By Cathryn Warburton, BSW Wellington

This article has also been published in Trademark World, February 2002.

In an unreported decision of the High Court in Wellington, Justice Ronald Young has given practitioners cause to take care with evidence filed in trade mark rectification matters. Royal New Zealand Squadron v Daks Simpson Group Plc, 21 September 2001 appears to be the first New Zealand High Court decision to determine the issue of the standard of evidence required for trade mark rectification matters. And Justice Young took a tough approach, saying the standard is the same as High Court standard.

In the dim and distant past, some matters before the Assistant Commissioner of Trade Marks relied on evidence that would not warm any law professor's heart. To say the least, some of the evidence was shoddy and basic rules of evidence, such as hearsay, best evidence etc were not contemplated when the evidence was drafted. This is not to say, of course, that all the evidence was that grim, but some of it left a lot to be desired. Over the years, with some firm guidance from certain Assistant Commissioners, evidence has started to shape up and the quality is much improved. However, it has generally been accepted that the standard of evidence required before the Hearings Office (as with many other tribunals) is not as high as that of the High Court.

Past practice in opposition proceedings
In the Colour Yellow decision, dated 20 December 1999, Assistant Commissioner Popplewell considered standards required for admissibility of opinion evidence in trade mark opposition matters. He concluded as a general principle that:

It seems to me that perhaps the most important factor in opposition proceedings is the desirability of having all the relevant evidence before the hearing officer in order that he or she might make an informed decision. This must, of course, be balanced against the need to ensure that the interests of both parties are taken into account - I must be sure that no irreparable harm is caused to the applicant by the admission of the evidence in question (at page 7). … … in proceedings before a hearings officer (who effectively acts in the manner of a tribunal) the strict rules of evidence as pertain in a Court may be relaxed, at least to some extent, and the standards required will not be so high
(at page 8).

The Assistant Commissioner was talking there of trade mark opposition proceedings.

The Squadron decision has set down quite a different standard for trade mark rectification proceedings. An opposition is the procedure used when trying to prevent a trade mark application proceeding through to registration, while rectification involves trying to remove a registered trade mark from the register (either in its entirety or by limiting the goods for which the trade mark is registered).

Another difference between the two procedures is that a rectification application may be started either directly in the High Court or before the Commissioner, while an opposition must be conducted via the Intellectual Property Office of New Zealand, which results in a hearing before an Assistant Commissioner. There are several grounds of opposition and rectification. The most common ground of rectification is that the trade mark has been on the register and has not been used in respect of all or some of the goods/services for which it is registered for at least five years.

Squadron on hearsay
The Squadron case was an appeal from an Assistant Commissioner's decision to limit the goods of a registered trade mark. The original registration covered a variety of clothing and the Assistant Commissioner limited the specification to "men's jackets and blazers".

The registered proprietor chose not to appeal the decision, the applicant for rectification did. This resulted in the registered proprietor cross-appealing.

The main ground of appeal was that, in light of the Assistant Commissioner's finding that there had not been "commercial use" of the trade mark in the relevant period, he did not have a discretion to retain registration in respect of any goods. The main ground of cross appeal was that the applicant for removal had not satisfied its initial onus of proving non-use - on the basis that the evidence submitted was inadmissible.

In a rectification application based on non-use the applicant for rectification has an initial, albeit slight, onus to show non-use. Thereafter, the registered proprietor must show it has made use of the trade mark. Then a third step is applied in that the judicial officer must ensure that the applicant for removal has proved its case overall (ensuring that too heavy an onus does not fall on the proprietor).

In the appeal decision, Justice Young J had to consider the admissibility of the appellant's evidence to determine whether it had overcome its initial onus of proving non-use. (The Assistant Commissioner had decided this evidence was both admissible and cogent.) He noted on page 5 of the decision that unlike the Accident Rehabilitation Compensation & Insurance Act, District Courts Act and Disputes Tribunals Act, the Trade Marks Act is silent as to whether or not the strict rules of evidence apply.

He held that:

General principle favours the inapplicability of the ordinary rules of evidence in such circumstances given the desire of administrative tribunals to function informally … It seems clear therefore that a tribunal such as the Assistant Commissioner of Trade Marks constituted here is a tribunal which would ordinarily be free to admit what evidence it considered proper, reliable, logically probative and given in accordance with the rules of natural justice.

However, Justice Young went on to note that rectification proceedings (at least those based on non-use by the proprietor) may be lodged either directly in the High Court or with the Commissioner of Trade Marks. He also noted that in any such application directly to the High Court, it would be bound by the usual rules of evidence.

And at page 8 he concludes that:

… it would be wrong for there to be different rules of evidence applying to a s35 [non-use removal] application depending on whether the application was dealt with by the Court or by the Assistant Commissioner. The rules of evidence applicable to the High Court must therefore apply to both.

Justice Young went on to say on the same page that this uniformity of evidentiary rules relates, amongst others, to the rules of hearsay evidence. The anonymous hearsay evidence accepted by the Assistant Commissioner was thus rejected.

Does Squadron apply to oppositions?
While Justice Young did not specifically comment on the point, the question on the minds of IP practitioners is, does Squadron apply to trade mark oppositions? Oppositions are more prevalent than rectification applications, and a decision to comply with High Court evidentiary standards would have quite an impact. However, trade mark oppositions cannot proceed directly in the High Court, so it seems that a more relaxed approach to opposition evidence will remain.

Having said that, Assistant Commissioners are obviously more likely to give weight to evidence conforming to the rules of evidence and these standards should be the constant goal of IP practitioners.

Squadron on rectification evidence generally
Having one declaration declared inadmissible, this left the appellant with only one declaration with which to overcome its initial hurdle of non-use. Justice Young rejected an argument that this evidence should be discarded because the Trade Mark Regulations state that evidence in reply should be confined to matters strictly in reply - instead he held that the Assistant Commissioner had properly considered this evidence and the remedy of the cross-appellant would have been to file further evidence if prejudiced by the non-reply nature of this evidence.

Justice Young also rejected the argument that evidence of non-use by only one deponent falls short of overcoming the initial onus. Instead, he held at page 11 that "one very knowledgeable person who had made inquiries of at least major clothing and shoe retailers around New Zealand during the relevant five-year period might be able to establish a prima facie case." It is interesting to note that the personal knowledge of one person would probably not be sufficient and even a very knowledgeable person would have to conduct appropriate enquiries.

He noted that the remaining declaration related only to men's wear and not to the remaining goods "slippers and women's outerwear". The deponent did not say why his knowledge extended beyond the two stores he had worked in/owned. Also, he did not identify the geographical extent of his knowledge of the clothing industry in New Zealand.

Justice Young held at page 12 that the evidence in this declaration "fell well short of establishing a prima facie case even allowing that there should be a low threshold in such circumstances."

His Honour's findings relating to the evidence resulted in the Assistant Commissioner's decision being overturned and the trade mark being restored in respect of all of the goods for which it was initially registered.

Asides
JusticeYoung also states at page 12 "that I am not at all convinced that the use of the word 'may' in s35 does indicate a discretion in the Assistant Commissioner" to retain registration for even some of the goods/services where non-use is shown and there is no adequate proof of use by the proprietor. This point was not fully argued before his honour and it is sufficient to note that since Estex Clothing Manufacturers v Ellis & Goldstein (1967) 116 CLR 254 at 270 which he referred to, there have been decisions confirming that such a discretion does in fact exist in foreign jurisdictions at least. (See for example, HERMES Trade Mark [1982] RPC 425, and Paragon Shoes Pty Ltd v Paragini Distributors (NSW) Pty Ltd (1988) 13 IPR 323, Woodward J at 345) There appears to be little local authority on the point.

It is also interesting to note that Young J held that, if he had had to consider the cross-appellant's evidence of use he would not have found it sufficient to have overcome the removal application. However, this did not affect his decision as he had already found that the initial onus of showing non-use had not been met. Similar reasoning has been followed in Australia: Studio Australia Pty Ltd v Softsel Computer Products Inc [19] IRP 247, and Australian Bacon Ltd v Mulfric Foods Pty Ltd [12] IPR 371.

Conclusion
Justice Young's conclusions about minimum standards required when proving
non-use of a trade mark should come as no surprise to practitioners. Assistant Commissioners of Trade Marks have been progressively signalling the industry that slap-dash evidence will not be sufficient to show non-use. However, his Honour's decision provides a very useful summary of principles to be borne in mind when preparing such evidence. These are: