Can and Should an Incorrect Owner Name be Corrected by Assignment in New Zealand?
…The best laid schemes o’ mice an’ men
Gang aft a-gley,
An’ lea’e us nought but grief an’ pain,
For promised joy!.. 1
Discovery of legacy errors in trade mark registration ownership can be the bane of the trade mark attorney as well as the trade mark owner.
Review of a robust portfolio can quickly descend into clammy realisation that action is needed to ensure the true and current owner can rely upon its register rights.
The usual way to update ownership in New Zealand is to record an assignment. However, sometimes the first owner on the Register should never have held the registration. This article considers whether an assignment of rights in this circumstance is an appropriate action.
Hornby Mall Ltd v Shopping Centre Investments Limited2
The 2020 decision of Hornby Mall Ltd v Shopping Centre Investments Limited (“Hornby Mall”) considered an update of owner through either assignment or alternatively a request for rectification of the register.
History of Hornby Mall
In 2005 Shopping Centre Investments Limited (SCIL) sought registration of Hornby Mall’s logo. The application was initially filed in the name of “Hornby Mall”. On request from the Intellectual Property Office to properly identify a legal entity as the owner, the attorney instructed that the owner should be Hornby Mall Limited.
This is where the wheels start to wobble.
Hornby Mall Limited (HML) was in fact an entirely separate legal entity in no way connected with SCIL or the mark. Entry of HML as the owner of the 2005 application was not noticed by SCIL.
In 2007, a replacement application was filed for THE HUB Logo. This fresh application was lodged in the name of HML. Again, SCIL did not notice entry of the wrong owner details. This application then matured to registration in the name of HML.
In 2017 on request for renewal instructions, SCIL noticed the owner name was wrong. By this time, HML was no longer in existence, having been struck off the Companies Register in 2015.
The two hurdles facing the attorneys were:
- How to enter SCIL as the owner; and
- How to ensure the registration is valid from the date of application.
The Legislation
New Zealand Trade Marks Act 2002, section 32, states the applicant for registration must be:
(1) A person claiming to be the owner of a trade mark …”
Section 76 of the New Zealand Trade Marks Act further provides for “rectification of an error or omission in the register” with the restriction that “an application for rectification of the register may not be made in respect of a matter that affects the validity of the registration of trade mark”.
Meanwhile in Australia – Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd3
In 2017 in Australia an opposition case Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd (“Pham Global”) was decided. One of the grounds of opposition was that the applicant for registration was not the true owner of the trade mark.
Australian Trade Mark Act 1995 section 27 is broadly equivalent to the New Zealand section noted above. Section 27 of the Australian Act states the applicant for registration “…claims to be the owner of a trade mark…”.
The applicant, an individual named Mr Pham, sought to defeat the opposition grounds that the applicant was not the true owner by assigning the application to the company Pham Global Pty Limited.
On consideration of the assignment and the opposition ground the Court held that “Mr Pham did not have any legal or equitable interest in the IR composite mark. Mr Pham made the applicant claiming to be the owner when he is not”4. Therefore, “Mr Pham could not assign that which he did not own”5.
For this reason, an assignment could not be recorded to update the owner and the opposition succeeded.
Same-Same but Different
Like Pham Global, in Hornby Mall the attorneys were faced with a situation where the applicant on record, HML, had no legal or equitable claim to ownership of the trade mark. The issue to consider is whether an assignment to SCIL would ever be able to be effected.
However, there are a key difference in the cases. In Pham Global:
- The applicant Mr Pham made an explicit claim around ownership by lodging the application.
- Mr Pham knew the company who should have owned the application.
In Hornby Mall:
- HML was not involved in the application and was in fact entirely ignorant of rights entered on the register in its name.
- SCIL was able to demonstrate clear use rights in the trade mark as well as ownership of copyright in the logo.
- Evidence clearly showed that entry of HML as owner was as a result of an error in 2005.
The Commissioner’s decision rested on the fact that “there is no evidence before me that HML had any substantive ownership rights … HML has never had any rights or interest in the name The Hub Hornby or the relevant mark”6.
The Commissioner stated that Hornby Mall is not “a case where SCIL should have sought an assignment from HML. First and foremost, by the time… the error was discovered, HML had been removed from the companies register. Secondly… HML appears to have had no ownership rights in the relevant mark that it could assign”7.
Therefore, while an assignment was briefly considered, the Commissioner agreed in this case rectification of the register was preferable.
Should an Assignment be considered as an option to update ownership in cases like Hornby Mall?
In the writer’s view where the applicant on record is a legal entity but has no legal or equitable interest in the trade mark, the position of the Court in Pham Global is correct and an assignment to update owner cannot be effected.
Intellectual Property is not the same as Real Property
The Torrens principle of indefeasibility of registered owner’s title for real property is confirmed in Frazer v Walker8. The Privy Council in that case confirmed that a registered owner will obtain an indefeasible title to an interest or estate upon the act of registration. While the Land Transfer Act 2017 confirmed judicial discretion exists to cancel an owner’s registration of title in cases of “manifest injustice”, as far as land law is concerned, the position reflected on the register is king.
The effects of incorrect register details parties with interests in land are therefore immense and correction of errors on the register not something easily achieved.
However, intellectual property is not real property.
One of the main differences is the acknowledgement that intellectual property rights can exist in purely equity. To then allow that an assignment could be possible from a party who has no equitable claim to ownership of a trade mark seems to mis-apply the Torrens real property principle to intellectual property and allocate the register a status potentially in conflict with common law ownership.
Take Home Lessons
In the writer’s view, where an applicant has no claim to a trade mark, the only proper avenue to ensure those trade mark rights can vest with the true owner is to seek a rectification of the register. Where rectification of the register is not possible, the registration must be fatally flawed.
The Commissioner in Hornby Mall raised concerns regarding the extreme delay in notice of errors in the application and the errors then made in the declarations supporting the request for rectification. While ultimately the decision went in the applicant’s favour, there is no guarantee the facts will always be so overwhelmingly supportive for rectification of the register.
Careful and diligent attention to detail is key:
- Check and double-check ownership details at application, acceptance and registration.
- Fully consider corporate structure and ownership of intellectual property including trade marks before lodging applications.
- Advise your attorney immediately of any changes to corporate structure.
Trade mark attorneys and trade mark owners both should be alive to the potential for extreme loss of rights where errors in owner details remain on the register. Review of details at routine intervals can help avoid the worst-case scenario.