[2014] Nzca 311 Between Sexwax Incorporated

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) SEXWAX INCORPORATED V ZOGGS INTERNATIONAL LIMITED CA461/2013 [2014] NZCA 311 [9 September 2014] 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 17,000 items have been sold between April 2006 and February 2011. The primary retail outlets in which its goods are sold include aquatic centres, swim schools and small aquatic retailers. [14] The application in December 2009 was to register the mark ZOGGS in class 25 of the Nice Classification of Goods (10th ed), comprising as follows: … clothing, footwear, headwear, swimwear, swim caps, warm-up suits, t-shirts, jackets, beachwear, leisure wear, ski wear, sports clothing and wetsuits. Assistant Commissioner’s decision [15] Assistant Commissioner Walden accepted that an opponent of an application to register a trade mark may rely on a name or an unregistered trade mark.6 She considered awareness and reputation required an identification of the market, and concluded the relevant market consisted of persons in New Zealand who are the prospective or potential purchasers of the goods on which the opposed mark may be applied and others involved in the purchase transactions.7 Having regard to the use of the opposed goods on a fair, notional use basis, she concluded the relevant market consisted of the general purchasing public and others involved in the purchase transactions such as retailers.

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