Use it or lose it: the scrap over SCRAPMAN

The recent IPONZ decision in Metalman New Zealand Ltd v Scrapman BOP Ltd ([2014] NZIPOTM 17) is a useful reminder of the fundamental trademark principle: use it or lose it.

Scrapman BOP applied to remove a trademark registration owned by Metalman, a dominant feature of which was the word 'Scrapman', from the New Zealand Trademarks Register. The attack was dual-pronged: the first ground was non-use; the second ground, broadly speaking, was that the trademark should not have been registered in the first place. As is most common in cases like this, Scrapman BOP’s motivation for applying to invalidate the trademark registration was to protect its own, older unregistered rights in the trademark SCRAPMAN. This article focuses on the first ground: non-use.

Under New Zealand trademark law, a trademark registration can be removed from the register if the owner of that registration has not made genuine use of the registered mark in the course of trade for a continuous period of three years or more up until one month before an application to remove the registration is filed. In considering the application, the most important factors to consider are: first, what does 'genuine use' mean; and, second, does whatever use of the mark the owner claims to have made fall within the meaning of 'use' within the Trademarks Act 2002?

In Ansul BV v Ajax Brandbeveiling BV (Case C-40/01), the European Court of Justice held the following factors were relevant to an assessment of whether use of a mark amounted to “genuine use”:

• Genuine use means “actual use of the mark”; the use should not be “token, serving solely to preserve the rights conferred by the mark”.
• Genuine use entails the use of the mark on the market for the goods or services protected by the mark. It does not include internal use by the undertaking concerned. Use of the mark must relate to goods or services which have already been, or are about to be, marketed and for which preparations to secure customers are underway (for example, in the form of advertising campaigns).
• In assessing the use of a mark, it is necessary to consider all facts and circumstances which establish whether the commercial exploitation of the mark is real, and in particular whether the use is viewed in the sector as maintaining or creating a share in the market for the goods or services protected by the mark. Circumstances to be considered include the nature of the goods and services in question, the characteristics of the market and the frequency with which the mark is used.

Section 7 of the Trademarks Act provides a non-exhaustive definition of 'use' in relation to a trademark, which includes “use [of the registered trademark] in a form differing in elements [from the registered trademark] that do not alter the distinctive character of the trademark in the form in which it was registered”. In other words, if you have used a version of your trademark which is fundamentally different from the registered version, you will be deemed not to have used the registered version.

Scrapman BOP claimed that Metalman and the original owner of the trademark registration, D&R Trucking, had not made genuine use of the trademark because, according to the evidence, D&R Trucking had only used the trademark once in three years in a local newspaper advert, and Metalman had never used the trademark. Scrapman BOP also argued that other use advanced by Metalman in evidence was not 'use' as defined in Section 7 of the act; this point was conceded by Metalman during the hearing.

Metalman also tried to admit other evidence of use but this evidence was held inadmissible by the assistant commissioner on the basis it was ‘hearsay’ - ie, statements made by someone other than the witness and tendered in the proceeding to prove the truth of their contents. In the words of the assistant commissioner: “There is no indication that [the witness] was even aware of D&R Trucking Limited at the relevant time, much less that he had any detailed personal knowledge of its activities.”

In the final analysis, the assistant commissioner agreed with Scrapman BOP and ordered that Metalman’s registration be removed from the Trademarks Register. The scrap over SCRAPMAN was won, and the 'use it or lose it' principle got to fight another day.

Ben Cain, James & Wells, Hamilton