Regulatory Ban on Product Held Insufficient Basis for Non-Use of Trade Mark
In InterAg v Bayer Intellectual Property GmbH 2020 NZIPOTM 21 the Assistant Commissioner revoked a trade mark after finding that a ban on the use of a product did not constitute special circumstances sufficient for justifying the non-use of a registered trade mark that was used in relation to a product that contained the banned product.
InterAg have two registrations for CIDIROL in class 5, the first covering pharmaceuticals and the second covering veterinary products including fertility enhancers for animals. Both parties agree that there has been no use of the CIDIROL trade mark since 2007, when the New Zealand Food Safety Authority introduced a ban on oestrogen products for animals producing food intended for human consumption in response to an EU Directive that included provisions that banned the importation of such food products. InterAg quickly substituted another hormone for use in it controlled internal drug release (CIDR) product, but decided not to use the same trade mark due to concerns over consumer confusion or reluctance
Bayer commenced the non-use revocation application after the CIDIROL registrations were cited against its application for CIDEROL in relation to veterinary preparations. InterAg sought to retain its registration by relying on subsection 66(2) of the Trade Marks Act 2002, which provides that a trade mark may not be revoked for its non-use if its non-use is due to special circumstances that are outside the control of the owner.
Both parties agree that the ban on oestrogen products for animals producing food intended for human consumption is outside the control of InterAg. However, Bayer argued that it is nonetheless not a special circumstance on the bases that: regulatory intervention is part of the veterinary environment; the ban does not extend to animals that do not produce food intended for human consumption; InterAg’s decision not to use the same trade mark for the substituted formulation was voluntary; fertility enhancers are specialized products that require input from veterinarians and so confusion is unlikely. InterAg argued that: it had not abandoned the mark and would resume use of it if the ban is lifted; the ban is a special circumstance as it is not usual or ordinary and is in line with Article 19 of the TRIPs Agreement which recognises import restrictions or other government requirements as a valid reason for non-use; and that there are business and public interest reasons for not using the same trade mark for its substitute product.
The Assistant Commissioner noted from a review of New Zealand precedential cases on subsection 66(2) that the existence of special circumstances turns on the particular facts of each case. It was further noted that the zone of monopoly can be significant and that registration should rarely be maintained in the absence of use and that it is only in sufficiently special cases that justice requires departing from the usual rule. It was noted from the Supreme Court case Crocodile International Pte Ltd v Lacoste  NZSC 14 that the traditional justifications for trade mark protection diminish in the absence of use and that the Supreme Court endorsed the following statement by the Judge in the UK case Laboratoire de la Mer Trade Marks  FSR 51 (Ch) at [19(a)]:
There is an obvious strong public interest in unused trade marks not being retained on the registers of national trade mark offices. They simply clog up the register and constitute a pointless hazard or obstacle for later traders who are trying actually to trade with the same or similar marks. They are abandoned vessels in the shipping lanes of trade.
The Assistant Commissioner was not swayed by InterAg’s appeal to public interest in defence of its marks, holding that there is no public interest in protecting unused marks on a speculative assessment of future confusion. Regarding InterAg’s appeal to Article 19 of the TRIPs Agreement the Assistant Commissioner considered that it only applied to delay or interruption, whereas the ban effectively has a permanent effect.
The Assistant Commissioner noted that at the level of dictionary definition that the ban qualifies as special as it is out of the ordinary, peculiar or abnormal. However, given the policy considerations, the Assistant Commissioner held that dictionary definitions are not adequate for finding the appropriate threshold for ‘special’ in the context of the non-use provisions of the trade mark legislation.
The Assistant Commissioner noted that there is no realistic possibility of the ban being lifted, but considered that the ban is not a sufficient cause for the non-use of the marks. While it decided not to do so, InterAg had the option of continuing to use the mark for its substitute product, and allay its concerns about consumer confusion by appropriately educating the relevant public. The onus was on InterAg to substantiate on the balance of probabilities that consumer confusion is the on-going basis for its non-use, but there was a lack of evidence in this regard. It was noted that the product is specialized in nature and its purchase is not made on impulse but rather is generally made in consultation with a veterinarian, and was not sold individually as it was only available as a component of the CIDR device. As such, the Assistant Commissioner found that consumer confusion would be unlikely and that by the earliest point in the non-use period asserted by Bayer could not provide a justifiable basis for the non-use.
Author: Quinn Miller