Judge Rejects Invalidity and Non-Use Challenges to Accidentally Ambiguous Registration

In Energy Beverages LLC v Frucor Suntory New Zealand Ltd [2020 NZHC 3296] the Judge upheld the Assistant Commissioner’s rejection of invalidity and non-use challenges to Frucor’s colour mark based on the shade of green shown on the register being different to the register’s description of the trade mark and as used.

As previously noted Frucor achieved registration for a colour mark in respect of energy drinks on the basis of acquired distinctiveness with the description of the mark at acceptance stating – The mark consists of the colour green (Pantone 376C), as shown in the representation attached to the application, applied as the predominant colour to the goods, their packaging or labels. However, the colour shown on the register is as shown here, whereas Pantone 376 is as shown here.

By the time of the initial proceedings IPONZ no longer retained the paper file as these were destroyed following digitization for the purposes of IPONZ’s online system. Frucor argued that the process of scanning, uploading, downloading and printing colour marks can lead to loss of integrity with respect to the original representation. The trade mark attorney who filed Frucor’s application gave a declaration that included a copy of the application filed which had a square sample that had been cut from a metallic label stapled to it as shown here. Evidence was led to the effect that it is not possible to have an exact Pantone colour system match for colours printed on metallic cans as the Pantone colour system does not take into account colour printed on such metallic substrates. Further, the grey of aluminium cans and the thin ink film can change the apparent colour, and even a skilled printer cannot reliably print a Pantone colour match on aluminium cans. Frucor said it chose Pantone 376C as the closest match, where the ‘C’ suffix refers to the colour being printed on coated or gloss paper.

Energy Beverages unsuccessfully argued before the Assistant Commissioner that the use of the word ‘predominantly’ in the description made the registration invalid as it meant the mark was not capable of a uniform graphical representation. The Assistant Commissioner accepted Frucor’s contention that Energy Beverage’s invalidity argument falls under section 18, which is not within the exceptions given in section 75 to the presumption that a mark that has been registered for 7 or more years is valid.

On appeal Energy Beverages accepted that its argument falls under section 18, but argued that the section 75 presumption of validity only applies to registered trade marks and that on account of the use of ‘predominantly’ Frucor’s mark never qualified as a trade mark. Frucor noted that in submissions on the Bill to the current Act it was argued that section 18 should fall within the section 75 exceptions, but that the Ministry rejected that on the basis that 7-years from registration is ample time for section 18 objections to be raised. It was also noted that Energy Beverage’s argument would require the concept of registration to be treated differently in sections 73 and 75, which would be contrary to the legislative purpose of simplifying procedures. In line with Frucor’s observations the Judge rejected Energy Beverage’s argument holding that the section 75 presumption of validity applies to Frucor’s mark given that section 18 is not an exception for that section and that the time limit for objecting under section 18 is consistent with the purposes of the Act.

If wrong in that conclusion, like the Assistant Commissioner, the Judge went on to consider whether the use of ‘predominantly’ meant the mark failed to satisfy the definition of a trade mark on account of not providing a uniform graphical representation or being ambiguous. The Assistant Commissioner held that Frucor’s registration is sufficiently clear and not defective for want of precision, and that the most memorable or main colour that catches the eye of reasonable consumers is the appropriate way to understand the use of ‘predominant’ in this context. Energy Beverages again emphasised that that approach is out of step with the approach taken in the UK and Europe, which consider the use of ‘predominant’ or ‘significant’ in the mark description as not satisfying the clarity, precision, self-containment, durability and objectivity requirements of a sign that qualifies as a trade mark. It was also argued that the distinction between infringement provision 89(1)(a), which does not require a likelihood of confusion, and infringement provisions 89(1)(b)&(c), which do require a likelihood of confusion, would be impossible to make if the scope of the mark is insufficiently precise. This in turn could result in an unduly wide scope of protection compared to the actual use made.

The Judge held that the strict European approach is not appropriate in the New Zealand context and that the practice of using such descriptions for colour marks is appropriate if the distinctiveness has been established through use, with protection only extending to the predominant colour – the remainder of the get-up being a matter of indifference. While the distinction between infringement provisions 89(1)(a) and 89(1)(b)&(c) can be harder to make from the description of colour marks, the Judge considered the description used sufficiently limiting and objective, even though whether a third party has made predominant use of a colour can require judgment.

Regarding the non-use ground, Energy Beverages appealed the Assistant Commissioner’s finding that the mark should be defined by the written description rather than the image on the register. The Assistant Commissioner’s finding in this regard did not depend upon their acceptance of the explanation for the image being a different shade of green, rather it was supported by the written description includes the phrase “as shown in the representation attached to the application”. While acknowledging that a written description is required for colour marks, Energy Beverages argued that did not necessarily mean the written description takes priority over the colour sample, and that the public is entitled to rely upon the register as being accurate. All the more so where the written description refers to the representation attached to the application when that representation is no longer available to the public.

However, the Judge found that the IPONZ Practice Guidelines for colour marks tipped the balance in favour of the written description having primacy. While members of the public can be misled by the incorrect representation of the filed colour sample, competitors could be expected to check the image on the IPONZ database against the Pantone colour if they have doubts. Given that the discrepancy was not the direct fault of Frucor, the Judge considered revocation would not be justified or appropriate where the mark as filed continues to be used. Rather, the appropriate action is to apply for the colour sample to be amended, as Frucor now has.

Author: Quinn Miller

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