New Zealand: use of trademarks as keywords found not to infringe
In considering a request for an interlocutory injunction, the High Court of New Zealand found that use of the term “intercity” as a keyword and in Internet advertisements did not infringe a trademark registration for the identical word. InterCity Group (NZ) Ltd v. Nakedbus NZ Ltd,  NZ 379 (Mar. 1, 2013) (Hansen, J.). The decision demonstrates the influence of European trademark law in New Zealand and the difficulties that an owner of a registered trademark may face in similar circumstances if its mark is descriptive.
The decision relates only to an interlocutory hearing. Mr. Justice Hansen noted that the court might reach a different decision at a full trial, in which all of the complex issues and facts could be considered.
InterCity Group alleged that the use by Nakedbus of “intercity” or variants of that word as a keyword or in online advertising infringed its prior-registered trademark INTERCITY and related common-law rights. In order to succeed in its request for an interlocutory injunction, InterCity needed to satisfy the court that there was a serious issue to be tried and that the balance of overall convenience weighed in its favor. If InterCity proved those elements, then the court needed to assess whether the overall justice of the case favored the grant of an interlocutory injunction or whether it was preferable for the Court not to intervene until all of the issues were canvassed fully at a substantive hearing.
The court considered numerous recent European cases, including Interflora v. Marks & Spencer ( Bus LR 1440 (CJEU)) and 32Red Plc v. WHG International Ltd & Others ( EWHC 62 (Ch)), in demonstrating the difficulty of determining whether use of a third party’s trademark as a keyword will damage the reputation or distinctive character of that trademark—in circumstances where the trademark is descriptive of the relevant goods or services. The 32Red case was cited to support the conclusion that, for purposes of this interlocutory hearing, the use by Nakedbus of the INTERCITY trademark as a keyword and in Internet advertisements did not “lead to a risk of confusing or deceiving consumers as to the origin of the services on offer.” As such, InterCity Group had failed to establish that there was a serious question to be tried on the issue of trademark infringement. Important in the court’s reasoning was the primarily descriptive significance of the mark INTERCITY.
Does confusion matter if the infringing mark is identical to a registered mark?
The court concluded that Nakedbus’s use of InterCity’s trademark as a keyword and in Internet advertisements had not been shown to lead to a risk of consumer confusion or deception as to the origin of Nakedbus’s services on offer. Consequently, the court found it unnecessary to consider whether the mark that Nakedbus used was “identical or merely similar” to the registered INTERCITY trademark.
However, in New Zealand there is no need to prove that the use of an allegedly infringing mark in relation to the same goods or services is likely to cause confusion if the mark in question is identical to the relevant registered mark. Hence, it was very important for the court to assess whether the infringing mark was identical or only similar to InterCity’s registered mark before moving on to consider any risk of confusion.
Although it was not clear from the judgment, the court did not conclude that Nakedbus was using the term “intercity” and related terms as trademarks, as they were not shown to have been used to indicate the origin of Nakedbus’s services. If so, this would be a narrow interpretation of what constitutes use of a term as a trademark, as the court seemed prepared to find that there was not even an arguable case that the use was potentially liable to adversely affect one of the functions of the trademark—not just the origin function, but also its quality, communication, investment and advertising functions, particularly as it had found that the way in which the defendant used the “intercity” word was “ambiguous.”
The court also found that InterCity Group did not establish that there was a serious issue to be tried as to whether Nakedbus’s use of “intercity” did not constitute passing off or contravention of the Fair Trading Act 1986, as it had not been shown that Nakedbus had made representations to the public that would be likely to lead the public to believe that its services were those of InterCity Group.
Breach of undertaking
InterCity also alleged that Nakedbus had breached an undertaking not to promote itself as “intercity.” As the undertakings to which InterCity referred were never recorded in writing, InterCity sought to rely on oral undertakings between the parties to support its position. It failed to establish this cause of action, as the court ruled that the oral undertakings were unclear and should have been confirmed in writing.
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This article was orginally published in the INTA Bulletin Vol. 68 No. 9 and has been rupublished here with permission.