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    Trading on a good name

    Author: Baldwin Shelston Waters       

    Author: Angela Sutton

    We've all heard the Shakespeare quote "a rose by any other name would smell as sweet". But would the marketing strength of the rose be as effective if it was called, for example, "umbrella" or "banana"? Imagine receiving a dozen red umbrellas from your sweetheart on Valentine's Day.

    Clearly a name is more than just a word. It conveys an image - a whole package. No more clearly can this be seen than in the branding of beers. What would SPEIGHTS be without the "Southern Man" image? Just recently we have seen the outrage of the West Coasters when DOMINON BREWERIES threatened to brew their local beer MONTEITHS in Auckland. "You can't have a Coast beer brewed in the urban metropolis", they argued - "it won't taste the same".

    Anyway, the whole image of the rugged West Coast beer would be lost if it was brewed in New Zealand's largest city.

    Not by any other name
    In the vast majority of cases, the name of a product is vital to its selling power. It is what distinguishes one company's brand of beer, washing powder or any other product from that of another company. A company manager would probably react pretty smartly if they heard that consumers were accidentally buying the competitor's products because the names sounded similar.

    What makes a good brand or trade mark is its image, yet it's very hard to keep a monopoly on a trade mark that describes the goods outright. This could lead to a situation where the trade mark is adopted by a competitor and the original owner has little or no legal recourse.

    The strongest protection that can be obtained for a brand or trade mark is registration under the Trade Marks Act 1953 ("the Act"). Relatively recent changes to the Act have broadened the definition of what can be the subject of a trade mark registration. "Marks" such as shapes, sounds, smells and even tastes can now be registered. The main difficulty with registering smells and tastes is the legal requirement that trade marks be able to be represented graphically. This is primarily for the administration of such marks, rather than any ideological reason.

    Sound, however, is easier to register. An example is the registered tune that accompanies the jingle; "The Warehouse, the Warehouse, where everyone gets a bargain". The "squeak" of dishes cleaned with a certain brand of dishwashing liquid is also protected, as are the shapes of famous liqueur and perfume bottles.

    Registering a trademark
    The key criterion for registering a trade mark is whether or not the mark distinguishes the goods/services of one trader from those of another. In other words, a mark can be registered only if it is not likely that another trader would want to use that mark in the ordinary course of trade.

    A good example of a mark that cannot be registered is a purely descriptive word. For instance, the word "CRUNCHY" could not be registered in relation to apples, as this would prevent other traders describing their apples as being crunchy. Similarly the shape of a product cannot be registered if the shape is purely functional.

    In the same vein, surnames and geographical names are difficult to register, on the basis that a registration would prevent another trader either using his or her own name in relation to the goods/services, or describing the origin of those goods/services. Very rare surnames or geographical areas where the manufacture of goods is highly unlikely, can also be registered.

    But how can CANTERBURY, the geographical place, be protected for the rugby jerseys? As with all good rules, there are exceptions. If a trader has used a trade mark extensively and has established a significant reputation for those goods/services, it is unlikely that another trader would, in good faith, want to use that mark.

    The trader's goods/services are distinguished by the reputation of the trade mark and consequently it may be possible to register marks that are otherwise descriptive or are a surname or geographical place name.

    It would be highly suspicious if another trader started producing rugby jerseys and just happened to call them CANTERBURY jerseys. The likelihood of consumers believing it to be the "real thing" would be fairly high.

    Descriptions of all kinds
    Registration under the Trade Marks Act 1953 prevents another trader adopting the same trade mark in relation to identical or similar goods covered by the registration. This particularly applies if consumers are likely to be deceived or confused. For example, a trade mark registration of NIKE for sportswear can be used to prevent another trader using the mark "NIKE" for sporting goods, such as tennis rackets, or for the retailing of sportswear.

    Infringement also arises when another trader uses a similar mark on the exact or similar goods and services covered by the registration. Using the NIKE example again, registration would be infringed with the use of "NIKEY" in relation to sportswear, sporting goods, or retailing of such goods.

    When a mark has not been registered
    If a trade mark has not been registered under the Trade Marks Act 1953, it may still be possible to prevent unauthorised use of the same or a confusingly similar mark. This is principally achieved by using the tort of passing off or the Fair Trading Act 1986. "Passing off" prevents one trader passing off their goods/services as those of another.

    For example, if a trader adopted the trade mark "NIKEY" on sportswear, with or without the swoosh, it would be seen as an attempt to "pass off" those goods as being those of the Nike Corporation. In doing this, Section 9 of the Fair Trading Act 1986 ("the Fair Trading Act")would also be breached. The section states that no trader shall, in trade, engage in conduct, which is misleading or deceptive.

    To be able to use the tort of "passing off" and Section 9 of the Fair Trading Act, it is necessary to demonstrate that there is an awareness of the trade mark and that it has a reputation. If a trade mark does not have a reputation, a consumer cannot be misled or deceived.

    Proving a reputation can be time consuming, expensive and, at the end of the day, subjective. What is a significant reputation to a suburban shop may not be considered significant to a multi-national corporation. Also, the multi-national may not even be aware of the suburban shop until it has launched a massive advertising campaign. Other sections in the Fair Trading Act may be able to be used, without having to prove reputation, if a misrepresentation is involved.

    The end benefits
    Having your trade mark registered is a safe option. First, it is usually not necessary to demonstrate the reputation of a registered trade mark when a case of infringement is being made. Secondly, the Trade Marks Register is publicly available, so a trader wanting to adopt a new mark can find out relatively easily whether any one else has had the same idea. This usually prevents problems before they even occur.

    If a trade mark is registered, it can also be easily licensed. It is preferable, for example, that a mark used in a franchise is registered under the Trade Marks Act 1953. A trade mark registration can also be sold, with or without the goodwill that may have accumulated in the mark.

    So, even if it's just for peace of mind, registration of a trade mark can prove worthwhile. After all, it's all in the name?

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

    Web site: Baldwin Shelston Waters

    July 2001

    July, 2001
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