Revocation for Non-Use: Not for Busybodies

New Zealand does not have any requirement for the owners of trade mark registrations to prove continued use.  As a result, many trade marks remain on the Register without being used, and can present a hurdle to incoming businesses.  Filing an application for revocation on the basis of non-use is one of the simplest ways to remove a trade mark from the Register where it has fallen into disuse. 

But the apparent ease of filing an application for revocation can be deceptive.  There are a few crucial points to consider when deciding if a revocation action is the right option for you, and if it will achieve the outcome you desire.

Consider Bob:  Bob is interested in using a trade mark, but has found that it is already on the Register.  Bob can’t see that the trade mark is in use and wants to know what he can do so that he can register the trade mark for his business.

The Effect and Date of Successful Revocation

First, and most importantly, Bob needs to identify his desired outcome from a whole-business perspective.  Bob should be sure that a successful revocation for non-use action will give him what he needs for his business to progress.

If a registration has been raised as a citation and is only partially vulnerable to removal – that is, is in use for some goods but not all goods covered by the registration – removing the directly overlapping goods in a revocation action can seem a simple answer.  But the Intellectual Property Office will still consider any remaining goods and assess if they are sufficiently similar that confusion is likely.  

Partial removal may not mean that Bob’s application will progress.

The date on which a registration will be revoked is also important.  When a trade mark is revoked, it ceases to have effect as a registered trade mark from the nominated date of revocation.  Many revocation actions nominate a date three years before the application for revocation is lodged as the effective date for revocation.

But if Bob has been using the trade mark before than this three year date there a risk that Bob could be sued for infringement for that earlier use during the period where the revoked trade mark is in force.  The case of Ziploc[1] also raises a potential problem regarding ownership.  If the registration remains in force on the filing date for Bob’s trade mark application, no matter for how brief a time, Bob could find his ownership of the trade mark is under attack on the grounds that at the time of filing, he was not the true owner.

A careful consideration of the similarity of trade marks, the potential overlap in market and the risk of infringement is necessary when nominating the effective date for revocation to minimise the risk of other challenges after the revocation action has concluded. 

Having established that Bob has a date for revocation in mind, the next hurdle – has Bob got the right standing to apply for revocation?

Aggrieved Party

Section 65(1) of the Trade Marks Act states that “an aggrieved person” may apply for revocation.  Traditionally, the benchmark for who counts as an aggrieved party has been relatively low.  As confirmed over years of case law, if Bob is likely to face a real legal or practical impact on his business through continuance of a trade mark registration – be it potential impediments to use, or a citation holding up a trade mark application – then Bob is likely to be aggrieved.

The recent decision of Nitro AG v Nitro Circus[2] usefully goes one step further to confirm that the liberal interpretation of the term “aggrieved person” means that the existence of a registration as one of a number of hurdles is sufficient – there is no need for the registration under attack to be the crucial and only impediment facing the applicant.

The bottom line to achieve standing as an aggrieved person is an element of impact on a commercial business.  Irritation that a trade mark is registered but isn’t being used, and hasn’t been for years, is not enough to establish you are an aggrieved person for the purposes of a revocation action.

Bob can definitely apply for revocation and the best date for effective revocation has been identified, but has Bob done enough investigations into use?

Genuine Use

It is well established in New Zealand through the oft-cited case of Metalman[3] that there is no de minimis principle involved in the assessment of genuine use.  That is, a single genuine use of a trade mark in the course of business can be enough to defend a trade mark registration under attack.

Under the Trade Marks Act 1953, the Commissioner had discretion when assessing whether a trade mark could be supported by the use file.  For many years since the implementation of the replacement Trade Marks Act 2002, a certain level of leniency in assessing use was applied.  The Commissioner in cases could be found to apply a residual discretion when assessing use.  Therefore, evidence of a trade mark that was quite like the registered trade mark, being used on associated goods or services, could be enough to defend a revocation action.

That leniency came to an abrupt halt in 2017 with the Lacoste case[4].  It was confirmed in Lacoste, and in every case since then, that no discretion regarding an assessment of use is provided for under the 2002 Act.  The trade mark as registered must be used on the goods and services described in the registration. 

Therefore, while Metalman establishes that there is no minimum amount of use required, it is clear that however meagre the evidence it is, it must show use of the trade mark on the goods and services. 

Things are looking good – Bob has grounds to apply for revocation, a date, and hasn’t found use in the relevant period but there is one more hurdle to consider – could the owner have a good reason for pausing use?

Special Circumstances

Section 66(2) of the Act provides a second line of defence for a registered trade mark owner where genuine use cannot be shown where “non-use is due to special circumstances that are outside the control of the owner of the trade mark”.

As confirmed in Manhaas Industries[5] where a business should reasonably be able to anticipate difficulties and plan an alternative action to manage factors – such as a new source of product – the reasons for non-use may not be considered “special circumstances”.  

It is also not enough for Bob to simply look at potential disruptions in normal trade channels.  As confirmed in the case of Fokker Bros[6], occurrences not in trade can also constitute special circumstances – for example difficulties suffered during a breakup coupled with actions of the company director not on behalf of the company could constitute “special circumstances”.

A good rule thumb to apply is: if a business should be able to anticipate and manage an interruption, bearing in mind the nature of the business and its usual operating parameters, then the cause of that interruption probably isn’t a “special circumstance”.

Special Note for 2020!

Bob should bear in mind that while businesses not using their trade mark now might be able to point to the impact of Covid-19 as a special circumstance, the situation may be quite different for businesses set up now and not using their trade marks in three years’ time.  Where a business has been set up during a pandemic, interruptions due to the pandemic should have been considered as part of the factors in normal running of that business.  Future delay may not be able to point to Covid-19 as a “special circumstances”.

What Next?

Revocation for non-use can be a good tool in the right hands, but there are other options which should be considered before launching into proceedings that, if contested, could take years to resolve.

Have a potentially problematic registered trade mark interfering with your business?  Talk to us today.

[1] International Consolidated Business Proprietary Limited v SC Johnson & Son Incorporated [2020] NZSC 110 wherein the Supreme Court considered an attack by ICB  on the grounds that because the revocation did not take effect until 22 April 2013, as at the date of application by Johnson of 19 April 2013, it was the owner of an identical trade mark on the register so Johnson could not be the true owner.  The Court in this case held that the simple fact of registration was not enough to thwart a claim to ownership.

[2] Nitro AG v Nitro Circus IP Holdings LP [2020] NZIPOTM 23 at para [16]

[3]  Metalman  New Zealand Limited v Scrapman BOP Limited [2014] NZHC 2028

[4] Crocodile International Pte Ltd v  Lacoste  [2017] NZSC 14 confirms that while Commissioner’s discretion existed under the Trade Marks Act 1953, on consideration of the sections relating to non-use in the 2002 Act, no residual discretion remains.

[5] Manhaas  Industries (2000) Limited v Fresha Export Limited [2012] NZHC 1815 the Court agreed with the Assistant Commissioner’s conclusion that sourcing fish, and managing difficulties in supply and quality of fish, should have been a routine challenges for the business.  Therefore non-use due to these factors was not a special circumstances.

[6]  Fokker Brothers Limited v Fokker Brothers Inc Limited [2019] NZIPOTM 2 confirms that the “in trade” requirement in the Trade Marks Act 1953 was not part of the current 2002 Act.  Special circumstances could any be external forces rather than voluntary acts of the owner.