BRITISH AMERICAN TOBACCO (BRANDS) INC V NV SUMATRA TOBACCO TRADING COMPANY HC WN CIV 2007-485-2814

BRITISH AMERICAN TOBACCO (BRANDS) INC V NV SUMATRA TOBACCO TRADING COMPANY HC WN CIV 2007-485-2814 11 November 2008IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY CIV 2007-485-2814UNDER the Trade Marks Act 1953 IN THE MATTER OF Trade Mark Application Nos. 683445 and 683446 in class 34 BETWEEN BRITISH AMERICAN TOBACCO (BRANDS) INCORPORATED Appellant AND NV SUMATRA TOBACCO TRADING COMPANY Respondent Hearing: 22 October 2008 Appearances: S A Barker and B Shone for appellant D L Marriott for respondent Judgment: 11 November 2008 at 1.30pmRESERVED JUDGMENT OF CLIFFORD J Introduction[1] The appellant, British American Tobacco (Brands) Incorporated ("BAT") owns the trade marks LUCKY STRIKE and LUCKIES. It has used those trade marks in relation to tobacco products since the 1850s and in relation to cigarettes since 1916. LUCKY STRIKE has been a registered mark in New Zealand since 1913 and LUCKIES since 1964. [2] In addition, BAT is the registered proprietor of a number of device marks incorporating the words LUCKY STRIKE, and of marks comprising cigarette pack labels, also incorporating those words.[3] Over BAT's opposition, the Assistant Commissioner of Trade Marks granted the application of the respondent NV Sumatra Tobacco Trading Company ("NV Sumatra") for the registration of each of the word marks LUCKY DRAW and LUCKY DREAM in respect of cigarettes, and other cigarette-related products, in Class 34. [4] The effective date of NV Sumatra's application was 21 July 2003, and so the Trade Marks Act 1953 ("the 1953 Act") applied. [5] BAT now appeals against that decision of the Assistant Commissioner. [6] The unusual feature of this appeal is that the marks in question relate to a product, namely cigarettes, that cannot be advertised within New Zealand. The questions of reputation, and deception and confusion, have to be considered in that context. The appeal also raises issues as regards the relationship between sections 16 and 17 of the 1953 Act, described by Richardson J in Pioneer Hi-Bred Corn Company v Hy-Line Chicks Pty Ltd [1978] 2 NZLR 50 at 61 as being "not easy to assess".The Assistant Commissioner's decision[7] BAT's notices of opposition referred generally to sections 16 and 17 of the 1953 Act. As drafted, and as regards s 17, their content reflected s 17(1), rather than s 17(2). [8] Based on BAT's notices of opposition, NV Sumatra argued that BAT had – contrary to the position that BAT wish to advance at the hearing – not pleaded reliance on either of section 17(2) or section 2 of the 1953 Act, nor on its LUCKIES mark. NV Sumatra opposed leave being granted to BAT to amend its pleadings. The Assistant Commissioner upheld NV Sumatra's position. She acknowledged, however, that BAT could rely on the LUCKIES mark as regards its grounds of opposition under section 16. Her decision on that point was accepted before me by NV Sumatra.[9] The Assistant Commissioner, therefore, considered BAT's opposition in terms of sections 16 and 17(1). [10] As for section 16, the Assistant Commissioner concluded that, as at the relevant date, BAT had not established that there was an awareness of its LUCKY STRIKE mark in New Zealand which would be likely to result in the use of NV Sumatra's marks deceiving or confusing a substantial number of persons in the relevant market. For that reason alone, BAT could not succeed under section 16(1). [11] The Assistant Commissioner nevertheless went on to compare BAT's LUCKY STRIKE marks with NV Sumatra's LUCKY DREAM and LUCKY DRAW marks in terms of s 16(1). She concluded, having regard to the whole of the marks, that they looked and sounded different and were conceptually distinct. Although they applied to the same goods, and were sold in the same market, features of that market (brand loyalty and the restrictions that applied to the sale and promotion of cigarettes in New Zealand) reduced the possibility of confusion. Therefore, BAT would not have succeeded in establishing the necessary likelihood of deception or confusion under section 16(1) (if it had been open for BAT to argue a breach of that section). [12] BAT also argued that registration of NV Sumatra's marks would be contrary to law as the use of those marks would amount to passing off and would be contrary to sections 9, 10 and 13 of the Fair Trading Act 1986. The Assistant Commissioner concluded that a higher threshold of confusion was required in those contexts. As BAT would not have succeeded under section 16(1) by reference to the risk of deception or confusion, it could not succeed under section 16(1) on the "contrary to law" ground. [13] As for s 17(1), the Assistant Commissioner noted the inquiry under s 17(1) related to the fair and notional use of the trade marks. There was, therefore, a broader context for the inquiry under s 17(1) than under s 16(1). At the same time, for the reasons she had concluded as regards s 16(1), she considered that BAT's LUCK STRIKE mark was different to the applicant's marks, and not likely todeceive or cause confusion. Accordingly, she found that BAT did not succeed on that ground of opposition either.Grounds of appeal and additional evidence[14] BAT appeals against the whole of the Assistant Commissioner's decision. [15] It argued that the Assistant Commissioner was wrong to find that the use of NV Sumatra's LUCKY DREAM and LUCKY DRAW marks was not likely to deceive or cause confusion in terms of section 16(1) and to conclude that: a) As at 25 July 2003 BAT had not established a sufficient reputation of its marks LUCKY STRIKE and LUCKIES in the relevant New Zealand market, including reputation based upon spill-over from its very substantial international reputation. b) On an overall comparison test, as at 25 July 2003 there were not sufficient similarities between BAT's marks LUCKY STRIKE and LUCKIES and NV Sumatra's marks LUCKY DREAM and LUCKY DRAW, such that were likely to give rise to deception or confusion. c) It was not necessary for the Assistant Commissioner to consider BAT's submission that registration of NV Sumatra's marks would be contrary to law or disentitled to protection because there was a higher threshold under the Fair Trading Act or for passing off. [16] BAT argued further that: a) NV Sumatra's marks were confusingly similar to BAT's marks such as to disentitle them to protection (by way of registration) under section 17(1) of the 1953 Act. b) The Assistant Commissioner was wrong in her ruling as to BAT's entitlement to rely on s 17(2), s 2 and on the LUCKIES mark inrelation to s 17. The Assistant Commissioner should have granted BAT's oral application for leave to amend the Notices of Opposition. c) The Assistant Commissioner failed to have regard to the fact that the New Zealand smoke free legislation would impact on both BAT and NV Sumatra in the context of potential confusion at points of sale. [17] Before the Assistant Commissioner, BAT had sought to establish reputation for the purposes of s 16(1) based on the spill-over of BAT's world-wide reputation into New Zealand, and the actual use by it of the LUCKY STRIKE mark in New Zealand. The Assistant Commissioner commented in the following terms on those arguments:As far as the opponent's spill-over reputation is concerned, I find that the opponent does not appear to have established how persons from, and/or who live in, New Zealand have, or are likely to have, been exposed to the opponent's worldwide reputation or to its LUCKY STRIKE trade marked goods in overseas markets – Conagra Inc v McCain Foods (Aust) Pty Ltd[1992] 23 IPR at p 234: [R]eputation within the jurisdiction may be proved by a variety of means including advertisements on television, or radio or in magazines and newspapers within the forum. It may be established by showing constant travel of people between other countries and the forum, and that people within the forum (whether residents there or persons simply visiting there from other countries) are exposed to the goods of the overseas owner [Assistant Commissioner's emphasis] In terms of actual use of its LUCKY STRIKE mark in New Zealand, the opponent has provided its approximate number of individual cigarettes sold in New Zealand under its LUCKY STRIKE brand for each of the years in the period 1997-2003. These figures appear to be the only evidence before me of the opponent's use of its LUCKY STRIKE mark in New Zealand. Unfortunately, however, I have no idea of how the LUCKY STRIKE mark was used, which LUCKY STRIKE mark or marks were used, where the products were sold, and how many customers in the New Zealand market would have purchased, or have been exposed to, the opponent's LUCKY STRIKE cigarettes (at p13).[18] No doubt in response to those comments BAT sought, and was granted, leave to adduce additional affidavit evidence. [19] This evidence comprised two further affidavits. The first of those was a second affidavit from Mr Aitchison, employed by BAT in the United Kingdom. InMr Aitchison's first affidavit, which had been before the Assistant Commissioner, he had – amongst other things – described what he saw to be the extensive worldwide reputation for the brands that had apparently been developed over a substantial period of time and – in particular – the extent of promotion of LUCKY STRIKE and LUCKIES associated with BAT's sponsorship of a Formula One motor racing team. In his second affidavit Mr Aitchison expanded on the detail of the coverage of BAT's marks from that sponsorship. Annexures include photographs of the marks on racing cars. Mr Aitchison also provided further evidence as to the sales records for LUCKY STRIKE cigarettes in New Zealand. [20] The second new affidavit was from a Ms Atford from AGB Nielsen Media Research. Ms Atford adduced statistical data, based on her employer's "Peoplemaker" system, on the New Zealand television viewing audiences for Formula One racing events in which the team of cars promoting the BAT brands competed. She also provided additional sales information for LUCKY STRIKE cigarettes. [21] At the leave hearing Mr Marriott had indicated that NV Sumatra would wish to respond with further evidence on the total number of cigarettes sold in New Zealand, the number of cigarettes the "average" smoker consumes, and possibly on the disjunct between international promotions, such as via Formula One motor racing, and the identification by consumers with a brand within New Zealand. NV Sumatra were given that opportunity to so respond but did not do so. Mr Marriott did, however, address those issues in his submissions, albeit without evidence on the points. [22] The relative lack of evidence provided to the Assistant Commissioner and this court is a matter I will refer to later. [23] On the two principal points, namely those of substantial reputation and deception and confusion, BAT argued at the hearing of the appeal that: a) Based on the evidence before the Assistant Commissioner and the new evidence, BAT did enjoy a substantial reputation in the relevantmarks as demonstrated by sales of its LUCKY STRIKE cigarettes and the evidence of the exposure in New Zealand of the LUCKY STRIKE brand associated with BAT's sponsorship of motor racing, including in particular Formula One motor racing. b) On an overall comparison of the marks, there were sufficient similarities, visually, aurally, linguistically and conceptually, as to give rise to the likelihood of deception or confusion. In arriving at her conclusion on this issue the Assistant Commissioner had placed insufficient weight on the existing and registered abbreviation of LUCKY STRIKE, that is LUCKIES, and on the propensity of New Zealanders to abbreviate words or phrases in colloquial speech. [24] NV Sumatra supported the Assistant Commissioner's decision, very much for the reasons she had recorded.The correct approach to this appeal[25] Both Mr Barker for BAT and Mr Marriott for NV Sumatra agreed that the approach to be taken in this general appeal has been clearly laid down by the Supreme Court in Austin, Nichols & Co Inc v Stichting Lodestar[2008] 2 NZLR 141 (SC). Delivering the Judgment of the Court, the Chief Justice said the following at paragraph [3]:[3] The short point raised by the appeal is whether the High Court on an appeal under s 27(6) of the Trade Marks Act 1953 must defer to the assessment of the Commissioner if the conclusion he or she has reached is one on which reasonable minds may differ. The short answer is that the general appeal under s 27(6) requires the High Court to come to its own view on the merits. The weight it gives to the decision of the Commissioner is a matter of judgment. If the High Court is of a different view from the Commissioner and is, therefore, of opinion that the Commissioner's decision is wrong, it must act on its own view.[26] Further, at paragraph [5], the Chief Justice stated that:The appeal court may or may not find the reasoning of the tribunal persuasive in its own terms. The tribunal may have had a particularadvantage (such as technical expertise or the opportunity to assess the credibility of witnesses, where such assessment is important). In such a case the appeal court may rightly hesitate to conclude that findings of fact or fact and degree are wrong. It may take the view that it has no basis for rejecting the reasoning of the tribunal appealed from and that its decision should stand. But the extent of the consideration an appeal court exercising a general power of appeal gives to the decision appealed from is a matter for its judgment. An appeal court makes no error in approach simply because it pays little explicit attention to the reasons of the court or tribunal appealed from, if it comes to a different reasoned result. On general appeal, the appeal court has the responsibility of arriving at its own assessment of the merits of the case. (Footnotes excluded)[27] In determining the present case, I must therefore come to my own view on the merits. [28] It was, nevertheless, Mr Marriott's submission that I should be slow to reduce the weight given to the Assistant Commissioner's decision unless I can point to some error of reasoning or fact. Furthermore, and as regards the new evidence, the approach I should take was whether that evidence would have been likely to have changed the Assistant Commissioner's decision in any material way. [29] I do not consider those submissions to be consistent with the Supreme Court's decision in Stichting Lodestar. Rather, I must reach my own, reasoned decision, giving such weight as I consider appropriate to the Assistant Commissioner's decision.DiscussionIntroduction – the smoke free legislation[30] Before considering the issues of reputation and potential deception and confusion, as relevant to section 16(1), and the question of potential deception and confusion, as relevant to section 17(1), I think it is important to have regard to the unusual context for this appeal which arises because of the effects of the Smoke Free Environments Act 1990. That Act prohibits the advertising in New Zealand of tobacco products. Therefore, there is no relevant history in New Zealand of advertising by BAT of its brands. Furthermore, the smoke free legislation not onlyprohibits the advertising of cigarette products, but also restricts the manner in which they may be displayed for sale. As summarised by Mr Barker:In terms of relevance to the present appeal, the principal restrictions under the Smoke Free Environments Act require retailers to ensure that no tobacco product exposed for sale is visible from outside the retailer's place of business and that no tobacco product is exposed for sale on any counter top or similar surface.[31] A Ms Brunton-Reid, for BAT, had deposed as follows in an affidavit in reply, available to the Assistant Commissioner:The common purchase situation for such products in New Zealand requires the consumer to ask for the product by name from a shop assistant. The consumer may or may not be able to point to the desired product as the products may or may not be visible at the point of sale. The products will often be stored some distance from the location where the customer requests them (for example in a supermarket).[32] The effect of the legislation is, therefore, and as best as I can assess on the available evidence, not only to restrict advertising but in general terms to require consumers wishing to purchase cigarettes to themselves select a particular brand in a vending machine or to ask for that brand from the shop assistant. The shop assistant must then select that brand from the controlled display cabinet and pass it to the purchaser. At the same time, section 16(2) of the 1953 Act provides that notwithstanding subsection (1), "it shall be lawful to register a trade mark even if the use of the trade mark is restricted or prohibited under the Smoke-Free Environments Act 1990". [33] The absence of advertising clearly impacts on the availability of evidence going to awareness and substantial reputation. At the same time, the effect of the legislation on the way in which cigarettes are purchased is relevant to the question of deception and confusion.The 1953 Act – sections 16(1) and 17(1)[34] Section 16(1) of the 1953 Act reads:It shall not be lawful to register as a trade mark or part of a trade mark any scandalous matter or any matter the use of which would be likely to deceiveor cause confusion or would be contrary to law or morality or would otherwise be disentitled to protection in a Court of justice.[35] Section 17(1) reads:Subject to subsection (5) of this section, no trade mark shall be registered in respect of any goods if it is identical with or similar to a trade mark belonging to a different proprietor and already on the register in respect of – (a) The same goods; or (b) Similar goods; or (c) Services that are similar to such goods, – if use of the first-mentioned mark is likely to deceive or cause confusion.[36] Both sections, as can be seen, use the phrase "likely to deceive or cause confusion". In s 16(1), that is one of the grounds which makes it not lawful to register a mark. In s 17(1), that is the ground on which registration is to be declined. [37] The two sections, as is well recognised, serve different purposes and work in different ways, although there are considerable similarities as regards determination of the question of the likelihood of deception or confusion. [38] The purpose of s 16(1) is to protect the public rather than the proprietary rights of traders involved in a dispute as to the use of a particular mark. The public are, as relevant, to be protected from undesirable confusion arising from the registration of a trade mark. The purpose of s 17(1) is, by contrast, to protect a registered mark, and the interest the proprietor of that mark has, from the registration of a potentially deceptive or confusing similar mark. In Pioneer Hi-Bred, a case under s 16 of the 1953 Act, Richardson J put the position this way:Whereas s 17 is concerned with the comparison between two rival marks relating to the same goods or description of goods of which one is already on the Register, s 16 is not so limited. It extends to cases where the public is likely to be deceived or confused merely by the mark in question. (at 61).[39] A similar approach is taken under both sections to determine the likelihood of deception or confusion. That is:a) The terms "deceive" and "confuse" may be distinguished, as explained in Pioneer Hi-Bred:"Deceived" implies the creation of an incorrect belief or mental impression and causing "confusion" may go no further than perplexing or mixing up the minds of the purchasing public (New Zealand Breweries Ltd v Heineken's Bier Browerij Maatschappij NV [1964] NZLR 115, 141). Where the deception or confusion alleged is as to the source of the goods, deceived is equivalent to being misled into thinking that the goods bearing the applicant's mark come from some other source and confused to being caused to wonder whether that might not be the case. (at 62)b) The test for a likelihood of deception and confusion has been expressed as follows: i) Under s 16(1):The test of likelihood of deception or confusion does not require that all persons in the market are likely to be deceived or confused. But it is not sufficient that someone in the market is likely to be deceived or confused. A balance has to be struck. Terms such as "a number of persons" (Jellinek's Application), "a substantial number of persons" (Smith Hayden & Co Ltd's Application), "any considerable section of the public" (New Zealand Breweries Ltd v Heineken's Bier Browerij Maatschappij NV), and "any significant number of such purchasers" (Polaroid Corporation v Hannaford & Burton Ltd) have been used. As Cooke J put it in his judgment in this case: " The varying terminology in the judgments is a reminder that it is not always necessary that large numbers of people should be, or should probably be, of the state of mind in question: rather it is a question of the significance of the numbers in relation to the market for the particular goods" ([1975] 2 NZLR 422, 429).(Pioneer Hi-Bred at 62)ii) Under s 17(1):[A]ssuming use by the respondent of its trade mark "Polaroid" in a normal and fair manner for sunglasses, is the court satisfied that there would be reasonable likelihood of deception or confusion among a substantial number of persons if "Solavoid" was used in a normal and fair manner also for sunglasses? (Hannaford & Burton Ltd v Polaroid Corporation[1976] 2 NZLR 14 (PC), at 18)c) Under both s 16(1) and 17(1), the onus is on the applicant for registration to show, on the balance of probabilities, that the mark tobe registered is not likely to cause deception or confusion. The placement of the onus can – as ever – be significant:If the question had arisen on an application for registration of the mark it is possible that the applicants might have failed to discharge the onus of showing that confusion was not likely. But in these proceedings for rectification, where the onus is the other way, their Lordships consider that the likelihood of confusion by a substantial number of purchasers has not been established. (Hannaford & Burton, at 19)d) The test in New Zealand for comparing marks was summarised in theNZ Breweries decision by Turner J, following the well known authority of In re Pianotist Co's Application (1906) 23 RPC 774, 777):1. You must take the two words and judge of them both by their look and by their sound; 2. You must consider the goods to which they are to be applied and the nature and kind of customer who is likely to buy these goods; and 3. You must consider all the surrounding circumstances and what is likely to happen if each of the marks is used in a normal way as a trade mark for the goods of the respective owners of the marks. (NZ Breweries Ltd v Heineken's Bier Browerij Maatschappij NV [1964] NZLR 115 at 139)e) It is the totality of the impression of a mark being compared that is important and to this end the "idea" of the mark may be significant and may either point to confusion or help to distinguish the mark (Polaroid Corporation v Hannaford & Burton Ltd [1975] 1 NZLR 566 (CA)). f) The Court must be careful to allow for imperfect recollection, and of the effect of careless pronunciation and speech (Re Rystra Ltd's Application [1943] 1 All ER 400). Judicial notice has been taken of the tendency to slur the terminations of words or of the last of a combination of two words (Gallagher v International Brands (1976) 1 NZIPR 43).g) The approach to be taken has been further explained by Richardson J (in Pioneer Hi-Bred, at 61) in an oft-cited series of ten propositions taken from the judgments of Romer J in Jellineks Application (1946) 63 RPC 59, 78 and of Kitto J in Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1953) 91 CLR 592, 594-596. It is sufficient for these purposes to simply acknowledge that passage from the decision of Richardson J. [40] There are two important differences between the approaches called for by s 76 and s 17. [41] First, and as acknowledged in Pioneer Hi-Bred, it is necessary under s 16 but not under s 17 for the opponent to registration to establish what is described as a "sufficiently substantial reputation in the New Zealand market to lead to the possibility that goods covered by the proposed trade mark would be identified with the opponent" (at 62). [42] Richardson J, in Pioneer Hy-Bred, commented on the purpose of the inquiry as to a "substantial reputation" in the following terms:Why then is such attention paid in the cases to the reputation of an opponent in the local market? It seems to me that the reason is this: if the opponent's mark is wholly unknown in the New Zealand market in which the applicant's mark is proposed to be used, the use of the applicant's mark could could [sic] not lead to deception or cause confusion. Those concerned in that market would not be misled into drawing any false inferences as to the origin or quality of the goods or otherwise. Nor would they be confused: because of their lack of awareness of the applicant's mark, there is nothing with which the applicant's mark could be confused. If those in the market did not have – to use the words of Romer J in Jellinek's Application at p 80 – "any cognisance whatever" of the opponent's mark by the date of the application, no confusion could arise in the public's mind by the introduction of goods bearing the applicant's mark. The reason then for considering reputation and considering it before turning to assess the likelihood of deception or confusion is:"In general, consideration of reputation is more helpful as the initial inquiry, for it informs the mind of the circumstances in the trade, against the background of which the two marks must be regarded as notionally in use" (Gaines Animal Foods Ltd's Application (1951) 68 RPC 178, 180) (at 63)[43] The onus is on the opponent to establish the necessary substantial reputation.[44] Conversely, under s 17 the comparison is between the registered mark(s) and the mark sought to be registered, and no reputation need be established. [45] Secondly, the comparison to be made under s 17(1) differs from that under s 16 in that the enquiry under s 17(1) is an entirely notional exercise. The Court must consider whether the use of each of the respective trademarks in a normal and fair manner would be likely to cause deception and confusion. By comparison, where the similarity with the opponent's mark is the basis on which the opponent submits the applicant's mark will be likely to "deceive or confuse" under s 16, the comparison which must be made is between the actual use of the opponent's mark with the notional use of the applicant's mark (with that notional use being in a "normal and fair manner"). [46] The Court of Appeal recognised this distinction in the decision of Anheuser- Busch Inc v Budweiser Budvar National Corporation [2003] 1 NZLR 472. In that case the plaintiff, the owner of the trademark "Budweiser", sought revocation from the register of the trademark for a similarly named Czech beer. In discussing ss 17 and 16, Gault J said at [30]:On his comparison of the trade marks themselves Doogue J correctly recognised that he was required to consider not the actual use of the BB marks but a notional use. The test of likely deception or confusion under s17(1) is applied to any fair use of each mark in relation to any of the goods covered by the registration.[47] Gault J went on to expand on this point further at [66] where he said:The comparison of trade marks to ascertain whether there is deceptive or confusing similarity contrary to s17(1) Trade Marks Act so as to establish a ground for removal of registrations is an entirely notional exercise. It contemplates any fair use of the marks in relation to any of the goods covered by the registrations. Opinion evidence that the marks are or are not confusingly similar is of limited value. That is for the court. Evidence of what actually is occurring in the market place reflects particular forms of use and cannot fully answer the question. Evidence of the absence of actual confusion might be explained by reference to particular factors such as additional label features or market circumstances that will not always be present. By way of example, in the present case, when the Judge dealt with the passing-off claim (in which actual usage is at issue) the Judge said that even if he had found the trade marks deceptively similar he could still have rejected passing-off because of the distinguishing market factors such as market sectors, likely customers and promotion strategies. Those factorsmight explain the absence of confusion but have no relevance to any fair use of the marks.[48] Given, therefore, that the test under s 17(1) is "entirely notional", the requirement that a "substantial" number of people would be confused or deceived is, in my opinion, indicative of whether the required level of "deception or confusion" would, on that notional exercise, be reached.Section 16(1) – a sufficiently substantial reputation?[49] In terms of section 16(1), Mr Barker for BAT accepted that BAT first had to establish a sufficiently substantial reputation in the New Zealand market. If BAT was able to establish such a reputation, the onus then shifted to NV Sumatra to establish that the use of its marks would not be likely to deceive or cause confusion with those of BAT. [50] Before me, BAT argued that the LUCKY STRIKE and LUCKIES marks had a sufficiently substantial reputation so as to lead to the likelihood that the goods covered by NV Sumatra's marks would be erroneously identified with its goods on the basis of: a) the evidence of annual sales of LUCKY STRIKE cigarettes in New Zealand; and b) the "spill-over" of the reputation of BAT's marks internationally, and in particular as a result of sponsorship by the LUCKY STRIKE brand of Formula One motor racing and motor cycling racing, into the New Zealand market. [51] More generally, Mr Barker pointed to BAT's international reputation in the brands as supported by: a) Evidence from Mr Aitchison's first affidavit of the extensive history of the LUCKY STRIKE and associated brands, and the international use of those brands. Mr Aitchison referred in his first affidavit (atparagraph [6]) to LUCKY STRIKE having been assessed as being the third most famous tobacco brand in the world. b) The fact (as referred to in Mr Barker's submissions) that the term and trade mark LUCKIES were so well known globally that the Oxford English Dictionary Online (Second Edition) described "Lucky" as a noun as, in some way, including the meaning of a LUCKY STRIKE cigarette. [52] BAT's evidence as to cigarette sales was as follows. [53] In his first affidavit Mr Aitchison provided the following information:Approximate annual worldwide sales figures since 1997 are as follows: YEAR NUMBER OF INDIVIDUAL CIGARETTES 1997 In excess of 21,000,000,000 1998 In excess of 22,000,000,000 1999 In excess of 23,000,000,000 2000 In excess of 25,000,000,000 2001 In excess of 26,000,000,000 2002 In excess of 24,000,000,000 2003 In excess of 25,000,000,000 LUCKY STRIKE is one of the BAT Group's key brands in New Zealand and has been sold here since at least 1997. Approximate annual sales figures for the LUCKY STRIKE brand in New Zealand are as follows: YEAR NUMBER OF INDIVIDUAL CIGARETTES 1997 In excess of 8,000,000 1998 In excess of 6,000,000 1999 In excess of 5,000,000 2000 In excess of 3,000,000 2001 In excess of 4,000,000 2002 In excess of 5,000,000 2003 In excess of 3,000,000[54] In his second affidavit, Mr Aitchison provided New Zealand sales figures over a longer period, going back to 1969 when some 20 million LUCKY STRIKE cigarettes were shown as having been sold. Mr Barker submitted that the figures from 1991 were most relevant, in that they post-dated the smoke free legislation. Sales figures in that period ranged from a low of 236,000 in 1991 to a high 6,100,000 in 1997, with 3,900,000 having been sold in 2003. [55] Mr Aitchison also provided a break down by region of sales figures, based on data obtained from AGB Nielsen. As regards that data his evidence was that:sales of "Lucky Strike" brand cigarettes are made across all regions in New Zealand with a particular bias towards North and East Auckland and Wellington. BAT regards this bias as typical of a premium brand, such as "Lucky Strike" (at paragraph 12).[56] BAT's evidence as to the exposure of the LUCKY STRIKE brand through sponsorship of televised motor sports which were broadcast in New Zealand comprised: a) In Mr Aitchison's first affidavit, a very general description of the association of the LUCKY STRIKE brand initially with motor cycle racing and, since 1999, with "the BAR Formula One Racing Team". In his first affidavit, Mr Aitchison appended an edition of "BAR's Formula One magazine" in support of those statements. There was no reference at all to the effect of that advertising in New Zealand. b) In his second affidavit, Mr Aitchison provided further detail of BAT's involvement in Formula One motor racing from 1999 to 2005 and of its ownership of the British American Racing Team. It would appear that, at 2003, the British American Racing Team was 100% owned by BAT and known, in 1999, as the Lucky Strike BAR team, and from 2000 to 2003, as the Lucky Strike BAR Honda team. c) Mr Aitchison described the use of the LUCKY STRIKE livery on the racing cars. In summary this "included the predominantly red circular LUCKY STRIKE trademark as well as the words "LUCKY STRIKE"and "LUCKIES" appearing prominently in various places on the two cars". Photographic evidence was provided of that. Mr Aitchison further described how car drivers and crew wore overalls bearing the LUCKY STRIKE and LUCKIES mark. Again photographic evidence was provided in support of that assertion. d) The AGB Nielsen information comprised a schedule of viewing figures between 1999 and, as relevant, 2003, for various television programmes. Those programmes include the Australian Grand Prix, a programme described as "Formula One Championship 1999", and programmes described as "Shell Helix Motor Sport" and "Shell Helix Motor Sport Formula One" respectively. Viewer figures were in the low to high tens of thousands for the programmes generally, and between approximately 100,000 and 200,000 when the Australian Grand Prix was broadcast. [57] Mr Barker asserted that this was an instance of "spill over" of an internationally well-recognised brand into New Zealand. He submitted that the international notoriety of a trade mark can be evidence in itself of reputation, due to the growth in international commerce and communication, and that therefore it could be concluded that the LUCKY STRIKE's international reputation had flowed through to the New Zealand market by a number of means, despite New Zealand's relatively restricted laws relating to the advertising of tobacco products. [58] In addition, Mr Barker pointed to the actual sales figures for LUCKY STRIKE cigarettes, noting the comparatively high figures in years predating 1990, and also pointing to the growth of sales from 1991 onwards, as supporting the existence certainly of awareness and, moreover, of a substantial reputation. [59] Notwithstanding the additional evidence provided by Mr Aitchison and Ms Atford, I share the difficulties expressed by the Assistant Commissioner as to the efficacy of that evidence to establish the substantial reputation necessary for the purposes of section 16(1).[60] As regards the evidence of cigarette sales, and whilst BAT have now provided some geographical breakdown which (on the affidavit of Ms Atford) is said to be consistent with the distribution of a premium brand, I consider the fundamental difficulty is that I have no evidence at all as to the total number of cigarettes smoked in New Zealand, nor any evidence as to the number of persons in New Zealand who smoke cigarettes marketed under BAT brands and who smoke cigarettes overall. That is, I have no evidence as to the significance of those numbers in terms of the relevant market. [61] In his submissions, Mr Marriott suggested that the appellant's sales constituted only a very small proportion of relevant market, and that sales of 3 million cigarettes in 2003 would, on the basis of a Statistics New Zealand report, constitute only 0.13% of the New Zealand cigarette market, taking – he said – his figures from the appellant's website. He also suggested that, on the basis that a "pack-a-day" smoker would smoke 7,000 cigarettes a year, the total number of cigarettes sold by BAT in New Zealand may constitute sales to only some 430 smokers of a pack a day. That, he submitted, was a negligible amount. He pointed me, again in his submissions, to what he said was the fact that "the Appellant's own website states that: "In 2004, approximately 25 percent of New Zealanders aged 18 years and over smoked a tobacco product"". That, he said, was in the order of 700,000 persons. [62] Those submissions by Mr Marriott do, in my judgment, raise a real question as to whether the actual level of sales figures establish that, at the relevant time, BAT had the "substantial reputation" Mr Barker acknowledged was necessary to establish. I note, however, that Mr Marriott provided that information in his submissions, and without any evidential basis for it. Whilst I have no reason to doubt the accuracy of what he said, that does, in my judgment, limit the reliance I can put on that information. At the same time, however, the onus in this area was on BAT. BAT did not provide any better evidence. Whilst therefore I can conclude that the LUCKY STRIKE brands were known within New Zealand, I consider that on the evidence provided to me I am not in a position to draw the necessary conclusion as to substantial reputation from the sales figures provided.[63] As regards the evidence of television broadcasting in New Zealand of Formula One and other motor sports involving team sponsorships by BAT which result in teams wearing logos incorporating BAT's trade marks, the evidence is simply of audience figures. I acknowledge that, particularly as regards the Australian Grand Prix, there are substantial audiences involved. There is, however, no evidence as to the actual exposure of BAT's brands on those television programmes. Mr Aitchison in his second affidavit does point to the extent to which the team or teams wearing BAT's logo's were successful, and therefore inferentially would have received a greater coverage than the "also rans". I am not satisfied, however, that that inference alone justifies me in reaching a conclusion as to substantial reputation. [64] Rather, I am left in the position that I have little – if any – evidence as to the extent of the coverage received by the appellant's brands through that television advertising, or of the extent to which that coverage resulted, in New Zealand and in consumers in the relevant market, in any form of brand awareness of the appellant's brands, beyond the sales figures referred to above. Mr Barker submitted that, unless that advertising were considered to be effective, it is unlikely that BAT would have engaged in such sponsorship. Whilst there clearly is something in that submission I do not think it answers the difficulties I have raised. It is, after all, the extent of the effectiveness of that coverage in New Zealand that I must determine. [65] I accept that the question of substantial reputation in New Zealand arises in a somewhat novel context in this case because of the impact of the smoke free legislation. Having said that, it appears to me that evidence of relative sales figures for the appellant's products, evidence perhaps also of the relative exposure of the appellant's products in vending machines and controlled display cabinets, together with evidence of brand recognition amongst consumers of cigarette products, would all be relevant to this question. As noted, no such evidence has been provided. [66] I acknowledge, speaking subjectively, that I personally have some awareness of the BAT marks. However, whereas the task of assessing the likelihood of deception and confusion may be very much one of the individual Judge, based on his or her impressions of the marks in question, I do not think the same can be said ofthe question of substantial reputation. That, I think, needs to be established on the basis of evidence relating to the market. In my judgment, and notwithstanding the additional evidence provided following the grant of leave, BAT has not established the necessary substantial reputation in New Zealand. Therefore, and as the Assistant Commissioner found, I also find that BAT's objection under section 16(1) fails. [67] On that basis, it is not necessary to consider the question under s 16(1) of the potential for confusion and deception which might arise from the registration and subsequent fair use of NV Sumatra's LUCKY DRAW and LUCKY DREAM brands in New Zealand. The Assistant Commissioner, however, did undertake that exercise. That she did so can, I think, be understood because the analysis required under s 17(1), again of the potential of deception and confusion, is accepted as being similar to that which is required to be carried out under s 16(1). [68] Given, however, the differences that do exist, I consider it appropriate to carry out the inquiry as to the possibility of deception and confusion in this appeal explicitly under s 17(1).Section 17(1) – a reasonable possibility of deception and confusion?[69] As identified by the Assistant Commissioner, the questions to be asked as regards s 17(1) are: a) Are the marks that are applied for by the applicant similar to the trade mark registrations of the opponent? b) Are the applicant's marks to be registered in respect of the same or similar goods or services as the goods covered by the opponent's trade mark registrations? c) Is the use of the applicant's mark likely to deceive or confuse? [70] As Mr Marriott acknowledged, the second question is to be answered in the affirmative. The issue therefore becomes whether the marks are "similar", and whether their use is likely to deceive or confuse. Those questions can essentially beconsidered as one, on the basis of the tests referred to above. Turning, therefore, to the comparative exercise required, I make the following comments. [71] In terms of both their look and their sound, NV Sumatra's marks include the common element of the word "Lucky" with the BAT marks. At the same time, however, they include the distinctive words "Dream" and "Draw" compared to the word "Strike". Therefore, judged simply by their look and their sound alone, whilst there is some possibility of deception and confusion, I do not consider that a sufficient likelihood of confusion, or deception, would arise. [72] As well as judging the words by their look and by their sound, I am also to consider the possibility of imperfect recollection and abbreviation. In my judgment, and having regard to both imperfect recollection and the inherent likelihood of a brand such as LUCKY STRIKE, LUCKY DRAW or LUCKY DREAM being shortened, this consideration indicates an increased possibility for deception and, more particularly, confusion. [73] I note further that I am in this context to consider the overall concept of the marks. Clearly, each of the marks in question shares as part of its conceptual construct the idea of luck, associated with the word "LUCKY". Beyond that, I acknowledge distinguishing words are used. However, in my judgment there is a clear conceptual similarity that does not end there. That is, in conjunction with the word "Lucky", both of the words "Strike" and "Draw" have connotations of games of chance in which success is associated with the luck of the "draw", or "striking it" lucky. In my judgment, this is a strong conceptual similarity. I recognise that that conceptual similarity is not shared to the same extent by the word "Dream". However, the overall concept of "Lucky Dream" also carries the connotation of a lucky outcome, in the sense of the luck of a dream coming true, or the luck of a "dream" outcome. [74] Notwithstanding, therefore, the dissimilarity when the marks are judged simply by reference to their look and sound, when I have regard to these additional factors I am not persuaded that there is not a reasonable possibility of confusion.[75] In this context I comment on the Assistant Commissioner's ruling that, whilst the mark "LUCKIES" was relevant for the purposes of BAT's s 16(1) ground of opposition, including on the question of deception and confusion, it was not relevant as pleaded for BAT's s 17(1) ground of opposition. The Assistant Commissioner reached that conclusion based principally – it would appear – on the potential prejudice faced by NV Sumatra if reliance had been allowed on the LUCKIES registration as regards s 17(1). Given the very similar nature of the analysis of the risk of deception and confusion to be carried out under ss 16(1) and 17(1), it seems difficult to conclude that if the brand "LUCKIES" is relevant for the purposes of s 16(1), any prejudice would arise in the context of the similar analysis under s 17(1). Considering, in the analysis of deception and confusion as regards s 17(1), the possibility of such deception and confusion also arising as regards fair use of the brand LUCKIES, strengthens the conclusion I have already reached with reference to the look, sound and concepts of the marks in question. [76] I now have to have regard to the goods to which they are to be applied and the nature and kind of customer who is likely to buy these goods. The goods in question are cigarettes. I think the relevant characteristics of these goods is that, although – as discussed below – the circumstances require the consumer to identify the brand they wish to purchase, the purchasing decision – given the relatively small amounts of money involved and its often habitual nature – will not be a particularly considered one. [77] In this context, Mr Marriott made certain assertions – by reference in his written submissions to comments attributed to Mr Warren Buffett – as to the brand loyalty of cigarette smokers. The proposition was, as I understood it, that a person loyal to the brand LUCKY STRIKE and asking for those cigarettes by name would be unlikely to be confused or deceived by cigarettes sold under the marks LUCKY DREAM or LUCKY DRAW. Again, however, no evidence of the degree of brand loyalty of cigarette smokers was provided. In those circumstances, I do not consider I can place any significant reliance on that aspect of Mr Marriott's submissions.[78] I acknowledge that the purchasers of cigarettes are legally required to be over the age of 18 years. Apart from that legal restriction, there is little practical restriction on who purchases cigarettes. [79] Taken together, I think consideration of the nature of the goods and of the customers involved adds to the possibility of the likelihood of deception or confusion. [80] The surrounding circumstances can, I think, be fairly taken from the description provided by Ms Brunton-Reid in her affidavit, as referred to at [31]. [81] In those circumstances, it does seem likely that consumers of cigarettes in New Zealand will ask for, or select, the product by brand name, as reflected in these marks. In the absence of any advertising, the relevant "confusion" would therefore appear to be a consumer asking for LUCKY STRIKE, but pointing to a LUCKY DREAM or LUCKY DRAW packet, confused either by the word "Lucky" in and of itself, or confused that the LUCKY DREAM and LUCKY DRAW product could be part of the LUCKY STRIKE family. Alternatively, a shopkeeper could make a similar mistake, and the consumer could assume that the product provided was the one asked for or, noticing the difference, assume that the products are in some way related. [82] I am not persuaded that such confusion is not a reasonable possibility. Furthermore, and having regard – in this hypothetical exercise – to the strength of that possibility, I am not persuaded by NV Sumatra that it is not a possibility that could affect a significant number of persons. [83] In analysing the likelihood of deception and confusion, I have given consideration to the significance of the "get up" of the LUCKY STRIKE brand, as it appears in various device marks. By contrast, NV Sumatra's brands are simply word brands. Therefore, assuming a hypothetical fair use, there is on the one hand the consideration that the distinctiveness of BAT's device marks would tend against deception or confusion arising. On the other hand, I also have to consider the possibility of the hypothetical fair use of BAT's word brand LUCKY STRIKE inand of itself. When consideration the possible fair use of that brand, in a hypothetical sense, the distinctiveness of the "get up" of associated marks – relative to a fair use of NV Sumatra's brands – becomes a less persuasive consideration. [84] Having regard to these considerations, therefore, I conclude that NV Sumatra did not discharge the onus of establishing before me that there was not a reasonable possibility that the fair notional use of the marks LUCKY DREAM and LUCKY DRAW could cause deception or confusion when compared with a notional fair use of the mark LUCKY STRIKE. [85] In my judgment, therefore, BAT has made out its grounds of opposition under s 17(1), and this appeal is accordingly allowed. [86] On that basis, it is not necessary for me to consider the further questions raised by BAT as regards the correctness of the Assistant Commissioner's approach to the issues raised by BAT's reliance on the alternate grounds under s 16(1), s 17(2) and s 2. [87] Costs will follow the event. I see no reason why costs should not be paid on a 2B basis. I trust the parties will be able to resolve the question of costs between them. If they cannot, submissions may be filed. Such submissions are to be received by me no later than 5 December."Clifford J"Solicitors: S A Barker, Buddle Findlay, PO Box 2694, Wellington for the appellant (scott.barker@buddlefindlay.com) D L Marriott, James & Wells, Private Bag 11907, Auckland for the respondent (davidm@jaws.co.nz)