Functionality - registrability of shape trade marks - cumulative protection under different IP regimes
The recent High Court and Court of Appeal decisions in Fredco Trading Limited v Robert Peter Miller shed some light on the registrability of shape marks in New Zealand under the Trade Marks Act 2002.
Facts
In 1980, the respondent ("Miller") began selling vine ties for use in kiwifruit orchards, under the trade mark "Klipon". Over one billion units have been sold. Until 2002, the Klipon tie had only one competitor in the vine tie market the ITW tie. The appearance of the ITW tie is different to that of the Klipon tie, which is a thin plastic rod with "swan neck" shaped hooked ends (see below).
June 2002 saw the entry of the appellant ("Fredco") into the vine tie market. The Fredco ties were almost identical to the Klipon tie. Miller responded by filing a trade mark application for the shape of the Klipon tie. The shape mark was registered in August 2003, with effect from July 2002. All other registered intellectual property rights in relation to the Klipon tie had expired - a registered design in 1995 and a registered patent in 1999. Miller then brought proceedings against Fredco for infringement of the shape trade mark. Fredco countered by challenging the validity of the trade mark registration.
Relevant Law
Under the Trade Marks Act 2002, a trade mark is a sign that is capable of being represented graphically, and capable of distinguishing the goods or services of one person from those of another person. The definition of sign specifically includes shapes.
Section 18 of the Act is central to both the High Court and Court of Appeal decisions, and provides as follows:
18 Non-distinctive trade mark not registrable
The Commissioner must not register-
(a) a sign that is not a trade mark:
(b) a trade mark that has no distinctive character:
(c) a trade mark that consists only of signs or indications that may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin, time of production of goods or of rendering of services, or other characteristics of goods or services:
(d) a trade mark that consists only of signs or indications that have become customary in the current language or in the bona fide and established practices of trade.
The Commissioner must not refuse to register a trade mark under subsection (1)(b), (c), or (d) if, before the date of application for registration, as a result of either the use made of it or of any other circumstances, the trade mark has acquired a distinctive character.
High Court
In the High Court, Venning J took a staged approach, asking:
i) Is the sign a trade mark? Is the Klipon tie shape capable of being represented graphically and distinguishing the Klipon tie from the goods of other traders? (s 18(1)(a))
ii) If so, does it have distinctive character? Does the Klipon tie shape have inherent qualities that mark it out as of a distinctive character? (s 18(1)b))
iii) If not, has it acquired that character through use? Is there sufficient evidence to suggest that the Klipon tie shape has acquired distinctiveness? (s 18(2))
The Judge took the view that the phrases "capable of distinguishing" and "distinctive character" had different meanings; if the legislature had intended the phrases to have the same meaning, then section 18(1)(b) of the Trade Marks Act would be superfluous.
The shape characteristics of the Klipon tie were held to be dictated largely by functional considerations. The variations, such as the "swan neck" protrusion, were held to be examples of how the technical result required of a vine tie can be achieved. The general shape of the Klipon tie was necessary to achieve the practical end of a working vine tie. Accordingly, Venning J found the Klipon tie to lack distinctive character.
Lack of distinctive character, however, is not fatal, as a mark that lacks inherent distinctive character may acquire distinctiveness through use. The evidence established that:
- until Fredco entered the market with its vine tie, for 24 years Miller was the only party to manufacture and distribute a vine tie with its unique shape characteristics;
- Miller had sold in excess of one billion units over 24 years;
- the ITW tie is distinguished by consumers as being different to the Klipon tie;
- the shape of the Klipon tie is promoted along with the brand name Klipon, with the shape appearing on promotional material;
- customers use the shape to identify the product and its source as a Klipon tie, both before and after purchase;
- other alternative shapes can be used to achieve the same purpose as the Klipon tie without copying the Klipon tie shape (for example, the ITW tie);
- the Klipon tie has an aesthetic component, namely the "swan neck" protrusion.
After considering the evidence, Venning J was satisfied that the Klipon tie had acquired distinctiveness and was validly registered.
Court of Appeal
Fredco appealed the decision of the High Court. In particular it was submitted that the Klipon tie was a functional shape and could not therefore act as a trade mark. Although it was not necessary to make a finding, the Court of Appeal considered that there was room for debate on whether functional shapes are registrable, despite the absence of an express prohibition on their registration, as in the United Kingdom.
The Court of Appeal observed that registration of a purely functional mark would not allow one to "corner the market" and prevent others from using similar products as there are other ways of achieving the same functionality. However, other traders may legitimately want to use a shape that is determined purely by function. Trade mark registration would create a monopoly over a functional shape and prevent legitimate use by other traders.
As in the High Court, the crucial finding to be made by the Court was whether the Klipon tie had acquired distinctiveness through use. The onus of proof lay on the appellant to show that the shape was not registrable.
Use of a shape resulting in acquired distinctiveness can mean both use as a trade mark and use of the good itself. This approach is consistent with section 18(2), which allows for distinctiveness to be acquired though use "or any other circumstances". The evidence from Miller was sufficient to satisfy the Court that the Klipon tie had acquired distinctiveness and was being used as a badge of origin. Its registration could remain.
Finally, the Court rejected the submission that the Klipon tie was a "limping mark" - one which is propped up by the "Klipon" name because the shape of the Klipon tie was found to convey information about the source of the product. The finding of Venning J that "the market uses the shape of the vine ties to relate the ties back to the Klipon brand" resonated with the Court of Appeal, who agreed with the conclusion.
The Fredco decisions illustrate the difficulty in registering a shape mark. They confirm that shape marks, even largely functional ones, can acquire distinctiveness through use. The presence of section 18(2) as a fall back for inherently non-distinctive shapes emphasizes the importance of ensuring that the public is educated to perceive the sign as an indication of the origin of the goods.
Barbara Sullivan - November 2006
