Leiying Zhu v Shanghai Yunzheng Catering Management Co. Limited [2021] NZIPOTM 14 (28 June 2021)

If death and taxes are two of life's certainties then a third one must surely be that you must be very careful with evidence preparation in New Zealand trade mark proceedings. This was reiterated in a recent unsuccessful invalidity action against a New Zealand trade mark registration, notwithstanding that the owner of the challenged mark did not bother to do anything at all. The case is a prime example of one in which a different outcome would almost certainly have been reached if the invalidity applicant had only filed appropriate and admissible evidence.

In Leiying Zhu v Shanghai Yunzheng Catering Management Co. Limited, Shanghi Yunzheng Catering Management Co. Limited (Shanghai Catering) applied for a declaration of invalidity against Leiying Zhu's registration No. 1086236 for the Chinese character mark shown below in class 43:

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The owner of the trade mark literally took no steps whatsoever. It did not even lodge a counterstatement. This meant that Shanghai Catering simply needed to establish a prima facie case that the registered mark was not registrable as at its filing date, noting that the registration itself is itself prima facie evidence of its own validity1. Curiously, Shanghai Catering did not file any submissions in support of its invalidity declaration, relying solely on two declarations filed on its behalf.

New Zealand sets a high bar for admissibility of evidence

Although New Zealand invalidity and opposition proceedings are usually considered by the Assistant Commissioner of Trade Marks rather than a court, there is still a high standard which must be met for evidence to be admissible in such proceedings. In this case, it seemed that the leading declaration of Ji Fangping was a prime example of how not to prepare and lodge a declaration in New Zealand opposition proceedings. Assistant Commissioner Natasha Alley (AC Alley) carefully identified a range of problems which led not only to the Fangping declaration being declared as being inadmissible but (even if it were found to be admissible), that its contents were so unreliable that it could not even make out a prima facie case. AC Alley's criticisms included:

  1. it is unclear under what authority the witness to Fangping's declaration had to witness the statutory declaration, and whether it was witnessed on the same day Fangping signed it;
  2. the certificate accompanying the declaration simply seemed to certify Fangping's signature, rather than certifying that the contents of Fangping's declaration were true;
  3. the declaration was undated;

The Assistant Commissioner herself undertook extensive research into the witnesses identity to try and determine whether he/she may fall within the category of relevant "approved persons". However in this case, Fangping did not even describe the witnesses position, occupation or role. As AC Alley identified:

this is not a high standard or overly onerous in a practical sense. A simple description of [the witnesses] position in the declaration or certificate would have been sufficient so long as that position falls within the category of approved persons in section 11(2) of the Oaths and Declarations Act. However, even that low bar has not been satisfied in the present case"2.

What about the contents of Fangping's Declaration – more problems, more holes

AC Alley went on to consider whether Shanghai Catering had established an awareness in its marks in New Zealand, to support the "reverse onus" invalidity ground under section 17 of the Trade Marks Act 2002. However even if the declaration had been admissible its contents fell far short of establishing the necessary awareness in Shanghai Catering's trade mark, even though this is a relatively low bar to establish. AC Alley identified numerous defects in the contents of the Fangping declaration, including:

  1. "It is unclear whether the "estimate" of the number of [Shanghai's catering's] customers is consistent across each of the years leading up to the relevant date or whether the numbers of customers grew over the years. It is also unclear to what extent the estimate is based on the year leading up to the date of the Fangping declaration, which falls entirely outside the relevant date.
  2. "It is not clear the extent to which [Shanghai Catering's] turnover figure takes into account the period after the relevant date";
  3. "There is no evidence of marketing expenditure for the related trade mark and no examples of advertising have been provided for that mark."
  4. "The number of [Shanghai Catering's restaurant sites] operating under this mark is also unknown";
  5. "The applicant has not provided any evidence of publications available in New Zealand that mention the relevant mark. While such evidence is not required, it would have been persuasive" (emphasis added)
  6. "there is no direct evidence from any witnesses in New Zealand as to their awareness of the marks relied on as a result of overseas travels."3

The Assistant Commissioner is highly respected and it would be a brave attorney who does not follow her guidance. As such, for any brand owner attempting to rely upon spillover reputation (whether in opposition or invalidity proceedings), they would be wise to commit the following comment from AC Alley to memory:

"Where an invalidity applicant is effectively asking the Assistant Commissioner to infer a reputation in New Zealand on the basis of overseas use accompanied by travel statistics, there should be clear evidence of a reputation in the overseas market combined with significant travel statistics for the relevant time. The travel statistics in the present case are not expressly for the relevant time and they are not of a level where an awareness in New Zealand can reasonably be inferred."4

All of these defects led Commissioner Alley to conclude that the evidence was "insufficient to establish even a prima facie case of cognisance, awareness or knowledge of [Shanghai Catering's mark] in New Zealand. Accordingly, I do not need to go on to consider whether there was a likelihood of confusion or deception"5.

What about Shanghai Catering's other invalidity grounds?

Shanghai Catering also alleged bad faith and proprietorship, as attempted invalidity grounds. AC Alley generously discussed each of those grounds but dismissed them due to the aforementioned defects in the Fangping declaration. To do otherwise would, to paraphrase Commissioner Ally, be to rely upon "purely conjecture" or guesswork.

Attorneys can learn from this case

AC Alley notes that in an undefended invalidity action, the onus placed upon the party seeking invalidation is not onerous. She went on to note:

Assuming the requisite evidence exists, it should not have been difficult to file admissible evidence establishing a prima facie case. It should be possible to meet this reasonably low bar in an uncontested invalidity proceeding without forgoing the efficient and cost effective objectives in the Act.

In the present case it is clear that the applicant has not discharged the onus of establishing a prima facie case that the owner's mark was invalid as at the relevant date. I would be surprised if the shortcomings identified with the applicant's evidence could not have been avoided in a timely and inexpensive manner6.

So where does that leave us?

At the risk of sounding like a preacher, attorneys must get their evidence right in New Zealand proceedings. AC Alley herself identifies that this case could easily been won with appropriate evidence that complied with New Zealand requirements. This is a subject upon which I have written several times over the last few years and which I will probably continue to comment upon for as long as Star Wars films continue to be produced.

Perhaps the best summation of the position in New Zealand is that provided by Isaac Asimov, who I am sure was thinking of New Zealand trade mark proceedings when he observed:

"I believe in evidence. I believe in observation, measurement, and reasoning, confirmed by independent observers. I'll believe anything, no matter how wild and ridiculous, if there is evidence for it.7"

Footnotes

1. Section 162, Trade Marks Act 2002

2. Para 26

3. Paras 55-61

4. Para 62

5. Para 64

6. Para 89, 90

7. Isaac Asimov, The Roving Mind.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.