IN THE COURT OF APPEAL OF NEW ZEALAND CA461/2013 ... wax and surfboard related products accounted...

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Transcript of IN THE COURT OF APPEAL OF NEW ZEALAND CA461/2013 ... wax and surfboard related products accounted...

  • SEXWAX INCORPORATED V ZOGGS INTERNATIONAL LIMITED CA461/2013 [2014] NZCA 311

    [9 September 2014]

    IN THE COURT OF APPEAL OF NEW ZEALAND

    CA461/2013

    [2014] NZCA 311

    BETWEEN

    SEXWAX INCORPORATED

    Appellant

    AND

    ZOGGS INTERNATIONAL LIMITED

    Respondent

    Hearing:

    22 May 2014 (further submissions received 26 May 2014)

    Court:

    O'Regan P, Stevens and Miller JJ

    Counsel:

    N J Robb and C A Edmonds for Appellant

    J O Upton QC and T A Huthwaite for Respondent

    Judgment:

    9 September 2014 at 3.15 pm

    JUDGMENT OF THE COURT

    A The appeal is allowed.

    B The direction given in the High Court that the respondent was entitled to

    register the ZOGGS mark is quashed.

    C The determination of the Assistant Commissioner that the appellant’s

    opposition based on s 17(1) of the Trade Marks Act 2002 succeeds is

    reinstated.

    D The respondent must pay the appellant costs for a standard appeal on a

    band A basis and usual disbursements.

    E In the absence of agreement, any question of costs in the High Court is to

    be determined by that Court.

    ____________________________________________________________________

    REASONS OF THE COURT

    (Given by Stevens J)

  • Table of Contents

    Para No

    Introduction [1]

    Background [8]

    Assistant Commissioner’s decision [15]

    High Court judgment [22]

    Statutory framework [26]

    Issue one: the MR ZOGS SEX WAX mark [31]

    Submissions of the parties [31]

    Our analysis [35]

    Issue two: reputation/awareness [43]

    Need for awareness of the opponent’s mark [43]

    The correct approach to s 17(1)(a) [48]

    Submissions on reputation/awareness [66]

    Our analysis [69]

    Issue three: likelihood of deception or confusion? [79]

    Submissions of the parties [79]

    Our analysis [83]

    Relief [88]

    Result [91]

    Introduction

    [1] The appellant Sexwax Incorporated (Sexwax) has since the 1980s marketed a

    large selling brand of surfboard wax through a New Zealand distributor. It does so

    using a distinctive unregistered mark or logo of which it is the proprietor, (the

    MR ZOGS SEX WAX mark):

    [2] The respondent, Zoggs International Ltd (Zoggs), applied in December 2009

    to register the trade mark (the ZOGGS mark):

    ZOGGS

  • [3] Zoggs’ application was declined by the Assistant Commissioner of Trade

    Marks under a number of statutory provisions, including s 17(1)(a) of the Trade

    Marks Act 2002 (the Act), on the basis that its use in New Zealand would be likely to

    deceive or cause confusion. 1

    [4] Zoggs successfully appealed to the High Court.2 Simon France J found that

    there was no likelihood that the ZOGGS trade mark would be confused with the

    MR ZOGS SEX WAX mark if registration were allowed. 3 He said the MR ZOGS

    SEX WAX mark was “quite dissimilar” to the ZOGGS mark, with the “predominant

    feature of the logo [being] the central Sexwax brand”. The concept of “Sex Wax”

    was “attention grabbing” and was the “single feature of the logo which would linger

    with people”. 4 Those findings were enough to dispose of the appeal, but the Judge

    also concluded: “With less conviction, but on balance, I would also have allowed

    the appeal against the finding of a sufficient reputation”. 5

    [5] Sexwax appeals to this Court, contending there was a sufficiently substantial

    awareness of the MR ZOGS SEX WAX mark for goods covered by the proposed

    registration of the ZOGGS mark. Further, it contends Zoggs has not discharged the

    onus of establishing that there is no reasonable likelihood of deception or confusion

    resulting from the use of the ZOGGS mark.

    [6] It follows that the key issues on appeal are:

    (a) What was the nature of the mark owned by Sexwax?

    (b) What is the reputation or awareness of that mark?

    1 Zoggs International Ltd v Sexwax Inc [2012] NZIPOTM 31 (Assistant Commissioner’s

    decision). 2 Zoggs International Ltd v Sexwax Inc [2013] NZHC 1494 (High Court judgment).

    3 At [68].

    4 At [61].

    5 At [63]. The Judge also upheld two other grounds of appeal, namely, against findings by the

    Assistant Commissioner that the application was made in bad faith (at [37]) and that there was

    no sufficiently definite intention to use the mark (at [45]). There was no appeal on these

    grounds.

  • (c) Has Zoggs discharged the onus of showing there is no reasonable

    likelihood of deception or confusion resulting from the notional use of

    the ZOGGS mark?

    [7] The questions of reputation and awareness and the likelihood of deception or

    confusion were advanced before us in the context of the “relevant market”. In

    determining the above questions, therefore, we discuss whether and in what

    circumstances the concept of the market ought to be used in applying s 17(1)(a) of

    the Act.

    Background

    [8] Sexwax is owned by a Mr Frederick Herzog III of California, USA.

    Commonly known as Mr Zog, he has used the name Zog in connection with his

    business for over 38 years. He first started manufacturing surfboards under the

    “Zog” and “Wave Delineation” brands. These were sold through retail outlets in

    California and through surf shops on the East Coast of the United States. In 1972 the

    Zog Industries business began manufacturing and selling surfboard wax under the

    brand name MR ZOGS SEX WAX. The label embodying the logo, set out at [1]

    above, has remained largely unchanged.

    [9] Mr Herzog’s business was originally named Zog Industries. It changed name

    formally in 1978 to Sexwax Incorporated, the name of the appellant, but has

    continued to use the name Zog Industries on all its business forms such as invoices,

    statements, sales and purchase orders and correspondence. Mr Herzog’s evidence is

    that the name Zog is integral to the mark by which the surfboard wax is sold. It is

    typically referred to or ordered as “a bar of SEX WAX” or “a bar of Zogs”.

    Mr Herzog states further that the phrase “MR ZOGS SEX WAX” is an integral part

    of the mark used by the business. The business has engaged in other activities such

    as publishing a newspaper, called the Zog Newsletter, and sells various other

    products featuring the mark, of which T-shirts and caps are examples.

    [10] Zog Industries sells surfboard wax using different formulas. For example, it

    sells a product called MR ZOGS SEX WAX Quick Humps formula, and a hockey

    wax using the logo “MR ZOGS SEX WAX Hockey formula”. Other products

  • include a drumstick formula wax using the same logo and a wide range of products

    including T-shirts, sweat-shirts, rash guards, swimwear, wax combs and beach

    towels, which are labelled or decorated with either the words

    “MR ZOGS SEX WAX” and design mark or using the word “Zog”. The MR ZOGS

    SEX WAX logo or the mark SEX WAX have been registered in a number of

    countries throughout the world. No application for registration has been made in

    New Zealand.

    [11] Zog Industries began selling its products in New Zealand through a primary

    distributor, Aerial Connection. The product is sold in retail shops all over New

    Zealand and is also sold on TradeMe. For the period November 1997 to June 2010,

    wax and surfboard related products accounted for 65 per cent of the product sales by

    Zog Industries to New Zealand. The balance of the sales (around 27 per cent) was

    made up mostly of T-shirts, which have either the complete logo or a dominant

    reference to SEX WAX on them. The MR ZOGS SEX WAX label, in whatever form

    it appears, is usually prominent and occupies the whole of the front or back of the

    T-shirt.

    [12] The respondent, Zoggs, was founded in Australia in 1992. The original

    products sold comprised swimwear goggles, with the name Zoggs being an

    adaptation of that word, or more particularly, of the abbreviation of the word

    “goggs”. The goggles were sold in New Zealand through The Warehouse chain from

    around 1994. Zoggs then began manufacturing swimwear aimed primarily at the

    recreational and fitness/training pool swimmer market. These items were marketed

    in various countries including New Zealand under the label “Zoggs Toggs”. In 1996,

    that mark was registered in various countries, including New Zealand. This has

    since expired and, due to an oversight, was not renewed.

    [13] In 2000 a decision was taken to combine the brands into “Zoggs”. The

    application to register the mark was intended to replace the existing mark

    registration of Zoggs Toggs and reflected the branding development. Zoggs

    International claims to be the largest leisure swimming brand in Australia, New

    Zealand and the United Kingdom. New Zealand sales under the Zoggs Toggs label

    commenced in the mid-1990s. Some