Tasman Insulation New Zealand Ltd v Knauf Insulation Ltd

JurisdictionNew Zealand
CourtHigh Court
JudgeBrown J
Judgment Date09 May 2014
Neutral Citation[2014] NZHC 960
Date09 May 2014
Docket NumberCIV-2011-404-8141

[2014] NZHC 960

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-8141

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
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

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).

Held: The issues were: whether the trade mark should be revoked pursuant to s66(1)(a) TMA (inactivity over a continuous period of three years or more); whether the trade mark “Batts” was not valid under s66(1)(c) (grounds for revoking registration of trade mark — trade mark had 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 there had been a breach by the invisible use of the trade mark in the website html coding; whether Knauf's EARTHWOOL® trade mark 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; and whether Knauf had used “Batts” as a description upon s95 TMA (no infringement for honest practices).

There was no rule that a secondary or even a third level product identifier could not be a trade mark. Such product identifiers could function as trade marks if they indicated to the consumer that the product originates from a particular undertaking. Each case would depend on its own facts. If it was possible for a sign to acquire distinctive character as a result of its use in conjunction with a registered trade mark, then it had to follow that the use of the former sign (once registered as a trade mark) in conjunction with another registered trade mark was not disqualified from consideration as genuine use for the purposes of s66(1)(a) TMA.

Tasman's use of “BATTS” was not as mere description but as a trade mark. It was plainly a use of the word in a style calculated to signal that its role was to denote the source of the goods and hence to function as a badge of origin. That was reinforced by the requirement that the trade marks be used as an adjective, not as a noun: i.e. PINK BATTS INSULATION. That the mark BATTS was being used by Tasman as a trade mark was supported by the fact that in several instances the word was marked with the symbol ®. There was genuine trade mark use by Tasman of the BATTS® mark during the relevant period.

Whether a trade mark had become “a common name in general public use” was a question of degree. The word “common” suggested that the use of the name had to be established or widespread in the trade for the relevant goods. A merely descriptive use of a registered trade mark did not make it a common name in the trade. Similarly, where a mark had become a household name, some use by way of synecdoche [expression whereby part represents the whole eg: “google” meaning to look something up on the internet] did not mean the mark had become truly generic or that such use was due to the acts or inactivity of the owner. Consumers who were aware of the trade mark significance of a name might nevertheless use it on occasion in a purely generic sense.

The date on which the relevant parts of the TMA came into force was 20 August 2003. Given the reference to events prior to that date, and indeed as far back in time as 1977 an issue arose as to the relevance of evidence prior to that date and whether acts or inactivity of the trade mark owner prior to 20 August 2003 could be taken into account in the consideration of the question whether the trade mark had become a common name in general public use. Secondly, if only acts or omissions since 20 August 2003 were relevant then, since the state of being a common name in general public use had to be as a consequence of the acts or omissions, was evidence of the state of the trade mark prior to that date relevant?

Whereas there were specific transitional provisions in respect of applications for revocation under s66(1)(a) ands 66(1)(b), there was no transitional provision in respect of applications under's 66(1)(c). Consequently the question fell to be determined by reference to general principles. Section 7 Interpretation Act 1999 created a presumption that an enactment was not retrospective. The purpose of the TMA was to ensure clarity and certainty and this suggested it was unlikely the TMA was passed with the intention that it would have retrospective effect. Therefore whether the trade mark had become a common name in general public use could only be considered to the extent that such a state of affairs had occurred as a result of the acts or inactivity of Tasman since 20 August 2003.

The evidence was that there was a degree of loose terminology, especially in stores where PINK® BATTS® product was sold, as well as a degree of usage by way of synecdoche. There was material in the form of the Trade Me listings, several of which are ambiguous on their face. Nevertheless there was also a not insignificant amount of what appeared to be generic use. However, collectively this evidence was not of a quantity or a quality to be satisfied that the trade mark had become a common name in general public use for pieces of fibrous insulation.

Tasman's brand compliance programme and the internal practices regarding use of the BATTS® trade mark showed that it was difficult to see how Tasman could realistically have done more to protect the trade mark and that its own use was almost exemplary.

Knauf's use of “batt” and “batts” was the use of a sign within the meaning of s5 TMA (interpretation — sign incudes: a brand, heading, label, letter, name or word) and s6 TMA (meaning of use of sign). The importation and sale of EARTHWOOL® insulation products bearing the sign “batt” or “batts” and the use of those words in the Knauf advertisements and on the www.earthwool.co.nz website all occurred in the course of trade.

“Batts” was a word which appeared to have a descriptive or nominative quality in other jurisdictions as designating a piece of insulation: it was not a fancy or invented word. The fact that, presumably because of Tasman's trade mark registration, the word had not been frequently used by others in New Zealand did not change the descriptive/nominative nature of the word. While proprietorial control observed national boundaries, the meaning of words did not. The high profile of the trade mark did not mean that all instances of use would be perceived by the relevant public to be trade mark use.

The names or brands which appeared on the packaging in the nature of promotional labelling were EARTHWOOL® and “Knaufinsulation”. They would both be perceived by the public to be brands. However the words “batt” and “batts” only appeared in the quite densely written installation instructions. The public would not perceive that manner of use of the words “batt” and “batts” in that context as being use as a trade mark.

The use of “Batts” in the HTML code on Knauf's website did not appear to convey common place information. The public would be inclined to the view that the use of the word “Batt” in this manner would be use as a trade mark. It was proper to construe invisible use of a registered trade mark by the use of a metatag, as use as a trade mark. The use of “Batt” in the HTML code was an infringement of the trade mark under s89 TMA. Knauf's use of “batt” and “batts” in the HTML code did not come within the protection afforded by s95(c)(i) TMA. Knauf's use of those words did not communicates any meaningful information about the “kind” of product or the “intended purpose” of the product. The use in the HTML code was not in accordance with honest practices. The other instances of use of the sign were infringements but nevertheless came within the protection afforded by s95(c)(i) TMA.

It was proper to construe invisible use of a registered trade mark by the use of a...

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