IP LAW UPDATE 2005
RECENT DEVELOPMENTS IN IP LAW
This paper was written for the Auckland District Law Society and presented to its members in October 2005
The aim of this paper is to give practitioners an overview of some of the more important recent developments in intellectual property (IP) law in New Zealand. The focus is on IP but with some discussion of related internet and privacy issues. In doing so, I hope to be able to provide a broad review of the past 12-18 months, identifying the main developments and more significant trends.
I have not attempted to deal with all developments. Neither time nor space permits that. However, hopefully I will be able to discuss a few of the more relevant and interesting issues, so as to give participants an overall feel for what is happening in this field.
Patents are regarded by many as one of the more esoteric and at times difficult areas of IP law. It represents as good a place as any to start.
Methods of Treatment of Humans
The Court of Appeal has handed down two recent decisions in the patents field. In the first, Pfizer v Commissioner of Patents,  1 NZLR 362, a full court (Anderson P, Glazebrook J, Hammond J, William Young J, O’Regan J) ruled on the allowability of methods of treatment of humans.
Pfizer had lodged two applications directed to methods of medical treatment of psychotic disorders, using a new compound. The Commissioner rejected the claims on the basis that they related to a method of treating humans and therefore failed to meet the test of a patentable invention as per s 2 of the Patents Act 1953. The hearings officer rejected the claims on the basis that they were not allowable on moral/policy grounds. Pfizer appealed the IPONZ decision to the High Court (judgment of Ellis J in Re Pfizer Inc, High Court – Wellington, AP257/2000, 30 August 2002, unreported). The High Court upheld the decision of the Assistant Commissioner. Pfizer then appealed that decision to the Court of Appeal.
In doing so, Pfizer argued that it was desirable that methods of medical treatment should be patentable and that Wellcome Foundation Ltd v Commissioner of Patents  NZLR 385 (“Wellcome“) should be overruled essentially for policy reasons.
In dismissing the appeal, the Court of Appeal found that its earlier decision in Wellcome was clear and that it prevented patents being granted for methods of treating disease or illness in human beings. Accordingly, it concluded that the issue was properly one for the legislature not the courts. The Court also stated that while conformity between the laws of New Zealand and Australia may be a desirable policy objective, that Australia’s acceptance of patentability of methods of medical treatment was not determinative.
Pfizer’s central argument was that, consistent with the judgment of the Court of Appeal in Pharmac, (Pharmaceutical Management Agency Ltd v Commissioner of Patents  2 NZLR 529) it was now appropriate for the Court to overrule Wellcome so as to permit the patenting of methods of medical treatment. It argued that such a conclusion would logically follow from the finding in Pharmac that methods of medical treatment are in fact capable of being an invention under the Act.
In delivering the principal judgment, O’Regan J accepted that the course proposed by Pfizer was certainly open to the Court, stating at paragraph 80 that:
“All of these heads of argument must, of course be addressed in the context of Pfizer’s broad contention that that patentability of methods of medical treatment was desirable and that we should overrule Wellcome (and Pharmac to the extent that it did not overrule Wellcome) for policy reasons. We accept that it would be open to us to do so, in the same way this Court accepted the patentability of Swiss claims in Pharmac.” In saying this, to some extent we have consistency between New Zealand and Australia”.
However, the Court was not prepared to go down Pfizer’s path, for reasons explained by O’Regan J. at paragraphs 83 and 84; namely that:
“…our overall view (which is confirmed by the nature of the evidence led) is that reform of this area of the law is better undertaken through the Parliamentary process. This would allow proper consultation with medical professionals and other organisations as well as the commercial interests which favour patentability, and the formulation of considered reform proposals after that consultation process has taken place.”
At the end of the day, the views of the Court are probably well summed up at paragraph 7 of the judgment of Anderson P, where his Honour states:
“…this Court once more unanimously holds that in terms of the present law, methods of medical treatment of humans are not patentable. Such methods may be inventions, but in terms of longstanding authority it is generally inconvenient to protect them with letters patent or grants of privilege.”
This result is an unwelcome one (sorry couldn’t resist) for the pharmaceutical industry. In Pharmac, (admittedly a case relating to Swiss-style claims) Gault J acknowledged that the exclusion from patentability of methods of medical treatment rests on moral, or more properly policy, grounds. Following this expression of opinion, IPONZ altered its practice, by refusing claims to methods of treating humans pursuant to Section 17 of the Patents Act – on the basis that the use of the invention would be contrary to morality.
Something in the order of 600 applications were left in limbo pending the outcome of the Pfizer appeal. Now that the position is clear again, objections are once again being made under section 2 of the Patents Act. Obviously, some claims may be capable of amendment by reformulating them as Swiss-type claims but for the rest, the prognosis is not good.
The net result is that we once again have a divergent position between New Zealand and Australia, even though the definitions of invention in the respective patents acts are materially the same. Further, decisions such as Bristol Myers Squibb Company v FH Faulding & Co Limited (2000) 170 ALR 439, (methods of medical treatment patentable and patents should be granted for such methods) might have formed the basis for some level of harmony. What we do see, on both sides of the Tasman is a delicate dance between our courts and legislatures as they try to demarcate the often fine line between making and interpreting the law.
In New Zealand, the courts having left the decision to Parliament, it seems that the likely result is that the new Patents Act will exclude from patentability inventions concerning diagnostic, therapeutic and surgical methods for the treatment of humans.
Accordingly, Parliament seems set to have the final word on this issue and to close the door on any further debate in New Zealand, at least for the foreseeable future.
Infringement and Validity
In the second decision, in Peterson Portable Sawing Systems Ltd v Lucas (Court of Appeal, CA64/03, 4 March 2005, Anderson P, McGrath J, Glazebrook J, unreported) the Court turned its mind to something completely different, portable sawmills. The appellant, Peterson, appealed against a High Court decision which had found that the patent was valid and infringed. One of the principal arguments put to the Court of Appeal was that the High Court judge had failed to distinguish between novelty and obviousness and in so doing finding that inventiveness is a matter of degree rather than classification. It was also asserted that in the High Court Fisher J had not properly addressed the issue of the common general knowledge.
In dismissing the appeal, the Court, per Anderson P, noted at paragraphs 79-83:
“The inventive concept was the addition to the Peterson Standard mill, with its advantages of open end framing, lightness and stability, of a quick and efficient method of, simultaneously, raising and lowering the separate rails…
That combination was fairly readily achievable, obvious in hindsight, and as the commercial success showed, very desirable to millers. But designers were designing away from such integration, not towards it. This would seem to be a classic case of a simple but not obvious solution, like the wheel.
Such observations are, however, less pertinent than the essentially factual enquiry which had to be undertaken by the trial Judge. It was for him to determine whether the Lucas mill was anticipated or obvious to the skilled addressee.
There will be cases where the subject art is complex and diverse, with the skilled addressee possessing extensive arcane knowledge which must be evaluated by a trial judge. Yet other cases will concern an art less specialised and complex. In those cases the scope for novelty and inventiveness may be relatively compressed and the notional skilled but unimaginative addressee may be more readily identifiable.
The present case seems one of the latter type. Indicative of the notional addressee are Mr Lucas, Mr Peterson, Mr Hutchinson and such designers as those of the Lewis mill. Fisher J was plainly entitled to have regard to reality in seeking to identify the notional. The appellants’ approach has been to invest a relatively straight forward, albeit subtle, question with an unwarranted complexity”.
As the person responsible for such complexity I should probably not comment at this point. In July leave was given by the Supreme Court, in what I think is the first IP case to be heard, to appeal parts of the decision (relating to the grounds of anticipation and obviousness). The appeal will be heard in November this year.
E Commerce Patents
Following the Federal Circuit’s decision in State Street Bank & Trust Co v Signature Financial Group Inc (method of doing business, producing a “useful, concrete and tangible result” and practical utility and therefore patentable) the general approach in New Zealand has been that methods of doing business are regarded in the same light as other methods and subjected to the same rules.
As a result, IPONZ has been inundated with new business method patent applications. While the New Zealand courts have yet to decide whether software or business methods are patentable it is likely that they will follow the international approach.
The patent area has been under the law reform microscope for some time now. A discussion document, Boundaries to Patentability was released by the Ministry of Economic Development (MED) in March 2002. Cabinet agreed to the policy proposals arising from the third stage of the review process and on 20 December 2004 a Draft (exposure draft) Patents Bill was released for public consultation. Submissions closed on 11 March 2005. The draft Bill is currently being reviewed. It is unclear when it will be introduced to the House, but with elections this year it is now likely to be in 2006.
The draft Patents Bill is a substantial document that will entirely replace the existing Act. Very briefly, the major proposed changes include:
a.A strengthening of the criteria for granting a patent;
b.Certain of the threshold tests, including that of utility, will be amplified and brought up-to-date with modern technological developments;
c.Novelty and obviousness will be measured against all matter made available to the public anywhere in the world, by any means, as opposed to just in New Zealand as at present; and
d.A Maori Consultative Committee will be set up to advise the Commissioner on matters relevant to Maori.
Ownership/Enforcement re Software
The courts are often called in to determine the ownership or vesting of rights in software. It is often a complex task.
In Pacific Software Technology Ltd & Anor v Perry Group Ltd & Anor  1 NZLR 164, (2003) 57 IPR 145, the Court of Appeal dismissed an appeal against a High Court decision which dealt with the ownership of computer software. The High Court ordered that the appellant deliver up the source code to the respondents. One issue which arose was as to the ownership of pre-existing libraries in which separate copyright vested. The Court found that it was necessary to imply licences vis-à-vis the source code and object code.
In New Zealand Payroll Software Systems Ltd v Advanced Management Systems Ltd & Anor  3 NZLR 1, the Court of Appeal considered s113, and s113 (1)(a) of the Copyright Act. The case related to the purported transfer of copyright in computer programs known as “LEADER”. In dismissing the appeal, the Court endorsed the High Court’s findings that, after the ongoing enhancement and modification of the software, the Crown, while once owning 100% of the software, at the time of the judgment owned 25%. The Court also found that the program had to be seen as a composite whole and not as separate units representing each different step in the process. As a result, it held that copyright was held in trust in appropriate proportions.
This case illustrates that the courts will intervene to determine the proportions of ownership or the vesting of other rights when software is developed and to import notions of the law of trusts, to balance the competing interests of parties who have worked together in a joint development programme.
In The Callista Group Ltd v Zhang, High Court – Auckland, CIV-2003-404-5127, 11 July 2005, Laurenson J considered a claim for breach of copyright. Callista sued Zhang (a computer programmer and dismissed former employee) alleging he had infringed its copyright. Callista asserted that Zhang had unlawfully written computer programmes for the second and third defendants. Zhang accepted that Callista owned the relevant copyright for its programmes but claimed parts of the source codes had been obtained from other sources and that the security keycode programmes were simply generic tools He also said that the programmes were not copied and lacked the necessary similarity to amount to an infringement.
The Court was firm in finding that copyright subsists in the programmes, in that they had been created over a significant period of time using skill, labour, and judgement. In terms of causal link, the Court concluded that the security programmes had been entirely incorporated in to the works created by Zhang. An injunction and damages of $150,000 were awarded.
On the issues of damages, Laurenson J expressed concern about the state of the evidence. His Honour considered the traditional approach as adopted in Feltex Furnishings of New Zealand Ltd v Brintons Ltd (1992) 4 NZBLC 102,913 but at the end of the day followed a broad “equitable/global” approach. In doing so, the Court lumped together the questions of compensation, flagrancy and ability to pay and ordered a single amount to be paid by way of damages. It is unclear as to whether this approach is correct in principle but in practical terms it might be seen as a solution to something of a dilemma.
In a case in which the trial judge expressed difficulty with both the facts and the law, this is a timely reminder that parties who represent themselves often do themselves a disservice, as Mr Zhang unfortunately discovered.
Copyright/Fair Trading Act
The interface between copyright and fair trading principles was recently canvassed in World TV Ltd v Best TV Ltd (2005) 11 TCLR 240 and 247.
WTVL (World) claimed that BTVL (Best) had infringed its copyright, or copyright that it had an interest in, by broadcasting Mandarin and Cantonese language programmes on a subscription basis. Baragwanath J dealt with the matter in two separate judgments. In the first, World obtained an interim injunction against Best. It alleged that Best was downloading by satellite programmes for which World had an exclusive New Zealand licence. It asserted that it was authorised to bring legal proceedings in New Zealand against other parties who, without authority, broadcast programmes produced by the Chinese state broadcaster CCTV.
In terms of the claim for interim relief, Baragwanath J stated that the Court’s responsibility in relation to intellectual property was to deal promptly and effectively with breaches. The Court was of the view that to not grant relief would be likely to cause damage to further subscribers. His Honour was uncertain as to whether he should grant relief in relation to various CCTV programmes, as pursuant to s 124 of the Copyright Act, Best was not the copyright owner or exclusive licensee. The Judge asked for further submissions on the latter point.
In its second judgment, the Court found that there was no evidence to support Best’s claim in copyright and that in the result it was not an infringement to simply rebroadcast material. Given that the copyright owner had elected not to sue the question was whether Best could itself bring a claim under the Fair Trading Act. On this point, the Court found that the scheme of the Copyright Act includes freedom to publish copyright material, subject of course to the right of the copyright owner to sue for breach of copyright. However, given that the copyright owner had elected not to do so his Honour concluded that it would be wrong to treat conduct that goes no further than mere copyright infringement as being actionable under the Fair Trading Act by a third party who was not the owner or an exclusive licensee.
This conclusion was dependant on the view that the mere broadcast of the particular programme was not misleading or deceptive. In doing so, the Court made interesting observations about the way to balance competing rights/interests provided by general and specific legislation and cited passages from Burrows, “Statute Law in New Zealand”, 3rd ed, LexisNexis, Wellington, 2003, pg 308, pg 314, pgs 368-383, and Ricketson, “The Law of Intellectual Property: Copyright, Designs and Confidential Information”, 2nd ed, Law Book Company, Sydney, 2002, para 1.125
Copyright in House Plans
In Golden Homes (1998) Ltd v Blue Chip Construction Ltd, High Court – Auckland, CIV-2003-404-7090, 21 June 2005, Allan J considered the question of copyright in building plans. The second plaintiff, Golden Homes Holdings Ltd (Golden) sought an extension of an earlier granted interim injunction against the defendants. The Court also considered an application for further and better discovery and for an order joining a new party. However, the judgment is more noteworthy in so far as it deals with the question of whether the interim injunction should be extended.
In declining an extension, his Honour considered the well established approach adopted in Ancher, Mortlock, Murray & Woolley Pty Ltd v Hooker Homes Pty Ltd  2 NSWLR 278 and Beazley Homes Ltd v Arrowsmith  1 NZLR 394. He found that there was a sufficient degree of objective similarity between Golden’s plans and those of certain of the defendants so as to raise a serious question for trial. However, he found that the balance of convenience favoured the defendants because, in part, the claim was not strong. Obviously, while only an interlocutory decision, it is a further reminder that in relation to building plans the courts tend to interpret copyright restrictively. As to whether infringement is ultimately made out, this will require determination at a substantive trial.
Dealing in Infringing DVD’s
On 15 November 2004 Zheng Wang was convicted in the Manukau District Court, Auckland under the Crimes Act 1961, for using a document known to be forged, to obtain a pecuniary advantage, and then escaping from custody. Wang was arrested by the police for selling pirated DVDs – being caught with a large number of DVDs and a sum of money in his possession. At the time of his arrest he tried to escape from custody.
The police charged Wang under the Crimes Act (S 257 making or using a forged document) rather than under the Copyright Act (S 131 criminal offence of dealing in objects that are infringing copies of copyright works). In his sentencing, Judge Harvey took into account the need to deter other potential pirates and to protect the community from the impact that pirating can have in terms of reduced creativity and the increased prices of accessing copyright materials.
Judge Harvey sentenced him to 15 months in prison on each charge, with the terms to run concurrently. It is understood that this was the first time in New Zealand’s that someone had been given a prison sentence in relation to pirated DVDs. Wang then appealed against both his conviction and sentence. See Wang v Police (High Court, Auckland, CRI-2004-404-000476, 12 May 2005 and 23 March 2005, Baragwanath J unreported).
While endorsing Judge Harvey’s concerns, Baragwanath J rejected the Crown’s argument that s 257(a) of the Crimes Act does not require proof of an attempt to deceive. His Honour noted that the requirement in sub clause (e) that the document be made “with the intention that it should pass as being made by some other person who did not make it…” point to Parliament’s purpose. They require the Crown to prove intent to deceive.
Accordingly, he found that because the DVDs were obvious forgeries and bore no resemblance to genuine licensed products that would be bought and sold legitimately that the necessary element could not be established. As a result his Honour found that the forgery conviction could not stand. The appeal against conviction was thus allowed and a sentence of 15 months for escaping from custody was set aside. A 26 day prison term was substituted.
With respect, it seems most unfortunate that someone found with 56 pirated DVD’s and a sum of money from the sale of others pirated DVD’s and who then attempts to escape from custody, ends up with a sentence of just 26 days. Music and movie piracy is a major problem and one would have thought that the police would have done a better job in getting a conviction that would stick and would have a bit more deterrence value.
To compound the problem, Mr Wang has since been charged with further offences – see article on DVD pirating in the 17 October 2005 issue of LawTalk.
In the digital copyright area, the main law reform proposals are contained in the position paper – “Digital Technology and the Copyright Act 1994 – Position Paper” Ministry Of Economic Development (December 2002). Issues discussed include:
a.Whether a broad distribution/communication right should be introduced;
b.Whether the existing definition of copying is broad enough to allow copyright owners to prohibit unauthorised copying of material in digital form and the conversion of print or analogue works to digital form;
c.Whether the definition of copying should be amended to address explicitly incidental and temporary copies;
d.Whether the fair dealing exceptions are adequate for digital technology and whether further exceptions are necessary; and
e.Whether time and format shifting should be allowed.
As at October, the Bill is still awaited. However, the timing of its introduction remains uncertain, given the election.
The Trade Marks Act 2002 came into force on 20 August 2003. This represents the first major overhaul of trade mark law for some 50 years. However, the new Act retains a number of existing features.
A trade mark is defined as any sign capable of being represented graphically and distinguishing the goods or services of one from another. A sign includes a brand, colour, device, heading, label, letter, name, numeral, shape, signature, smell, sound, taste, ticket, or word; many of these falling into the category of “non-traditional” marks, something I touch on below.
A series of new “absolute” and “relative” grounds for objection to registrability now exist. Certain marks cannot be registered:
a.a sign that is not a trade mark;
b.a trade mark that has no distinctive character;
c.a trade mark that consists only of signs or indications that may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin, time of production of goods or of rendering of services, or other characteristics of goods or services; and
d.a trade mark that consists only of signs or indications that have become customary in the current language or in the bona fide and established practices of trade.
A number of other significant changes have been made. The first is that the distinction between Parts A and B of the register has been abolished. Multi-class applications can now be lodged. Well-known marks receive greater protection and dilution of such marks may now be prevented where the use takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the mark. The use of trade marks in comparative advertising is now expressly permitted, as long as it is in accordance with so called “honest practices”.
Indigenous rights are expressly catered for. A Maori advisory committee advises the Commissioner of Trade Marks on whether a trade mark is considered to be offensive. Other marks, that are likely to offend “significant sections” of the community, may now also be rejected (see further comment below).
By all accounts, the new regime is working well, which in part is a reflection of the quality of people involved. This is encouraging, because similar advisory committees are proposed in the patents and plant varieties (PVR) areas, on the latter see comments below.
A number of trade mark cases are worthy of mention. The Court of Appeal dealt with the difficult issue of whether and if so to what extent a company can use a competitor’s marks in Benchmark Building Supplies Ltd v Mitre 10 (New Zealand) Ltd  1 NZLR 26. Benchmark appealed successfully from a High Court judgment granting an interlocutory injunction restraining an unusual form of comparative advertising. Mitre10 produced promotional brochures advertising their products and prices. Benchmark used these brochures, after putting their own stickers on them, setting out prices of equivalent products in its own Benchmarks stores. The High Court considered that this amounted to both copyright and trade mark infringement. The Court of Appeal differed, finding that Benchmark had not reproduced any copyright works as such; pointing out that nothing had actually been copied. Accordingly, it found that even though Benchmark had taken advantage of the brochures, economic benefit is not a relevant consideration in deciding copyright infringement and absent reproduction there was no infringement.
The Court then considered the question of moral rights. It confirmed that a breach of an author’s moral rights is a wrong actionable only by the author, not the copyright owner and as Mitre 10 was not the author of the brochures, that it could not do so. Finally, in terms of trade mark infringement, it found that Benchmark’s use of Mitre10’s trade marks constituted comparative advertising within s 94 of the Trade Marks Act 2002 and was therefore permissible.
Spill over Reputation
The conflict between local and overseas rights and interests continues to exercise the IP community’s mind. The need to recognise local proprietors’ interests, while at the same time acknowledging the internationalisation of IP, is likely to continue to create tensions. This it has, as illustrated by the recent Le Mans decision.
The Automobile Club de l’Ouest (ACO) is the organisation behind the famous Le Mans car races. It sought to register Le Mans in New Zealand for, inter alia, vehicles, engines and car tyres and parts, fittings and accessories therefore. However, the local Dunlop company, South Pacific Tyres New Zealand Ltd, opposed registration on the basis that it had been using the trade mark on tyres in New Zealand since the 1980s. It argued that ACO had not used the mark for the relevant goods set out in its specification and further that the trade mark was not distinctive, given the geographical significance of the French town Le Mans.
ACO responded by saying that the town of Le Mans was only well-known and indeed world-famous because of its efforts to hold and promote the race and without these efforts few people would have heard of the town at all. The applicant provided survey evidence which showed (not unsurprisingly) that the public at large associated Le Mans with the car race rather than the particular geographical location of the town (no doubt true!) Thus, the applicant argued that the primary significance was the race rather than the place
The hearings officer was clearly faced with a difficult call. The survey evidence was highly probative and one could understand ACO’s view that it was the true and rightful owner of the trade mark not just in France, but internationally. This viewpoint was supported by the results of the market survey which showed that the majority of the public thought of a car race when shown the words LE MANS in relation to tyres and the fact that only a small percentage of respondents made a connection with South Pacific/Dunlop.
The hearings officer concluded that the name Le Mans has more than one signification and that notwithstanding the evidence that the Le Mans trade mark was distinctive, that one of its meanings was geographical. Significantly, it was found that South Pacific had proved that it in turn had a reputation in the mark for tyres in New Zealand, it being able to show this notwithstanding the survey evidence which might suggest otherwise. The hearings officer also placed emphasis on the fact that South Pacific was the first party to use the trade mark in New Zealand for tyres. Accordingly it was found that South Pacific had sufficient reputation in the trade mark in relation to tyres, notwithstanding the contrary evidence.
Finally, ACO’s argument that South Pacific’s use of the mark Le Mans for tyres was a misappropriation was rejected on the basis that there was no evidence of fraudulent use.
In the result, while both parties had argued that the goods were too similar, the hearings officer came to a conclusion that the merits were sufficiently evenly balanced and that neither party should succeed entirely at the expense of the other. Even if this is not what the parties wanted, it is suggested, with respect, that the decision is practical and logically sound. This however will not necessarily be the final word on the issue. The parties have appealed/cross appealed. Accordingly, the outcome may only be known once the High Court has heard the appeal.
In Valley Girl Co Ltd v Hanama Collection PTY Ltd, (High Court – Wellington, CIV2004-485-2005, 6 April 2005, Miller J, unreported) the issue of spill-over arose again.
The appellant, (the New Zealand company, Valley Girl), failed in its appeal against an IPONZ decision that the use of the trade mark VALLEYGIRL was likely to mislead or deceive. The respondent, Hanama, had used the same mark throughout Australia since 1996. The sole director of Valley Girl had supplied garments and materials to Hanama in the past. The applicant indicated that the VALLEY GIRL name was intended to evoke fresh, youthful, and feminine qualities. Unfortunately, that connotation escapes me. The Office refused the trade mark application on grounds that Hanama had established a reputation in the mark in New Zealand before the relevant (application) date and was therefore the true proprietor of the mark in New Zealand.
Of possible relevance to those preparing evidence in these types of situations, I think it can be said that our tribunals and courts are reasonably well inclined to rely on Australian spill-over. Miller J put it this way, at paragraph 27:
“The number of travellers between New Zealand and Australia is also very substantial. It is true that the evidence does not establish what proportion of them would be aware of the respondents’ goods in Australia, but it is a reasonable inference that the proportion of travellers who fall into the target market corresponds to the proportion of that group in the population as a whole.”
The Court had to assess the situation under the Trade Marks Act 1953. It held that while the opponent/respondent had to point to knowledge of the mark in New Zealand, actual trade or dealing in the goods bearing the mark in New Zealand was not required. Both the Assistant Commissioner and the High Court Judge were influenced by the fact that the marks were identical.
The Court also looked at the issue of bad faith, an issue which had awaited detailed judicial comment and found that there was no evidence of fraud and that something more than the mere appropriation of a foreign mark must be shown in order to establish bad faith.
As to good/bad faith, his Honour stated, at paragraphs 52 and 53:
“As was held in Malibu Boats West Inc v Catanese (1999) 51 IPR 134 at , the Courts view borrowings from abroad with suspicion, and in circumstances where the appellant appropriated the same mark for goods in the same class, it is perhaps easier to draw the inference that the mark is valuable to the appellant precisely because it has some measure of recognition in this country.
I will approach the matter on the basis that the appellant was not entitled to claim proprietorship of the mark in New Zealand if its claim is affected by fraud or breach of duty, or the application was made in bad faith. The New Zealand Act does not refer to bad faith, but I accept that bad faith is not confined to dishonesty. It may be demonstrated by evidence of conduct falling short of reasonable standards of commercial behaviour”.
His Honour then concluded at paragraphs 56 and 57:
“I accept that the appellant has chosen to appropriate the respondents’ mark. In so doing the appellant took an opportunity that arose out of Mr Cho’s business dealings with the respondents in Australia. It is a reasonable inference that the appellant hopes to exploit such recognition as the mark has in New Zealand arising out of its use in Australia. The question is whether that amounts to bad faith.
I am not satisfied that it does. Accordingly, something more than appropriation of a foreign mark must be shown in order to establish bad faith. Since that is all the respondents can point to, their objection to the appellants’ claim to proprietorship fails so far as it is based on bad faith, fraud, or breach of duty”.
Rules of Comparison
In Austin, Nichols & Co Inc v Stichting Lodestar, (High Court – Wellington, CIV-2004-485-1281, 5 May 2005, Gendall J, unreported) the Court considered an appeal from ANCI, the proprietor of the well known trade mark “WILD TURKEY” for alcoholic beverages. It opposed registration of the trade mark “WILD GEESE” also for alcoholic beverages, on the basis that it was likely to deceive or cause confusion.
His Honour Justice Gendall agreed with the appellant. He held that the relevant consideration was of notional not actual use; and that the test is whether, as part of the overall assessment, this being the key consideration, the marks convey the same “idea”. The Judge found that confusing similarity may exist (in this case because of the “wild game bird” connection) despite differences and ultimately concluded that the overlap or similarity between the proposed goods to which marks would be used was likely to confuse or deceive the public. Accordingly, the appeal was allowed.
In Tammy v Tommy Hilfiger Licensing, Inc., (IPONZ, T4/2005, 14 December 2004) the same comparative exercise was undertaken in relation to marks used in the clothing industry. This time the Assistant Commissioner compared TOMMY with TAMMY. She did so because she considered that TOMMY is the essential feature of the Tommy Hilfiger marks and the Tommy Hilfiger marks are apparently commonly referred to by persons in the trade and by customers as “Tommy”.
Having done so, she concluded that:
“In comparing the TOMMY and TAMMY marks, I must ultimately focus on the whole of each word, not do a side by side comparison, and I must allow for imperfect recollection….
Having considered the parties’ submissions and evidence, my overall impression of TOMMY and TAMMY is that the marks look similar, but they sound different. In my view, the most important difference between the marks is the conceptual difference – that TOMMY is the name of a male and TAMMY is the name of a female. It is difficult to envisage how a substantial number of persons in the relevant market are likely to be deceived or confused by these two marks, which have such a significant difference as this.”
Non traditional marks i.e. colour, shapes, smells and the like, have proved to be a fertile area for disagreement. This is perhaps not surprising, given that they tend to occupy ground outside the traditional sphere of trade mark rights.
In terms of one category of “non-traditional” marks, namely shape marks, the decision in Fredco Trading Ltd v Miller, (High Court – Auckland, CIV2004-404-000895, 16 December 2004, Venning J, unreported) is likely to be important going forward.
Fredco applied for a declaration of invalidity in relation to a trade mark registration for plastic vine ties – known commercially as the Klipon. Trade Mark registration number 661428, is represented as follows:
and covers “plastic vine ties” in class 22. By way of explanation, the registration states that: “The mark consists of the three dimensional shape of a vine tie, as shown in the representation attached to the application”. The registration thus relates to a relatively simple and in part functional shape, making the decision an important one in this relatively new and largely uncharted area.
Miller, the proprietor of the trade mark, established that it had designed and sold the vine tie for over 20 years for use in the kiwifruit industry and had amassed very substantial sales. The parties were commercial competitors selling functionally similar vine ties. When Fredco launched a competitive product Miller sued for passing off, breach of the Fair Trading Act 1986 and infringement of its shape trade mark. The infringement proceedings were stayed pending resolution of the attack against the validity of the trade mark registration.
It is clear that his Honour Justice Venning was influenced by the evidence. He stated:
“The Klipon vine tie and the ITW vine tie carry out the same task. They satisfy the same basic requirements. However, aspects of the shape of the Klipon vine tie are different to that of the ITW vine tie. The swan-neck hook in particular and to a lesser degree the rectangular shape of the head are features that distinguish the Klipon vine tie from the ITW vine tie. More significantly, there is evidence that consumers can and do distinguish between a Klipon vine tie and its competitor based on shape”.
He went on to say that:
“While the shape of the Klipon vine tie is influenced by functional considerations because a vine tie must have certain features, the shape of the Klipon vine tie is not wholly determined by these considerations. There is a combination of aesthetic with functional by the use of, for example, the swan-neck.”
Accordingly, the Judge found that the shape mark was valid, relying on the important factual findings that:
a.“The ITW vine tie is distinguished by consumers as different to the Klipon vine tie.
b.The shape of the respondent’s vine tie is promoted along with the brand name Klipon.
c.There is evidence before the Court that customers use the shape to identify the product and its source as a Klipon vine tie both before and after sale.
d.It is possible to use alternative shapes to achieve the same purpose without copying identically the Klipon shape.
e.There is an aesthetic component to the shape of the Klipon vine tie, the swan-neck”.
In holding that the trade mark registration was valid the Court found that the “swan neck” shape of the Klipon vine tie made it “capable of distinguishing” from other vine ties. In doing so the his Honour noted that the terms “capable of distinguishing” and “distinctive character” have different meanings and that the swan-neck rectangular end and other variations of the Klipon vine tie were merely examples of how the same technical result could be achieved. Accordingly, the Court concluded that the evidence was sufficient to establish the necessary distinctive character and sustain the registration.
The decision has been appealed. The Court of Appeal will no doubt add to the debate over where the proper line of demarcation ought to lie in relation to “distinctive character”
In Société des Produits Nestlé SA v Cadbury Limited and Effem Foods Limited (IPONZ, T14/2005, 22 March 2005) Nestle sought to register their LIFE SAVER sweet as a shape mark. The grounds of opposition were that the shape mark was not registrable –
a.because the mark was in common usage and non-distinctive for food products and confectionery;
b.that the mark could not be distinctive of the goods for which Nestlé sought registration; and
c.because the mark was not capable of distinguishing the goods of Nestlé from those of other traders.
The Assistant Commissioner agreed, first noting that the scope of the shape mark was very broad. For example, she pointed out that it is possible that the shape mark could be of any size, any colour or colours, and of any solidity and that the goods to be covered by the mark (confectionery) were also very broad in scope.
Accordingly, she held:
“I consider that the very broad scope of the shape mark and the goods will make it more likely that other traders will legitimately wish to use the same or a similar mark as, on or in connection with, their own goods.
Although, this ring-shaped confectionery may not be similar to Nestlé’s LIFE SAVER sweet, I consider that this ring-shaped confectionery of other traders could be similar to the shape mark shown in representation attached to the trade mark application. Indeed, I consider that a doughnut could be caught by the shape mark as it currently stands.
There is also evidence that other traders may wish to use a ring-shape as the shape of their confectionery for functional reasons such as the “play” value of sugar candy with a ring shape, how shape affects taste, and how a ring shape may be perceived as making the product appear larger than a solid circular shape…”
This illustrates how important it is with ‘non-traditional’ marks to give very careful thought to the scope of the mark and the goods or services covered.
Further, the hearings officer supported her refusal, with further reasons, namely:
“Even if the shape mark had been defined to equate exactly with the LIFE SAVER sweet (but without the mark LIFE SAVER embossed on the surface of the shape mark), which is logically inconsistent because it could not equate exactly with the LIFE SAVER sweet in that case, I consider that there is still a significant difficulty in establishing that the shape mark is factually distinctive.
There is no evidence from consumers concerning how they would perceive the shape mark without the LIFE SAVER mark. And, in my view, there is insufficient evidence to support the contention that a LIFE SAVER sweet (with the LIFE SAVER mark) would be perceived by consumers as a trade mark even though there has been extensive marketing of the “hole” feature of the LIFE SAVER sweet.
If the shape of the LIFE SAVER sweet has not functioned as a reliable badge of origin, it must follow that the shape mark (which is much broader in scope than the LIFE SAVER sweet shape) is not factually distinctive”.
Again, the lesson is clear; appropriate evidence must be directed specifically to the ‘non-traditional’ elements of use, particularly given the growing and proper recognition that use does not necessarily equate to distinctiveness.
In Cadbury Ltd v J H Whittaker & Sons Limited, (IPONZ, T26/2004, 4 and 5 October 2004) registration of the colour purple was allowed. Cadbury Limited filed an application for registration of the colour purple, in Part A of the register; on the basis of use of the colour in relation to chocolate products. The specification of goods covers block chocolate, chocolate in bar or tablet form. Assistant Commissioner Walden allowed the application, stating in terms of the legal test, that:
“I must, however, focus on the particular goods covered by the application and how the colour purple has, in fact, been used by the applicant on those goods up to the relevant date so that I may properly understand:
(1)What consumers and traders will understand the applicant’s colour mark consists of:
(2)Whether consumers and traders will perceive the colour mark as a badge of origin.
I consider that the public will not normally perceive a single colour as a badge of origin unless they have been educated to understand that the colour functions in this way. And I consider that the use of the colour purple on packaging that contains other trade marks does make it more difficult (but possible) for the applicant to establish that the colour purple has functioned as a trade mark.”
Referring to the actual evidence lodged by Cadbury, the hearings officer found that it was sufficient to get the applicant home, putting it this way:
“… I find that the extensive, continuous, and largely consistent use over such a long period of time (since 1920 in New Zealand) of the colour purple on the packaging of the applicant’s milk chocolate blocks combined with specific attempts to educate the public into perceiving the colour purple as a badge of origin are likely to result in the public perceiving that the colour purple functions as a badge of origin for the applicant’s goods.
In the circumstances, I conclude that the applicant has established the very substantial level of factual distinctiveness needed to overcome the low inherent distinctiveness of its colour mark.”
It is clear from this that in all colour cases the opposing forces of inherent and actual distinctiveness will compete and that the “actual” will only prevail in relatively limited situations, and will of course depend on the quality of the evidence.
The issue of offensiveness is an interesting, and I suggest, an increasingly relevant one. Under the current Act S 17 provides a series of absolute grounds for the Commissioner to deny registration. One of the grounds is that the Commissioner considers that the use or registration of the trade mark “would be likely to offend a significant section of the community, including Maori”.
In terms of self-regulation, the ASA Code in turn states that insofar as ethical obligations are concerned advertisers have a general obligation to ensure that their ads are decent and that advertisements should not contain anything which clearly offends against generally prevailing community standards, taking into account the context, medium, audience and product (including services).
Specifically in terms of offensiveness, the Code states that:
“Advertisements should not contain anything which in the light of generally prevailing community standards is likely to cause serious or widespread offence taking into account the context, medium, audience and product (including services)”.
I will not review advertising standards decisions. However, in terms of what gets onto the trade mark register, it is sometimes difficult to see where the line has or ought to be drawn. For example, we have trade mark registration number 701409 for CNUT in class 25 for clothing, footwear, headgear. The proprietor is Cnut Limited, a United Kingdom company. We also have trade mark registration number 701410 for WNAK for the same class and goods and in the same name.
We then have trade mark registration number 289545 for the well known mark FCUK. The goods covered are articles of clothing; headgear, footwear in class 25. The proprietor is French Connection Ltd, of England.
Then we find trade mark registration number 308977 for the BUGGER device:
This registration is in class 16 covering paper, cardboard and goods made from these materials not included in other classes; printed matter. The proprietor is a New Zealand citizen.
I was then interested to note trade mark registration number 654408 for the GOOD BASTARDS device in class 32 for beer in the name of a Queensland individual.
I then did a search for “bad bastard” but the search returned a “no result”. This suggests that buggers and good bastards are okay but bad bastards are not necessarily so.
In terms of marks like “Tiny Penis” (see Ghazalian’s Trade Mark Application  RPC 33) the jury still seems to be out. That is not to say that “penis” marks are necessarily off-limits. When giving a recent talk in Australian, an Australian practitioner noted that there was nothing offensive about the word “penis” and that it was more the word “tiny” that was offensive.
Trade mark application number 725947 is currently under examination. It is for the word mark “On The Wrong End Of The Penis” covering printed matter e.g. books and calenders in class 16. The applicant is an individual from Beverly Hills, New South Wales. She also has an accepted application (Number 725949) for the word mark “On The Right End Of The Penis” in the same class and for the same goods. I regret to say that the applicant does not explain what distinguishes the wrong from the right end.
In deciding what is offensive and to who that offensiveness needs to be directed or felt, issues tend to arise as to how the so-called reasonable person would react and if the issue is to be looked at objectively, just how narrowly or broadly should the relevant universe be constituted. A recent Court of Appeal decision might shed a shard of light on that issue.
In R v Hana, (Court of Appeal, CA193/04, 27 September 2004, Anderson P, McGrath J, Glazebrook J, unreported) Hana applied unsuccessfully for special leave to appeal; having been convicted in the District Court on two counts of, inter alia, offensive behaviour. This comprised standing naked on a traffic island in Courtenay Place, a major Wellington thoroughfare, at 2.30 am. It was common ground that some of the patrons of nearby night club (Kitty O’Sheas) found the incident amusing rather than offensive. It is unclear whether Guinness or some other lubricant was involved. However, one member of the public complained and charges were laid. It was argued that his behaviour was confined to a nude appearance and did not involve any “ancillary lewdness” and that the public reaction was confined to amusement and derisory comments and that the only people likely to be in vicinity at the time were those who had been enjoying the convivial atmosphere of the adjacent night club.
The Court of Appeal, in a slightly more censorious tone, held that a deliberate display of nakedness by an adult in the middle of a major city thoroughfare, even in the early hours of the morning, is manifestly legally capable of being offensive and that the interests of the wider community needed to be taken into account in reaching that conclusion. At paragraph 5 the Court stated:
“With respect to counsel, we think the submissions overlook the readiness with which intoxicated persons may be amused by offensive behaviour. But in any event Courtenay Place, even in the early hours of the morning, is not the exclusive domain of such people. At 2.30 in the morning it is highly likely there will be other people around; those driving vehicles in the area for personal or business reasons, patrons of night clubs who have not been reduced to frivolity by over indulgence in alcohol, local residents travelling to or from their homes, and such like.”
This suggests that when offensiveness is involved an objective “wider community” approach may be adopted and that sectional and sometimes more tolerant views will not necessarily prevail.
Statutes Amendment Bill
The Statutes Amendment Bill (No. 5) was reported to contain “minor and technical amendments” to the Trade Marks Act 2002, (the “Act”). It received its first reading in the House on 14 April 2005. The Government Administration Select Committee was to give its report back to the House by 14 August 2005. According to George Wardle, Senior Analyst, Intellectual Property Policy Group, Ministry of Economic Development, (whose assistance I acknowledge), the Bill was reported back to the House of Representatives by the Government Administration Select Committee on 1 August 2005, just prior to when the House dissolved for the elections. A copy of the Select Committee’s report can be accessed at http://www.clerk.parliament.govt.nz/Content/SelectCommitteeReports/249bar2.pdf
A copy of the Bill is available at www.knowledge-basket.co.nz
A number of the proposed amendments are purely technical. However, a number of them have potentially important consequences. The more significant changes are as follows.
Clause 90 substitutes a new S 17 into the Act, which has been re-drafted to remove the perceived lack of clarity of the phrase “register a trade mark or part of a trade mark”. It is not possible for the Commissioner to register part of a trade mark and the amendment is designed to correct this possible anomaly.
Clause 91 amends S 18(1)(c) of the Act to remove the suggestion that a purely descriptive certification trade mark can be registered. This will be achieved by deleting from S 18(1)(c) “(unless the trade mark is a certification trade mark)”. Once this is done, the Commissioner will be able to register something which has not previously been legally recognised as a certification trade mark.
Clause 92 amends S 25(1) of the Act. A new S 25(1)(a)(ii) restores a ground for refusing registration that was inadvertently not carried over from the Trade Marks Act 1953.
S 25 of the Act was intended to perpetuate the provisions of S 17 of the old 1953 Act, with some modifications in relation to well-known trade marks. S 17 of the 1953 Act provided the Commissioner with a specific power to refuse to register a trade mark. One such situation was where an identical mark was thought to be registered in respect of similar goods or services and where its use was likely to deceive or confuse.
The Ministry of Economic Development has taken the view that the current wording of S 25 does not provide the Commissioner with the power to refuse to register a trade mark where it is identical to another trade mark (belonging to another person) for similar goods or services and where its use is likely to deceive or confuse. The view that it has taken is that while the Commissioner does have a general power under S 17 of the Act to refuse to register a trade mark, (where its use is likely to deceive or cause confusion), S 25 needs to be amended to expressly provide the Commissioner with the power to refuse to register trade marks in the above situation.
Clause 93 amends S 32(1) of the Act by clarifying that it is the owner of the trade mark who applies for its registration. S 32(1) specifies that a person may, on payment of the prescribed fee, apply for the registration of a trade mark. Under S 17(1)(b)(iii) the Commissioner must not register a trade mark if the application for the registration of the trade mark is made in bad faith. This is a new provision which did not exist in the 1953 Act.
A trade mark can now be attacked or opposed on the basis of bad faith. The term “bad faith” is not defined in the Act. However, as our new act is based on the corresponding UK act, it is likely that UK case law will be persuasive in determining what amounts to bad faith.
It is clear from earlier UK cases that an improper claim to proprietorship may amount to bad faith. It is also clear that the applicant’s intention and knowledge will be important considerations in determining whether good or bad faith exists. It is possible that an applicant might apply for a trade mark not knowing of the existence of another entity, even though the existence of that entity might be proved conclusively at a subsequent date. The purpose of the change is to move back to the approach under S 26 of the 1953 Act, which provided a purely objective test of ownership. The amendment does this by clarifying that the person applying to register a trade mark, merely needs to be the person claiming to be the owner of the trade mark.
Clause 105 amends S 208(5) of the Act to clarify the relevant uninterrupted period of suspension of use in relation to certain trade marks registered before the commencement of the principal Act. S 208 sets out the transitional arrangements in respect of trade marks registered before the commencement of the current Act. Under the 1953 Act, a registered trade mark could not be revoked for non-use during the period of five years, beginning at its actual date of registration. This meant that the relevant date was the date the trade mark was entered onto the register.
The wording of S 208(4) of the Act was designed to preserve the five-year non-use period only for those trade marks whose actual date of registration was before the date of commencement of the current Act. However, it soon became apparent that S 208(4) could be interpreted as applying to registered trade marks that had a deemed date of registration. That is, the date an application for registration of a trade mark was filed and that this was before the date of commencement of the current Act. It was therefore felt that S 208(4) needed to be amended to remove this uncertainty.
MED officials have stated that S 208(5) was supposed to preserve the five-year period of suspended use under the 1953 Act for any trade mark whose actual date of registration was before the commencement of the current Act, and where use of the trade mark was suspended within the 5-year period prior to the commencement of the current Act. It appears that, as drafted, it provides that the use of the trade mark must be suspended before that 5-year period. S 208(5) is therefore designed to provide that the use of the trade mark must be suspended within the 5-year period before the commencement of the current Act.
All of these changes are potentially important, depending on the particular factual situation that arises. The passage of the Bill will be closely followed for this reason.
5.BREACH OF CONFIDENCE
Breach of confidence is an important remedy. Breach can be difficult to prove. However, once established, it can be a remedy with real teeth. This is illustrated by the recent case: Eil Brigade Road Ltd v Brown, (High Court – Christchurch, CIV2001-409-000733, 5 August 2004, Fogarty J, unreported). The plaintiff, EIL, brought a successful action against seven defendants, all of whom had been former employees, claiming it had lost five major customers as a result of the defendants’ breaches. The judgment provides a useful summary of the law in relation to breach of the duty of confidence; breach of duties of loyalty, good faith and fidelity; misuse of confidential information, inducing a breach of contractual relations and interference with business by unlawful means and conspiracy, all of which were run by the plaintiff.
The defendants argued that the customers could not be, and in fact were never, the property of the plaintiff; those customers who did transfer would have transferred their business to the defendants anyway and at most nominal damages should be awarded, as the customers would have moved regardless of any breach of duty or unlawful conduct by the defendants.
The Court rejected these defences and found that the principal defendant breached his duty of mutual trust and confidence by taking personal advantage of social relationships with account managers to encourage them to leave the plaintiff and that these breaches were serious enough to warrant liability for damages. His Honour also found that the breaches of duties of fidelity, inducement of breach of contractual relations and conspiracy were all substantial factors in the plaintiff losing its customers. In the result, the quantum of damages was assessed only on the conspiracy action on the basis that it was in reality causative of the harm. General damages of $1,578,000 were awarded for loss of profits and the sum of $1,556,000 was awarded for loss of business value on the sale of the plaintiff company.
In Norbrook Laboratories Ltd v Bomac Laboratories Ltd  3 NZLR 49 (Court of Appeal, Keith J, Tipping J, McGrath J) the Court dealt with the sometimes vexed issue of onus of proof. Norbrook brought proceedings against Bomac, alleging, inter alia, that it had misused confidential information that Norbrook had given it, by supplying the information to another party or alternatively, in making an application for regulatory approval. The central allegation was that Bomac had misused information concerning the correct percentage of an ingredient in Norbrook’s animal remedy product. In the High Court, Heath J dismissed Norbrook’s claims for misuse of confidential information and breach of fiduciary duty. On appeal, Norbrook argued that Bomac must have, either subconsciously or otherwise, provided the third party with the relevant confidential information concerning the percentage.
The appeal was dismissed. The Court found that there was no legal or evidential onus on a party in possession of confidential information, pursuant to a commercial agreement or otherwise, to satisfy Court that it has not misused it. It reiterated that the onus of proving a breach remained on the party alleging such misuse.
At paragraph 27 the Court stated:
“Nor do we accept that contractual obligations of confidentiality in a commercial context require that there should be a legal or evidential onus on a party in possession of confidential information to satisfy the Court that it has not misused it. Any other approach would unduly inhibit competition and would be contrary to the principles as stated in the citation from Copinger and Skone James……… The onus of proving the breach accordingly remains with the plaintiff Norbrook. That onus required it to call evidence of misuse, that is evidence giving rise to an inference that there was misuse. Norbrook also had to negate any evidence put forward by Bomac to counter an inference that the confidential information was misused.”
The Court of Appeal differed from the trial judge on certain questions of fact and accordingly considered the matter of breach afresh. Nevertheless, it came to the same conclusion and after having looked at the practicalities of the situation, stated at paragraph 35 that:
“It is helpful to begin from some basic principles. First, the possession of confidential information does not of itself preclude a person from developing a product equivalent to that which is protected, provided that the confidential information or element is not misused. Secondly, the fact that a person is aware, when receiving information from an independent source, that it conforms with the confidential information, does not in itself give rise to misuse. Nor does the mere fact that the person takes comfort from that knowledge. It is only if the knowledge or comfort causes the person to do, or to omit to do, something that there is conduct amounting to misuse. Normally this will take the form of a person avoiding having to undertake some part of the process required to develop the product. Were the rule to be otherwise, it would be virtually impossible for those possessing confidential information ever to be involved in developing equivalent competing products. It must be borne in mind that the purpose of the protection of confidences in law and equity is to prevent disclosure and misuse, not to disqualify people from competing.”
This should help to clarify just what a defendant is expected to do when allegations of misuse are made.
Apart from a number of interlocutory injunction decisions (see the September issue of IPSANZ’s journal – the Intellectual Property Forum) there has not been too much to report. However, in Bruce Sutton v Bay Masonry Ltd (High Court, Tauranga, Civ-2003-470-000260, 28 May 2004, Williams J, unreported) the plaintiffs were the proprietors of a New Zealand registered design for a so-called “Z-post”; essentially a metal stake used for fencing. They sued the defendants for design infringement. The defendants alleged that the design was invalid. The proceeding went to trial on the rectification claim alone. The Judge concluded that the Z-post did not appeal to the eye and it was dictated solely by function. Accordingly, it was found that the registered design was invalid. The case can be noted for containing a full analysis of the dichotomy between form and function.
In Viscount Plastics Ltd v Lamnei Plastics Ltd, High Court – Auckland, CIV-2005-404-3452, 13 September 2005, Gendall J considered an application for an interim injunction in relation to plastic crates adapted to carry bread loaves. The plaintiff alleged that the defendant had infringed its registered design and copyright. The defendant argued that its design was sufficiently different and whatever similarities existed were too general in nature.
The Court found that there was a serious question to be tried on both the primary claim and the counterclaim and that while the plaintiff’s ability to manage its monopoly situation was a factor to be weighed in determining balance of convenience, considered that the delay which the plaintiff had allowed militated against granting relief. Accordingly, the application was declined. This illustrates that the management of the monopoly situation will certainly continue to give to a plaintiff the initial advantage, but that traditional considerations such as delay and a prejudice may well overcome it.
The Internet Society of New Zealand (InternetNZ) has set up a working group to formulate a policy as to whether the New Zealand country code should have an alternative dispute resolution system for domain name disputes and, if so what form it should take. The working group has been looking at options for some time now but a long overdue proposal is expected shortly. It is expected that we will adopt a regime similar to the one run by Nominet in the UK.
In terms of cases, in Containerlift Services Ltd v Maxwell Rotors Ltd, (2003) 10 TCLR 807, the plaintiff obtained an interlocutory injunction enjoining the defendants from using the name “Containerlift” or any confusingly similar name, including using it as Internet domain name or in promotional material. It did so, even though it only had a reputation and goodwill in the name in the United Kingdom. In doing so, the Court accepted that the defendants’ use of the domain name was designed to misappropriate the plaintiffs’ goodwill and reputation in name and trade mark. In doing so the Court relied on a “conflict of laws” rule on double actionability, finding that if the defendants’ acts constituted passing off they would be actionable in England, and if they occurred in New Zealand, they would be actionable in this country.
In an application for review (see Containerlift Services Ltd v Maxwell Rotors Ltd (No 2) (2003) 10 TCLR 817) the defendants raised concerns at the worldwide scope of the prohibition and submitted that the plaintiffs or any of them had failed to establish any reputation outside the United Kingdom and parts of northern Europe. Accordingly they said that the injunction should be varied. The defendants also argued that the cause of action based on s 3 of the Fair Trading Act should be struck out because the Act could only regulate supply of goods and services, (a jurisdiction provision) in New Zealand and did not have extraterritorial effect.
In relation to the Fair Trading Act jurisdiction argument, the Court accepted that s 3 does not have extraterritorial effect and that it governs actions of people who are in New Zealand. However, it concluded that people outside New Zealand can still invoke the Act and as the defendants’ website operated from New Zealand and was designed to promote its business, their actions were subject to the Act.
The Court agreed that as the plaintiffs had no reputation outside the United Kingdom and Europe, any interim injunctions should be no broader in their effect than is required. Accordingly, the injunction was amended so as to limit it to the United Kingdom and Europe. The Court also noted that the defendants were required to ensure inquiries from those areas were redirected and that if that was not feasible technically, to simply refrain from using the expression “Containerlift” at all on their website.
In terms of the UDRP, in Museum of New Zealand Te Papa Tongarewa v Greg Nicolas, Case No. D2004-0288, WIPO, Sir Ian Barker QC, the panellist ordered the transfer of the domain name “tepapa.com” to the Museum of New Zealand, commonly known as Te Papa (“Our Place”) and located in country’s capital, Wellington.
One of the central issues in these disputes is whether the respondent has a legitimate interest in the disputed domain name. In this particular case, the respondent stated that he had made demonstrable efforts to use the domain name and that these efforts were genuine. To support this contention he asserted that he wished to “create a website extolling the beauties and advantages of the many places he had visited and of New Zealand in particular” and that it was just coincidental that the first letters of what he had in mind coincided with the domain name. The phrase the respondent had in mind when the creative process was underway was the somewhat bizarre: “The Exciting People and Places Around”.
Sir Ian Barker was not willing to slip too easily into that trap, stating, rather incredulously that:
“the full name for the initials, does not immediately call to mind a website where Filipino migrant workers would find either inspiration as to other places where they might live or solace from their current adversities.”
If there was, as the Respondent claims, a religious and altruistic element in his proposed website, then one could readily have thought of many other names which would indicate both a religious element and the desire to assist Filipino migrant workers abroad”.
Sir Ian then concluded, rather pointedly, that:
“the inference is easy to draw that the name, “The Exciting People and Places Around,” was one concocted to give legitimacy to the disputed domain name”.
Finally, Sir Ian also noted that:
“given the publicity surrounding the naming of the national museum as “Te Papa” it is hard to see why the Respondent did not search the Trade marks register where he would have learnt at the time of registration of the domain name, of the Complainant’s trade mark application.”
He therefore found, correctly many would say, that the domain name had been lodged and subsequently maintained in bad faith.
In a similar vein and in a UDRP case relying on Te Papa you may want to refer to Maori Television Service v. Damien Sampat Case No. D2005-0524, WIPO.
8.FAIR TRADING ACT
The Fair Trading Act remains an important weapon in a competitor’s armoury, not just in terms of straight IP issues but also in terms of product and label claims. The High Court recently considered two cases which involved allegations of misleading or deceptive conduct in trade. The first related to a “Made in New Zealand” claim. In Carter Holt Harvey Limited v Cottonsoft Limited ((2004) 8 NZBLC 101,5887, 7 October, 2004), the large local paper and packaging materials company Carter Holt Harvey stated that its KIWISOFT toilet paper was manufactured by a New Zealand company. The product also bore the ‘Buy NZ Made’ logo. Consumers might have been forgiven for thinking that the toilet paper concerned came from New Zealand. It transpired that the paper was in fact made from imported bulk tissue and converted into toilet paper in New Zealand.
The High Court ordered that the company alter its packaging to make it clear that only part of the relevant manufacturing process occurred in New Zealand. Carter Holt appealed that decision, only to have the appeal dismissed by the Court of Appeal – see Carter Holt Harvey Ltd v Cottonsoft Ltd (2004) 8 NZBLC 101,588.
In an unrelated but seemingly connected development in Reckitt Benckiser (NZ) Ltd v SC Johnson & Son Pty Ltd, (High Court – Auckland, 9 September 2004, unreported), Reckitt Benckiser challenged SC Johnson’s television commercials for an air freshener. Leaving the obvious one liners to one side, very briefly SC Johnson claimed that the product sanitized the air by eliminating odour-causing bacteria. Reckitt Benckiser challenged the scientific basis for the claims and sought an urgent injunction preventing further commercials going to air.
The High Court agreed that there was merit in the challenge and granted an interim injunction.
9.PLANT VARIETY RIGHTS
This is another relatively seldom resorted to remedy in New Zealand. However, in Cropmark Seeds Ltd v Winchester International (NZ) Ltd, (High Court – Timaru, CIV-2003-476-8, 28 September 2004, John Hansen J, unreported) Cropmark was partially successful in its application for a declaration under the Plant Variety Rights Act 1987. It is the proprietor of a PVR in barley, known as “Optic”. In the declaration it sought a determination that the defendants had directed others to buy unlicensed varieties so as to avoid payment of a licence, thereby infringing its PVR. The plaintiff sought in addition to the declaration various monetary relief, including exemplary damages.
The Court made the declaration against both defendants, on the basis that they had infringed the PVR. The claim for monetary relief was unsuccessful against one defendant on the basis of lack of evidence as to knowledge/intent. However, in relation to the other defendant, the Court was satisfied that his conduct was sufficiently outrageous and illustrated a flagrant disregard for the plaintiff’s rights. Accordingly exemplary damages of $10,000 were awarded.
In 2002 the Ministry of Economic Development released a discussion paper on plant variety rights. This was followed by a 2003 Cabinet Paper. Both indicated that the Plant Variety Rights Act 1987 was to be amended to be compliant with the provisions of the 1991 UPOV Convention. A draft Plant Variety Rights Amendment Bill was released for consultation in mid 2005, with comments on the draft bill due by mid October.
The Bill is clearly a step in the right direction. However, it does not necessarily meet the policy objective of bringing the legislation into line with UPOV and the Bill still lacks a lot of detail, particularly at the procedural level. For example, there is no detail as to how plant variety rights are contested and cancelled, and just what powers the Commissioner has. The Bill is also unsatisfactory in so far as appeals are concerned, limiting any appeals from the Commissioner to the district Court in Christchurch. Given that other IP legislation provides clear structure in this regard, it as unfortunate that the Government has not taken the opportunity of bringing the PVR regime into line with other IP rights regimes.
The concept of personality rights is now more often referred to in the context of “image rights”. The situation in New Zealand remains unacceptably complicated, and some would argue introspective. However in Hosking (see below,) the Court of Appeal has at least confirmed that the law does not recognise a separate tort of breach of image rights. To that extent the position is now absolutely clear. Accordingly, a person wishing to try and prevent a third party from misusing or misappropriating his or her image has to choose from a range of ill-suited options.
In our modern personality/media driven society, I suggest that this is an area of the law that will receive increased attention. I certainly subscribe to the view that “image rights” are overdue for greater recognition in a developed society like New Zealand and that incremental growth, perhaps even into a separate tort, is likely.
Intimate and often voyeuristic covert filming is a particular type of activity which seems to be on the rise in New Zealand. By comparison, the relatively recent case on Bondi where topless sunbathers were photographed on a mobile phone comes to mind. It occurs when one person makes a surreptitious visual record of another person in intimate circumstances without the person’s consent or knowledge and in circumstances that the person would reasonably expect to be private. It takes away a person’s freedom of choice to decide how they respond or conduct themselves, for example, to adjust their behaviour to minimise the intrusion and control how they are viewed.
The Law Commission’s report (Study Paper 15) on the topic of Intimate Covert Filming, recommended both the creation of new criminal liability and amendments to the Privacy Act to provide a civil remedy through the complaints process under that Act. On 12 April 2005 the Justice Minister introduced the Crimes (Intimate Covert Filming) Amendment Bill.
The aim of the legislation is to criminalise specific types of conduct. This Bill proposes amendments to the Crimes Act 1961 to create three new offence provisions, relating to the making, possession and the publishing, importing, exporting, or selling of an intimate visual recording. All offences have a penalty of imprisonment not exceeding three years, other than simple possession (possession without an intention to publish, export or sell the intimate visual recording) which has a penalty of imprisonment not exceeding one year.
The Bill was reported back to the House by the Government Administration Select Committee on 1 August 2005. A copy of the Select Committee’s report can be accessed at http://www.clerk.parliament.govt.nz/Content/SelectCommitteeReports/257bar2.pdf
Tracking and Monitoring
Internet technology has spawned a plethora of devices and software for identifying, tracking, collating and retrieving information, which often includes personal information. I deal with these various topics under the “privacy” head. One of the most common of these new practices is rather endearingly referred to as cookies, spiders and web bugs. Another more recent phenomenon is ‘phishing’, also called ‘brand spoofing’ or ‘carding’. This involves sending an email to customers of established legitimate enterprises attempting to deceive them into providing personal information that is then used for identity theft and fraud. The email normally directs the recipient to a mock website. The recipient is then asked to update personal information such as credit card details and account information. Even if only a small proportion of these attempts succeed the potential for online fraud is significant and anecdotal evidence suggests the problem is real and happening now.
Cookies are data files which reside on a user’s computer hard drive. They are deposited on the hard drive and retrieved when the user visits the same website again. The information stored is used to convey the user’s preferences and again his/her personal details. Cookies are however also used for legitimate purposes, including allowing the use of “shopping carts” when buying online.
Web bugs are similar. These are programming codes comprising tiny graphics files, undetectable to the human eye. They allow others to monitor who is accessing a website and to provide details of the Internet protocol address – the user’s unique identifier. There has not, to my knowledge, been any litigation in New Zealand in this area. However, it is only a matter of time before it occurs.
Scraping involves gathering information from websites and re-using it. The question then arises as to whether this places an unacceptable strain on a company’s computer system and/or breaches a service provider’s terms and conditions.
In New Zealand, the online auction organisation Trade Me took similar action and managed to get a competitor TradeWise to stop scraping auction information (called “screen scraping”) from its site. See article by Russell McVeagh in World eBusiness Law Report, 9 May 2003 at http://www.worldebusinesslawreport.com/index.cfm?action=login&c=17801&id=1925.
In terms of the threat to privacy, in Private Word, Issue No. 48, April-June 2003, the Privacy Commissioner notes that the 1980 OECD Guidelines on Privacy may well be ineffective with spiders and crawlers. This may well be correct as the guidelines were prepared before these devices were invented. It is also noted that these devices are capable of subjecting personal data to fresh surveillance against criteria different from those for which the data had originally been collected and possibly unknown or even non-existent at the time of collection.
Interception and Monitoring of Emails
The issue of interception was graphically illustrated in a recent High Court decision in S P Bates & Associates Ltd v Woolworths (NZ) Ltd (HC Auckland, CL 15/02, 13 March 2003, Fisher J; unreported, noted in 26 TCL 15/2 and  BCL 391).
The plaintiff trades under the name “SecureNet”. SecureNet is an ISP which provides Internet services to Woolworths. Part of the service included scanning for viruses, spam, fraud, unauthorised access of the Woolworths’ computer system along with unauthorised computer usage by Woolworths’ own staff. Woolworths pulled out of their arrangement and SecureNet sought an interim injunction to prevent Woolworths doing so.
When the relationship between the parties deteriorated, SecureNet started checking Woolworths’ e mails saying that that they were entitled to do so pursuant to the arrangement and in the context of the deteriorating commercial relationship.
Justice Fisher was less than impressed with this suggestion. His Honour noted (at paragraph 8) that the screening of e mails was in the first instance a purely automatic process effected by software services contracted by others to SecureNet. The lesson is clear. Technical ability and access does not justify an invasion of others’ space. Likewise, a contractual relationship does not entitle a party to go beyond the terms of the agreement to pry into other person’s affairs, whether they are commercial or private.
Sections 216 A-F of the Crimes Amendment Act (No 6) extends the prohibition against interception of communications to cover electronic and data communications, which would probably cover e mails. S 216 B(1) now makes it an offence to intercept any private communications by means of an interception device (which is widely defined so as to include a “computer”). To “intercept” requires the conduct to occur while the communication is taking place. Arguably it would cover the unauthorized tracking and monitoring of e mails in the fashion dealt with in SecureNet and suggests that caution will need to be exercised by contractors who go outside the scope of their contracts (and indeed others).
The Privacy Commissioner, in the Telecommunications Information Privacy Code 2003, (28pp) (document available from email@example.com) relates to telecommunications agencies, insofar as they handle personal information about customers and telecommunications users. Amongst the requirements is that telcos must provide “blocking” options free of charge when caller ID is offered and prohibiting the use of traffic data gained from interconnection for unauthorised direct marketing. The Code commenced in November 2003.
Spam is a major problem in New Zealand, just as it is in Australia.
In May 2004 the Ministry of Economic Development produced a discussion paper. It received a large number of submissions in response. It is understood that respondents virtually all agreed that spam has markedly eroded confidence in the reliability of email and that legislation is necessary. In late July 2005, the Unsolicited Electronic Messages Bill was introduced. The Bill deals with text and instant messaging services and emails. It targets New Zealand-based spammers. The Bill adopts, in the main, an opt-in model, concentrating on multiple marketing messages.
It differentiates between three types of messages:
a.Commercial electronic messages which require an “opt-in” regime;
b.Promotional electronic messages which are not commercial but have as their primary purpose, the promotion or marketing of an organisation’s aims or ideals – these may have an “opt-out” regime; and
c.Non-controlled messages which are neither promotional nor commercial. These are un-regulated.
It is arguably difficult to properly distinguish between commercial and promotional messages and between organisations that are delivering a promotional message and those that are delivering commercial messages. Hopefully this issue will be addressed.
It is also unclear as to why the Bill has limited the opt-in approach to just commercial electronic messages. Arguably, it should apply to all commercial/promotional messages and not just those with a primary commercial/promotional purpose.
According to George Wardle of the MED, the Bill was introduced into the House on 28 July 2005. This was just prior to the House dissolving. It did not receive a first reading before the House dissolved and as a result was not referred to a Select Committee for consideration.
In addition, arguably, certain types of spam can now be caught by s250 of the Crimes Amendment Act (No 6), which covers a situation where someone intentionally or recklessly and without authorization:
“Damages, deletes, modifies, or otherwise interferes with or impairs any data or software in a computer system”.
The word “adds” was deleted from the provision because it would probably have caught “cookies”. Even so, denial of service (DOS) attacks would clearly be caught by the provision as would spam and crawlers that materially impair or erode a computer system/service through a sudden or sustained attack of sufficient magnitude.
The Tort of Privacy
In terms of the development of a tort of privacy, the recent developments in Hosking v Runting  3 NZLR 385 are well known. Mike Hosking applied unsuccessfully to prevent the publication of photographs of his wife and daughters in a stroller along a public footpath. He expressed concern about the risk to their children’s safety should photographs be published; particularly given his then profile. The media argued that the public effect of the orders sought would significantly impact on freedom of expression and on their commercial interests. It was also argued that the couple had allowed their private lives to be publicised in the past and that their privacy had to give way to the wider public interest.
In the High Court, Randerson J held that the Court should not recognise a separate tort of privacy and that the deliberate approach to privacy taken by the legislature to date indicated that the courts should be cautious about creating new law in this field. In effect, his Honour concluded that the law in New Zealand did not recognise a tortious action of privacy based on publication of photographs taken in a public place and that if this was to occur it was up to Parliament, not the courts, to create any new law.
In the Court of Appeal (Hosking v Runting (2004) 7 HRNZ 30,  1 NZLR 1) the Court unanimously agreed that, on the facts, the publication of the photographs did not amount to a breach of privacy. However, more importantly, a majority found that there is a new civil liability for publishing facts about a person. It did so on, the basis of an impetus for development caused by the international emergence of concern for the protection of human rights and a shift in the emphasis from the traditional approach of liability for reprehensible conduct to the protection of identified rights.
The Court had the option of relying and possibly expanding on the existing remedy of breach of confidence. This is what has happened in the United Kingdom and the Court noted that in doing so the courts had been able to provide an adequate remedy in most cases where the publication involved deeply personal information.
The Majority were however not attracted to this approach, stating at paragraph 48 that
“Privacy and confidence are different concepts. To press every case calling for a remedy for unwarranted exposure of information about the private lives of individuals into a cause of action having as its foundation trust and confidence will be to confuse those concepts.”
However, at paragraph 21 of his judgment, Gault P (as he then was) noted the submission that the circumstances surrounding the taking and intended publication of the photographs did not give rise to any obligation of confidence. There was no undertaking of confidence, and the nature of the information was not such that would give rise to an obligation of confidence. I suggest that, given that the photographs were taken in public and did not reveal anything particularly private, the artificiality of trying to fashion a claim around breach of confidence in this type of situation is self evident.
Instead, at paragraph 25, his Honour traced the development of the concept of breach of privacy at common law, going way back to Pollard v Photographic Co (1888) 40 Ch D 345, where a woman who commissioned photographs of herself for private use was able to prevent a photographer from incorporating her image onto Christmas cards for general sale. That is, on the basis of a “gross breach of faith”.
At paragraph 117 his Honour Justice Gault noted that in New Zealand there are two fundamental requirements for a successful claim for interference with privacy. That is,
a.The existence of facts in respect of which there is a reasonable expectation of privacy; and
b.Publicity given to those private facts that would be considered highly offensive to an objective reasonable person.
Accordingly, it was felt that the appropriate test should be to prevent breaches of privacy which were “highly offensive to the reasonable person”. It seems that the test is deliberately strict and narrow in scope and that only severe forms of breach will be covered.
His Honour noted, seemingly with approval, the sentiments expressed by Kirby J, (in the seminal High Court of Australia decision of Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd  HCA 63, 76 ALJR 1) who commented (at paragraphs 188– 189), that:
In recent years, stimulated in part by invasions of individual privacy, including by the media, deemed unacceptable to society and, in part, by the influence of modern human rights jurisprudence that includes recognition of a right to individual privacy, courts in several jurisdictions have looked again at the availability under the common law of an actionable wrong of invasion of privacy. It is this course that the respondent invited this court to take to remove any doubt that the interlocutory injunction it sought was fully justified …
Whether, so many years after Victoria Park and all that has followed, it would be appropriate for this court to declare the existence of an actionable wrong of invasion of privacy is a difficult question. I would prefer to postpone an answer to the question.
It seems that the concerns expressed about invasions of individual privacy, including by the media, struck a chord and that the majority of the Court of Appeal were prepared to go where even Kirby J was not quite prepared to venture. This, I suggest, is an important development, of which no doubt more will be heard.
Other Privacy Related Case Law Developments
In Television New Zealand Ltd v Mafart, (High Court – Auckland, S89/85; S90/85, 23 May 2005, Simon France J, unreported) TVNZ applied for leave to access to closed-circuit television footage and documents relating to the infamous sinking of the Rainbow Warrior by French agents. TVNZ planned to run a documentary for the 20th anniversary of the incident and sought from the Court access to trial material for purposes of making a documentary marking the anniversary. While previously unsuccessful the broadcaster was this time able to gain access to material (other than administrative files and sentencing material). In doing so the Court considered whether the law had changed since previous applications and whether privacy interests remained paramount.
Simon France J concluded that TVNZ should be able to gain access on the basis that the French agents had themselves chosen to write on the topic and intended to control coverage rather than remove it from public domain. In the result, the his Honour found that the privacy expectation was inherently low and in effect that the public interest outweighed the privacy interest.
In Attorney-General v Television New Zealand Ltd (2004) 17 PRNZ 360, (Supreme Court, Gault J, Keith J) in a very high profile case, the Attorney General applied successfully for leave to appeal against a Court of Appeal decision relating to TVNZ’s efforts to interview Mr Zaoui, a person alleged to be a security risk and subject to a security certificate. In doing so, the Supreme Court assessed the competing interests involved in values in the integrity of statutory processes, freedom of expression and national security
These cases show that the conflict between freedom of expression and a right to, inter alia, privacy will continue to shape our jurisprudence. It is also clear that rights in content, access to information, privacy, and freedom of expression are all concepts that play an increasingly important role in our modern “information society”.
On 21 June 2005 the Geographical Indications (Wines and Spirits) Registration Bill was introduced into Parliament. The Bill is designed to replace the Geographical Indications Act 1994, which has been in force for many years but surprisingly has never taken effect. Its purpose is to bring New Zealand up to date in this area.
Once passed in to law, registration of a geographical indications or GI will be limited to wines and spirits only. A registered GI restricts the use of the GI on wines and spirits that do not originate from the geographical area indicated. The Fair Trading Act and the common law will continue to provide the main source of protection for other goods and non-registered GIs.
The Bill contains a new definition of GI, namely an indication that identifies a wine or spirit:
a.as originating in the territory of a country, or a region or locality in that territory, and
b.as having a given quality, reputation or some other characteristic that is essentially attributable to its geographical origin.
The Bill seeks to deal with the relationship between trade marks and GIs and recognises a first-in-time, first-in-right principle for determining priority of rights. This regularisation is long overdue. The question is whether it goes far enough?
13.MATTERS OF GENERAL INTEREST
Regulation of the Patent Attorney Profession
In October 2002 the Ministry of Economic Development issued a discussion paper proposing a number of changes to the regulation of the patent attorney profession, including important issues such as multidisciplinary partnerships and profit-sharing. It also proposed that foreign-registered patent attorneys would be allowed to register and practice in New Zealand even when not resident here, subject to equivalence of qualification.
In June 2003 the Lawyers and Conveyancers Bill 2003 was introduced. Various submissions were made to the relevant Parliamentary select committee, liaison occurred between the patent attorney and legal professions and plenty of lobbying was done behind-the-scenes. A substantial piece of draft legislation eventuated but earlier this year the Bill was suddenly sidelined by the new Attorney General. This is one of the more rapid turnabouts, even in an election year. The future of this legislation looks decidedly uncertain and there is no point in trying to predict things until the new government clarifies its intentions.
Developments at IPONZ
Registered users of the IPONZ website are now able to send non-fee bearing trade mark correspondence electronically. Users can use this new online correspondence facility by attaching correspondence through a browser feature. Up to 10 letters can be lodged at a time. IPONZ is currently developing software that will allow registered users to submit patent and design correspondence online, including the ability to include payments. This is being done as part of the ECLIPSE project – a project to enhance and redevelop IPONZ’s present database (IPOL). It is hoped that this new functionality will be available early in 2006.
Internet Code of Practice
The New Zealand Internet Society, known as InternetNZ, has for some time now being working on an Internet Code of Practice. Its purpose is to serve as a guiding document for users, providers and businesses that use the Internet. It is designed to encourage responsible self-regulation.
In January this year it released its Internet Code of Practice Working Paper, so as to engender discussion and consultation. While adoption of the Code will be voluntary, ISPs that sign up may be liable for failing to comply with its provisions. Some of the principles include the rights of the public to:
a.clear and honest terms and conditions;
b.change service providers without unreasonable difficulty; and
c.information regarding blocking adult content and how to protect the security of their computer equipment.
ISP rights and obligations are also dealt with, including that they should not provide services that are illegal and certainly not knowingly host services that breach laws relating to offensive material, privacy, copyright and defamation. Likewise, the need to comply with New Zealand’s privacy laws is also dealt with as is the requirement to cooperate and deal responsibly with issues such as spam and hacking. A dispute resolution mechanism is also proposed.
Parallel importation is no longer the hot topic it was a few years ago, with the Government basically removing most barriers to the practice. The draft Patents Bill does not however expressly address the issue of parallel imports. Some commentators have suggested that this may create uncertainty as to the legality of parallel imports under the proposed new act. (The previous restrictions created under copyright and trade mark law have been removed – the Copyright Act 1994 allows parallel imports as long as the goods are not infringing copies in the country of origin and the Trade Marks Act 2002 provides that a trade mark is not infringed where the proprietor put the goods on the market under that trade mark anywhere in the world.)
The exception is the Copyright (Parallel Importation of Films and Onus of Proof) Amendment Act 2003, (which came into force on 30 October 2003) which prohibits the parallel importation of films within nine months of their first public release anywhere in the world.
14.PROCEDURAL CASES OF INTEREST
A number of cases may be of some interest, particularly to practitioners involved in contentious matters.
Ex Parte Orders
In Abn Amro Holdings Nv v Abn Union Treasury Management Ltd, (High Court – Auckland, CIV2004-404-7200, 9 February 2005, Heath J, unreported) the parties were in a dispute over the well known trade mark “ABN”. Abn Amro sought and obtained an ex parte interim injunction. The defendants, who included ABN Union Building Society, applied to rescind the order, on the basis that the disclosure made on the ex parte application was so inadequate as to justify a refusal of continuation of the injunction. Heath J declined to do so, finding that the disclosure was adequate in the circumstances. His Honour did however note that there was no reason why the Pickwick procedure (Pickwick International 1972] 3 All ER 384) could not have been utilised. The court commented:
“Nevertheless, that is the preferred practice: at least the Pickwick procedure provides an opportunity to be heard on the injunction application, albeit in a limited way. In my view, the application was not so urgent that the Pickwick procedure could not be used”.
One of the difficulties with ex parte applications is how to deal with hearsay and opinion evidence, often prepared in the heat of the moment. Heath J had no issue with it, pointing out entirely realistically I would suggest, at paragraph 18:
“Additionally, there can be criticism of the inadmissible opinion evidence before the Court from the private investigator. However, the inadmissible rhetoric of that evidence is most unlikely to have swayed the Judge”.
Nevertheless, his Honour still concluded that there was a seriously arguable case of trade mark infringement and that the balance of convenience favoured the plaintiff, for reasons including that:
a.the defendant had no prior business connection in New Zealand;
b.evidence on the nature of the potential loss to the plaintiff caused to the defendant by the injunction was sparse; and
c.the potential damage to Abn Amro was serious.
Accordingly, the orders remained in place.
As to the weight likely to be afforded to ECJ decisions (which are increasingly relied upon by IPONZ), the Court made its position crystal clear, at paragraph 28:
“To the extent that there is any difference in approach, while the English Court of Appeal and Laddie J were bound by the decision of the European Court of Justice, I am bound by the decision of the New Zealand Court of Appeal. I apply the approach evidenced in Anheuser-Busch”
Use of the Police
The Stepping Stones Nursery Ltd v Attorney-General, (High Court – New Plymouth, CIV2003-443-000054, 18 May 2004, Venning J, unreported), illustrates the dangers of using the police to try and advance commercial interests.
It is an interesting case that relates to PVR rights in a certain plant variety known as “Red Dragon”. The parties were commercial competitors, operating in New Plymouth. One of the parties managed to convince the local police to obtain search warrants and to search certain properties. The police did so and executed warrants with the assistance of a plant expert. Despite not finding any allegedly stolen budwood, the expert confirmed that the particular nursery involved was growing Red Dragon. On numerous occasions the police handed over sensitive commercial information to the company that had made complaint. The Stepping Stones Nursery then issued proceedings against the Crown claiming damages for breach of the New Zealand Bill of Rights Act 1990 (unlawful search and seizure) and for breach of confidence. It was successful.
The Court ruled, in this particular decision, that certain parts of witness statements’ be ruled inadmissible as they were not relevant. That is, as evidence of the competitive relationship between the parties and consequences on the unlawful disclosure were not relevant because the focus was on actions of the police in the conduct of the search and later in the disclosure of the information to a third party.
Stay of Proceedings
Situations arise where parties bring parallel proceedings at IPONZ and in the High Court. Questions then arise as to which particular proceeding should proceed first and if and in what manner the other proceeding should be stayed. This issue was dealt with by the High Court in Flexiteek International v Tek-Dek NZ Ltd, (High Court – Auckland, CIV2003-404-4123, 12 February 2004, Laurenson J, unreported).
Flexiteek was the proprietor of a patent. It threatened infringement proceedings against Tek-Dek. Tek-Dek then applied to IPONZ to have the patent revoked, under s 42 of the Patents Act 1953. Flexiteek and its manufacturer sought an interim injunction in the High Court alleging patent infringement. Tek-Dek in turn responded seeking a stay of the infringement proceedings in the High Court until the revocation proceedings had been resolved at IPONZ.
Tek-Dek failed however to convince the Court to grant a stay. Instead, Laurenson J found that the affidavit evidence indicated that resolution of the matter may take substantially longer if left to IPONZ. His Honour also noted that Flexiteek had already filed a number of documents in the High Court, whereas Tek-Dek had not yet filed original documents required to initiate the proceedings before the Commissioner. Finally, the Court took into account issues of costs and that there were case management advantages of dealing with and resolving both issues together and that this could be done better in the High Court, which at the end of the day was the better forum to decide the matter.
Sealed Air New Zealand Ltd v Machinery Developments Ltd, (High Court – Wellington, CIV-2003-485-2274, 25 August 2004, MacKenzie J, unreported) related to an appeal and cross appeal against a decision of the assistant commissioner in relation to an invention directed to certain packaging apparatus.
The facts are not necessarily that relevant. However, the Court did reaffirm that in patent opposition proceedings, while the standard of proof is the civil balance of probabilities the threshold which an opponent must reach is high; “manifestly untenable”. The Court also endorsed the assistant commissioner’s approach in allowing time for amendments to be made to the specification so as to remove ambiguity, on the basis that it was a practical and reasonable way of resolving the issues before him.
Summary judgment is being used more now in the IP field than in the past. For example, in University of Waikato v Benchmarking Services Ltd & Anor, (2004) 8 NZBLC 101,561 the appellant had sought the usual remedies against the respondents in relation to a survey which, it was alleged, the respondents had copied and used in their brochure and website. On appeal the Court of Appeal found that the respondents had no defence and that the claim for infringement was made out. As a result, summary judgment was granted and the question of damages remitted to the High Court for determination.
Belated Opposition Proceedings
In Lacme v Gallagher Group, High Court – Wellington, CIV-2004-485-2659, 17 August 2005, the Court considered an interesting technical point as to when patent opposition proceedings have been brought. Gallagher had opposed a patent by filing a notice of opposition, but it had not lodged a statement of case. The question was whether an opposition had been brought. The Commissioner found that Gallagher could bring belated opposition proceedings as the notice of opposition alone did not constitute the “launch” of the opposition.
The High Court differed. It considered that the concept of a “launched opposition” did not appear in the New Zealand legislation and there was no basis for importing it into the legislation and effectively putting a gloss on it. Accordingly, the appeal was allowed, meaning that Gallagher could not apply to revoke the patent through belated opposition proceedings. This of course did not preclude Gallagher from bringing subsequent revocation proceedings in the High Court.
15.PROCEDURAL DECISIONS AT IPONZ
In applications for removal, success or failure is often determined by the quality and thus probative value of the evidence put forward. In Seamaster v HCB Technologies Ltd, IPONZ, P12/2005, 28 February 2005, the application for removal failed. The applicant had filed some evidence to prove its case but sought in addition to rely on allegations made in the pleadings but not otherwise supported in the evidence.
Unsurprisingly, this approach failed, the hearings officer stating:
“Acknowledging this, [namely its evidentiary problem] the applicant sought to rely on the details of sales and promotions set out in the application for invalidity.
On the face of it those details do disclose prior use of the mark (since October 2002) and a consequent reputation in the mark.
However, (subject to any regulations) evidence in any proceeding under the Act can only be given by affidavit or statutory declaration (section 160). There are no relevant regulations.
It follows, therefore (in accordance with common practice) that claims made in the pleadings are not evidence.”
This is a reminder of the need to ensure that the evidence supports the legal test as pleaded and that both the pleadings and evidence have their own separate roles.
In New Zealand Rugby Football Union Inc v Seabreeze Fashions New Zealand Limited
IPONZ, T17/2005, 23 May 2005, the issue of consolidation came up. One might be excused for thinking that the relatively simple task of consolidating two proceedings would at least be open to the Commissioner. Regrettably, this did not prove to be the case, with the Assistant Commissioner rather surprisingly concluding that he had no jurisdiction to consolidate two oppositions. He did so for the following reason:
“Unlike the High Court there is no express power conferred on the Commissioner by either the Act or the Regulations to consolidate opposition proceedings.
There is no inherent jurisdiction to do so and I do not consider there is, in this case, a discretion provided by regulations 93 or 94….
If I am wrong in this view and regulation 94 does provide the Commissioner with the discretion to dispense with an immediate hearing of this opposition, on the condition that it is consolidated with the LWR opposition, the applicant has nevertheless failed to satisfy me that it would be reasonable to do so.
I do not consider consolidation is in the overall interests of justice….
Weighing all relevant considerations, I consider the “open ended” delay to the opponents outweighs any prejudice to the applicant that may be caused by procedural difficulties”.
The Assistant Commissioner thus made it clear that he would not have allowed consolidation of the proceedings anyway. That much one can accept. However, the finding that he lacked jurisdiction is troubling and these procedural powers, or lack thereof, should be looked at.
In Synthon BV v Smithkline Beecham Plc, IPONZ, P23/2004, 2 November 2004 the question of late evidence arose. That is, whether late evidence could be submitted after a substantive hearing (a patent opposition) but prior to issuance of the decision. While normally it is difficult to have evidence admitted late, particularly after the hearing has been conducted, the assistant commissioner allowed it in this case. That is, on the basis that it seemed clear to him that he had the jurisdiction to allow further evidence at any time after the formal evidence stages, as set out in regulation 49 to 52, have been completed. In doing so, the Assistant Commissioner accepted that this discretion should be exercised sparingly, particularly, as in the present case, when the substantive hearing had been held. Nevertheless, he held that because of the exceptional circumstances of the case he should give leave, pursuant to regulation 52, for the filing of the affidavits.
It is apparent that there have been a number of developments in New Zealand over the past eighteen or so months. Some have obviously been more important than others. It is clear that IP law remains an area of growing importance. Likewise, sometimes loosely related areas, where electronic communications, content and individual rights are involved, particularly when freedom of expression and privacy come into play, continue to grow in complexity and importance. Likewise, the demarcation between traditional IP and a host of fringe areas is increasingly murky.
Hopefully, this review will assist in keeping you reasonably up to date.