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.

Hornby Mall’s logo

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 not4. Therefore, “Mr Pham could not assign that which he did not own5.

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.

An International Comparison of Government Funding for R&D and IP Costs

Governments around the world are increasingly encouraging R&D, and particularly innovation, by supporting local companies as well as attracting foreign companies to invest locally in R&D. Equally there is a push for the IP generated from the R&D to be properly legislated for and protected. This article examines and compares ways that governments have been providing encouragement, for example the types and levels of direct support and tax relief offered by a number of key economies.

Direct support

Direct support in the form of grants or subsidies for R&D is very common in the jurisdictions listed. Direct support for resulting IP is less common in Europe and the US but is more widely available in a number of Asia Pacific countries as set out below. 

Direct support for R&D is often in the form of either research funding, (which may be done via collaboration with academia) or project type grants for a specified export product or market strategy. It will often partially cover such things as employing R&D technical staff, prototyping costs, market surveys and sometimes associated professional advice. For example In Singapore the direct funding support has been increased to 90% of IP costs for Covid-19 affected businesses.

As foreshadowed above, direct support for IP filings is less common than the direct support for R&D.  Sometimes funding may be available for capability development e.g. IP strategy work or FTO searching, but not IP filing per se. However, when it is available, it will usually be focused on the initial stage of filing a provisional followed by a PCT application. Usually by the end of the 30 Month PCT deadline, commercial arrangements should be in place and the project should be self-funding. China has long provided a comprehensive central policy for IP filing subsidies, which is then implemented by the provincial governments.

Tax relief

Tax relief is another tool used by governments to incentivise local innovation or investment. This support may be in the form of tax breaks (that may be refunded in cash for R&D or IP spending) or IP box regimes. 

Enhanced tax breaks on R&D and cash pay-outs for tax losses are often of most interest for start-ups who have a high burn rate and need to hoard every dollar they can. Increasingly for multinationals who are forum shopping for the most favourable regime to locate a R&D hub, the tax regime may be a deciding factor.

Tax relief on IP expenses, and more so on IP derived income, is also becoming a tool for encouraging innovation in some economies. 

Patent Boxes or IP Boxes are a developing tool used around the world and essentially prescribe a lower tax rate on income derived from patents (and in some cases from other forms of intellectual property).  The UK has a good example of a patent box, where the tax on patent derived income is prescribed at to 10% but it can go as low as 2.5% such as Cyprus.

Tax is obviously a more complex issue to describe and compare between different jurisdictions. The table below (and accompanying footnotes) is a snapshot of the different types of support available in several patent jurisdictions at the time of writing, but is subject to significant change in the current environment. 

Country IP direct support R&D direct support Tax Break IP box
NZ Yes1 Yes2 Yes3 No
Australia Yes4 Yes5 Yes6 No
Singapore Yes7 Yes8 Yes9 Yes10
China Yes11 Yes12 Yes13 No14
US No15 Yes16 Yes17 No
EU Yes18 Yes19 Yes20 Yes21

Conclusion

A wide range of subsidies and tax relief provisions are currently available, and in the predicted recession, countries are likely to offer even more generous schemes (for those that haven’t already). This is an important factor for corporate counsel or leadership teams considering where to base their R&D efforts. As always, expert advice will be necessary to assess this for individual circumstances.


1 Callaghan Innovation IP development programme up to $22,000 (40% subsidised). Co-investment of up to $900,000 available for international growth. https://www.callaghaninnovation.govt.nz/innovation-skills/innovation-ip and https://www.nzte.govt.nz/our-services/international-growth-fund.

2 Grants of 40% of eligible R&D costs. See https://www.callaghaninnovation.govt.nz/grants.

3 15% R&D tax credit, 28% cash-out of R&D losses. https://www.classic.ird.govt.nz/research-development/rdti/rdti-about/ and https://www.classic.ird.govt.nz/research-development/rdltc/overview/what-is-rdltc/what-is-rdltc.html.

4 15% R&D tax credit, 28% cash-out of R&D losses. https://www.classic.ird.govt.nz/research-development/rdti/rdti-about/ and https://www.classic.ird.govt.nz/research-development/rdltc/overview/what-is-rdltc/what-is-rdltc.html.

5 Up to $100,000 for research costs. https://www.business.gov.au/grants-and-programs/csiro-kickstart and https://www.business.gov.au/grants-and-programs/innovation-connections.

6 Up to 43.5% R&D tax offset. https://www.ato.gov.au/Business/Research-and-development-tax-incentive/.

7 Grant of up to 80% of product development costs. https://www.enterprisesg.gov.sg/financial-assistance/grants/for-local-companies/enterprise-development-grant/innovation-and-productivity/product-development.

8 Grant of up to 80% of product development costs and 70% of costs up to $100,000 SGD for entering new markets. https://www.enterprisesg.gov.sg/financial-assistance/grants/for-local-companies/enterprise-development-grant/innovation-and-productivity/product-development and https://www.enterprisesg.gov.sg/financial-assistance/grants/for-local-companies/market-readiness-assistance-grant.

9 Grant of up to 80% of product development costs and 70% of costs up to $100,000 SGD for entering new markets. https://www.enterprisesg.gov.sg/financial-assistance/grants/for-local-companies/enterprise-development-grant/innovation-and-productivity/product-development and https://www.enterprisesg.gov.sg/financial-assistance/grants/for-local-companies/market-readiness-assistance-grant.

10 IP income taxed at 5% or 10%. https://www.edb.gov.sg/en/how-we-help/incentives-and-schemes.html.

11 Up to $7100 USD per application. https://www.mondaq.com/china/patent/779124/patent-subsidy-in-china-a-reformation-from-quantity-to-quality.

12 Up to $7100 USD per application. https://www.mondaq.com/china/patent/779124/patent-subsidy-in-china-a-reformation-from-quantity-to-quality.

13 Tax credit up to 75% of R&D costs. Corporate tax rate reduction to 15% under High and New Technology Enterprise (HNTE) programme. https://www.oecd.org/sti/rd-tax-stats-china.pdf and https://www.pwccn.com/en/services/tax/china-rd-incentive-service/high-and-new-technology-enterprise.html.

14 Although see the HNTE programme above..

15 Although companies can benefit from IP developed using federal R&D funding. https://www.innovation.pitt.edu/resources/intellectual-property-overview/federal-funding-and-ip/.

16 Although companies can benefit from IP developed using federal R&D funding. https://www.innovation.pitt.edu/resources/intellectual-property-overview/federal-funding-and-ip/.

17 Tax credit up to 20% of R&D costs. https://squarmilner.com/rd-tax-credit/.

18 Tax credit up to 20% of R&D costs. https://squarmilner.com/rd-tax-credit/.

19 Funding awards of several million Euros at the EU level, grants or awards available in UK, France, Germany and others. https://ec.europa.eu/programmes/horizon2020/en/, https://www.gov.uk/guidance/innovation-apply-for-a-funding-award, https://www.callsforproposals.com/en/french-national-research-agency-anr.html, https://www.research-in-germany.org/en/research-funding/research-funding-system.html.

20 Funding awards of several million Euros at the EU level, grants or awards available in UK, France, Germany and others. https://ec.europa.eu/programmes/horizon2020/en/, https://www.gov.uk/guidance/innovation-apply-for-a-funding-award, https://www.callsforproposals.com/en/french-national-research-agency-anr.html, https://www.research-in-germany.org/en/research-funding/research-funding-system.html.

21 Patent box systems in UK, France, Italy and others. https://taxfoundation.org/patent-box-regimes-europe-2019/.

Strange Bedfellows: Marrying Deep Tech with IP Strategy

In a drama worthy of Shakespeare, players in deep tech, such as artificial intelligence, block chain, big data, robotics, electronics, and photonics, often feel like they are arrayed against an army of foes.

In this series of articles, we will investigate some of the issues encountered by deep tech in trying to integrate IP strategy into their battle plans (or courting strategy as the case may be). In this first issue we will look at the Agile development approach, what challenges this brings, and how an Agile IP strategy can be transformed into a perfect bedfellow.

Agile Development

Agile development is sometimes described as a cult or manifesto for coders. Even though it dates back to 2001, it is still in widespread use today in the deep tech arena, and is gaining more popularity in wider business processes.

It typically relies on short sprints or iterations where everybody in the organisation is focused on implementing a feature or revision within a set timebox. In this mode, it is very hard to find focus or time to spend on IP or other “trivialities”: everybody is focused on the end goal for that iteration.

At the beginning of each sprint there is a goal, but by the very nature of this approach, goalposts shift drastically over the project. This means pinning down what the product will look like at the end is difficult if not impossible. Sprinting is very focused on getting customer feedback at the end of each sprint and feeding that back into the plan for the next sprint.

Overall IP strategy

The overall business goals in deep tech will typically be related to a successful exit or further investment rounds. In such a case, the IP strategy can often be focused on adding value to future investors or other stakeholders. Deep Tech IP is often shrouded in mystery as if there is some secret crystal ball. However, IP strategy is usually very simple:

  • What aspects will add the most value to your revenue projections?
  • Can those aspects be protected (and how)?
  • Who will try to copy it?
  • How will you stop the copiers?
  • Do you need to worry about patent trolls or infringing other patents?

Freedom to Operate

Freedom to operate (FTO) can sometimes be the last thing entrepreneurs want to know about. They are focused on getting their product to market and burn rate. However, stakeholders such as investors, and even government funding can often be tied to this thorny issue.

While stakeholders may insist on getting freedom to operate searching done, depending on the nature of the tech, the markets and even on the investors, it may make sense to delay or rethink what searching is most useful.

Sprints can change the nature of the product drastically, so figuring out what to search is tricky.  Because FTO searching can be expensive, and relies on comparing the launched product with live patents existing at launch, it is often left until late in the process. However, this need not be the approach.

Early on in the project an overall FTO search can be done on the very broad premise. This will draw out any major roadblocks but won’t focus on finer details. This can be used to guide each sprint on general areas or features to avoid.

For each sprint, instead of an FTO search, a short landscape search may be better. This is more targeted at giving an idea of who has patented what in the area of the iteration. This can be used together with a SWOT analysis of your strengths, weakness, opportunities, and threats to help align IP value with the R&D development. At the end of the day, the vast majority of value that successful businesses accrue is intangible (whether measured in the balance sheet or through expert intangible valuations) and this should remind us all of the risks at stake.

Prioritisation

Deciding what to protect, when and how, may cause endless hand wringing. This is particularly acute with an Agile approach since nobody knows what the product will look like at the end of the project. Alternatively, the founders may have heard through contacts that trade secrets are the way to go, or some rumour that software isn’t patentable.

The best approach (as with most things) is to be pragmatic and prioritise with your best guesses. For each sprint, a decision can be made about what might be patented during the sprint and at what stage. This will change according to where that sprint is, in the overall timeline. The organisation can include things to patent in the burn chart/story map but this can be updated as part of the Agile process.

Enforcement

During internal development, before the product has been launched, there is minimal practical risk of patent infringement. However once your product is out in the market, especially in the US, is it common in deep tech to get infringement warnings in the mail. Whether the threat comes from a trading business or a non-practising entity (patent troll), a pre-planned approach to a range of scenarios is a good start.

Often the key is acting quickly and confidently. This may mean calling their bluff straight away (where the patent in question was already known previously to be of dubious validity), not replying, entering a dialogue about collaboration instead, or even entering an early settlement at a much lower royalty rate.

Branding

The brand may be the last thing on engineers’ minds during each sprint, but while customer perception may be the focus of marketing or sales, it should be on the forefront of the whole team.  Sometimes a pseudo internal brand for each sprint can help, which encompasses or represents the personas for the project or sprint. 

At fulfilment or closer to product launch, these internal brands might actually provide some candidates for focus groups. Even at that stage it is important to think through perceptions of different cultures and implications of different languages or pronunciations of major target jurisdictions.

A final word

Buzzwords may be king, but in the end what matters is value. Simplicity is essential in the IP strategy and the simpler and shorter it is the easier it is for all the team to buy into it and integrate it into their tasks. The IP strategy can be a perfect bedfellow of Agile development.

Driving Research & Development in a Downturn

In challenging times, the natural reaction of many businesses is to minimise expenditure in an attempt to ride out the storm. Research and development investment may be seen as an unjustifiable expense. However, studies of past recessions have shown that companies that maintain, or even increase, research and development levels during downturns outperform others when market conditions improve.

In a 2003 study of nearly 1000 businesses from around the world and across a wide range of industries, Roberts found that investments in marketing, product development and customer-perceived quality were “good costs” that should be increased during market recessions in order to maximise growth and market share upon recovery.1 As shown below, firms that increased spending on marketing and product development increased their ROCE (return on capital employed) and market share over the recovery, as did firms whose product quality was seen to have increased.

Marketing Spend

Product Development Spend

Customer-Perceived Quality

Others have found that research and development spending increases growth in times of market stability, and that this effect is magnified during recessions.2 In the period from 2004 to 2009—spanning the 2008-2009 global financial crisis—Norwegian firms with low R&D spending grew by 29% on average, while firms with high R&D spending grew by 103%. This effect was most pronounced during the crisis – the high R&D firms grew by over 10% in this period, while other firms contracted.

Investments in innovation and product development may not pay immediate dividends, with benefits typically not accruing until after the worst of the recession has passed. This illustrates the importance of long-term strategic thinking over knee-jerk reaction. The passing of the baton from the US to Japan in the field of semiconductor manufacture illustrates this point.

In the early 1970s, US suppliers of semiconductor devices outsold their Japanese counterparts by more than two to one. However, by the end of the 1980s they had fallen behind the Japanese. Writing for the MIT Sloan Management Review, Ghemawat notes that in the aftermath of the 1974-1975 recession, US companies eased up on investment, while Japanese companies held firm.3 In such an innovation-driven and rapidly changing industry, this brief pause was enough to fall behind. To take a specific case, US manufacturers failed to invest in production capacity for 16 kilobyte dynamic random access memory (DRAM) chips during the downturn, which left them unable to meet demand from IBM when the upturn came. This forced IBM to turn to Japanese suppliers, who by 1979 had captured 43% of the US market for 16 k DRAM chips.

Of course, businesses operate under financial constraints and any money spent on research and development is money that is unavailable to spend on other things. The right level of investment will be a balance between the competing requirements of retaining sufficient resources to see out the difficult times and setting the stage to benefit once market conditions improve. One way that this balancing act can be made easier is for the Government to subsidise R&D costs, which has been shown to increase overall R&D expenditure.4 Research and development during difficult times benefits a society as a whole, as does a thriving and competitive market, making it an ideal use of public funds.5 The Singaporean Government has recognised the importance of this and recently increased funding levels available under its Enterprise Development Grant up to 90% for companies severely affected by COVID-19. In Australia, the ATO is allowing IP assets to be immediately deducted against taxable income, rather than depreciated, under an expanded Instant Asset Write Off scheme. In New Zealand, a number of funding sources and tax credits are available. In addition, Callaghan Innovation has indicated increased flexibility in relation to R&D grants due to the impact of COVID-19, and we hope new programmes will be forthcoming soon.

The message from history is clear: money spent on research and development during a recession has been shown to have general and specific economic benefits. A positive strategy including an active research and development programme can have many other positive effects at the company level. It allows the company to retain quality staff by giving them satisfying and engaging work when they might otherwise be underutilised, retain existing clients and gain new ones with superior products, and be ready to capitalise on new products and skilled staff during the recovery. Where companies are not in a position to invest in research and development, there is a role for Government to provide subsidies to promote public well-being and economic growth.


1 Roberts, “What strategic investments should you make during a recession to gain competitive advantage in the recovery?”, Strategy & Leadership, Vol. 31 Iss 4 pp. 31–39.

2 Lome et al, “The effect of R&D on performance: Do R&D-intensive firms handle a financial crisis better?”, Journal of High Technology Management Research.

3 Ghemawat, “The Risk of Not Investing in a Recession”, MIT Sloan Management Review Spring 2009, Vol 50 No. 3.

4 Hud et al, “The Impact of R&D Subsidies During the Crisis”, Centre for European Economic Research Discussion Paper No. 14-024.

5 Barlevy, “On the Cyclicality of Research and Development”, Economic Research, Federal Reserve Bank of Chicago.

A Place for Intellectual Property in Times of Crisis

The impact of Covid-19 has made itself felt internationally and is likely to stretch considerably into the future.  In times of crisis, focus necessarily turns to home and health, and doing what you must to ensure day to day life is manageable.  But it is important to bear in mind that, eventually, we will come out the other side and we will need to pick up life in the new normal.

While aspects of life that aren’t essential may be easily sacrificed in the short term, you should also have a plan in place for the new normal.  Your IP rights should form part of that plan.

What Should You Do?

Step 1 – Review what you have

If you already have registered IP protection in place, now is a good time to seek an overview of what you have covered and when renewal of rights fall due.

Review what IP you have in use or under development that is not covered by your existing registered rights.  Do you have any current or projected IP that could provide a competitive advantage in the future?

Step 2 Identify potential vulnerabilities

Brand and marketing experts are predicting a dramatic increase in counterfeit products and mis-used trade marks as commerce necessarily moves onto a digital and social media platform.

A review now should allow you to identify gaps in your protection.

Step 3 – Develop a strategy for best positioning

Discussions with your IP provider with a clear understanding of budgets will help you set up a strategy to maximise your protection. 

This includes having a plan to manage renewal of already registered IP rights, finding options to firm up any vulnerabilities, and strategically securing fresh registered IP rights to protect your points of competitive advantage.

Do not be shy about having these conversations now.  Working with your IP provider at the early stage of planning means you can structure your approach and should be able to avoid the need for urgent, and potentially costly, protective steps down the line.

Step 4 – Maintain vigilant review of the market place

It is dangerous to assume that because we are in a time of crisis, other traders won’t try to take advantage of a lapse in rights, or perceived inability to enforce rights.

Quick action against obvious infringements may be a cost-effective way to stop third parties gaining a toehold that will affect your ability to re-enter the market.

What now?

With the right tools created now, you can have a path to success in the new normal.

Talk to us today to review your IP portfolio.

A Final Innovative Step: Australia Plans to Phase Out Innovation Patents (Update)

On 26 February 2020, the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act 2019 came into force in Australia. This begins the abolition of Australia’s innovation patent system.

Any innovation patent application must be filed before 26 August 2021. From that date, you will only be able to pursue a standard patent in Australia.

This will mark the end of Australia’s second-tier patent. Our earlier post discusses the background to this change.

This change will affect a number of New Zealand and Australian businesses who protect their incremental innovations which do not quite fit in the standard patent system. Get in touch with us to discuss how this change will affect your business.

SKY v SKYKICK – Lessons from Europe

The recent case of the Court of Justice of the European Union (CJEU) Sky v SkyKick[1] is being touted as one of the most important decisions for trade mark law out of Europe in the last couple of years. 

We discuss what all the fuss is about and what lessons can be learnt from this decision:

The Facts

Sky Plc and the related group of companies (“Sky”) is well-known for its range of broadcasting services provided under the trade mark SKY.  SKY is a registered trade mark in many countries, and has been successfully enforced throughout the years.

In 2012, SkyKick UK and SkyKick Inc (SkyKick) launched a range of cloud-based software services under the trade mark SKYKICK, starting in the US and extending internationally.

In 2016, Sky sued Skykick for trade infringement, relying on its United Kingdom (UK) and European Union (EU) registrations for SKY.

SkyKick did not take this lying down.  SkyKick attacked Sky’s trade mark registrations as invalid because the registrations included terms such as “computer software” which lacked clarity and precision, and included broad areas in which Sky could not reasonably claim any intention to use.

The first case Sky Plc & Ors v SkyKick UK Ltd & Anor[2]

In this 2018 decision the Court held that, on the face of it, there was trade mark infringement, but if the counterattack to Sky’s trade mark registrations succeed, the outcome of the proceeding may be significantly different.

In view of the potential effect of this decision on the parties and on other EU and UK trade mark registrations, Mr Justice Arnold referred the issue of validity of the SKY trade mark registrations to the CJEU for determination. 

The CJEU case

The key questions under consideration by the CJEU were:

  • Can an EU or a national EU Member State trade mark be declared partially or wholly invalid because some terms lack clarity or precision and third parties cannot identify the extent of protection?
  • If the answer to this is yes, is “computer software” one such imprecise and unclear term?
  • Is it bad faith to file for broad goods or services where there is no intent to use the trade mark on all those goods and services?
  • If the answer to this is yes, can an application made with certain broad terms be deemed filed in bad faith just for those broad terms?

In its decision issued January 2020, the CJEU confirmed:

  • EU or national EU Member State registrations cannot be declared partially or wholly invalid on the grounds that some terms lack clarity or precision.
  • However, an application made without intent to use can constitute bad faith if the application was filed either with an intent to undermine third party rights or in a manner inconsistent with honest business practice.  There is no need for a third party to be specifically targeted.
  • If the lack of intention to use only relates to some goods and services, then the bad faith only relates to those claimed areas.

This is good news for the owners of the many EU and UK trade mark registrations where the description of goods includes terms like “computer software” – an acceptable term in trade mark applications for many years!  It may however be bad news for owners of registrations secured with broad terms filed as a defensive measure and with no true intent to use the trade mark for those broad goods and services

What does this mean for new trade mark applications?

It is often thought of as best practice when filing an application to claim the broadest right allowable under the law of the country in which the application is lodged. 

However, it is a balancing act between covering a broad area and ensuring the described area is still within the area of intended use, particularly where a country requires a declaration of intention to use at the time of filing.

It is also risky to use the same filing method for applications over the years as cases are continually being decided which modify the parameters of what is best practice.

A trade mark professional will be aware of up to date cases as well as the technical aspects of filing a trade mark application. With this knowledge, an experienced professional will be able to tailor an application so that the trade mark owner has the advantage of the best filing at the time the application is lodged for the specific country of interest.

What does this mean for your registered trade marks?

Once a trade mark is registered, it should not simply be left on the register with no attention beyond renewal every ten years. 

As you nurture and grow your business, so too should you care for your trade mark registrations.

Depending on the nature of the business, trade mark registrations should be routinely reviewed to assess compliance with any new laws and to ensure registered coverage reflects the area of use and best practice for registered rights.

What does this mean if you are getting ready to sue someone?

The first step to any infringement action is do your homework! 

Having a trade mark registration is not a magic bullet to stop third parties. 

Before raising an objection, you should conduct careful investigations into the offending company.   It may have trade mark registrations or common law rights that would affect the strength of your position.

Of no less importance, you should carefully check your own trade mark registrations and common law rights.  Any vulnerabilities should be identified and fixed, preferably before raising an objection.  Such preliminary steps will help ensure you have the strongest position from which to objection and help avoid counter-attacks that can delay an outcome in own infringement action for years.

Time and money spent in preparing to object can save you time and money in the long run.

Worried about your trade mark protection?  Talk to us today.


[1] Case C‑371/18

[2] Sky Plc & Ors v Skykick UK Ltd & Anor [2018] EWHC 155 (Ch)

Intellectual Property in the Post-Brexit UK

After more than three years of negotiations, the UK has officially left the EU as of 31 January 2020.

For now, business as usual

Part of the deal includes a transitional provision that will run until 31 December 2020. During this period, EU laws will continue to apply in the UK while negotiations take place to determine the terms of the relationship in the future. Any changes to intellectual property rights will not happen immediately and there is no rush for you to address potential changes.

Things to note

  • Any registered EU trade marks or designs will be transferred to equivalent UK rights. You do not need to take any action. At the end of the transition period, owners of registered EU rights can expect to receive an equivalent UK registration.
  • Owners of any pending EU trade marks or designs will have nine months in which they can apply for the same protection in the UK and the same priority date will be allocated. There will be fees related to this step.
  • Brexit will not affect any European patent applications or granted patents, as the European patent system is independent of the EU.
  • On 27 February 2020 the UK withdrew from the UPC. The UK will remain part of the European patent system.

We will contact our clients who have rights that may be affected by Brexit directly with an outline of options. But if you have any queries, let us know – we are here to help.

Funding for IP and R&D in New Zealand

New clients, and old clients alike, often ask us whether there is any funding support for IP-related costs. They are often surprised to hear that the New Zealand government provides support for some IP costs, and even more so for R&D costs.

There are a lot of programmes which innovative businesses might qualify for. We have put together a brief list of sources of funding available (as of 2020), but this is always changing.

IP Funding

The New Zealand government has started to recognise how important intellectual property advice is to New Zealand businesses. The key programmes for IP funding are:

  • Innovation IP (40%) from Callaghan Innovation
  • Capability Voucher (50%) from NZTE
  • Mentoring (Regional)

R&D Funding

There are even more sources which offer funding for research and development. There has never been a better time to be looking into new R&D projects in New Zealand. The most common R&D funding sources are:

  • Project grants (40%) through Callaghan Innovation
  • R&D loss tax credit (28%) through IRD
  • R&D tax incentive (15%) through IRD
  • Endeavor fund
  • Catalyst fund
  • PreSeed Accelerator Fund
  • Māori Business Growth Support
  • Māori Innovation Fund
  • Provincial Growth Fund

Traditional Sources

Of course, funding can also be obtained from more traditional private sources. This includes bootstrapping, debt instruments (based on IP as security), angel investment, venture capital, competitions and incubators, and crowdfunding.

Where Do I Start?

With so many programmes available, it can be hard to know where to start.

Ellis Terry are experts on IP in New Zealand. We help New Zealand-based businesses to work out which government programmes are worth investigating and to source private funding. Get in touch with Blayne Peacock if you need any assistance.

An Expensive Ear-Worm: Why You Don’t Hear Frosty the Snowman © in the Mall

At about this time every year the debate about best and worst Christmas music heats up. As we move through the month of endless repetitions of the same batch of Christmas songs blaring through the shop stereo, you might notice you never hear your favourite ditty and pause to ask: whatever happened to Frosty?

The answer may be copyright.

The recent High Court case of Australian Performing Right Association Limited v JT Hi Fi Limited and John Tom1 reminds us of the importance of understanding when you might need to secure permission before playing music in your store. In this case JT Hi Fi Limited trading as Paul Money Hi Fi played five songs in its Mt Eden store without securing a license to so do. Because the music was used to demonstrate sound quality, the Court held it was a public performance under the Copyright Act and one authorised by JT Hi Fi and Mr Tom.

In the absence of permission from the copyright owner, JT Hi Fi and Mr Tom were held to have infringed copyright in the works. The Court awarded compensatory damages of $2,123.20 with additional damages of $15,000 to the copyright owner.

Because copyright is an unregistered right, the owner of copyright does not need to have ownership listed on any particular index in order to claim those rights. But you can still take steps to minimise the risk that your catchy tune could result in an expensive outcome.

• Performers rights may be indexed, so do some searching.

Queries through the Australasian Performing Right Association (APRA) and Australasian Mechanical Copyright Owners Society (AMCOS) is a good first step.2

• Traditional music is more likely to be out of the period for copyright protection.

Copyright has a limited life so the older the music, the more likely it is that any copyright term has expired. You should bear in mind that traditional Christmas carols may be safe to use, but modern re-working of traditional carols could still attract copyright.

• Seek help from a professional.

Assessing whether you are at risk of breaching another person’s intellectual property rights is not something that should be treated lightly. Using someone who conducts these sorts of checks for a living can save you time, and may in the long run be the difference between Christmas cheer and a nasty letter.


1 [2019] NZHC 2508.

2 http://apraamcos.co.nz/