Registration Shield Evades Issues with Establishing Reputation

In Toyota New Zealand Limited v Vanguard Trademark Holdings USA LLC 2022 NZIPOTM 9 Vanguard had mixed results, but its class 39 registration proved sufficient against core aspects of Toyota’s goods and services specifications in classes 12 and 35.

Background: Vanguard opposed Toyota’s November 2017 applications for the following three marks: DRIVE HAPPY; THE DRIVE HAPPY PROJECT; and the shown TOYOTA DRIVE HAPPY PROJECT device mark, each covering the same goods and services in classes 9, 12, 16, 25, 35, 36, 37, 41, and 42. The marks achieved acceptance in February 2018 after Toyota agreed to remove class 39 from the specifications and Toyota launched its Drive Happy Project shortly thereafter, based around a fundamental change in sales model.

In early 2014 Vanguard obtained registration in New Zealand for DRIVE HAPPY in class 39 covering vehicle renting and leasing services and reservation services for the rental and leasing of vehicles, having allowed a 1999 registration for the same mark in class 39 to expire in 2006. Use of Vanguard’s mark in the course of trade in New Zealand commenced around 2012 and is made through use by its USA subsidiary Alamo Rent A Car. In earlier proceedings between the parties Toyota had sought to revoke Vanguard’s class 39 registration on the basis that it had not been used for a continuous period of three or more years up to 22nd January 2018. However, the same Assistant Commissioner found that use in the course of trade in New Zealand during the relevant period was established and that the services did not need to be physically provided in New Zealand in order to count as being used in the course of trade in New Zealand.

Grounds of Opposition: By the hearing Vanguard limited its pleaded grounds of opposition to section 17(1)(a) – use likely to deceive or confuse, and section 25(1)(b) – confusion likely in relation to its class 39 registration covering the same or similar services. However, shortly before the hearing Vanguard sought to amend its pleadings in relation to Toyota’s application for the identical trade mark DRIVE HAPPY so that it was under section 25(1)(a) instead of section 25(1)(b) as the likelihood of confusion is presumed for the former where the services are identical. Given the late stage of the amendment application IPONZ declined to allow it. The scheduled hearing occurred despite the period within which Vanguard could appeal the amendment rejection expiring the next day. The Assistant Commissioner concurred with IPONZ’s rejection, finding it would prejudice Toyota and that on balance the public interest favoured declining the amendment request.

Likelihood of Deception or Confusion: For the section 17(1)(a) ground Vanguard had the initial onus of establishing awareness of its mark in New Zealand prior to the application date of Toyota’s marks. While there were significant sales through the Alamo website covering a 5-year period for car related services in New Zealand, it was not clear whether that revenue was generated in relation to the DRIVE HAPPY mark or under the ALAMO brand. The website evidence of use Vanguard provided was undated, which led the Assistant Commissioner to hold that the sales only evidenced awareness of the ALAMO brand. Similarly, evidence of visits to the ALAMO website by people in New Zealand did not establish awareness of the DRIVE HAPPY mark in the absence of dated evidence thereof. Even a significant history of New Zealand customers making bookings of Alamo rental cars was found not to establish awareness of the DRIVE HAPPY mark. In 2012 Alamo and Vanguard entered into long-term rental contracts with 3 New Zealand based travel agents, which included authorised use by the travel agents of the DRIVE HAPPY mark along with having Alamo promotional brochures and fleet cards that included the DRIVE HAPPY mark available for customers. However, the Assistant Commissioner found the mark to be not particularly prominent and raised further doubts around its evidential worth. While there was evidence of the mark being used on Alamo’s social media accounts there was no evidence regarding whether these sites were visited by people in New Zealand. Further, the use of the mark in close proximity to the ALAMO brand meant it functioned as a secondary mark having diminished reputation compared to standalone use. The Assistant Commissioner held that Vanguard had not discharged the onus of establishing awareness of its mark in New Zealand and so rejected the section 17(1)(a) ground. That somewhat harsh result seems to be on account of the Assistant Commissioner’s piecemeal approach to considering the evidence. The use made through the contracts with New Zealand based travel agents seems to be Vanguard’s strongest evidence. Given that the mark was used on the promotional brochures and fleet cards it would seem fair to infer that the mark would have been similarly displayed (in even clearer resolution) on the website, the address of which would have been on the brochures. By allowing one source of evidence to corroborate other evidence using prima facie valid inferences there appears to be sufficient basis for establishing awareness of the mark in New Zealand, even if the mark was only used as a secondary mark.

Similar Prior Registration: As the consideration of deception or confusion under section 25(1)(b) is made on the basis of notional use (in a normal and fair manner) in relation to the registered mark’s specified services, establishing actual use is not required.

At the hearing Vanguard conceded that Toyota’s class 16, 25 and 42 goods and services were not the same as or similar to the services of their registration. While both companies can be described as operating in the car business and Toyota’s specifications cover vehicle related goods and services, Toyota argued that a more nuanced consideration of similarity is required given the expansive nature of the vehicle industry. While accepting on a notional basis that Vanguard could offer software to facilitate its provision of class 39 services, the Assistant Commissioner considered such offering would be incidental and insufficiently similar to Toyota’s class 9 goods. The Assistant Commissioner also rejected Vanguard’s contention that Toyota’s lease financing services are similar to its vehicle leasing services. While the respective services will involve similar users, the uses and physical acts of service are not similar or competitive. Toyota’s class 41 services were similarly found to be insufficiently similar to Vanguard’s services. For class 12  motor vehicles were found to be similar, but motor vehicle parts and fittings were not. Motor vehicles have the same uses and can have the same users and, particularly for online purchases, the trade channels can be similar, and the supply of motor vehicles (for sale) is in competition with the leasing of vehicles. In class 35 wholesaling and retailing services in relation to vehicles and auction sales and services were readily found similar to Vanguard’s renting and leasing services. However, the class 37 maintenance, repair and servicing of vehicles services were, on balance, considered insufficiently similar.

The Assistant Commissioner readily found Toyota’s DRIVE HAPPY mark to satisfy the similar mark requirement under section 25(1)(b). Given the prominence of that phrase in the overall impression created by Toyota’s other word and device mark applications and the unusual or unexpected nature of that phrase, those marks were also found to satisfy the similar mark requirement. The word “PROJECT” was considered to add little as it plays a descriptive role that is conceptually consistent with the idea evoked by Vanguard’s mark. While the device mark includes the distinctive word “TOYOTA”, it is not as prominent and reputation in that element cannot be considered under section 25(1)(b) and it has no plain meaning in English. While the length of the device mark creates auditory differences the opposed goods and services would not be purchased solely in an auditory context.

In considering the likelihood of deception or confusion the Assistant Commissioner noted that a high degree of similarity between the marks can offset a lower degree of similarity between the respective goods and/or services (or vice versa). The absence of evidence of confusion was found to be unsurprising given Vanguard has not had large volumes of sales under its mark, and does not establish that confusion or being caused to wonder might not occur in the future, particularly if DRIVE HAPPY is not used in close proximity to the ALAMO brand. The Assistant Commissioner agreed with Vanguard that use of the opposed marks by Toyota could cause consumers to wonder if there is a close association, commercial link or co-branding alliance between Toyota and Alamo, and that the presence of the word “PROJECT” can reinforce rather than allay that impression. Consequently, the Assistant Commissioner held that Toyota had not established that a substantial number of prospective purchasers are not likely to be confused if it uses the opposed marks in relation to motor vehicles, or wholesale and retail services in relation to vehicles, or auction sales and services in relation to motor vehicles. That finding was more finely balanced in respect to Toyota’s device mark, but was still sufficient to engage section 25(1)(b).

While the section 25(1)(b) finding only affected several of the numerous goods and services in Toyota’s applications, they are nonetheless core aspects of Toyota’s business. Given that Toyota is still using the marks on its website (https://www.toyota.co.nz/drive-happy/) presumably they are going to appeal the decision.

Author: Quinn Miller

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