The North Face defeated on appeal in dispute over similar device mark

In The North Face Apparel Corporation v Sanyang Industry Company Limited (CA638/2012 [2014] NZCA 398), the New Zealand Court of Appeal has allowed the registration by Sanyang Industry Co Ltd of the following trademark in Classes 7, 16, 25 and 35 of the Nice Classification in New Zealand, despite an opposition by The North Face Apparel Corp:

North Face opposed the Class 25 application on the basis, among other things, that Sanyang was not the owner.

Sanyang is a Taiwanese company manufacturing cars and motorbikes and also selling clothing branded with its trademark. North Face is a well-known Californian clothing company. The following two trademarks form part of North Face’s suite of trademarks and formed the basis of its opposition:

Sanyang was successful in defending its application before the commissioner of trademarks. North Face then appealed to the High Court, which agreed with the Commissioner and dismissed North Face’s opposition. North Face then appealed to the Court of Appeal. 

The case before the Court of Appeal was based on proprietorship. 

The test for proprietorship, which all trademark applications must meet, is set out in Newnham v Table for Six (1996) Ltd ((1998) 44 IPR 269 at 278 (HC)):  

1. there is no prior use or prior assertion of proprietorship;
2. the applicant is using or has sufficiently definite intention to use the mark; and
3. there is no fraud or breach of duty involved.

Under the head of proprietorship, an opponent can defeat an application if she or he can show prior use of not just an identical trademark, but one that is substantially identical (The Shell Company of Australia Limited v Esso Standard Oil (Australia) Limited ([1963] HCA 66; (1963) 109 CLR 407 at 414).

The two proprietorship issues on appeal were:

1. what was the nature and extent of North Face’s use of its device marks in New Zealand before January 22 2008; and
2. was it the proprietor, and therefore did North Face own Sanyang’s proposed mark?

North Face wanted to be able to rely on use of the S device mark without the words 'summit series', as this made the case for proprietorship of Sanyang’s mark stronger, as in, the Sanyang mark is so similar to the North Face marks that North Face is the owner and not Sanyang. When the Sanyang mark is rotated, the case for similarity is accentuated:

The Court of Appeal confirmed that the test for proprietorship relies on use, not on actual sales of goods, so an advertisement, say in a catalogue, would satisfy the proprietorship test.

North Face relied on a Fall 2007 catalogue listing New Zealand sales offices, along with invoices to prove that the device marks had been used in New Zealand. The catalogue displayed three types of gloves or mittens bearing the device marks. Sanyang argued that this did not prove that the goods had been sold in New Zealand bearing the marks at issue. The Court of Appeal found that a reasonable inference could be drawn that the goods supplied were those advertised in the Fall 2007 catalogue.

Having found that the marks were used for gloves and mittens, the Court of Appeal turned to what it called “the real issue in this context”, which was whether North Face’s S device mark was ever used as a mark in its own right for apparel other than gloves and mittens because the composite mark includes the S device.

The Court of Appeal ruled that a composite mark can comprise the use of an identifiable trademark, provided the mark creates a “separate and distinct commercial impression from the other components of the image”.

However, the Court of Appeal found that the elements of the composite mark were not divisible and did not create a distinct commercial impression from the words 'summit series'.

Having found they were not separate marks, and therefore there was no use for goods other than gloves and mittens, North Face then argued that use for gloves and mittens was use for the “same type of thing” as other goods in Class 25.

The Court of Appeal found that the goods had to be “essentially identical” to gloves and mittens and other items in Class 25 were not essentially identical.

The Court of Appeal then turned to consider whether North Face and not Sanyang was the owner of the mark applied for because it incorporates or subsumes North Face’s S device mark and for that reason is substantially identical.

North Face argued that, if the marks are identical, the first mark has inevitably been taken, but where the marks are not completely identical, the proper inquiry is whether the property has been taken. The Court of Appeal considered this to be a departure from North Face’s case as previously argued because it had withdrawn its other opposition grounds based on similarity of the trademarks. The Court of Appeal said that it was not clear how North Face centred its argument before the commissioner and the High Court on the Shell comparative test. The Court of Appeal seemed to misunderstand that the marks do not need to be identical to succeed under proprietorship. All that is required is substantial identicality, and this is a discrete opposition ground from confusing similarity.

The Court of Appeal ruled that North Face had failed to prove prior use of an identical mark and was therefore not the proprietor of Sanyang’s application. It also ruled that, even if it had allowed North Face to argue substantial identicality, Sanyang’s mark represented an arrow moving from left to right and had a metallic appearance like a badge on a vehicle, whereas North Face’s mark looked like a mountain peak and gave a clean and pristine image.

So while North Face succeeding in showing use of its mark on gloves and mittens, it failed on proprietorship. The Court of Appeal awarded a reduced figure for costs to Sanyang given that North Face proved use of its marks.

Kate Duckworth, Catalyst Intellectual Property, Wellington