Passing Off

The issue of passing off and breach of the Fair Trading Act 1986 was considered in the High Court in 2000. In Patience & Nicholson (NZ) Ltd v Cyclone Hardware Limited (High Court, Auckland, CP685/98, 25 June 2000, Rodney Hansen J), the issue of ownership of rights in names and trade marks was considered in the context of previous members of the same group of companies, now competing with each other.

Patience & Nicholson (NZ) Ltd, the plaintiff, had traded in New Zealand since 1961 under the P&N name and until 1989 had branded all its products P&N. It makes and sells cutting tools. Cyclone Hardware had purchased the Australian and international cutting tool business of the group, but not the New Zealand business. The question was whether the Australian interests could re-enter New Zealand, in the face of the New Zealand company’s claim to the P&N name and trade mark, and trade in competition with them, using the common P&N brand. As the case law indicates, this situation is far from unusual, as companies change their status, ownership and control.

While Justice Hansen accepted that there were numerous cases recognizing international “spill-over” of reputation and goodwill, he found that in this particular case the situation was somewhat different. That is, because a material part of the goodwill was localized in New Zealand and a greater part of the goodwill was found to be owned by the New Zealand company. A consideration the judge took into account was a market survey that indicated that the P&N name was associated with the New Zealand company, rather than the Australian company. There was also evidence of customers being confused and misled about the identity of the Australian company and its products.

An injunction was granted along with damages or an account of profits, which have now to be determined in a separate quantum trial. Cyclone Hardware obtained a stay and appealed the decision to the Court of Appeal. Cyclone Hardware Pty Ltd & Patience & Nicholson (NZ) Ltd, (Court of Appeal, Wellington, CA 145/00 and CA192/00, 20 February 2001)

The Court of Appeal considered the appeal in November 2000. In a judgment just handed down, a court consisting of Justices Keith, Blanchard and Tipping dismissed the appeal, indicating that the trial judge was entitled, on the facts, to come to the decision he did. In particular, in a judgment given by Justice Keith, it was found that the main criticism of the judgment, ie that the trial judge had improperly considered rights in the trade mark and the trade name separately, was rejected.

The court also found that the market survey provided a satisfactory basis for confirming the trial judge’s conclusions and that the judgment should be upheld.

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