk of genericism	[160]
Analysis	[169]
Trade mark infringement	[174]
The sign usage in issue	[181]
Issue 3: Was there use of a sign in the course of trade and, if so, was that use as a trade mark?	[186]
Use of a sign	[186]
In the course of trade	[189]
Is the sign as used likely to be taken as being use as a trade mark?	[191]
The law	[192]
The parties’ cases	[199]
My assessment	[211]
The installation instructions on the packaging	[214]
The packaging label	[216]
The sentence on the www.earthwool.co.nz website page	[219]
The use of “Batt” in the HTML code	[222]
The issue of “invisible” use	[224]
Issue 4: Was the use of “batt” or “batts” within s 89(1)(a)—(c)	[237]
Issue 5: Is there an available defence under's 95?	[243]
Law	[245]
Discussion	[252]
Issue 6: Is there an available defence under's 66(1)(c)?	[261]
Issue 7: Was Tasman's proceeding unjustified?	[262]
The Fair Trading Act claims and counterclaims	[272]
Relevant principles	[274]
Issue 8: Is Knauf's EARTHWOOL® brand misleading or deceptive?	[282]
The evidence..	[287]
Discussion	[303]
Remedy	[319]
Issue 9: Is the manner of the marketing of the EARTHWOOL® product on the www.ecoinsulation.co.nz website misleading or deceptive?	[325]
Issue 10: Is the manner of the marketing of the EARTHWOOL® product on the www.earthwool.co.nz website misleading or deceptive?	[335]
Issue 11: Was the 26 August 2012 press release referring to “a competitor” false or misleading?	[348]
Analysis	[357]
Issue 12: Was Tasman's 7:1 compression ratio statement misleading or deceptive?	[361]
Issue 13: Was the immersion test misleading or deceptive?	[380]
Disposition	[397]

Introduction

1 It is common ground that beyond New Zealand the word “batt” is not the subject of trade mark protection for insulation materials. 1 Although not common ground, there was evidence that when used as an alternative name for a slab or segment of building insulation material, the word “batt” is generic and of common usage abroad. 2 In New Zealand, however, since 27 August 1973 the plaintiff (“Tasman”) has been the registered proprietor of Trade Mark 105507 for the sign “BATTS” in respect of insulating materials in class 17.

2 Unsurprisingly therefore Tasman contends that use of the word “batts” in New Zealand to describe other manufacturers’ insulation products constitutes an infringement of Tasman's registered trade mark. In particular Tasman sues for trade mark

infringement in relation to the use of the words “batt” and “batts” both on the first defendant's (“Knauf's”) EARTHWOOL® insulation product 3 and on the website www.earthwool.co.nz.

3 However the primary trade mark issue, in this litigation stems from the defendants’ contention that Tasman's trade mark registration is not valid because even in New Zealand the word “batts” has become generic. The statutory ground for such a challenge in s 66(1)(c) of the Trade Marks Act 2002 (“the Act”) requires the defendants to prove not only that the word “batts” has become a common name in general public use but also that that state of affairs is as a consequence of the acts or omissions of Tasman.

4 In addition to the trade mark issues, the parties’ various trading and marketing activities in New Zealand have excited claims and counterclaims of contraventions of the Fair Trading Act 1986. Tasman's primary concern relates to alleged representations by the defendants concerning Knauf's EARTHWOOL® branded product. These representations, according to Tasman, convey the misleading impression that the product is manufactured substantially from animals’ wool whereas in fact it is manufactured from recycled glass.

5 The defendants’ concerns relate first to a representation by Tasman as to the compression ratio of Tasman's packaged product and secondly to Tasman's conduct of a demonstration comparing Tasman's PINK® BATTS® insulation product and the Knauf EARTHWOOL® product floating on water. This demonstration, which I refer to as the immersion test, was dubbed “the Titanic test” by Tasman itself.

6 Throughout this judgment I will refer to PINK, BATTS and EARTHWOOL followed by the ® symbol because each of those words is a registered trade mark in New Zealand. However, where the parties use a different format in documents which are referred to in the judgment (e.g. the plaintiff's use of Pink Batts and the defendants’ use of EarthWool®), the form of the words actually used will be adhered to.

The New Zealand insulation market and participants

7 The total market in New Zealand for insulation products is approximately 15 million square metres per year. Insulation can take several forms depending on the mode of application. When insulating wall cavities the most common form of insulation is a rectangular segment, whereas for ceiling cavities and attic spaces segments or rolls of insulation are more commonly used. Blown insulation and sheets of polystyrene are also commonly used.

8 Such materials are primarily made from glass, polyester or wool. Insulation made from glass is the most commonly used, it being less expensive than polyester which in turn is less expensive than wool insulation. Numerous companies import from overseas insulation made from recycled glass whereas the importation of wool in large quantities into New Zealand is difficult due to New Zealand's regulatory requirements. The raw material cost of wool is also higher.

9 The term “glass wool” is often used by people in the insulation trade to refer to insulation made from glass whereas consumers in the general public tend to use the word “fibreglass”.

10 Tasman, which is the only New Zealand manufacturer of insulation products made from recycled glass, manufactures in excess of seven million square metres of product per year. Since at least 1973 Tasman has sold its insulation under the PINK® BATTS® brand name. The PINK® trade mark is owned by Owens Corning and is used by Tasman under licence in New Zealand.

11 Bradford Gold, Premier and EARTHWOOL® are imported brands of insulation products made from recycled glass. Knauf markets and sells insulation under the EARTHWOOL® brand. Eco Insulation Ltd (“Eco Insulation”), the second defendant, markets and sells natural wool, polyester and polyester/wool blend insulation in New Zealand and is a New Zealand distributor of Knauf's EARTHWOOL® insulation. Buildfornextgen Ltd (“BFNG”), the third defendant, is also a marketer and distributor in New Zealand of EARTHWOOL®...