By Alex McDonald
Paper delivered at the Strategic Branding 2002 Conference, 13-14 May 2002

This paper deals with issues related to brand selection, registration and ownership, and in particular some pitfalls that brand owners may encounter downstream. Reference is made to some cases which deal with trade mark infringement and the law in relation to passing off.

DESCRIPTIVE TRADE MARKS
The more commonplace and descriptive the brand, the less likely a Court is to listen to an argument from your company that someone else should be stopped from using the same kinds of words, pictures or packaging.
Having said that, under trade mark law there are circumstances in which you can obtain registration of a word or words that are descriptive of the goods and services. This is particularly so if you have used the mark and you can establish that it is recognised by consumers as a trade mark. In those circumstances the words are said to have acquired a secondary meaning beyond their original descriptive meaning which can enable the words to be registered.

However even though it may be possible to obtain registration for such marks, the difficulty is that the scope of the protection obtained through registration is likely to be relatively narrow. Consequently minor differences in competing marks can leave the original trade mark owner powerless to take action against them.

For instance, this may well be the reason why marks like PIZZA HUT and PIZZA HAVEN were able to coexist in the New Zealand market.

KLISSERS CASE
The point was illustrated in a New Zealand case in the 1980's in which the bread maker, Klissers applied for an interim injunction to stop a competitor using gingham checks on their bread packaging. The problem there however was that the look or get up of the packaging which had been designed by Mrs Klisser was not new in the first place. Other traders had used a similar get-up. Despite this Klissers used this style of packaging on its products for many years and claimed that it functioned as a trade mark by identifying its goods. Klissers failed in that case to obtain an interim injunction, because despite its extensive use of a gingham check pattern on its product packaging incidents of use by other traders meant that it could not claim an exclusive right to use the pattern and the Court would not intervene to help Klissers.

The case shows how much easier Klissers' job might have been, had they chosen a more distinctive style of packaging in the first place. Ideally Klissers needed to have chosen badging that it could safely say that no other trader would naturally arrive at or would have a genuine legitimate, reason for using. Given the relatively common image of freshly baked bread wrapped in a gingham tea towel the difficulties for Klissers should have been obvious.

CLASSIC CRANBERRY
The same issue but in the case of words marks is shown in the CLASSIC CRANBERRY decision. Ocean Spray began marketing its fruit juices in New Zealand in 1995. In the vanguard of its range was a product marketed under the CLASSIC CRANBERRY brand which featured prominently in its advertising. In 1998, Frucor entered the market with CRANBERRY CLASSIC. At that time Ocean Spray had not secured a trade mark registration. It therefore took action for passing off claiming that Frucor's use of CLASSIC CRANBERRY would mislead consumers into thinking that their product was Ocean Spray's.

Ocean Spray failed to obtain an interim injunction because there were many other dissimilarities between the packaging and get-up of the two products. The case illustrates the vulnerability of a trader that chooses to use a common place mark. In this type of case the rival trader can open the way for other competitors to also use the words that make up the brand and effectively destroy any property rights that the brand owner might have established in those words.

Not only are descriptive marks difficult to use against competitors but they are also hard to register. Having said that, trade mark attorneys have developed a range of techniques to enable them to be registered. The most common is to file an application to register the mark in combination with a logo or to pair it with a house mark so that for instance OVEN CHIPS becomes MCCAIN OVEN CHIPS. Having obtained that registration the tactic is usually to file a further application for the more descriptive elements and to then argue that registration should be granted because those elements clearly function as an important and registrable part of the mark as has been exhibited by the prior registration.

BRAND PORTFOLIO MANAGEMENT
Issues of brand protection need to be reviewed regularly. While previously it was not possible to obtain registration for shapes, colours, smells, sounds and tastes - now any of those can be registered as a trade mark, provided the mark can distinguish your goods and services from those of another trader.

This means that existing marks should be looked at afresh to see whether in fact there are aspects of the brand which have not been registered which could now be registered. Through use, colours and shapes may acquire high levels of distinctiveness or individuality, which means that registered trade mark protection can be obtained for those features.
Brand managers need to make sure that not only do they get protection for that aspect of the brand, but that they are careful to police any use of it by other traders.

Revamping existing brands or extending a brand beyond the original product area can create legal difficulties where the underlying legal protection does not keep pace with those changes.

If a brand owner is considering extending use of a brand or mark to different product or service in the foreseeable future, it is important that additional trade mark protection is considered.

The importance of conducting local and overseas searches in relation to potential markets during the brand selection stage, cannot be stressed enough. The same lessons apply when consideration is given to modifying an existing brand. Brand managers should keep in mind the fact that it is possible to file an application in Australia within 6 months of a New Zealand application and in doing so claim the priority date of the New Zealand application. If there has been an intervening trade mark application by an Australian company this is a means by which that application can effectively be knocked out.

Most brand owners know to use the TM and ® symbol. The reason for this is obviously to alert competitors to the fact that you have a registration so the words are off limits for their use and more generally to indicate that you take your intellectual property rights seriously. While the TM sign can be used for non-registered marks the ® symbol is only for registered marks. Problems can be caused if the symbols aren't used correctly.

INTERNET USE
The Internet has bought into conflict traders who may previously have been operating in separate jurisdictions using identical trade marks for years without ever being aware of the other. It is important that companies intending to promote their goods or services over the Internet conduct searches in the countries they intend to target through the Internet to establish whether similar or identical trade marks are already registered. Regular monitoring of the Internet to determine whether your trade mark has been used on another's website is also important.

There is UK case law involving adidas which establishes that using meta-tags solely to attract Internet users from the trade mark owner's site constitutes trade mark infringement and passing off.

Transversely where there is a registration in another country which conflicts with your mark it is important to make it clear that you are not trying to attract customers in that country.

GENERICISM
The fact that the mark has become generic is a ground for removal from the trade marks register. A mark becomes generic when it becomes the name or description of the goods or services to which it is applied. This is a big danger where the mark is used for goods and services for which there is no established name or where the name is used as a noun or a verb instead of an adjective.

Genericism is a brand management issue. The test is "has the trade mark lost distinctiveness so that it no longer indicates that products bearing the same mark come from the same source".

"Escalator", "aspirin", "nugget", "kerosene", "fibreglass", "trampoline", and "yoyo" were all once registered trade marks. "Brylcream", "Eno", "Marmite", "Milo", "Formica" and "Xerox" all remain registered trade marks, despite the threat of genericism.

CHAMPAGNE CASE
One of the first New Zealand cases to deal with the issue was the 1992 Champagne Case.

The factual background to the case was that wines produced in the Champagne district of France labelled and promoted as Champagne had been marketed in New Zealand from as early as 1845. It was established in the evidence that as at 1958 the New Zealand market had had long use of the name Champagne only as an appellation of origin. There had been isolated incidents in which Australian and New Zealand manufacturers had used Champagne on locally made sparkling wine but the French Champagne growers had been quick to challenge that use.

The case involved use of the word Champagne by the Australian manufacturer, Seaview. The fact that the French wine growers had vigorously protected the use of the word in New Zealand enabled the Court to decide that the word had not become generic despite the fact that there was evidence that New Zealand consumers were relatively ignorant of the word as a term to designate wine of a particular region in France.

That situation is however going to change when the new Trade Marks Act comes into force. The new Act will make it easier for competitors to revoke a trade mark registration where it is used generically by the public, notwithstanding the fact that it is used and recognised in trade as a trade mark.

COMBATING GENERICISM
Common tools to combat genericism are to introduce a name for the new product at the same time that the brand is launched. Rollerblade did this with "in-line skating" and Jet- Ski with "personal watercraft" though few people might know that.

The market also needs to be policed for use of the brand in a generic sense by other traders. Print advertising which shows the brand in use as a brand in combination with the product name is also important to send home that message to consumers who may otherwise only be exposed to the mark through verbal use which can more easily lead to genericism.

NON-USE
"Use it or lose it" is a phrase commonly used by trade mark lawyers. You can obtain registration of a trade without actually using it but if it sits on the register for more than 5 years (about to be reduced to 3 years) without it being used, a competitor can apply to remove the registration.

This is what happened in a New Zealand case that went to the Privy Council several years ago involving Unilever and Cussons concerning a 1947 trade mark registration for RADIANT held by Unilever. RADIANT was a highly important brand for Unilever overseas. However Unilever had not used the mark in New Zealand. In 1996 Cussons entered the market with RADIANT branded product and applied to remove the registration on the basis of non-use.

Fortunately for Unilever it had lodged a further application for the mark in 1995 when it first became aware that the existing registration was vulnerable to attack and so it was ultimately able to hold on to the mark and require Cussons to leave the market.

The case however illustrates the warning that just because a company decides a brand does not fit within its current marketing strategy, care needs to be taken to make sure it doesn't arm a competitor with the means to take the mark from it. Even small amounts of use will be sufficient to keep a registration alive and kicking. A company that buys another company with a well known brand such as has recently taken place with Hewlett Packard and Compaq, needs to think very carefully about whether abandoning the mark is in the best interests of the company. Company structures change, marks that were once unfashionable can become fashionable again so that what might have seemed like a sensible move at one point can look very different 5 or 10 years down the track.

The non-use problem can also arise where marks are not used consistently. Often companies will obtain separate registrations for the various component parts of its brand. For example separate registrations for the word mark, the logo and a strap-line. Conceivably there might also be registrations for the shape of the product or a colour. If a decision is made at a later date to say modify the logo so that while it's still a rooster in gumboots it doesn't look anything like the one for which the company owns a registration and that mark can then become invalid for non-use.

SUMMARY
It is worth bearing in mind that the Courts have been deciding trade mark cases for hundreds of years. The principles that they have established and which are reflected by parliament in trade mark legislation centre on the premise that if you are going to give a company a property right in the form of a registered trade mark you have to consider what impact that will have on that company's competitors. If the mark genuinely identifies the source of the goods and no competition could honestly wish to use the mark it should have protection. However, if it identifies the goods themselves (as in the case of generic marks) or there appears to be no intention to use the mark (as in marks that have not been used for 5 years or more) then registration should be withdrawn.

Merely obtaining a registration is not the end of the story as brands require ongoing management and review in order for them to provide the legal protection which is an important part of their function and their value as an asset.

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

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