Bill to Implement NZ-UK FTA Introduced to Parliament
Following on from the earlier notified Agreement in Principle for a NZ-UK Free Trade Agreement, the United Kingdom Free Trade Agreement Legislation Bill has now been introduced to New Zealand’s parliament as part of the process towards final ratification of the agreement.
In relation to intellectual property the vast majority of the obligations are already met by New Zealand’s current legislation. The only imminent change will be the replacement of section 174B of the Copyright Act 1994 so as to specify that performer’s rights are also infringed by the playing in public by means of a sound recording of the whole or a substantial part of a performance without the performer’s consent. Arguably this is merely clarificational as section 174B currently specifies that a person who communicates to the public the whole or a substantial part of a performance by means of a sound recording without the performer’s consent infringes the performer’s rights. Part of the definition of ‘communicate’ in section 2(1) is to transmit or make available by means of a communication technology and so should already cover the playing of a sound recording.
Some other changes to the Copyright Act 1994 will eventuate at a later date. Within 2-years of the FTA entering into force New Zealand has to introduce an artist’s resale right scheme and operate it on a reciprocal basis with the UK. Under an artist resale right scheme visual artists receive a royalty on the resale of their art works in the secondary art market for as long as the artwork remains protected by copyright. The secondary market would minimally cover resale in either New Zealand or the United Kingdom of an art work first produced in one of those jurisdictions, although it could extend to other jurisdictions that have resale right legislation. There will be flexibility for New Zealand to specify the percentage amount(s) of the royalty, any threshold sales value and how the royalty will be collected. Currently the threshold sale value in the UK is £1,000 and for Australia it is AU $1,000. Resale royalty payments in Australia are mostly between AU $50 and AU $500.
Further out, New Zealand will have up to 15-years from the FTA entering into force to extend the copyright term for authors, performers and producers by 20-years to 70-years either from the death of the author or from the work’s creation as is appropriate. The additional term would only apply to works that still have copyright at the date of implementation and so would not reapply copyright to a work that had fallen out of copyright.
Although not subject to a timeframe, New Zealand also has an obligation to make all reasonable efforts to join the Hague Agreement on Industrial Designs – Geneva Act (1999). This will be the subject of a separate national interest and regulatory impact assessment.
There are also conditional obligations under the FTA. If New Zealand’s geographical indications legislation is extended in a bespoke fashion to recognise agricultural products or has substantive changes to the current wine and spirits provisions then that extension will also be done for the UK. This conditional provision is on account of the on-going negotiations for an EU-NZ FTA, and will be reviewed within two years of entry into force of the FTA if no such bespoke changes have been made.
Both parties are also obligated to work towards a multilateral outcome in the World Intellectual Property Organization’s Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore (WIPO IGC) and to share information and otherwise cooperate in working toward that outcome. There is also a requirement for both parties to endeavour to cooperate to enhance understanding of matters of interest to Māori relating to intellectual property and issues relating to genetic resources, traditional knowledge and traditional cultural expressions.
Forthcoming PCT Fee Changes for New Zealand
Effective from 1st August 2022 the NZD equivalent amount for an International Search carried out by the USPTO will change as indicated below. (PCT Newsletter; 2022/6)
ISA (Currency = NZD) | Intl Search Fee (Current) | Intl Search Fee (01/08/2022)
USPTO (Large Entity) | 3,126 | 3,368
USPTO (Small Entity) | 1,563 | 1,684
USPTO (Micro Entity) | 782 | 842
3. Trade Marks
Strike Out Decision Confirms High Bar for Establishing Bad Faith
In Lidl Great Britain Ltd v Tesco Stores Ltd 2022 EWHC 1434 the Judge declined to infer bad faith from overlapping registrations for a mark that remained unused over a prolonged period.
Lidl has 3 UK national trade mark registrations for its wordless device mark covering 14 goods classes and 4 services classes stemming from a 1995 filing. It also has an EU registration for the same mark, which gave rise to a UK registration following the UK’s departure from the EU. Lidl also obtained UK registrations for the same mark from filings in 2002 and 2007 each covering a wider range of goods and services. In 2021 Lidl also filed a currently pending UK application for the same mark covering goods and services in 43 of the 45 classes. Despite all of these overlapping registrations and the pending application Lidl has not used the wordless mark for any of its goods or services. Instead Lidl has extensively used and has substantial reputation in a mark consisting of the wordless mark with a stylised version of the word LiDL inside the circle, which is also registered.
After Tesco began using a similar device mark within its Clubcard Prices marketing Lidl brought proceedings for trade mark infringement, passing off and infringement of copyright. Tesco counterclaimed that Lidl’s wordless device mark registrations should be invalidated for bad faith and for non-use. The present case concerns Lidl’s strike out and/or summary judgment application in relation to Tesco’s bad faith counterclaim as well as Lidl’s application for survey evidence to be admitted for establishing acquired distinctiveness of the wordless device mark through use of the LiDL device mark. Despite the presence of a stylised version of its name, Lidl claims that its LiDL device mark does not alter the distinctive character of its wordless device mark in which case under section 46(2) use of the former qualifies as use of the latter. This decision does not rule on whether Lidl can claim the benefit of section 46(2) to avoid its wordless device marks being invalidated for non-use for a period of 5 or more years from the date of registration.
Lidl’s infringement claim is based upon having reputation in the wordless mark through use of the LiDL device mark and its claim that Tesco’s device mark takes unfair advantage of that reputation. Given Lidl’s lack of use of the wordless device mark on its own Tesco argued that the duplicate registrations thereof evidenced bad faith on the basis that Lidl merely sought to evade the non-use revocation ground by ever-greening. Tesco asserted that Lidl only sought to obtain legal protection for the wordless device mark so as to use it as a legal weapon with the prolonged absence of use establishing that the mark was never intended to be used in line with the true function of a trade mark. Tesco also contends that the wordless device mark has no reputation or goodwill and that consumers do not rely on it for indicating a source of origin for goods or services.
Citing the recent Court of Appeal case Sky Limited v Skykick UK Ltd  EWCA 1121 at  the Judge noted that bad faith as a ground for invalidity requires a use of the system of trade mark registration which would be regarded in commerce as not in accordance with honest practices or acceptable commercial behaviour. It was further noted that seeking to obtain trade mark rights for purposes other than those falling within the functions of a trade mark would constitute bad faith, although lack of intention to use at the time of making the application on its own is insufficient to establish bad faith. There will only be bad faith where the absence of intention to use is coupled with objective, relevant and consistent indicia of additional positive intention of obtaining an exclusive right for purposes other than those falling within the functions of a trade mark. Good faith is presumed until the contrary is proved. Given that an allegation of bad faith is akin to an allegation of dishonesty it must be fully and properly pleaded so that the party alleged knows the respects in which their conduct is characterised as such, and the facts on which such an allegation is being made.
Applying these principles to the case the Judge found that Tesco’s allegation that the wordless device mark is merely a legal weapon is no more than an assertion with no objective basis. That Lidl already owned a registration for the LiDL device mark, from which it claimed use of the wordless device mark, did not add anything to that assertion according to the Judge, as the mere existence of an overlapping registration is not enough to shift the presumption of good faith. Similarly, Tesco’s contention that bad faith can be inferred from Lidl’s overlapping registrations on the basis that they merely amounted to ever-greening was rejected, with the Judge finding that the mere existence of overlapping filings is not enough on its own to give rise to a prima facie case of bad faith. The Judge indicated that to establish such a prima facie case would require something along the lines of showing that the making of the overlapping registrations was bogus or made no commercial sense. The Judge found nothing in Tesco’s pleadings was inconsistent with the presumption of good faith or gave rise to a clear inference of bad faith and also found that aspects of Tesco’s allegations of bad faith did not meet the higher bar for such pleadings of being fully and properly pleaded. Consequently, the Judge granted Lidl’s strike out and/or summary judgment application in relation to Tesco’s bad faith counterclaim.
The Judge went on to grant Lidl’s application to admit survey evidence for use in response to Tesco’s case of lack of use of the wordless device mark, lack of recognition by consumers and lack of distinctive character and reputation.
All In Good Time – Doctrine of Laches Defence Rejected
In A.I.G. Agency Inc v American International Group 21-1948 the Court of Appeals for the Eight Circuit’s (CA8C’s) application of the doctrine of progressive encroachment led it to reject the district court’s finding of a doctrine of laches defence.
Agency operates primarily in Missouri and began using AIG in relation to its insurance broker services around 1958. International was incorporated in 1967 and began using AIG in relation to insurance services sometime between 1968 and 1970, and obtained its first federal trademark registration for AIG in relation to insurance in 1981. In 1995 International notified Agency about its registration and demanded Agency stop using AIG. In response Agency asserted its right to use AIG in Missouri and Illinois on account of using the mark there prior to International’s registration. In 2012 International significantly increased its direct to consumer marketing strategy and Agency experienced a significant increase in incidences of consumer confusion thereafter.
In 2017 Agency sued International on the basis of its common law trademark rights, unfair competition and contravention of 15 USC § 1125 (false designations of origin; false description or representation). International counter-claimed for trademark infringement, unfair competition and dilution and moved for summary judgement on the basis of a doctrine of laches, which provides a defence when the claimant inexcusably delayed in asserting its claim. The district court granted summary judgement to International on the basis of its doctrine of laches defence.
On appeal, the CA8C noted that a party raising a laches defence bears the burden of establishing: (1) a delay in asserting a right or a claim; (2) that the delay was not excusable; and (3) that there was undue prejudice to the party against whom the claim is asserted. The CAFC further noted that in this case the doctrine of progressive encroachment is a relevant factor in whether there was inexcusable delay. Under the doctrine of progressive encroachment, the delay is measured from when the infringement or offending use became actionable and provable, not from when the claimant first learned of the potentially infringing or offending mark.
Agency argued that given the fact-intensive nature of the likelihood of confusion inquiry it was only following International’s change of marketing strategy in 2012 that it had actionable grounds. By asserting that there was inexcusable delay, International had the burden of showing that there was a likelihood of confusion prior to its 2012 change in marketing strategy. The CA8C found International provided little to no pre-2012 evidence of confusion in Agency’s markets of Missouri and Illinois while also finding that to be consistent with Agency’s evidence showing consumer confusion being negligible pre-2012 and significantly increasing from 2015. Another factor was the degree to which the two parties were competitive prior to International’s 2012 change in marketing strategy. Whereas International was primarily an insurance product creator or underwriter, Agency was an insurance broker, sometimes selling International’s products. Although the parties operated in both the commercial insurance market and the consumer insurance market prior to 2012, until 2011 International’s involvement in direct-to-consumer products was marketed under a different name.
These factors led the CA8C to find there to be a genuine dispute of material fact as to whether a likelihood of confusion existed pre-2012, thereby preventing application of the doctrine of laches at the summary judgement stage. Hence, while International’s 1995 cease and desist letter made Agency cognizant of the risk of confusion, on the evidence this was insufficient to establish that Agency had an actionable and provable claim at that time.