GOODMAN FIELDER CONSUMER FOODS PTY LTD v HEINZ WATTIEʼS LTD [2017] NZHC 177

GOODMAN FIELDER CONSUMER FOODS PTY LTD v HEINZ WATTIEʼS LTD [2017] NZHC 177 [16February 2017]CONFIDENTIALITY ORDER: SEE PARA [51] .IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCOMMERCIAL LISTCIV-2016-404-002187[2017] NZHC 177BETWEEN GOODMAN FIELDER CONSUMERFOODS PTY LIMITEDApplicantAND HEINZ WATTIEʼS LIMITEDRespondentHearing: 10 February 2017Appearances: J G Miles QC and J R Wach for ApplicantC Elliott QC for RespondentJudgment: 16 February 2017JUDGMENT OF VENNING JDISCOVERY APPLICATIONSThis judgment was delivered by me on 16 February 2017 at 3.45 pm, pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateSolicitors: James & Wells, AucklandMartelli McKegg, AucklandCopy to: C Elliott QC, AucklandApplication for discovery[1] The plaintiff (Goodman Fielder) seeks orders revoking the defendant's (Heinz Wattie's) trade mark for the word mark PRAISE in certain classes. Theparties agree targeted discovery is appropriate but have been unable to agree on thenature and scope of such discovery. Both Goodman Fielder and Heinz Wattie's havemade applications for discovery.Context[2] Although Goodman Fielder has its registered office in Australia it carries on the business of manufacturing, packing, distributing, marketing and selling food and related goods in New Zealand. It has registered and uses the PRAISE trade mark in Australia and has applied for registration of New Zealand trade marks 1043924 and 1043925 incorporating the word PRAISE.[3] Heinz Wattie's is currently the owner of a New Zealand registered trade mark 801921 for the word mark PRAISE in two classes, 29 and 30.1 Heinz Wattie's mark prevents registration of Goodman Fielder's mark in New Zealand.[4] Goodman Fielder seeks revocation of Heinz Wattie's mark under s 66 of the Trade Marks Act 2002 (the Act). It says Heinz Wattie's has not put its PRAISE trademark to genuine use in the course of trade in New Zealand for a continuous period of three years or more.Goodman Fielder's argument on discovery[5] Goodman Fielder accepts that Heinz Wattie's has used the PRAISE mark butsays it has only done so on very limited occasions in the context of the relevant market, which it defines as the market for Fast Moving Consumer Goods (FMCG) in New Zealand. Mr Miles QC submitted Heinz Wattie's sporadic use of the mark1 Class 29 – Dairy products, eggs, milk and milk products; edible oils and fats; sweet spreads in this class; savoury spreads in this class; dips in this class; preserved, dried, cooked and frozen fruits and vegetables; snack foods in this class; prepared meals and constituents for meals. Class 30 – mayonnaise; salad dressings; sauces and condiments in this class, including cooking sauces, marinades and flavourings (other than essential oils) for adding to food; sweet spreads in this class; savoury spreads in this class; dips in this class; mustard; vinegar; salt; spices; seasonings; snack foods in this class; prepared meals and constituents for meals.PRAISE in New Zealand was not genuine but was rather directed at blocking Goodman Fielder from bringing its PRAISE brand to New Zealand.[6] Mr Miles submitted that the scope of the tailored discovery must be informed by the matters in issue in the proceedings. There were essentially only two issues –whether Goodman Fielder was an aggrieved person, which he submitted was not seriously arguable, and secondly, whether the limited use of the PRAISE mark byHeinz Wattie's was genuine. This required Heinz Wattie's to discover documentsrelevant to its use of the mark and also its use of two related trade marks for similar products, namely mayonnaise and dressing products. Goodman Fielder seeks discovery of the documents in accordance with schedule A attached to this judgment.Heinz Wattie's response[7] Heinz Wattie's accepts that the principal issue for determination is whether itsuse of the PRAISE trade mark was genuine and if not, whether the non-use (if any) was due to special circumstances.2 While acknowledging the test for determiningwhether Goodman Fielder was an aggrieved person is not high, Heinz Wattie's does not concede the point. Heinz Wattie's seeks discovery of documents relevant to thatissue.[8] Mr Elliott QC also submitted that, as the ultimate test for determiningwhether Heinz Wattie's use was genuine or not was an objective test, on the basis ofequivalence Goodman Fielder should be required to discover documents relating to its use of the PRAISE trade mark in relation to "relevant comparator" products. The scope of discovery initially sought by Heinz Wattie's is attached as schedule B to thejudgment.[9] In preparation for the hearing Mr Elliott sought to refine the discovery sought from Goodman Fielder. In a memorandum for the hearing he suggested that Goodman Fielder should discover:(a) documents relating to the plaintiff's standing as an aggrieved person;2 In its statement of issues.(b) documents relating to the plaintiff's marketing and selling of relevantcomparator food products3 in New Zealand and Australia including:a. niche products and product sold or proposed to be sold through smaller retail outlets;b. the plaintiff's sales of Relevant Comparator food products inorder to either test a market or market segment, trade channel or with/for one or more customers or make a product viable or realistic in a particular market category or channel or with/for one or more customers.(c) documents relating to blocking strategies undertaken by the plaintiff in either Australia or New Zealand, including offering pallet deals to supermarkets, airing advertising campaigns for competing product, engaging in media warfare or taking action to deter or provoke a competitor reaction.[10] Goodman Fielder concedes that documents in the first category should bediscovered but objects to the second and third categories sought by Heinz Wattie's onthe grounds they are not relevant to the issues in the proceeding.[11] During the course of submissions Mr Elliott sought to redefine the categories of discovery further but maintained his submission that Goodman Fielder should discover documents relating to its use of the PRAISE brand.The approach to discovery[12] The concept of proportionality is central to tailored discovery.4 The scope of the discovery order will be informed by the relevance of the discovery sought to the issues in the case and, where relevant, the statutory framework.5[13] In the recent case of Chatfield & Co Ltd v Commissioner of Inland Revenuethe Court of Appeal discussed the approach to discovery following the amendment to3 "Relevant comparator products" are products sold in Australia and New Zealand which provide a means whereby the nature and extent of the [Heinz Wattie's] use of the PRAISE trade markcan be assessed by the Court and which provide a yardstick whereby a reasonably objective assessment can be made.4 High Court Rules 2016, r 8.9(a).5 Commerce Commission v Cathay Pacific Airways Ltd [2012] NZHC 726; and ASB Bank Ltd v Commissioner of Inland Revenue [2014] NZHC 2184, (2014) 26 NZTC 21-098.the discovery rules and confirmed relevance was still to be assessed by having regard to the pleadings:6[21] Since 1 February 2012, the High Court Rules have provided for twokinds of discovery, namely "standard discovery" and "tailored discovery".Standard discovery requires each party to disclose documents that are orhave been in that party's control and are documents on which the partyrelies, or adversely affect that party's or another party's case, or support another party's case. The intention was to replace the previous rule with one that was narrower in scope. Formerly, under what was commonly known as the Peruvian Guano test, the obligation was to disclose documents that were or might be relevant to issues in the proceeding, or may lead to a train of inquiry. But the references in the new rule to the cases of the parties means that relevance will still be a hallmark of what has to be discovered. As with evidence, the relevance of a document for discovery purposes must be assessed having regard to the pleaded claim.(footnotes omitted)[14] Mr Elliott suggested that it may not be appropriate to apply the relevance criteria and general principles relating to tailored discovery to an application such as this, as applications for revocation are often made to the Patents Office. Discovery is not provided for in such applications.[15] There is no principled reason why the established principles relating to discovery in High Court proceedings generally should not apply to applications of this nature brought in this Court. In Royal New Zealand Yacht Squadron v Daks Simpson Group Plc the Court rejected a submission that there should be a different approach to the standard of evidence before the Commissioner to that in the High Court, noting that it would be wrong for there to be different rules of evidence applying to the applications depending on whether the application was dealt with by the Court or the Assistant Commissioner.7 Similarly, the established principles relating to discovery should apply to applications under the Act made to this Court.The issues[16] Goodman Fielder says it is an aggrieved person, that it has standing to applyfor revocation of Heinz Wattie's PRAISE mark as an aggrieved person under s 656 Chatfield & Co Ltd v Commissioner of Inland Revenue [2016] NZCA 614, (2016) 27 NZTC 22- 084.7 Royal New Zealand Yacht Squadron v Daks Simpson Group Plc [2002] NZAR 187 (HC).and that its application is not vexatious. As noted, Heinz Wattie's formally puts Goodman Fielder's standing in issue.[17] Goodman Fielder's substantive claim relies on s 66(1)(a) of the Act. The relevant provisions of s 66(1) are:66 Grounds for revoking registration of trade mark(1) The registration of a trade mark may be revoked on any of the following grounds:(a) that at no time during a continuous period of 3 years or more was the trade mark put to genuine use in the course of trade in New Zealand, by the owner for the time being, in relation to goods or services in respect of which it is registered:(1A) For the purposes of subsection (1)(a), continuous period means a period that commences from a date after the actual date of registration and continues uninterrupted up to the date 1 month before the application for revocation.(2) However, despite subsection (1), a trade mark may not be revoked for its non-use if its non-use is due to special circumstances that are outside the control of the owner of the trade mark.[18] Heinz Wattie's says its use of the PRAISE mark in New Zealand was genuineand, if not, the non-use (if any) was due to special circumstances.[19] The relevant issues in the case are whether Goodman Fielder is an aggrievedperson, whether Heinz Wattie's use of the mark in New Zealand has been genuine,and, if not, whether the non-use (if any) was due to special circumstances outsideHeinz Wattie's control.Onus of proof[20] Section 67 provides for the onus of proof on an application for revocation under s 66(1)(a):67 Onus of proof for revocation of registration of trade mark for non-useIf an owner or a licensee intends to oppose an application for the revocation of the registration of a trade mark under section 66(1)(a), the owner or the licensee must, within the period specified by the Commissioner or the court,—(a) provide proof of the use of the trade mark if the ground insection 66(1)(a) forms the basis for the application; or(b) raise the special circumstances that justify the non-use of the trade mark if section 66(2) applies.[21] There is a difference between the parties as to the effect of s 67. Where, ashere, there is a record of some, albeit limited, use of the mark by Heinz Wattie's(which Goodman Fielder acknowledges) Mr Elliott submitted that the onus on HeinzWattie's to provide proof of use of the mark had been satisfied. He submitted the onus then shifted back to Goodman Fielder to prove that Heinz Wattie's use was notgenuine. Mr Elliott submitted that supported Heinz Wattie's request for discovery of documents relating to Goodman Fielder's marketing and sales of relevantcomparator products.[22] The texts in the area contain somewhat contradictory passages on this point. Mr Elliott relies on a comment in the text by Paul Sumpter Trade Marks in Practicewhere the author states:8The procedure for a non use application is different (regs 96 –100) from the other grounds, because there is an initial onus on the owner to prove use.[23] Mr Elliott submitted that reference to "initial onus" supported his propositionthat all Heinz Wattie's had to do was to establish any examples of use and the onusthen reverted back to Goodman Fielder to prove the use was not genuine.[24] Other authors appear to take a different view. In Kerly's Law of Trade Marksand Trade Names the authors state:910-011 With one notable exception, if an application is made for a declaration of invalidity or for revocation, the onus lies on the8 Paul Sumpter Trade Marks in Practice (3rd ed, LexisNexis, Wellington, 2015) at TMA66.3.9 James Mellor and others Kerly's Law of Trade Marks and Trade Names (15th ed, Sweet & Maxwell, London, 2011).person making the attack to prove the grounds of invalidity and/or revocation relied upon to the normal civil standard of the balance ofprobabilities 10-012 The exception concerns alleged non-use. If any question arises in UK proceedings as to the use to which a UK registered trade mark has been put, it is for the proprietor to show what use has been made of the mark. Therefore, an application to revoke for non-use places the onus of proof on the proprietor to prove the use which has been made of the mark. Equally, if the proprietor is not able to show genuine use, the onus rests on him to show that there are proper reasons for the non-use.(emphasis added)[25] Mr Elliott also referred to the following passage from James & Wells Intellectual Property Law in New Zealand:10If the application is based on one of the grounds of non-use set out in s 66(1)(a) or (b), the initial onus is on the trade mark owner or licensee to prove that the registered trade mark should not be revoked. Once use of the trade mark or special circumstances justifying non-use of the trade mark areestablished, the onus switches back to the person applying to revoke theregistered trade mark to prove that the trade mark should be revoked on therelevant ground of non-use.[26] However, later in the same text the authors state:11Where an application to revoke a registered trade mark is based on one of the grounds of non-use set out in s 66(1)(a) and (b) Trade Marks Act 2002, the trade mark owner or licensee bears the initial onus of establishing thatthe mark was put to genuine use on or in relation to some or all of the goodsor services covered by the registration or that the use of the mark was notsuspended (s 67).(emphasis added)[27] In Susy Frankel's Intellectual Property in New Zealand the author notes following the introduction of the 2002 Act:12Under the 2002 Act, the onus is different. It requires the owner of a trade mark to show use.10 Ian Finch (ed) James & Wells Intellectual Property Law in New Zealand (2nd ed, Thomson Brookers, Wellington, 2012) at 451.11 At 752.12 Susy Frankel Intellectual Property in New Zealand (2nd ed, LexisNexis, Wellington, 2011) at 554.When read in context the author appears to be equating use with genuine use. The passage follows reference to Royal New Zealand Yacht Squadron v Daks Simpson Group Plc where Ronald Young J held that under the former Act, once an applicant had established a prima facie case the Commissioner should then " require theRespondent to show there was a bona fide use of the trade mark ".13 That suggeststhat even under the former Act the respondent had an onus to show bona fide orgenuine use.[28] Section 67 is directed at the ground for revocation of non-use under s 66(1)(a). The only ground for revocation under s 66(1)(a) is that the trade mark was not put to genuine use. In my view the onus placed on the respondent under s 67 is an onus to prove genuine use.[29] However, it is unnecessary for this Court to make a definitive ruling on that at this stage of the proceeding, because whichever party has the onus of proof, theprincipal issue in this case is clearly whether Heinz Wattie's use of the mark wasgenuine.The test of genuine use[30] Whether the use is genuine or not is essentially an objective test. InLaboratoires Goëmer SA v La Mer Technology Inc Mummery LJ in the UK Court of Appeal said:14[34] There was some discussion at the hearing about the extent to which Goëmar was entitled to rely on its intention, purpose or motivation in thesales of the goods bearing the mark I do not find such factors of muchassistance in deciding whether there has been genuine use. I do not understand the Court of Justice to hold that subjective factors of that kind are relevant to genuine use. What matters are the objective circumstances inwhich the goods bearing the mark came to be in the United Kingdom. [31] However, in his text, Sumpter suggests the test for genuine use may comprise both objective and subjective assessments:1513 Royal New Zealand Yacht Squadron v Daks Simpson Group Plc, above n 7, at [9].14 Laboratoires Goëmer SA v La Mer Technology Inc [2005] EWCA Civ 978.15 Sumpter, above n 8, at [TMA66.7].No doubt the test for "genuine use" is largely objective but subjectiveaspects (objectively assessed) may arise in determining if use by an owner is a sham and intended only to preserve the mark or is for the purpose of genuine trade.[32] On either approach, it is difficult to see what relevance Goodman Fielder's use of its word mark may have to the issue of whether Heinz Wattie's use wasgenuine in the sense discussed in Case C-40/01 Ansul BV v Ajax Brandbeveiligingand as summarised in Pasticceria e Confetteria Sant Ambroeus SRL v G & D Restaurant Associates Ltd.16 What is relevant is the circumstances surroundingHeinz Wattie's use of the mark in New Zealand. Those circumstances do not involveconsideration of Goodman Fielder's business practices.[33] Mr Elliott made the point it was important not to confuse onus and proof. He submitted all evidence of marketing, if relevant, would be discoverable not justHeinz Wattie's marketing. I acknowledge the distinction between onus and proof, but on Mr Elliott's argument third party discovery could be required from othercompetitors in the FMCG market. That cannot be seriously suggested to be appropriate. Goodman Fielder is in no different position to third party competitors, other than as a party to this litigation.[34] Mr Elliott referred to the reference in Laboratoires Goëmar SA's Trade Mark(No 1) by Jacob J to "similar entities" and two decisions of this Court which hesuggested supported his argument.17[35] The quotation Mr Elliott relied on from the judgment of Jacob J inLaboratoires Goëmar SA's Trade Mark (No 1) case appears in a passage when the Judge was discussing the former legislation. But even if generally applicable to thetest under the present Act the comparison of how similar entities go about marketingdoes not require discovery of Goodman Fielder's documents relating to its marketingand sales. Evidence of how a similar entity might go about marketing can be given16 Case C-40/01 Ansul BV v Ajax Brandbeveiliging BV [2003] ECR I-2439, and Pasticceria e Confetteria Sant Ambroeus SRL v G & D Restaurant Associates Ltd [2010] RPC 28.17 Laboratoires Goëmar SA's Trade Mark (No 1) [2002] FSR 51 (Ch) at [27]; Metalman New Zealand Limited v Scrapman BOP Ltd [2014] NZHC 2028, [2014] NZAR 1393; andSambbasivam v Chetty (2011) 94 IPR 214 (HC).without requiring Goodman Fielder, just because it is a party to the proceeding, to disclose details of its marketing and trading data.[36] In Metalman New Zealand Limited v Scrapman BOP Ltd Lang J referred to the ruling of the European Court of Justice in Ansul, particularly the passage that:18(c) When assessing whether there has been genuine use of the trade mark, regard must be had to all the facts and circumstances relevant to establishing whether the commercial exploitation of the mark is real. This may involve consideration of whether the use in question is warranted in the economic sector concerned to maintain or create a share in the market for the goods or services protected by the mark.(d) Assessing the circumstances of the case can include givingconsideration to the nature of the goods or service at issue, thecharacteristics of the market concerned and the scale and frequencyof use of the mark. Use of the mark does not always have to bequantitatively significant for it to be deemed genuine, as thatdepends on the characteristics and market of the goods or service inquestion.(footnote omitted).[37] In Sambbasivam v Chetty & Ors Dobson J stated:19[46] I consider that the activity qualifies as genuine when such a small number of dealings might in other contexts not qualify as such, because of the nature of the goods in respect of which the mark is used. Two transactions in the space of the relevant 3-year period in other contexts such as, say, a high volume manufacturing business, might be so insignificant as to not justify a finding that the use is genuine. However, business on a very modest scale as an adjunct to a principal business in Mumbai and branches in South Africa, Malaysia, Singapore and Dubai may qualify as genuine without the same minimum level of activity that would be required in other contexts to establish its genuine character.[38] With respect, however, the passages from the above cases simply reaffirmthat whether the use of the mark by Heinz Wattie's is genuine is to be determined incontext.[39] The context can be provided by expert and experienced witnesses in this area. Context can be proved without discovery of Goodman Fielder's use of its mark. Whether Goodman Fielder's use was genuine or why or how it traded using its mark18 Metalman New Zealand Limited v Scrapman BOP Ltd, above n 17, at [14], citing Case C-40/01Ansul BV v Ajax Brandbeveiliging, above n 16.19 Sambbasivam v Chetty, above n 17.is not in issue. The patterns of trading by Goodman Fielder in the wide variety ofproducts sought by Heinz Wattie's is not relevant to the principal issue in thisproceeding.[40] If the expert or other evidence called by Goodman Fielder relies on particular documentation of Goodman Fielders then the ongoing obligation to discover would apply and discovery may, at that stage, be required. At this stage of the proceedings,however, I reject the submission by Heinz Wattie's that discovery is required of Goodman Fielder's marketing and trading data. It is not relevant to the principal issue the Court has to rule on.[41] With the exception of documents relevant to Goodman Fielder's standing, the documents sought by Heinz Wattie's from Goodman Fielder are not sufficientlyrelevant to the issue in the case to make them discoverable.[42] By contrast the documents sought by Goodman Fielder are directly relevantto whether Heinz Wattie's use was genuine as opposed to token. Discovery is sought of documents dated from between 31 July 2011 to 31 August 2016 which make reference to the PRAISE trade mark brand or product. The evidence of Ms Ellerm,Goodman Fielder's manager of marketing, confirms that the FMCG market ischallenging. She would expect internal and external correspondence, memoranda and meeting notes to accompany the high level of effort required to maximise thelikelihood of a successful distribution and marketing programme. The defendant'sexpert, Mr Pretty, says that overall what Ms Ellerm says is reasonably accurate, although he takes issue with aspects of her evidence. For present purposes, those differences are not material.[43] Next, Goodman Fielder seeks documents (not limited to the period 31 July2011 to 31 August 2016) relating to any launch or relaunch by Heinz Wattie's of thePRAISE mayonnaise brand in New Zealand. The evidence discloses sporadic or clustered use of the mark in relation to such products since 2000. Each use is likelyto have been commenced by a launch or relaunch. Ms Ellerm's evidence confirmsthat a launch or relaunch of a product is a critical phase in the lifespan of an FMCG. A number of documents would have been generated.[44] Goodman Fielder also seeks documents relating to Heinz Wattie's PRAISE,Seriously Good and ETA Mayonnaise dressing products to enable comparison between the use made by Heinz Wattie's of the PRAISE mark and its comparablemarks.[45] Mr Elliott accepted a comparator of other Heinz Wattie's brands was relevantbut submitted that it should be restricted to Seriously Good, rather than the ETA brand which involved very high volume sales. However, as Mr Miles submitted, in earlier proceedings in 2005 Mr Pretty deposed that:The PRAISE product was replaced by the ETA rich and creamy brand of mayonnaise (albeit the products had exactly the same recipe).There appears to be a relationship which supports the inclusion of documents relating to the ETA brand in the discovery exercise.[46] Discovery of both Heinz Wattie's other relevant brands, Seriously Good and ETA will enable a comparison to be made between Heinz Wattie's use of the PRAISE trade mark and its use of other trade marks for comparable products. Theremay well be reasons for the different approaches but how Heinz Wattie's acted inrelation to similar products is relevant to whether its use of this mark was genuine. The related financial documents will disclose the amount spent on promoting the brand and the returns. It will be probative of the nature and character of HeinzWattie's use of the relevant mark.Result[47] Goodman Fielder is to discover all documents relevant to its pleading that itis an aggrieved person. Otherwise Heinz Wattie's application for discovery isdismissed.[48] Heinz Wattie's is to discover the documents sought in the plaintiff'sapplication and noted in Schedule A to this judgment.[49] The parties are to comply with the discovery by filing and serving a sworn affidavit in accordance with r 8.15 within 20 working days and are to make the documents available for inspection in accordance with r 8.28.Confidentiality[50] Both parties accept that aspects of the documents will be confidential. Mr Elliott has proposed a confidentiality order which is not opposed.[51] I make an order subject to any further order of the Court that the contents of any documents identified by the parties as confidential will be treated at all times as confidential. Access is restricted to the parties' lawyers, counsel and independent experts.Costs[52] Goodman Fielder has substantively succeeded on the applications. It is to have costs on both applications but allowance for only one half day and one counsel.__________________________ Venning JSCHEDULE ASCHEDULE B