The Cost of Trade Mark Non-Use – Duelling Over Crocodile Marks Continues
In Lacoste v Crocodile International Pte Limited 2024 NZHC 1333 the Judge confirmed that pleading non-use puts both genuine use and use as a trade mark in issue and that pleading non-use in respect of all goods and/or services does not preclude a finding of partial revocation.
Background to the Duelling Crocodiles - Draining the Swamp
The case is part of on-going proceedings between the parties over a composite mark containing a stylised version of the word Crocodile and a left-facing curved crocodile that was initially created by the owner of a predecessor entity of Crocodile International.
Lacoste was the first to use a (right-facing curved) crocodile device as a trade mark in respect of clothing items. However, it was Crocodile Garments Ltd, a predecessor entity of Crocodile International, that in 1963 first registered a crocodile device mark in New Zealand, being the above noted composite mark containing a left-facing curved crocodile. However, the mark being the subject of that registration (70068) was not used in New Zealand. This prompted Lacoste to file a non-use revocation proceeding against registration 70068 in 1999 and, as part of a wider global settlement agreement between the parties, in 2003 Crocodile Garments assigned registration 70068 to Lacoste. Lacoste had begun using a right-facing curved crocodile device trade mark in New Zealand in 1983, but it was only in 2005, subsequent to the settlement agreement, that it was able to achieve registration in class 25 for its right-facing curved crocodile device trade mark in New Zealand.
However, Lacoste also did not use the 70068 subject mark in New Zealand. Indeed, it became apparent during the subsequent proceedings that Lacoste’s purpose in acquiring the mark from Crocodile Garments was to preclude its use in the New Zealand market. This enabled Crocodile International in 2008 to apply for revocation of registration 70068 on the basis of non-use. Likely in anticipation of registration 70068 being revoked, prior to the Assistant Commissioner’s (AC’s) decision, Lacoste made two applications (837027 and 978868) for the identical mark covering the identical goods (articles of clothing) in class 25, and both applications were accepted. Crocodile International opposed application 837027 and filed an invalidity action against 978868 after it was registered in December 2013, although this was later dropped after being replaced by a non-use revocation action in April 2018.
In February 2014, the AC’s decision regarding registration 70068 issued, holding that it be revoked for non-use on the basis that Lacoste could not claim use of that registration via its use of its right facing curved crocodile device. On a global appreciation approach, the AC held that section 7(1)(a) of the Trade Marks Act 2002 was not available to Lacoste as Lacoste’s use of its right-facing curved crocodile device was use in a form differing in elements that alter the distinctive character of the 70068 mark.
While Lacoste’s appeal of that decision was pending, the same AC issued their decision in the opposition against application 837027 by Crocodile International. The opposition had two main asserted bases: (i) a claim that use of the device would amount to copyright infringement as it claimed copyright was not assigned with the trade mark; and (ii) that Lacoste had no intention of using the mark. The AC held that (i) was statutorily precluded by clause 28 of schedule 1 of the Copyright Act 1994, which denies copyright to artistic works created before 1st April 1963 that constitute a design capable of registration under the Designs Act 1953 and which have been multiplied by an industrial process. Regarding basis (ii), the AC decided that while an application is prima facie evidence of intention to use, this was displaced by Lacoste’s pleadings, which shifted the onus to them to establish that use of its right-facing curved crocodile device supports an intention to use the left-facing composite mark. In line with their decision regarding registration 70068, the AC held that Lacoste had not displaced that onus due to material differences between the device marks.
However, the AC’s decision to revoke registration 70068 was successfully appealed, with the High Court Judge agreeing with Lacoste’s contention that the central message of both the left and right-facing trade marks was the same. In the context of the similarities, the differences were held to be minor and did not alter the distinctive character of registration 70068, with the Judge finding that an average consumer would conclude that the different marks are associated with the same manufacturer.
While Crocodile International’s appeal of that decision was pending Lacoste also successfully appealed the AC’s decision in the opposition to application 837027. The Judge upheld the finding that copyright in the device was statutorily precluded, adding that even if copyright existed the facts and circumstances supported an implicit agreement to Lacoste’s use of the mark. The Judge also rejected the AC’s finding that Lacoste’s pleadings suggested a lack of intention to use on the basis that it sets the bar for such a finding too low, instead finding that Lacoste’s history of using various crocodile marks reinforces the prima facie presumption of intention to use that applicants enjoy.
The April 2016 Court of Appeal decision regarding revocation of registration 70068 also went in Lacoste’s favour. The Court of Appeal agreed with the High Court that the central idea and message was retained despite minor differences and that informs the likely impact of the mark on the average consumer taking into account the visual, aural and/or conceptual qualities of the mark.
The February 2017 revocation ruling by the Supreme Court reversed and agreed with the AC, finding that the central message approach both risks ignoring or downplaying potentially significant visual differences between trade marks and can lead to greater uncertainty in the case of trade marks that may be taken to have multiple messages. In rejecting the ‘central message’ approach they held that it risks over-extending the penumbra of protection for a trader and so is contrary to the policy of not clogging the register. Instead, the correct approach was to assess the differences between trade marks in terms of distinctive character, which involves a global appreciation of the visual, aural and conceptual qualities of the trade mark.
The Supreme Court decision noted at [20] that the opposition to application 837027 was before the Court of Appeal. No decision issued from that appeal, and application 837027 was voluntarily withdrawn in January 2018. However, Lacoste still had registration 978868 for a mark and goods identical to the revoked registration 70068, although Crocodile International filed a non-use revocation action against registration 978868 in April 2018.
More to Chew Over or a Case of Crocodile Tears?
The current case involves an appeal from a direction issued by the AC regarding pleadings and admissibility issues in the non-use revocation action against registration 978868. Lacoste alleges Crocodile International's written submissions prior to the scheduled hearing raised new grounds. Crocodile International’s non-use pleadings recited the text of section 66(1)(a). While that is standard practice, Lacoste argued that they had not been put on notice that they needed to demonstrate ‘use as a trade mark’, and considered that the pleading only required them to demonstrate genuine or non-token use. They also argued that partial revocation had not been pleaded.
IPONZ declined Lacoste’s application to be heard on the matter, but instead agreed to a Case Management Conference (CMC), where the AC concluded there was no defect in Crocodile’s pleadings and no basis upon which to grant Lacoste leave to file further evidence of its use of the registered mark. The AC then directed the substantive hearing on the revocation application should proceed without delay.
Lacoste appealed the AC direction, while Crocodile sought to strike out the appeal on the basis that an appeal can only be made from a decision, not a direction. Crocodile also described Lacoste’s application for leave to file further evidence on appeal as an attempt to circumvent the high threshold and strict procedural requirements for filing evidence out of time before the IPONZ. The Judge noted that the regulations distinguish between a decision and a direction, but considered it is the substance of the determination that is important when considering the right to appeal. While stemming from a CMC rather than a hearing, the Judge held that the AC still effectively issued a decision that Lacoste had a right to appeal from, and further noted that appealable decisions include substantive issues and mere procedural rulings.
The Judge agreed with the AC’s determination that Crocodile International’s non-use pleading put both genuine use and use as a trade mark in issue. The Judge also found no merit in Lacoste’s contention that partial revocation needed to be additionally pleaded as it would prevent the Commissioner or the Court from making a partial revocation ruling if revocation had been sought for all goods and/or services. Given those findings, the Judge declined Lacoste's request to admit additional evidence. While that evidence was relevant and cogent, it was not fresh and there was no exceptional reason to allow late filing.
Anything Gained or Lost?
Given the Supreme Court’s ruling in respect of an identical mark and goods, and Lacoste’s reluctance to use the left-facing composite mark, it looks like it will soon be game, set and match to Crocodile International in respect of the revocation of that mark. Given Lacoste’s extensive and continuous prior use rights in its right-facing curved crocodile device marks, it needs to be asked what Crocodile International seeks to gain from this battle.
In November 2013, Crocodile International filed application 988410 for a refreshed version of the left-facing curved crocodile composite mark in class 25 for clothing, footwear and headgear, and this remains unexamined and in abeyance. Once registration 978868 is revoked, Crocodile International will have a strong case for ownership of that device mark given its differences to the versions Lacoste uses (and the expired copyright). However, will Crocodile International be able to register application 988410 or use it in respect of clothing without Lacoste suing for infringement? While the left and right-facing marks are not similar enough for one to constitute use of the other, they are arguably similar enough for the lesser standard of causing deception or confusion. Lacoste will also likely be able to utilise the enhanced protections available for well known marks.
This is not to say that Lacoste has established a monopoly in respect of crocodile or alligator device marks in New Zealand in relation to clothing, footwear and headgear. Currently, there are 7 other owners of registrations in class 25 that have been classified as containing crocodile or alligator devices, but none of those registrations are sufficiently similar to the marks involved in the long running proceedings between Lacoste and Crocodile International.
Authors: Quinn Miller and Thomas Robinson-Piper
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