Decision Maker Not Absolved by Lack of Acceptable Opinion Evidence for Specialist Goods

In Fantech (NZ) Limited v Systemair Aktiebolag 2021 NZIPOTM 40 the Assistant Commissioner held that when specialist goods are involved opinion evidence from people accustomed to dealing in specialist goods is not required in order for a determination to be made regarding the likelihood for confusion.

In December 2014 Systemair AB sought a declaration of invalidity in regards to Fantech’s registration of SYSTEMAIR in class 11 in relation to apparatuses for refrigerating, heating and ventilating, which was filed in August 2012. Systemair AB pleaded three grounds of invalidity – s. 17(1)(a) likely to deceive or cause confusion; s. 17(1)(b) contrary to law; and s. 17(2) bad faith.

Background
The predecessor company of Systemair AB was established in Sweden and following a merger in 1997 it adopted the Systemair AB name, started using SYSTEMAIR as a brand, and progressively expanded its network of subsidiaries and distributors around the world. Fantech (NZ) is part of a group of companies, including Fantech Australia, belonging to the Fantech Group, all of which are under the common ownership of Elta Group (Asia Pacific) Pty Ltd. In 2007 Elta Group acquired a Western Australian company called Systemaire Pty Ltd, who in 2003 obtained registration in Australia of the series mark SYSTEMAIRE / SYSTEMAIR in class 11 for ventilating goods. That mark was assigned to Fantech Australia in 2016. In August 2012 the Fantech Group instructed its solicitors to file the above noted New Zealand application for SYSTEMAIR in the name of Fantech (NZ), which achieved registration in February 2013.

Systemair AB was the first to use the brand SYSTEMAIR in New Zealand. The evidence indicated use began around 2002 when it fulfilled orders by a New Zealand based supplier and continued to fulfil subsequent orders by various New Zealand businesses thereafter. The earliest specifically documented evidence of such sales was from 2008. The evidence even showed that Fantech (NZ) purchased relevant goods under the SYSTEMAIR brand from Systemair’s subsidiary in the USA.

Reputation in Invalidity Applicant’s Mark
Given the consistent sales with some being to major players in the New Zealand market the Assistant Commissioner found that Systemair AB had established sufficient reputation in the SYSTEMAIR brand in New Zealand to meet the onus on it in that regard under section 17(1)(a). The Assistant Commissioner downplayed Fantech’s concerns about whether the relevant market had been identified or whether the circumstances of trade had been evidenced for the purposes of establishing reputation. It was held that specific evidence of market share or the circumstances of trade while desirable is not essential to making such a determination and cautioned that the initial awareness inquiry should not be approached in such a way as to reduce the utility of s 17(1)(a) as a public protection measure.

Likelihood of Deception or Confusion
The Assistant Commissioner readily found the marks to be identical and the respective goods to be identical in part and at least similar for the remainder. Consequently, the determination of the likelihood of deception or confusion under section 17(1)(a) in this case depended primarily on the surrounding circumstances in which Fantech (NZ)’s mark would be used in relation to the goods in their specification on a notional fair use basis. This would include the circumstances in which the applicant’s mark may be used, the market in which the goods may be bought and sold, and the nature and kind of customer who is likely to buy the goods.

The Assistant Commissioner noted that the specified goods could range from household heaters and fans to commercial apparatus for ventilating, heating, or refrigerating. While the commercial goods will be more expensive and involve a higher level of attention by the purchaser, the Assistant Commissioner considered that purchasers of the relevant household goods would still be reasonably well-informed, observant and circumspect as the goods are not every day buys or impulse purchases.

For the goods that would be sold in a specialist market Fantech (NZ) sought to use the High Court decision MAN Truck & Bus AG v Shaanxi Heavy-Duty Automobile Co. Limited [2017] NZHC 2821 to justify requiring evidence of persons accustomed to dealing in that market for determining the likelihood of deception or confusion. The Judge in that decision held that in the absence of such evidence the applicant was unable to discharge its onus of establishing that the opposed mark would not be likely to deceive or cause confusion. However, the Assistant Commissioner did not find that decision persuasive for two reasons. Firstly, the Assistant Commissioner noted that there was evidence from a person accustomed to dealing in the specialist market concerned and that it favoured Systemair AB’s position. Secondly, the Assistant Commissioner agreed with Systemair AB’s contention that the Judge in the MAN Truck case misapplied precedent when declining to make a determination on the likelihood of confusion in the absence of evidence of persons accustomed to dealing in the relevant market. The Judge considered he was applying proposition 10 from the New Zealand Court of Appeal decision Pioneer Hi-Bred Corn Company v Hy-Line Chicks Pty Ltd [1978] 2 NZLR 50, which at 62 made the following statement based on a principle stated by Lord Diplock in the UK House of Lords decision GE Trade Mark [1973] RPC 297 at 321:

(10) Where goods are sold or may be sold to the general public for consumption or domestic use, the judge or officer making the decision is entitled to take into account his own experience and his own reactions as a member of the public, as well as evidence from other members of the public, when considering whether buyers would be likely to be deceived or confused by use of a trade mark. But where the goods are of a kind not normally sold to the public at large, but are ordinarily sold and expected to be sold in a specialist market consisting of persons engaged in a particular trade, evidence of persons accustomed to dealing in that market as to the likelihood of deception or confusion is essential (GE Trade Mark [1973] RPC 297, 321; [1972] 2 All ER 507, 515).

The Assistant Commissioner considered that the Judge in the MAN Truck case neglected to take into account Lord Diplock’s focus being on whether the decision maker could give any weight to their own personal experience when the goods are sold in a specialist market. In particular, the Assistant Commissioner emphasised the following extract from Lord Diplock’s decision:

A judge, though he must use his common sense in assessing the credibility and probative value of that evidence is not entitled to supplement any deficiency in evidence of this kind by giving effect to his own subjective view as to whether or not he himself would be likely to be deceived or confused.

While Lord Diplock cautioned against the decision maker taking into account their own subjective impressions, he did not mean this to imply that the decision maker is absolved from reaching a conclusion as to likely confusion on the basis of any relevant evidence before them. To hold otherwise would be counter to the public protection purpose of section 17(1)(a).

The Assistant Commissioner also distinguished the MAN Truck case as being an opposition case with the onus on the trade mark applicant whereas the onus is on the invalidity applicant for invalidity cases. Further, in contrast, the MAN Truck case did not involve identical marks. It was contended that it would be inconsistent to require evidence regarding deception or confusion for identical marks involving the same goods when deception or confusion is assumed for such double identity for relative grounds and infringement purposes. The Assistant Commissioner found there to be no surrounding circumstances justifying keeping Fantech’s registered mark on the register and so declared the registration invalid under section 17(1)(a). The Assistant Commissioner either rejected or declined to rule on the other grounds for invalidity.

Author: Quinn Miller

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