By Julie Ballance

This article was also published in Trademark Feb/Mar 2002 and is reproduced on the Findlaw website courtesy of Trade New Zealand

The present legislative log-jam makes it difficult to get new legislation on to the Government's agenda, but in August last year a new Trade Marks Bill was introduced to Parliament. The Bill is intended to replace the current Trade Marks Act 1953.

It contains a number of interesting features, some of which represent significant changes to the existing legislation. Key features of interest are:

Counterfeiting - criminal provisions
As the law presently stands, owners of registered trade marks that are the subject of counterfeiting only have civil remedies available to them. This means the trade mark owner must sue the counterfeiter for trade mark infringement under the Trade Marks Act 1953 or use common law remedies such as passing off.

The Bill contains provisions making it a criminal offence to counterfeit a registered trade mark. Under these provisions, not only is it an offence to import or sell counterfeit goods, it is also an offence for a person to possess for the purpose of trade or manufacture any goods to which that person knows a registered trade mark is falsely applied.

Where the counterfeiter is a company, every director and every person concerned in the management of the body corporate may be personally liable for counterfeiting activities. Penalties are harsh, and include imprisonment for a term of up to five years or a fine of up to $150,000.

As these provisions relate to registered trade marks only, trade mark owners who may be at risk from counterfeiting will have an added incentive to ensure their trade marks are registered.

Maori considerations
The Bill contains a provision barring the Commissioner of Trade Marks from
registering a trade mark if the Commissioner considers that, on reasonable grounds, the use or registration of the mark is likely to offend a significant section of the community, including Maori. While a bar on registration of offensive marks is not new, the specific reference to Maori concerns is.

The Bill requires the Commissioner of Trade Marks to appoint a committee to advise whether any trade mark comprising or incorporating Maori text or imagery is offensive or likely to be offensive to Maori. This provision does not automatically exclude registration of trade marks that incorporate text or images of Maori origin. The use or registration of trade marks must be offensive or likely to offend.

There has already been much debate about these provisions and how they will work in practice.


Comparative advertising
Comparative advertising occurs when one trader specifically refers in its advertising material to a similar product or service of another trader and says, "mine is better".

Modern commercial practice suggests comparative advertising should be allowed. However, due to a poorly drafted amendment to the existing legislation, the use of another trader's registered trade mark in a comparative advertising situation may amount to an infringement of that trader's trade mark registration. In other words, there is no defence for comparative advertising in the current legislation.

The Bill now specifically states that a registered trade mark is not infringed if it is used by another trader for the purposes of comparative advertising. We must assume however, that advertising material must still comply with other relevant legislation such as the Fair Trading Act 1986. The Advertising Standards Authority Codes of Practice also contain specific guidelines on comparative advertising.


Removal of registered trade marks from the register
The existing legislation contains provisions allowing the Commissioner to remove a trade mark from the Register, in certain circumstances. The Bill alters these provisions. Currently, the law 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 (a well known example is "Rollerblade" for inline skates). The Bill alters the test to whether or not the trade mark in question has become a common name for the product in general public use.

A concern that has been expressed with this change is that, while a trade mark owner may reasonably be in a position to prevent misuse of its trade mark by other members of the trade (and indeed Rollerblade Inc was successful in doing this), a trade mark owner has no practical way of preventing such misuse by the general public.

For traders with products so successful their trade mark is in danger of becoming the generic name of the product, the provisions of the Bill make that trade mark owner's position more difficult to defend.

CONCLUSION
The new Bill is welcome as it will provide a number of improvements for trade mark owners over the existing 50-year-old legislation. At the same time, it includes a number of controversial features.

We await the final form of the new legislation with interest.

This is a general summary only and should not be taken as a substitute for specific advice.

Web site: Baldwin Shelston Waters
Email: email@bsw.com

February 2002