New Trade Marks Bill

July 2001

The eagerly anticipated Trade Marks Bill was recently introduced into Parliament. The Bill updates New Zealand's trade mark law to better serve the business and Maori communities and will replace the Trade Marks Act 1953.

Overview

The majority of the provisions in the Bill do not appear to be contentious.

The amendments are designed to:

• simplify important clauses;
• replace archaic language;
• align New Zealand's legislation more closely with overseas intellectual property regimes;
• make the legislation more user-friendly and commercially orientated; and
• address concerns about ownership and use of trade marks containing Maori words and symbols.

General provisions of note

Importance of trade marks

The Bill explicitly recognises the importance of a brand and its monetary value to businesses. Section 9 states that "Equities in respect of a trade mark may be enforced in the same way as equities in respect of any other personal property".

Removal of Part A and Part B Distinction in Registration

Currently, the category that a trade mark falls into is completely subjective, based on a dubious difference between "distinctiveness" (Part A) and "capable of distinguishing" (Part B).

Part A registration bestows a higher level of protection. It is considered conclusively valid, while Part B remains permanently open to challenge.

There used to be a significant difference in the effect of Part A and Part B registrations when it came to comparative advertising - a Part B mark could be used in a comparative advertisement without being penalised for infringement while a Part A mark could not. However, due to the 1994 amendments to the current Act, comparative advertising (using a competitor's registered trade mark) has amounted to infringement regardless of whether the plaintiff's trade mark is registered in Part A or Part B.

Under the Bill, all registrations are treated equally and use of registered trade marks in comparative advertising is now an exception to infringement across the board.

To qualify for registration, a trade mark must have "a distinctive character". This term is not defined in the Bill, but is likely to equate to the present "capable of distinguishing" test.

Term

Trade marks will be registered for a term of 10 years, with renewal every 10 years. This will align our laws with other jurisdictions. Under the existing legislation, registration is for a seven year term with renewal every 14 years.

Non-distinctive trade marks

The provisions on the registrability of non-distinctive trade marks are interesting and topical inclusions in the Bill. These include:

• the relevance of colour to the distinctive character of trade marks;
• geographical indications (the Geographical Indications Act is yet to come into force); and
• trade marks that contain commonly used chemical names.

Removal of a registered trade mark

Previously the non-use period was five years before removal could be effected. This has now been reduced to three years to account for commercial realities.

Criminal proceeding and penalties

Counterfeit activity will be further deterred by the simplification of bringing criminal proceedings and an increase in the level of fines.

The Border Protections Measures section has also been tightened up. Under the existing Act criminal proceedings do not exist and fines are not specified. The Bill provides for both.

Maori provisions

A provision in the Trade Marks Bill prevents registration of a trade mark if it is "culturally offensive." While this provision resulted from recommendations of a Maori Trade Marks Focus Group established by the then Ministry of Commerce, the concept is not limited to the Maori culture.

According to the Bill, if a significant section of the community, including Maori, would be offended by the registration of certain words or symbols, the Commissioner must not allow registration. The phrase significant section of the community is not defined.

It is stated that this provision is an absolute ground for refusal of registration (suggesting there is no way of permitting registration) as opposed to a relative ground (where, if consent is obtained from the potentially aggrieved party then registration can proceed). If so, this could prevent Maori and the trade applicant reaching agreement to their mutual economic benefit.

A provision in the Bill requires the appointment of an advisory committee to advise the Commissioner of Trade Marks as to likely offensiveness of a trade mark that is a derivative of Maori text or imagery. The composition of the committee is not prescribed. It also seems that the Bill does not require the committee to play the same role in respect of other sections of the community.

Finally, the Bill contains a provision allowing a person who is culturally aggrieved to seek a declaration that a registered trade mark is invalid because, for instance, it is likely to offend Maori. Such a declaration of invalidity would be retrospective and the trade mark registration would be deemed to effectively have not existed.

There has always been provision in New Zealand trade mark legislation to refuse registration of offensive trade marks or later remove them. Cultural issues may not have been spelled out but were taken into account. The Bill now enshrines them specifically.