Mere delay is not bar to seeking remedy, says Court of Appeal

New Zealand
In Intellectual Property Development Corporation Pty Ltd v Primary Distributors New Zealand Limited ([2009] NZCA 429, September 23 2009), the Court of Appeal of New Zealand has allowed an appeal against a decision of the High Court in a case involving the trademark HEFTY.
Intellectual Property Development Corporation Pty Ltd (IPDC) owns the trademark HEFTY for cling wrap, among other things. IPDC claimed that Primary Distributors New Zealand Limited infringed its trademark rights by marketing products under the brand Hefty in New Zealand. Primary Distributors accepted that it had infringed the HEFTY mark, but the parties disagreed as to the account of profits. 
One of the key facts was that in January 2006 email correspondence took place between IPDC and Primary Distributors. One of the emails included this statement from Primary Distributors: “The Hefty brand will now continue in New Zealand”. IPDC did not complain until a cease and desist letter was sent in July 2006. Primary Distributors claimed that IPDC was not entitled to an account of profits for the period during which it was aware that Primary Distributors was infringing its mark, but did nothing about it. Primary Distributors also claimed that IPDC had lost its rights through its inaction or, alternatively, that its conduct amounted to waiver, acquiescence or laches.
The High Court ruled that a plaintiff cannot permit a defendant to make profits and subsequently expect to claim those profits. Therefore, it concluded that an account of profits was not available for the period between January and July 2006, as IPDC was aware of Primary Distributor’s conduct but did not take any action (for further details please see "Not so HEFTY account of profits").
IPDC appealed to the Court of Appeal. Having already conceded before the High Court that a court is entitled to refuse an account of profits when the claimant has neglected to start proceedings after becoming aware of the infringement, IPDC claimed that this reasoning applied only where there had been an inordinate delay - and that this was not such a case.
The Court of Appeal ruled that mere delay was not a bar to seeking a remedy, unless "the delay is inordinate or something more is present". The court thus ordered an account of profits from the date on which the infringement began until the date on which it ended.
IPDC also requested an account of profits against the directors of Primary Distributors personally. Primary Distributors claimed that the directors should be jointly and severally liable only for an account of profits against the company, but not for any personal profits that they had made. The court remitted this matter back to the High Court for determination.
As the High Court did not deal with passing off in its decision, the Court of Appeal also remitted this issue back for determination. 
Kate Duckworth, Baldwins, Wellington

Unlock unlimited access to all WTR content