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Tasman Insulation NZ Ltd v Knauf Insulation Ltd

(2015 NZCA 602; 16 December 2015)

In Tasman Insulation NZ Ltd v Knauf Insulation Ltd the Court of Appeal largely upheld the findings of the May 2014 High Court decision which considered the issues of genericism, use as a trade mark, infringement and misleading and deceptive conduct.
The dispute stemmed from when the defendants started selling insulation products in New Zealand under the EarthWool brand while also using the word ‘batt’ or ‘batts’ on the label, packaging, website and html code. Knauf claimed that such use of the words ‘batt’ or ‘batts’ was not use as a trade mark and that in any case those words had become generic for insulation products. Along with pleading infringement, Tasman also claimed that Knauf’s use of the brand EarthWool was misleading and deceptive as it gave the false impression that the product is made from natural wool when it is actually made from recycled glass.
The Court of Appeal agreed with the trial Judge’s finding that Knauf had not satisfied its burden of establishing that ‘batt’ or ‘batts’ are generic terms in relation to the goods. While the terms were only marketed as trade marks in conjunction with the word ‘pink’, the evidence establishes the terms to be separately understood by the general public in New Zealand as iconic brands. While the terms have descriptive meaning in relation to the goods in overseas markets, it is the use of the terms in New Zealand that is important. The Court of Appeal noted that some generic use of the terms is inevitable and virtually impossible to eradicate, but held that any evidence of the terms being used descriptively was not on account of any acts or inactivity on Tasman’s part. Consequently, Tasman's registration for BATTS was not revoked.
The Court of Appeal also agreed with the trial Judge’s findings that Knauf’s use of the terms on the label, packaging and website would not be understood by prospective users as having trade mark significance, and hence were not infringing uses. The Court of Appeal overturned the trial Judge’s holding of infringement for the use of the terms in the HTML code, finding there was insufficient evidence that such use of the terms would convey to a substantial number of normally informed and attentive internet users that the words were used as a trade mark.
The Court of Appeal also upheld the trial Judge’s findings that the EarthWool brand and online marketing were misleading and deceptive. While the survey evidence supporting those findings had some deficiencies, the evidence nonetheless showed that a clear majority of people thought EarthWool was made from sheep wool. Particularly given that end consumers were part of Knauf’s marketing audience, they should have made it plain that the product was made of glass.