HEALTHY CHOICE: CAN YOUR USE DISTINGUISH MY GOODS?

Trade Mark Lawyer New ZealandAlex McDonald | Trade Mark Lawyer, New Zealand

The New Zealand Court of Appeal has delivered a judgment1 in a longstanding dispute between ConAgra Inc. and McCain Foods (Aust) Pty Limited over the rights to the trade mark HEALTHY CHOICE. The case involves the issue of whether a trade mark is capable of distinguishing goods and the extent to which use, after the date of application, may be considered in making that determination.

ConAgra Inc. is a US food manufacturer of frozen foods. McCain Foods (Aust) Pty Limited is an Australian competitor. ConAgra first coined the trade mark HEALTHY CHOICE and used it extensively in the United States.

In 1989 ConAgra applied to register HEALTHY CHOICE in New Zealand for frozen prepared dinners and related goods on the basis of proposed use. When McCain subsequently entered the New Zealand market with HEALTHY CHOICE branded frozen foods in February 1991, ConAgra elected not to do so.

In Australian litigation between the same parties it was held that McCain had adopted HEALTHY CHOICE knowing of and intending to emulate the market success of ConAgra in the United States. McCain opposed ConAgra’s New Zealand application to register HEALTHY CHOICE.

McCain’s opposition was unsuccessful before the New Zealand Commissioner of trademarks2 and on appeal before the New Zealand High Court.3 McCain appealed to the New Zealand Court of Appeal.

The legal background

ConAgra sought registration on the basis of section 15 of the New Zealand Trade Marks Act 1953 which reads:

(1) In order for a trade mark to be registrable in Part B of the register it must be capable, in relation to the goods or services in respect of which it is registered or proposed to be registered, of distinguishing goods or services with which the proprietor of the trade mark is or may be connected in the course of trade from goods or services in the case of which no such connection subsists, either generally or, where the trade mark is registered or proposed to be registered subject to limitations, in relation to use within the extent of the registration.

(2) In determining whether a trade mark is capable of distinguishing as aforesaid the Commissioner or the Court may have regard to the extent to which—

a) The trade mark is inherently capable of distinguishing as aforesaid; and

b) By reason of the use of the trade mark or of any other circumstances, the trade mark is in fact capable of distinguishing as aforesaid.

(3) A trade mark may be registered in Part B, notwithstanding any registration in Part A in the name of the same proprietor of the same trade mark or any part or parts thereof.

Eligibility for registration in Part A requires the mark to be “distinctive” (s14(1)). That is defined for the purposes of s14 to mean:

… adapted, in relation to the goods and services in respect of which a trade mark is registered or proposed to be registered, to distinguish goods or services which the proprietor of the trade mark is or may be connected in the course of trade from goods or services in the case of which no such connection subsists, either generally or, where the trade mark is registered or proposed to be registered subject to limitation, in relation to use within the extent of the registration.

The decision

Before the Assistant Commissioner, McCain argued that the word combination HEALTHY CHOICE could not be distinctive of ConAgra’s goods.

In support of its opposition (albeit on other grounds) McCain had filed evidence intended to demonstrate that through use HEALTHY CHOICE was a trade mark which distinguished McCain’s goods in the New Zealand market.

The Assistant Commissioner referred to the difficulty in reconciling McCain’s own evidence with its assertion that the words were descriptive of the goods for which ConAgra sought registration.

In addressing the issue of distinctiveness, the Assistant Commissioner considered whether other traders, in the ordinary course of business, without improper motive, would decide to use the words for the same goods. In doing so, the Assistant Commissioner relied on the following passage in the judgment of Gault J of the New Zealand Court of Appeal in Mainland Products Ltd v Bonlac Foods (NZ) Ltd.4

The normal meaning (if any) of the word will be a primary consideration. The way it is used in relation to particular goods will be another. Also relevant will be the nature of the market, the kinds of customers and the general circumstances of the trade in the goods concerned. These matters are to be discerned from the evidence including any direct evidence of what the usage has conveyed to the relevant members of the trade or public.

In dealing with “normal meaning” the Assistant Commissioner took the view that McCain’s evidence of use clearly fitted within the provisions of section 12(b) of the Act (allowing use as a bona fide description of the character or quality of the goods) and would not be interfered with by registration of ConAgra’s mark.

In considering the next step in Gault J’s guidelines, the way in which HEALTHY CHOICE is used in relation to goods, the Assistant Commissioner referred to the “somewhat unusual situation” in terms of the facts of the case.

While the opponent had used HEALTHY CHOICE in New Zealand as a trade mark there had been no use in New Zealand up to the relevant date by the applicant, even though its mark was a major brand in the United States. The Assistant Commissioner concluded that the evidence established that both companies had adopted HEALTHY CHOICE as a trade mark to which they attached significant value. This would support a position that, as at the date of the application, the trade mark had some inherent distinctiveness and was capable of distinguishing goods.

The Assistant Commissioner determined that if a trade mark, through use by the opponent, had become distinctive, then that ought to be a circumstance that could be relied upon by the applicant. However, it was only one factor in the analysis adopted following the guide lines set by Gault J. in the Mainland case.

The Assistant Commissioner then dealt with the final matter identified in Mainland, namely the nature of the market, the kinds of customers and the general circumstances of the trade in the goods. The Assistant Commissioner noted that the independent witnesses from the New Zealand market all recognised HEALTHY CHOICE as a trade mark and none suggested that the words were merely descriptive of a range of products. Nor did they suggest those products needed to meet certain characteristics which could relate to a descriptive interpretation of the words HEALTHY CHOICE.

Whilst recognising that McCain’s evidence of use post-dated ConAgra’s 1989 application, the Assistant Commissioner determined that “market activity since that date can influence whether the mark is capable of distinguishing goods”.

The Assistant Commissioner concluded that as at April 1989 the words HEALTHY CHOICE were inherently capable of distinguishing ConAgra’s goods and accepted the application for registration.

The High Court Judgment

On appeal before Wild J., McCain argued that the Assistant Commissioner erred in finding that HEALTHY CHOICE was capable of distinguishing ConAgra’s goods under section 15(2).

In particular, it contended that the approach adopted from the Mainland case was inappropriate on the basis that it was an infringement claim concerned with the issue of whether the use of the word “vintage” was likely to be taken as use of a trade mark or as a bona fide description. Further, McCain argued that the Assistant Commissioner had been wrong to take into account McCain’s activities in the market after the date of ConAgra’s application as evidence to support ConAgra’s application.

After considering the evidence, Wild J held that “healthy” and “choice” either singularly or in combination were not merely laudatory or descriptive. In applying the Mainland test His Honour said that the enquiry in both cases was “as to the way in which traders and customers would perceive the words in question: as a distinguishing mark, or merely as descriptive of the product in question.”

Wild J. held that the test for registration under section 15 is “forward looking”. In deciding that HEALTHY CHOICE was inherently capable of distinguishing ConAgra’s goods, he noted that neither word was a laudatory epithet. Further and importantly, he commented that none of the witnesses from the New Zealand market place considered the words “healthy” and “choice” in combination were merely descriptive, or even really descriptive at all of a particular product or range of products. In adapting a passage from the Re Trade Mark TOTAL he said:

…it is not usual to ask for (food) which is ‘healthy choice’. There is no such thing as (healthy choice food). Such a statement would not be ordinary English and would have no meaning unless it was a reference to a brand name or trademark ‘HEALTHY CHOICE’.

Wild J. noted that ConAgra’s uncontested evidence was that it coined HEALTHY CHOICE in the United States, building it around the concept of “wellness”. When ConAgra sought registration of HEALTHY CHOICE in New Zealand in 1989, no-one was using that mark here, nor had anyone thought of combining the two words. There was thus no risk of registration causing confusion. As a consequence the evidence supported registrability in Part B.

In considering whether registration of HEALTHY CHOICE would inhibit the ordinary use of the English language by writers on food, health and the like, His Honour held that the examples of use before the Court would be protected from infringement by s12(b) as use as a bona fide description. Further, as the examples of use before the Court were not even descriptions by a person of that person’s good, Wild J. considered them to be wholly unobjectionable. Therefore, registration did not give rise to the concerns regarding the “snatching away of the language” or “chilling effect of registration” referred to by McGechan J in Dollar Rent a Car Systems, Inc.6

Wild J. commented that there were no similarities between the present case and cases such as TARZAN Trade Mark7 and Holt’s Trade Mark,8 where the Courts held that the words in question (“Tarzan” and “Trilby”), although undoubtedly originally invented, had long ago become too well known to be any longer so regarded, and were not registrable as marks.

Wild J. went on to find that McCain’s use of HEALTHY CHOICE in New Zealand was “another circumstance” under section 15(2)(b) on which ConAgra could rely to establish the capability of the words to distinguish its goods.

The decision of the Court of Appeal

View case here

The two issues considered by the Court of Appeal were whether:

1. The Court was entitled to take into account, as supportive of ConAgra’s application, McCain’s activities in the market after the date of ConAgra’s application; and

2. The words were inherently capable of distinguishing.

Gault J. gave the unanimous judgment of the Court. His Honour began by reviewing the law in relation to section 15 and, in doing so, commented that the quality of being capable of distinguishing must be present before the date of registration, that is, that it must be a trade mark. His Honour said the meaning to be given to the issue of whether a mark is capable of distinguishing must involve an existing capacity rather than merely a capability (in the sense of potential) for becoming distinctive in the future.

In support of the view, His Honour commented that otherwise it would be possible to obtain registration and sue for infringement before a mark had realised the very quality essential to any trade mark – that of distinguishing the goods or services of the proprietor from those of competitors. Further, to grant registration on the basis of potential would require speculation about the manner and extent of future use by which the potential would be realised.

His Honour went on to hold that to be capable of distinguishing, a mark must at the date of registration have that as an inherent quality, or have it demonstrated in fact by prior use or “other circumstances”. There was no reason why subsequent events might not constitute “other circumstances” where they assisted in establishing the essential quality at the time of registration.

However, in considering ConAgra’s reliance upon McCain’s evidence of use as supportive of the issue of distinctiveness, Gault J. found it difficult to accept the argument that use by a competitor could be relied upon. In His Honour’s view, subsequent evidence of how the mark is used in the trade to distinguish the goods of a competitor was not able to prove that the mark was capable of distinguishing the goods of the applicant. If that use was relevant, in Gault J’s opinion it only tended to prove that the trade mark did not, in fact, distinguish the goods of the applicant. Therefore, such later adverse use was better treated as irrelevant.

His Honour was prepared to accept that in appropriate circumstances, use by another trader in relation to different goods, or in a different market, would assist in assessing capacity to distinguish, but that would depend on the circumstances.

Gault J’s view was that use by ConAgra of its mark in the United States had the potential to show (assuming that the markets were similar) that if promoted on a massive scale the trade mark may come to distinguish ConAgra’s goods. If that occurred however, the trade mark would then be registered on the basis of evidence of that use – though even that was not inevitable, having regard to the emphasis on its descriptiveness in the promotional material produced.

In considering the distinctiveness of HEALTHY CHOICE as an unused trade mark, Gault J said that it was necessary to have regard not just to the particular manner in which the applicant intends to use it, but to all fair use within the scope of the monopoly sought.

The Court of Appeal distinguished the Mainland decision on the basis that it dealt with the issue of whether alleged infringing use of the word “vintage” fell with the exclusion of section 12(b) as use as a bona fide description. Therefore the focus in Mainland was upon what the particular use complained or might convey in the course of trade. Gault J. saw that as a much narrower question that was presented to the Court in Healthy Choice.

In Gault J’s view, the proper enquiry was how any fair use of the word combination in relation to any of the goods of the application would be understood by those to whom it would be presented in the course of trade. There were no special trade characteristics in the products of the application or if the types of likely purchasers. Instead, just “ordinary words” proposed to be used in a field encompassing high volume sales to the whole range of New Zealand purchasers. Consequently, there was no need to consider special trade usage.

In considering the issue of whether others might, without improper motive, wish to use the words, Gault J. commented that modern marketing involved extensive promotion through oral and visual media and was not always confined to strict grammatical usage. He therefore rejected arguments that it was not an answer to a descriptiveness objection to say that the trade mark is not a description of a particular product. It was sufficient if it was a description that might reasonably be used in relation to products of the kind in question.

Gault J. declined to apply the BABY DRY decision, describing Proctor & Gamble Company 5 Office for Harmonisation in the Internal Market as a decision that reflected a shift from 6 previous English law. His Honour concluded it would be unlikely that the word combination BABY DRY for disposal nappies would qualify for registration in New Zealand.

Gault J. noted that the separate words HEALTHY and CHOICE were recorded in dictionaries and “widely” used as adjectives, often in relation to foods. Contrary to the view of Justice Wild, he considered that the words HEALTHY and CHOICE “singularly” were purely laudatory of food products.

In refusing registration of the application, His Honour cited the reality of modern marketing and food buying with an emphasis on health. Gault J. determined that the combination of the words HEALTHY and CHOICE could not be regarded as creating any subtle or skillful illusion. That position would not be altered, even if the trade mark was taken by customers as a combination of a noun qualified by an adjective.

Comment

As the Court of Appeal noted, the case presented somewhat unusual facts. While HEALTHY CHOICE had been used extensively in the United States, it was unused by the applicant ConAgra in New Zealand. The trade mark had, however, been used extensively and for many years in New Zealand by the opponent, McCain, after the date of application.

The indication by the New Zealand Court of Appeal in this decision that in considering the issue of capability to distinguish the BABY DRY case could not necessarily be relied on as good authority in New Zealand is noteworthy in itself.

The Court of Appeal also saw as significant the way in which modern marketing methods have extended the boundaries of the way in which honest traders may wish to promote their goods. In focusing on this trend, the Court signaled the need for caution in assessing the issue of descriptiveness purely in terms of whether the words are apt to describe a particular product.

Instead the judgment suggests that the consideration should be as to whether the word(s) are a description that might reasonably be used in relation to products of that kind.

The decision provides a New Zealand appellate court consideration of the concept of capability to distinguish and what has traditionally been regarded as the “forward-looking” nature of that principle. It signals that the capacity to distinguish must be present at the date of the application; either or proved to exist in fact by reference to the trade mark’s use or other circumstances.

In considering the issue of inherent capability of distinguishing, the Court of Appeal gave emphasis to the need to have regard not just to the particular manner in which the applicant intends to use the mark “but to all fair use within the scope of the monopoly sought”.

On one view there may appear to be tension in the judgment between the Court’s unwillingness to treat the subsequent evidence of use of the opponent of the trade mark HEALTHY CHOICE as a “special circumstance” while accepting that in appropriate circumstances use by another trader in relation to different goods, or in a different market may assist in assessing capacity to distinguish, depending upon the circumstances.

In this respect, it is not clear why the Court of Appeal did not expressly consider ConAgra’s cross appeal, namely that the Court should take account of ConAgra’s extensive use in the US to support the contention that the trademark was capable of distinguishing in New Zealand. One assumes that the Court considered that evidence of use was not sufficient for the Court to determine capability to distinguish.

On a broader view, however, the decision suggests that in considering all “fair” use of the mark it was not, in fact, reasonable for the Court to take into account the opponent’s use.

The decision suggests that the holder of a prior trade mark application which it fails to use and who allows another party to enter the market before the application is perfected, does so at considerable risk, particularly where the trade mark has descriptive elements. In such circumstances, the Court was clearly reluctant to view the use of the subsequent entrant to the market as a special circumstance.

Alex McDonald – Trade Mark Lawyer, Auckland


  1. McCain Foods (Aust) Pty Limited v ConAgra Inc., [2002] 3 NZLR 40 (CA)
  2. Re Trade Mark Healthy Choice, Assistant Commissioner Howie, 3 May 2000
  3. McCain Foods (Aust) Pty Limited v ConAgra Inc., 22 June 2001, Wild J, AP 105/00
  4. Mainland Products Ltd v Bonlac Foods (NZ) Limited [1998] 3 NZLR 341 at 345‐346
  5. Intellectual Property Office of New Zealand decision of Assistant Commissioner Frankel, 15 December 1998
  6. Dollar Rent a Car Systems Inc v The Commissioner of Patents, trademarks & Designs, 24/03/98, McGechan J, High Court Wellington AP 12/97
  7. [1970] FSR 245
  8. (1896) 13 RPC 118, 121
  9. [2002] RPC 16

 

 

HEALTHY CHOICE: CAN YOUR USE DISTINGUISH MY GOODS?

 

Trade Mark Lawyer New Zealand

Alex McDonald, Trade Mark Lawyer, Auckland

The New Zealand Court of Appeal has delivered a judgment1 in a longstanding dispute between ConAgra Inc. and McCain Foods (Aust) Pty Limited over the rights to the trade mark HEALTHY CHOICE. The case involves the issue of whether a trade mark is capable of distinguishing goods and the extent to which use, after the date of application, may be considered in making that determination.

ConAgra Inc. is a US food manufacturer of frozen foods. McCain Foods (Aust) Pty Limited is an Australian competitor. ConAgra first coined the trade mark HEALTHY CHOICE and used it extensively in the United States.

In 1989 ConAgra applied to register HEALTHY CHOICE in New Zealand for frozen prepared dinners and related goods on the basis of proposed use. When McCain subsequently entered the New Zealand market with HEALTHY CHOICE branded frozen foods in February 1991, ConAgra elected not to do so.

In Australian litigation between the same parties it was held that McCain had adopted HEALTHY CHOICE knowing of and intending to emulate the market success of ConAgra in the United States. McCain opposed ConAgra’s New Zealand application to register HEALTHY CHOICE.

McCain’s opposition was unsuccessful before the New Zealand Commissioner of trademarks2 and on appeal before the New Zealand High Court.3 McCain appealed to the New Zealand Court of Appeal.

The legal background

ConAgra sought registration on the basis of section 15 of the New Zealand Trade Marks Act 1953 which reads:

(1) In order for a trade mark to be registrable in Part B of the register it must be capable, in relation to the goods or services in respect of which it is registered or proposed to be registered, of distinguishing goods or services with which the proprietor of the trade mark is or may be connected in the course of trade from goods or services in the case of which no such connection subsists, either generally or, where the trade mark is registered or proposed to be registered subject to limitations, in relation to use within the extent of the registration.

(2) In determining whether a trade mark is capable of distinguishing as aforesaid the Commissioner or the Court may have regard to the extent to which—

a) The trade mark is inherently capable of distinguishing as aforesaid; and

b) By reason of the use of the trade mark or of any other circumstances, the trade mark is in fact capable of distinguishing as aforesaid.

(3) A trade mark may be registered in Part B, notwithstanding any registration in Part A in the name of the same proprietor of the same trade mark or any part or parts thereof.

Eligibility for registration in Part A requires the mark to be “distinctive” (s14(1)). That is defined for the purposes of s14 to mean:

… adapted, in relation to the goods and services in respect of which a trade mark is registered or proposed to be registered, to distinguish goods or services which the proprietor of the trade mark is or may be connected in the course of trade from goods or services in the case of which no such connection subsists, either generally or, where the trade mark is registered or proposed to be registered subject to limitation, in relation to use within the extent of the registration.

The decision

Before the Assistant Commissioner, McCain argued that the word combination HEALTHY CHOICE could not be distinctive of ConAgra’s goods.

In support of its opposition (albeit on other grounds) McCain had filed evidence intended to demonstrate that through use HEALTHY CHOICE was a trade mark which distinguished McCain’s goods in the New Zealand market.

The Assistant Commissioner referred to the difficulty in reconciling McCain’s own evidence with its assertion that the words were descriptive of the goods for which ConAgra sought registration.

In addressing the issue of distinctiveness, the Assistant Commissioner considered whether other traders, in the ordinary course of business, without improper motive, would decide to use the words for the same goods. In doing so, the Assistant Commissioner relied on the following passage in the judgment of Gault J of the New Zealand Court of Appeal in Mainland Products Ltd v Bonlac Foods (NZ) Ltd.4

The normal meaning (if any) of the word will be a primary consideration. The way it is used in relation to particular goods will be another. Also relevant will be the nature of the market, the kinds of customers and the general circumstances of the trade in the goods concerned. These matters are to be discerned from the evidence including any direct evidence of what the usage has conveyed to the relevant members of the trade or public.

In dealing with “normal meaning” the Assistant Commissioner took the view that McCain’s evidence of use clearly fitted within the provisions of section 12(b) of the Act (allowing use as a bona fide description of the character or quality of the goods) and would not be interfered with by registration of ConAgra’s mark.

In considering the next step in Gault J’s guidelines, the way in which HEALTHY CHOICE is used in relation to goods, the Assistant Commissioner referred to the “somewhat unusual situation” in terms of the facts of the case.

While the opponent had used HEALTHY CHOICE in New Zealand as a trade mark there had been no use in New Zealand up to the relevant date by the applicant, even though its mark was a major brand in the United States. The Assistant Commissioner concluded that the evidence established that both companies had adopted HEALTHY CHOICE as a trade mark to which they attached significant value. This would support a position that, as at the date of the application, the trade mark had some inherent distinctiveness and was capable of distinguishing goods.

The Assistant Commissioner determined that if a trade mark, through use by the opponent, had become distinctive, then that ought to be a circumstance that could be relied upon by the applicant. However, it was only one factor in the analysis adopted following the guide lines set by Gault J. in the Mainlandcase.

The Assistant Commissioner then dealt with the final matter identified in Mainland, namely the nature of the market, the kinds of customers and the general circumstances of the trade in the goods. The Assistant Commissioner noted that the independent witnesses from the New Zealand market all recognised HEALTHY CHOICE as a trade mark and none suggested that the words were merely descriptive of a range of products. Nor did they suggest those products needed to meet certain characteristics which could relate to a descriptive interpretation of the words HEALTHY CHOICE.

Whilst recognising that McCain’s evidence of use post-dated ConAgra’s 1989 application, the Assistant Commissioner determined that “market activity since that date can influence whether the mark is capable of distinguishing goods”.

The Assistant Commissioner concluded that as at April 1989 the words HEALTHY CHOICE were inherently capable of distinguishing ConAgra’s goods and accepted the application for registration.

The High Court Judgment

On appeal before Wild J., McCain argued that the Assistant Commissioner erred in finding that HEALTHY CHOICE was capable of distinguishing ConAgra’s goods under section 15(2).

In particular, it contended that the approach adopted from the Mainland case was inappropriate on the basis that it was an infringement claim concerned with the issue of whether the use of the word “vintage” was likely to be taken as use of a trade mark or as a bona fide description. Further, McCain argued that the Assistant Commissioner had been wrong to take into account McCain’s activities in the market after the date of ConAgra’s application as evidence to support ConAgra’s application.

After considering the evidence, Wild J held that “healthy” and “choice” either singularly or in combination were not merely laudatory or descriptive. In applying the Mainland test His Honour said that the enquiry in both cases was “as to the way in which traders and customers would perceive the words in question: as a distinguishing mark, or merely as descriptive of the product in question.”

Wild J. held that the test for registration under section 15 is “forward looking”. In deciding that HEALTHY CHOICE was inherently capable of distinguishing ConAgra’s goods, he noted that neither word was a laudatory epithet. Further and importantly, he commented that none of the witnesses from the New Zealand market place considered the words “healthy” and “choice” in combination were merely descriptive, or even really descriptive at all of a particular product or range of products. In adapting a passage from the Re trademark TOTALv he said:

…it is not usual to ask for (food) which is ‘healthy choice’. There is no such thing as (healthy choice food). Such a statement would not be ordinary English and would have no meaning unless it was a reference to a brand name or trademark ‘HEALTHY CHOICE’.

Wild J. noted that ConAgra’s uncontested evidence was that it coined HEALTHY CHOICE in the United States, building it around the concept of “wellness”. When ConAgra sought registration of HEALTHY CHOICE in New Zealand in 1989, no-one was using that mark here, nor had anyone thought of combining the two words. There was thus no risk of registration causing confusion. As a consequence the evidence supported registrability in Part B.

In considering whether registration of HEALTHY CHOICE would inhibit the ordinary use of the English language by writers on food, health and the like, His Honour held that the examples of use before the Court would be protected from infringement by s12(b) as use as a bona fide description. Further, as the examples of use before the Court were not even descriptions by a person of that person’s good, Wild J. considered them to be wholly unobjectionable. Therefore, registration did not give rise to the concerns regarding the “snatching away of the language” or “chilling effect of registration” referred to by McGechan J inDollar Rent a Car Systems, Inc.6

Wild J. commented that there were no similarities between the present case and cases such as TARZAN Trade Mark7 and Holt’s Trade Mark,8 where the Courts held that the words in question (“Tarzan” and “Trilby”), although undoubtedly originally invented, had long ago become too well known to be any longer so regarded, and were not registrable as marks.

Wild J. went on to find that McCain’s use of HEALTHY CHOICE in New Zealand was “another circumstance” under section 15(2)(b) on which ConAgra could rely to establish the capability of the words to distinguish its goods.

The decision of the Court of Appeal

View case here

The two issues considered by the Court of Appeal were whether:

1. The Court was entitled to take into account, as supportive of ConAgra’s application, McCain’s activities in the market after the date of ConAgra’s application; and

2. The words were inherently capable of distinguishing.

Gault J. gave the unanimous judgment of the Court. His Honour began by reviewing the law in relation to section 15 and, in doing so, commented that the quality of being capable of distinguishing must be present before the date of registration, that is, that it must be a trade mark. His Honour said the meaning to be given to the issue of whether a mark is capable of distinguishing must involve an existing capacity rather than merely a capability (in the sense of potential) for becoming distinctive in the future.

In support of the view, His Honour commented that otherwise it would be possible to obtain registration and sue for infringement before a mark had realised the very quality essential to any trade mark – that of distinguishing the goods or services of the proprietor from those of competitors. Further, to grant registration on the basis of potential would require speculation about the manner and extent of future use by which the potential would be realised.

His Honour went on to hold that to be capable of distinguishing, a mark must at the date of registration have that as an inherent quality, or have it demonstrated in fact by prior use or “other circumstances”. There was no reason why subsequent events might not constitute “other circumstances” where they assisted in establishing the essential quality at the time of registration.

However, in considering ConAgra’s reliance upon McCain’s evidence of use as supportive of the issue of distinctiveness, Gault J. found it difficult to accept the argument that use by a competitor could be relied upon. In His Honour’s view, subsequent evidence of how the mark is used in the trade to distinguish the goods of a competitor was not able to prove that the mark was capable of distinguishing the goods of the applicant. If that use was relevant, in Gault J’s opinion it only tended to prove that the trade mark did not, in fact, distinguish the goods of the applicant. Therefore, such later adverse use was better treated as irrelevant.

His Honour was prepared to accept that in appropriate circumstances, use by another trader in relation to different goods, or in a different market, would assist in assessing capacity to distinguish, but that would depend on the circumstances.

Gault J’s view was that use by ConAgra of its mark in the United States had the potential to show (assuming that the markets were similar) that if promoted on a massive scale the trade mark may come to distinguish ConAgra’s goods. If that occurred however, the trade mark would then be registered on the basis of evidence of that use – though even that was not inevitable, having regard to the emphasis on its descriptiveness in the promotional material produced.

In considering the distinctiveness of HEALTHY CHOICE as an unused trade mark, Gault J said that it was necessary to have regard not just to the particular manner in which the applicant intends to use it, but to all fair use within the scope of the monopoly sought.

The Court of Appeal distinguished the Mainland decision on the basis that it dealt with the issue of whether alleged infringing use of the word “vintage” fell with the exclusion of section 12(b) as use as a bona fide description. Therefore the focus in Mainland was upon what the particular use complained or might convey in the course of trade. Gault J. saw that as a much narrower question that was presented to the Court in Healthy Choice.

In Gault J’s view, the proper enquiry was how any fair use of the word combination in relation to any of the goods of the application would be understood by those to whom it would be presented in the course of trade. There were no special trade characteristics in the products of the application or if the types of likely purchasers. Instead, just “ordinary words” proposed to be used in a field encompassing high volume sales to the whole range of New Zealand purchasers. Consequently, there was no need to consider special trade usage.

In considering the issue of whether others might, without improper motive, wish to use the words, Gault J. commented that modern marketing involved extensive promotion through oral and visual media and was not always confined to strict grammatical usage. He therefore rejected arguments that it was not an answer to a descriptiveness objection to say that the trade mark is not a description of a particular product. It was sufficient if it was a description that might reasonably be used in relation to products of the kind in question.

Gault J. declined to apply the BABY DRY decision, describing Proctor & Gamble Company 5 Office for Harmonisation in the Internal Marketix as a decision that reflected a shift from 6 previous English law. His Honour concluded it would be unlikely that the word combination BABY DRY for disposal nappies would qualify for registration in New Zealand.

Gault J. noted that the separate words HEALTHY and CHOICE were recorded in dictionaries and “widely” used as adjectives, often in relation to foods. Contrary to the view of Justice Wild, he considered that the words HEALTHY and CHOICE “singularly” were purely laudatory of food products.

In refusing registration of the application, His Honour cited the reality of modern marketing and food buying with an emphasis on health. Gault J. determined that the combination of the words HEALTHY and CHOICE could not be regarded as creating any subtle or skillful illusion. That position would not be altered, even if the trade mark was taken by customers as a combination of a noun qualified by an adjective.

Comment

As the Court of Appeal noted, the case presented somewhat unusual facts. While HEALTHY CHOICE had been used extensively in the United States, it was unused by the applicant ConAgra in New Zealand. The trade mark had, however, been used extensively and for many years in New Zealand by the opponent, McCain, after the date of application.

The indication by the New Zealand Court of Appeal in this decision that in considering the issue of capability to distinguish the BABY DRY case could not necessarily be relied on as good authority in New Zealand is noteworthy in itself.

The Court of Appeal also saw as significant the way in which modern marketing methods have extended the boundaries of the way in which honest traders may wish to promote their goods. In focusing on this trend, the Court signaled the need for caution in assessing the issue of descriptiveness purely in terms of whether the words are apt to describe a particular product.

Instead the judgment suggests that the consideration should be as to whether the word(s) are a description that might reasonably be used in relation to products of that kind.

The decision provides a New Zealand appellate court consideration of the concept of capability to distinguish and what has traditionally been regarded as the “forward-looking” nature of that principle. It signals that the capacity to distinguish must be present at the date of the application; either or proved to exist in fact by reference to the trade mark’s use or other circumstances.

In considering the issue of inherent capability of distinguishing, the Court of Appeal gave emphasis to the need to have regard not just to the particular manner in which the applicant intends to use the mark “but to all fair use within the scope of the monopoly sought”.

On one view there may appear to be tension in the judgment between the Court’s unwillingness to treat the subsequent evidence of use of the opponent of the trade mark HEALTHY CHOICE as a “special circumstance” while accepting that in appropriate circumstances use by another trader in relation to different goods, or in a different market may assist in assessing capacity to distinguish, depending upon the circumstances.

In this respect, it is not clear why the Court of Appeal did not expressly consider ConAgra’s cross appeal, namely that the Court should take account of ConAgra’s extensive use in the US to support the contention that the trademark was capable of distinguishing in New Zealand. One assumes that the Court considered that evidence of use was not sufficient for the Court to determine capability to distinguish.

On a broader view, however, the decision suggests that in considering all “fair” use of the mark it was not, in fact, reasonable for the Court to take into account the opponent’s use.

The decision suggests that the holder of a prior trade mark application which it fails to use and who allows another party to enter the market before the application is perfected, does so at considerable risk, particularly where the trade mark has descriptive elements. In such circumstances, the Court was clearly reluctant to view the use of the subsequent entrant to the market as a special circumstance.

 


  1. McCain Foods (Aust) Pty Limited v ConAgra Inc., [2002] 3 NZLR 40 (CA)
  2. Re Trade Mark Healthy Choice, Assistant Commissioner Howie, 3 May 2000
  3. McCain Foods (Aust) Pty Limited v ConAgra Inc., 22 June 2001, Wild J, AP 105/00
  4. Mainland Products Ltd v Bonlac Foods (NZ) Limited [1998] 3 NZLR 341 at 345‐346
  5. Intellectual Property Office of New Zealand decision of Assistant Commissioner Frankel, 15 December 1998
  6. Dollar Rent a Car Systems Inc v The Commissioner of Patents, trademarks & Designs, 24/03/98, McGechan J, High Court Wellington AP 12/97
  7. [1970] FSR 245
  8. (1896) 13 RPC 118, 121
  9. [2002] RPC 16