Trade Marks Bill update

July 2002

Significant amendments to the Bill since our last newsletter include:

• Defensive trade marks - These will be abolished and defensive registrations converted to ordinary registrations.

• Generic marks - Removal of a mark for genericism has become substantially easier under the Bill. The test is now "general public use" rather than the previous "trade use" despite the "general public use" test being vigorously opposed by some sectors. Trade mark owners can no longer rely on those in the trade knowing the sign as a trade mark.

• Non-use - Marks will be able to be removed after three years non-use as opposed to the current five year period.

• Protection of well-known trade marks - Amendments have strengthened the protection provisions. Registration now prohibited where the trade mark application covers a mark that is similar to a well-known trade mark irrespective of whether the application covers services which are dissimilar to the goods of a well-known trade mark (and vice versa). Protection now also provided against dilution of well-known trade marks. Now explicit on when infringement arises.

• Shape trade marks - Shift away from unwieldy European tests in favour of the general test of "distinctiveness" which applies in Australia.

The Trade Marks Bill is currently before Parliament and, after the election, is likely to be passed within six months to a year. The Bill is intended to replace the Trade Marks Act 1953 and will bring about a number of significant changes. We discuss below the key changes to trade mark law which you need to be aware of to protect your intellectual property.

Main changes

These are:

• amendments to the threshold test for distinctiveness which a trade mark must meet to be registered;

• strengthening protection for well- known trade marks;

• removing the ability to register defensive trade marks;

• removing the current distinction between Part A and Part B of the Trade Marks Register;

• changing the term and date for renewal of trade marks;

• requiring the Commissioner of Trade Marks to establish an advisory group on marks with a Maori influence;

• prohibiting registration of a trade mark if it is "culturally offensive";

• clarifying the law on comparative advertising;

• making counterfeiting a criminal offence; and

• changing the basis for removing a trade mark from the Register.

1. New test for distinctiveness

The previous requirement that a trade mark had to be either "adapted to distinguish" or "capable of distinguishing" to be registered has been changed in the Bill. To qualify for registration under the Bill, a trade mark must simply have "a distinctive character". This phrase is not defined but is likely to equate to the "capable of distinguishing test" currently used for Part B of the Register.

2. Well-known trade marks

Currently, trade mark protection is limited to the particular goods or services (or similar goods or services) for which a trade mark is registered. Therefore, a person may be able to register a trade mark identical or similar to a mark already registered, if the second mark is registered in respect of different goods and/or services. An action for trade mark infringement cannot be taken for the use of a mark similar or identical to a registered trade mark, where the use is in relation to different goods or services than those for which the registered trade mark is registered.

The Trade Marks Bill prohibits registration of a trade mark that is identical or similar to a trade mark already well-known in New Zealand if the use of the second trade mark would imply a connection between the two marks. This would, for example, prevent registration of a mark for KODAK TYRES, even though KODAK may only have registrations in respect of cameras and photography. This is consistent with article 16 of the TRIPS Agreement. It is important to note that there is no requirement that the public is likely to be deceived or confused.

The trade mark infringement provisions have also changed. The new provisions allow for the owner of a well-known registered trade mark to sue for trade mark infringement if the distinctive character or reputation of the trade mark is unfairly taken advantage.

3. Defensive trade marks

The current Trade Marks Act allows for defensive trade marks to be filed under section 36, where a registered trade mark has become well-known. The current defensive marks cannot be removed for non-use.

The Trade Marks Bill abolishes defensive trade marks. Defensive trade marks have inherent limitations (for example, proving that a mark is well-known), and the Bill strengthens the protection for well-known trade marks in other ways.

Existing defensive marks will become ordinary trade mark registrations under the new regime. These marks will ultimately be able to be challenged on the basis of non-use, although a three year grace period is granted.

4. Removal of Part A and Part B distinction of registration

The New Zealand Trade Mark Register is currently divided into Parts A and B. Part A holds marks that are "distinctive", while Part B holds marks "capable of distinguishing". The difference between the two Parts has, in practice, become minimal. There was previously a distinction in relation to comparative advertising but an amendment to the Trade Marks Act in 1994 removed this distinction.

The Trade Marks Bill treats all registrations equally and for new registrations (where the mark is simply required to have a "distinctive character") there will no longer be a distinction between Part A and Part B.

5. Period of Registration

Currently registration is for an initial seven year term with subsequent renewal terms of 14 years upon the payment of renewal fees.

The Bill provides for trade marks to be registered for an initial term of 10 years, with renewal every 10 years thereafter.

6. Addressing the interests of Maori

A trade mark cannot be registered if the Trade Marks Commissioner considers that the mark's use or registration would be likely to offend a significant portion of the community, including Maori.

The Bill also requires the Commissioner to establish an advisory committee for trade mark applications that have a Maori influence, such as marks that include Maori words and imagery.

This part of the Bill does not affect the use of existing trade marks, nor unregistered trade marks with Maori imagery.

7. Counterfeiting

Under current New Zealand law, a trade mark owner only has civil remedies (such as suing the counterfeiter for trade mark infringement, breach of the Fair Trading Act 1986 or passing off) where a registered trade mark is the subject of counterfeiting.

Provisions of the Bill make it a criminal offence to counterfeit a registered trade mark. This includes importing or selling counterfeit goods and possessing any goods for the purpose of trade or manufacture to which a registered trade mark is falsely applied. The penalties for counterfeiting include imprisonment for a term of up to five years or a fine of up to $150,000.

8. Removal of registered trade marks from the Register

Trade marks can be removed from the Trade Mark Register in certain circumstances, including where the mark has not been used. Under the current legislation, the non-use period is five years. The Bill reduces this to three years.

The current legislation also provides for a trade mark to be removed from the Register if it has become commonly used in the trade to refer to a particular type of product. The Bill alters the test for removal on this basis. It will now be whether or not the trade mark has become a common name for the product in general public use. This is a controversial change, and means that existing trade mark owners must be vigilant in maintaining the validity of their trade marks.

In this regard it is important to always use the sign to designate that a mark is registered, or to designate that it is unregistered or pending registration.

9. Comparative advertising

The Bill clarifies that a registered trade mark is not infringed if it is used for comparative advertising. However, the advertisement must not be contrary to honest practices in industrial or commercial matters or take unfair advantage of, or be detrimental to, the registered mark's distinctive character or reputation.

Please note that the Trade Marks Bill may be subject to further amendment.