Should Unregistered Marks Have a Special Circumstances Exception for Non-Use?

As a common law country New Zealand's trade mark legislation favours use over registration. However, the privileges available for unregistered marks appear vulnerable to non-use due to circumstances outside the control of the owner.

New Zealand’s trade mark legislation has recognised prior user rights for continuously used unregistered trade marks since being provided for in section 94 of the Patents, Designs and Trade Marks Act 1911. Under the various re-enactments of that provision such continuously used unregistered trade marks cannot infringe a subsequently registered later used mark covering the same or similar goods and can themselves become registered despite the same or a confusingly similar later used mark having been registered by a third-party.

However, whereas registered marks can have a period of non-use – currently 3-years under the Trade Marks Act 2002, but previously 5-years under the Trade Marks Act 1953 – without being removed from the register, unregistered trade marks need to be continuously used in order to retain the above mentioned privileges. Obviously the ‘continuously used’ proviso has some flexibility built in given that closure of a business for say two or three weeks over the Christmas – New Year period would not prevent a claim to continuous use. Although it would be judged on a case-by-case basis, the period of non-use that an unregistered mark can have before it loses its claim to continuous use will be considerably less than 3-years.

Crucially, the continuously used proviso for unregistered marks has no special circumstances exception as applies for registered trade marks. Under section 66(2) non-use due to special circumstances that are outside the control of the owner of the trade mark will prevent the registration being revoked for non-use.

The special circumstances criterion is not easily satisfied, given that it needs to be due to circumstances outside the control of the owner. Yet, it is easier to satisfy under the current Act as the Trade Marks Act 1953 required the non-use to be due to special circumstances in the trade and not to any intention not to use or to abandon the trade mark. The ‘in the trade’ proviso was recognised by the then Ministry of Commerce as being hard to satisfy back in 1991 as their proposed recommendation for the reform of the Trade Marks Act 1953 stated:

At present non-use of a trade mark cannot be relied upon to support the removal of the trade mark if the non-use is due to special circumstances in the trade. The Ministry considers that it is appropriate to widen the scope of the defence to allow the Commissioner to take into account any special circumstances outside the control of the registered proprietor. This is in line with international trends and would also absorb the present defence relating to warfare.

Arguably the situation brought about by the Covid-19 pandemic highlights the need for the provision allowing non-infringement and registration privileges for continuously prior used unregistered trade marks to specifically include a special circumstances exception for non-use due to circumstances outside the control of the owner. Currently, the absence of such a provision would make it hard for a Judge to exercise discretion in favour of the owner of an unregistered mark who was unable to use it due to circumstances outside their control. The presence of the special circumstances exception in section 66(2) would arguably imply that the legislature deliberately chose not to have a special circumstances exception for unregistered marks. Arguably that default interpretation needs to be countered by specific legislative change. Much of the case law regarding special circumstances would readily apply allowing reasonable certainty around what might qualify as a special circumstance. The period of allowable non-use would need to be determined on a case-by-case basis. New Zealand is not alone in not having such an exception. I am not aware of any countries that do. Notably, from a New Zealand perspective, influential jurisdictions such as Australia, Singapore and the United Kingdom do not.

While the current situation gives yet another reason for registering trade marks, it seems that legislative change is justifiable.

Author: Quinn Miller

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