PHARMAZEN LIMITED v ANAGENIX IP LIMITED [2019] NZHC 1520

PHARMAZEN LIMITED v ANAGENIX IP LIMITED [2019] NZHC 1520 [1 July 2019]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2018-485-741[2019] NZHC 1520BETWEEN PHARMAZEN LIMITEDAppellantAND ANAGENIX IP LIMITEDRespondentHearing: 25 March 2019Appearances: J V Ormsby and T M Ritchie for the AppellantS Wheeldon for the RespondentJudgment: 1 July 2019JUDGMENT OF CULL JTABLE OF CONTENTSBackground 7The Commissioner's decision 9Approach to appeal 12Preliminary issue of evidence 18Legal framework 22Issues 27Issue One: whether the goods are similar 28Issue Two: whether the trade marks are similar 40Visual comparison 43Aural Comparison 49Conceptual/descriptive comparison 54Discussion 58Issue Three: whether the trade mark would be likely to deceive or confuse 64Result 80[1] Pharmazen Limited's (Pharmazen) application to register its trademark,ActiPhen, was declined by the Assistant Commissioner of Trade Marks (theCommissioner).1 Pharmazen appeals the Commissioner's decision (the Decision).1 Pharmazen Limited v Anagenix IP Limited [2018] NZIPOTM 27.[2] The Commissioner found that the ActiPhen trademark is similar to AnagenixIP Limited's (Anagenix) mark, ACTAZIN,2 is in respect of similar goods,3 and that itis likely a significant number of persons in the relevant market would be deceived orconfused by Pharmazen's use of the mark under s 25(1)(b) of the Trade Marks Act2002 (the Act).4[3] Although Anagenix was successful under s 25(1)(b) of the Act, theCommissioner went on to find Anagenix failed in its other grounds of opposition unders 17(1) of the Act. Section 17(1)(a) requires that the use of the applied-for trade markmust not be likely to deceive or confuse, and s 17(1)(b) requires that the use of theapplied-for trade mark must not be contrary to the Fair Trading Act 1986 or other NewZealand law for being misleading or deceptive.[4] Pharmazen appeals the Decision under s 170 of the Act. Pharmazen submitsthat the Commissioner's Decision relating to s 25(1)(b) is wrong and inconsistent withother findings made by the Commissioner: the same conclusions which led Anagenixto fail in respect of s 17(1)(a) must necessarily mean that Anagenix fails unders 25(1)(b).[5] Accordingly, Pharmazen submits:(a) the Commissioner erred in fact and law in finding that the goods aresimilar;(b) the Commissioner erred in fact and law in finding that the trade marksare similar; and(c) the Commissioner erred in fact and law in finding that a significantnumber of persons in New Zealand would be deceived or confused byPharmazen's use of the ActiPhen mark.2 At [65].3 At [53].4 At [69].[6] Anagenix submits the Commissioner made no error in fact or in law: the goodsare similar and the marks are similar, such that Pharmazen's use of the ActiPhen markwould be likely to deceive or confuse a significant number of people.Background[7] On 4 May 2016, Pharmazen lodged an application to register the "ActiPhen"trade mark in relation to class 5 goods for food preparations adapted for medicinalpurposes, pharmaceutical preparations, dietary supplements for humans and animals,antioxidants and kiwifruit powder, and class 16 goods such as printed material relatingto the class 5 goods.5 Anagenix filed a notice of opposition to prevent the registrationof the mark, pleading the following grounds in its amended notice of opposition on 5May 2017:(a) the opposed mark is similar to Anagenix's registered mark that isregistered in respect of goods that are the same or similar toPharmazen's goods, and use of the opposed mark by Pharmazen islikely to deceive or confuse (s 25(1)(b));(b) use of the opposed mark would be likely to deceive or cause confusion(s 17(1)(a)); and(c) use of the opposed mark is contrary to law because it would amount toa breach of the section 9, 10 and 13 of the Fair Trading Act 1986(s17(1)(b)).[8] Anagenix relied upon its common law rights in the word mark ACTAZIN andits registered mark. ACTAZIN is a trade mark of class 5 goods and services forkiwifruit extract powder as a dietetic substance or ingredient adapted for human healthand medical use, and of class 29 goods and services for kiwifruit extract powder as adried fruit ingredient in the manufacture of food and chilled dairy products.5 See Pharmazen, above n 1, at [1] for further description.The Commissioner's decision[9] On 9 August 2018, the Commissioner determined that Pharmazen's ActiPhenand Anagenix's ACTAZIN produce similar goods and services; the ActiPhen mark issimilar to the ACTAZIN mark as they both begin with the prefix ACT which is notcommonplace, they have three syllables, and they end with the letter "N"; and thesimilarity is likely to deceive or confuse a significant number of persons in the relevantmarket, for the purposes of s 25(1)(b).6[10] While noted as unnecessary, the Commissioner went on to consider theremaining grounds of opposition, under s 17(1)(a) and s 17(1)(b), and determined thatthere was "insufficient evidence of awareness of the ACTAZIN mark in the relevantNew Zealand market to satisfy the reputational threshold under s 17(1)(a)" becauseAnagenix had not sold or marketed ACTAZIN in New Zealand since 2012.7 TheCommissioner explained that the threshold for establishing grounds for oppositionunder s 17(1)(b) is higher than that for s 17(1)(a), so where an opponent has notsucceeded under s 17(1)(a), it is unlikely they will succeed under s 17(1)(b).8 As theCommissioner found that Anagenix failed to establish sufficient awareness of its markin the relevant marketplace to support its s 17(1)(a) ground of opposition, "[t]his pointis relevant to, and dispositive of, all Fair Trading Act grounds advanced" byAnagenix.9[11] The Commissioner accordingly directed that the trade mark application forActiPhen not proceed to registration, and awarded Anagenix scale costs.Approach to appeal[12] Section 170 of the Act allows for any "person who is aggrieved by a decisionof the Commissioner" under the Act the right to appeal to the High Court.10 Notice of6 At [49]-[74].7 At [75]-[76].8 At [80], citing New Zealand Milk Brands Limited v N V Sumatra Tobacco Trading Company HCWellington CIV-2007-485-2485, 28 November 2008 at [59]-[60].9 At [82].10 Trade Marks Act 2002, s 5 defines the "Commissioner" as including the Assistant Commissionerof Trade Marks and also defines "court" as the High Court for the purpose of the appeal provisions.an appeal must be filed in the Court and served on the Commissioner within 20working days after the Decision was given.11[13] In hearing an appeal, s 172 provides:172 Hearing of appeal(1) On an appeal, the court must hear the parties and the Commissioner.(2) Appeals must be heard only on the materials stated by theCommissioner unless a party, either in the manner prescribed or byspecial leave of the court, brings forward further material for theconsideration of the court.(3) In the case of an appeal against the acceptance of an application or theregistration of a trade mark,—(a) no further grounds of objection are permitted by the opponentor the Commissioner, other than those stated by the opponent,except by leave of the court; and(b) if further grounds of objection are permitted, the applicant'sapplication may be withdrawn without payment of the costsof the opponent on giving notice as prescribed.[14] In determining an appeal, s 173 provides that the Court may:(a) confirm, modify, or reverse the Commissioner's decision orany part of it:(b) exercise any of the powers that could have been exercised bythe Commissioner in relation to the matter to which the appealrelates:(c) in the case of an appeal against the registration of a trademark, permit the trade mark proposed to be registered to bemodified in any manner that does not substantially affect itsidentity. However, in any such case, the trade mark as somodified must be advertised in the prescribed manner beforebeing registered.[15] There is no presumptive level of respect or deference to the original decision-maker.12 As the Supreme Court noted in Austin, Nichols & Co v Stichting Lodestar:1311 Section 171.12 New Zealand Milk Brands, above n 8, at [6], citing Austin, Nichols & Co Inc v Stichting Lodestar[2007] NZSC 103, [2008] 2 NZLR 141; and Crocodile International Pte Ltd v Lacoste [2017]NZSC 14 at [64]-[65].13 Austin, Nichols, above n 12, at [5].An appeal court makes no error in approach simply because it pays littleexplicit attention to the reasons of the court or tribunal appealed from, if itcomes to a different reasoned result. On general appeal, the appeal court hasthe responsibility of arriving at its own assessment of the merits of the case.[16] This means that the weight afforded to factual findings or technical attributesof the decision appealed from is "an entirely context-specific assessment for the Judgeon appeal."14[17] Once an application for trade mark registration is challenged under s 25(1)(b),the onus is on the applicant, that is, Pharmazen, to establish that the likelihood ofdeception or confusion does not arise.15 Whether the use of the proposed mark is likelyto deceive or confuse is a question of fact to be decided on the circumstances in aparticular case by the Court.16Preliminary issue of evidence[18] Pharmazen filed an interlocutory application on notice for leave to adducefurther evidence. The evidence consists of an affidavit sworn by Mr Craig McIntosh,the Chief Executive of Pharmazen, on 23 November 2018. Anagenix has not opposedthe application to file further evidence, and I have granted the application.[19] Mr McIntosh's affidavit introduces further evidence including:(a) A recent Australian decision between Anagenix and Pharmazenconcerning the registration of the mark ActiPhen in Australia (theAustralian Decision).17 The Australian Decision was released after theNew Zealand hearing and about one month after the Decision wasreleased.(b) The author of email correspondence exhibited to Mr McIntosh'soriginal Statutory Declaration dated 6 October 2017, Mr MarkThurston. Mr Thurston is the President of AIPD Incorporated who14 New Zealand Milk Brands, above n 8, at [6].15 New Zealand Milk Brands, above n 8, at [7], citing New Zealand Breweries Ltd v Heineken's BierBrowerij Maatschappij NV [1964] NZLR 115 (CA).16 New Zealand Milk Brands, above n 8, at [8], citing New Zealand Breweries, above n 15, at 139.17 Anagenix IP Limited v Pharmazen Limited 2018 ATMO 142 (the Australian Decision).acquired the licensing rights for ACTAZIN from Anagenix for theUSA, Canada, Mexico and Brazil.(c) Mr McIntosh's extensive experience in the nutraceutical market, inNew Zealand and internationally, including his attendance at tradeshows around the world. Pharmazen submits this is relevant becausecounsel for Anagenix inferred at the hearing before the Commissionerthat Mr McIntosh did not have significant experience in the industry.[20] In the Australian Decision, the Australian Hearings Officer found thatAnagenix had not established any grounds of opposition to the registration of the markActiPhen in Australia. The Hearings Officer made the following factual findings:(a) There are such differences in spelling between the marks ActiPhen andACTAZIN that there is a clear picture of dissimilarity and they are notsubstantially identical.(b) There are very different aural and visual structures between the marks,being "iPhe" in comparison to "AZI" which is different in both lookand sound.(c) ActiPhen has eight letters compared to ACTAZIN's seven letters.(d) Pronunciation of the different marks is likely to vary, particularly whenthe suffixes between the two marks are so different. The differences inspelling is too great to conclude that the two marks would bepronounced in a similar fashion.[21] The Hearings Officer concluded there was no tangible danger of the marksbeing confused, especially as Anagenix's goods are being sold to manufacturers ratherthan end consumers.1818 The Australian Decision, above n 17, at [24].Legal framework[22] The relevant part of s 25 of the Act is as follows:25 Registrability of identical or similar trade mark(1) The Commissioner must not register a trade mark (trade mark A) inrespect of any goods or services if –(b) it is similar to a trade mark (trade mark C) that belongs to adifferent owner and that is registered, or has priority undersection 34 or section 36, in respect of the same goods orservices or goods or services that are similar to those goods orservices, and its use is likely to deceive or confuse; or[23] It is common ground for both parties that s 25(1)(b) has three requirements, tobe addressed in the following order:19a) is Pharmazen's proposed mark in respect of the same or similar goodsor services covered by any of Anagenix's trade mark registrations?b) if so, is Pharmazen's proposed mark similar to any of Anagenix's trademark registrations for the same or similar goods identified in the firstinquiry?c) if so, is the use Pharmazen's proposed mark likely to deceive orconfuse?[24] In Intellectual Reserve Inc v Sintes, Winkelmann J outlined the relevantprinciples in making assessments under this section:20(a) the applicant has the onus of establishing that its mark does not breachs 25(1)(b) of the Act;19 NV Sumatra Tobacco Trading Company v New Zealand Milk Brands Limited [2011] NZCA 264,[2011] 3 NZLR 206 at [32].20 Intellectual Reserve Inc v Sintes HC Auckland CIV-2007-404-2610, 13 December 2007 at [16][Intellectual Reserve High Court]. This decision was upheld on appeal in Intellectual Reserve Incv Sintes [2009] NZCA 305, [2014] NZAR 556 [Intellectual Reserve Court of Appeal].(b) the Court should consider the marks in their entirety; the overall or netimpression of the marks should be considered;(c) while differences between two marks may be significant, it is thesimilarities which are most significant, whether visual, audible,distinctive, or conceptual;(d) the impression or idea conveyed by the marks is important in assessinghow they will be recalled; the idea of a mark is more likely to berecalled than its precise details;(e) comparison is not of the opponent's mark with the mark of the applicantwhen taken side by side, but taking into account imperfect recollectionin all the circumstances in which the products might be sold; thequestion is whether the person who sees the proposed trade mark in theabsence of the other trade mark, and in view only of her generalrecollection of what the nature of the other trade mark was, would beliable to be deceived and to think that the trade mark before her is thesame as the other; and(f) the marks are to be compared as they would be encountered in the usualcircumstances of trade.[25] Also of relevance is s 17:17 Absolute grounds for not registering trade mark: general(1) The Commissioner must not register as a trade mark or partof a trade mark any matter –(a) the use of which would be likely to deceive or causeconfusion; or(b) the use of which is contrary to New Zealand law orwould otherwise be disentitled to protection in anycourt; or[26] There is substantial overlap between s 17(1)(a) and s 25(1)(b).21 The Court ofAppeal in NV Sumatra Tobacco Trading Co v New Zealand Milk Brands Ltd has notedthat the purpose of s 17(1)(a) is the protection of the public from deception orconfusion.22 The comparison under s 17(1)(a) is between the actual use of Anagenix'sregistered mark and the fair and notional use of Pharmazen's mark.23 This is incontrast to s 25(1)(b) where the comparison is the fair and notional use of bothmarks.24Issues[27] There are therefore three key issues:(a) whether the goods are similar, for the purposes of s 25(1)(b);(b) whether the trade marks are similar, for the purposes of s 25(1)(b); and(c) whether the use of the trade mark would be likely to deceive or confuse,for the purposes of s 25(1)(b) or s 17(1)(a).Issue One: whether the goods are similar[28] In British Sugar plc v James Robertson & Sons Ltd, a number of factors wereidentified to assist in determining whether there is similarity between goods:25(a) the respective uses of the goods or services;(b) the respective users of the goods or services;(c) the physical nature of the goods or acts of service;(d) the respective trade channels through which the goods or services reachthe market;21 New Zealand Milk Brands, above n 8, at [56].22 NV Sumatra Tobacco Trading, above n 19, at [78].23 Anheuser-Busch Inc v Budweiser Budvar National Corporation [2002] 1 NZLR 472 (CA) at [74].24 Anheuser-Busch, above n 23, at [30].25 British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281 (Ch) at 296-297.(e) in the case of self-service consumer items, where in practice they arerespectively found or likely to be found in supermarkets and inparticular whether they are, or are likely to be, found on the same ordifferent shelves; and(f) the extent to which the respective goods or services are competitive.This inquiry may take into account how those in trade classify goods,for instance whether market research companies, who act for industry,put the goods or services in the same or different sectors.[29] The question of similarity in goods or services is one of fact to be determinedon a case-by-case basis, and the approach taken is a practical one, looking at the goodsfrom a business and commercial point of view.26[30] Pharmazen submits that the Commissioner erred in fact and law in finding thatthe goods are similar. Pharmazen submits there is evidence that, in locations whereACTAZIN has a market (which is not in New Zealand), the products are considereddifferent due to their variances, which include their different manufacture process,additives, water activity, and enzyme activity. In particular, Pharmazen submits theActiPhen goods have no artificial additives while ACTAZIN's do, the ActiPhen goodsare low in water activity and therefore suitable to formulate with probiotics whileACTAZIN's are high in water activity and are unsuitable for formulating withprobiotics, and the ActiPhen goods are high in enzyme activity (a key aspect fordigestive health benefits) while ACTAZIN's are low in enzyme activity.[31] Anagenix submits there is considerable overlap between the goods ofPharmazen's application and those of Anagenix's registration: the ACTAZINregistration covers kiwifruit extract powder as a dietic substance, or as an ingredientfor use in dietary supplements and in food products; and the ActiPhen specificationincludes kiwifruit powder for use as an ingredient in dietary supplements. For thepurposes of s 25(1)(b), Anagenix submits these goods are the same.26 New Zealand Milk Brands, above n 8, at [33], citing J Lyons and Co Ltd's Application [1959] RPC120 at 128 and Gutta-Percha & Rubber Manufacturing Co (Toronto) Limited's Application (1909)26 RPC 84.[32] Anagenix further submits that many goods of the application are also similarto "kiwifruit extract powder as a dietic substance or ingredient adapted for humanhealth and medical use". For example, the broad descriptions in the class 5specification such as "food preparations adapted for medicinal purposes" and "dietarysupplements for humans and animals (for medicinal purposes)" encompass numerousproducts similar to Anagenix's goods.[33] Finally, Anagenix submits that while Pharmazen has compared the attributesof the ActiPhen and ACTAZIN products on the market, the parties' actual products areirrelevant to the inquiry under this section as to the similarity of goods. Instead, it isthe goods of Anagenix's registration and those of Pharmazen's application that mustbe compared.[34] ActiPhen is specified as applying to the following goods:(a) Class 5: Food preparations adapted for medicinal purposes;pharmaceutical preparations; pharmaceutical preparations containingenzymes; pharmaceutical preparations to support gut health anddigestion; dietary supplements for humans and animals (for medicinalpurposes); antioxidants (dietary supplements); kiwifruit powder for useas an ingredient in dietary supplements (medicinal purposes); kiwifruitpowder (not for medicinal purposes) for use as an ingredient in dietarysupplements; kiwifruit powder (not for medicinal purposes) for use asan ingredient in animal feed supplements.(b) Class 16: Printed material relating to food preparations for medicinalpurposes, pharmaceutical preparations, pharmaceutical preparationscontaining enzymes; pharmaceutical preparations to support gut healthand digestion; dietary supplements for humans and animals (formedicinal purposes); antioxidants (dietary supplements); kiwifruitpowder for use as an ingredient in dietary supplements (medicinalpurposes); kiwifruit powder (not for medicinal purposes) for use as aningredient in dietary supplements; kiwifruit powder (not for medicinalpurposes) for use as an ingredient in animal feed supplements.[35] The question is whether Anagenix's registered mark applies to goods that aresimilar to these specified goods.[36] The details of Anagenix's registered mark are as follows:(a) Class 5: kiwifruit extract powder as a dietic substance or ingredientadapted for human health and medical use including dietary, health andnutritional supplements, medical food and functional foods andbeverages.(b) Class 29: kiwifruit extract powder as a dried fruit ingredient in themanufacture of food and chilled dairy products, including drinkingyoghurts.[37] The differences outlined by Pharmazen at [30] are not only disputed, butaddress the third point only in the British Sugar formulation. As Dobson J noted inNew Zealand Milk Brands, "[t]he physical composition of the goods is one factor inthe British Sugar calculus, but it is not determinative. Another factor is that they arecompetitive."27 He went on to find that the application for non-dairy creamer existsto compete with the opponent's dairy products, and as such the goods were found tobe similar.28[38] Both goods have not identical but similar composition. The respective usesand users of the goods and the respective trade channels through which the goods reachthe market, through wholesale consumers to manufacturers and manufacturers, are thesame or similar. The goods appear to be in competition with each other, despite someof their different physical components.[39] I concur with the Commissioner's finding that there cannot be any real doubtas to the similarity of the parties' respective goods.2927 New Zealand Milk Brands, above n 8, at [36].28 New Zealand Milk Brands, above n 8, at [35]-[37].29 Pharmazen, above n 1, at [53].Issue Two: whether the trade marks are similar[40] The test for whether the trade marks are similar was outlined in New ZealandBreweries:30The rules for comparison of word marks have been summarised as follow[sic]: 1. You must take the two words and judge of them both by their look andby their sound; 2. You must consider the goods to which they are to be appliedand 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 tohappen if each of the marks is used in a normal way as a trade mark for thegoods of the respective owners of the marks: [41] Often, this comes down to a consideration of the visual, aural, and conceptualsimilarities of the marks. It is the similarities that are important, not the differences.31[42] Pharmazen submits that the Commissioner erred in fact and law in finding thatAnagenix has a ground of opposition under s 25(1)(b) of the Act because the marks,ActiPhen and ACTAZIN, are visually and aurally different. Pharmazen relies on bothits own analysis of the marks and the analysis in the recent Australian Decision, inwhich the Australian Delegate held the marks to be dissimilar.Visual comparison[43] Anagenix's mark ACTAZIN is registered in plain block capitals, with noadditional distinctive material or distinctive font. Pharmazen's mark is ActiPhen. Itis a combination of upper and lower case letters, with no additional distinctive materialor distinctive font.[44] Pharmazen provides the following table to submit that the marks are visuallydistinct. In doing so it used lower case lettering for ActiPhen. As the parties concedeand as the Commissioner noted, fair notional use of the mark will include its use inupper case letters. I therefore set it out as follows:ACTIPHEN ACTAZIN30 New Zealand Breweries, above n 15, at 139.31 Intellectual Reserve High Court, above n 20, at [16(ii)].Two halves ACTI and PHEN ACTA and ZINLast Syllable Four letters Three lettersLength of Mark Eight letters Seven lettersCapitals One capital in the middle (if lowercase is used)Full mark is in capitalletters[45] The Australian Decision, on which Pharmazen relies, finds that the marks arenot "deceptively similar", this being the statutory standard under the Australian TradeMarks Act 1995, s 44. It should be noted that this standard therefore puts togetherwhat in New Zealand law is separated out into "similarity between marks", and theirlikelihood to "deceive or confuse". The Australian Decision notes:32 Visually, all the trade marks begin with the same three letter prefix ACT-and end with the letter "N". However, it is also clear that all the trade markscontain very different aural and visual structures within the trade mark being"-iPhe-" in comparison to "-azi-" which are very different in look and sound.The Trade Mark is also eight letters long compared to the opponent's trademark which consists of seven letters. I am not satisfied that the Trade Mark is deceptively similar to theopponent's trade mark, particularly when the trade marks are considered, asthey must be, as wholes. The spelling differences between the 'coined' termsis significantThe Trade Mark is broken into two distinct parts via the capitalisation of the"A-" and then the "-P-" within the Trade Mark.[46] Anagenix submits that a comparison of the respective marks side by side andtheir constituent parts in isolation has been criticised by this Court in New ZealandMilk Brands,33 where Dobson J stated:[30] This approach involves dissecting the constituent parts of the marksat issue, rather than viewing them as a whole. The question is not whether GKis different to CH. It is whether ANGKOR is similar to ANCHOR.32 The Australian Decision, above n 17, at [18], [21] and [22].33 New Zealand Milk Brands, above n 8, at [29].[47] In that case, Dobson J reached the opposite conclusion from the Commissioner,finding that the marks as a whole were similar. This was despite the fact ANCHORwas found to be an iconic mark, and the word "anchor" has a clear meaning while"ANGKOR" had none in New Zealand.34[48] Anagenix submit that the "fair and notional" use of the marks would includeACTAZIN and ACTIPHEN, and Actazin and Actiphen. Visually, then, both marks aredominated by the first syllable ACT-, they both comprise three syllables, and theyshare a similar structure and rhythm. They also share the final letter "N".Aural Comparison[49] Pharmazen submits that the natural pronunciation of ActiPhen and ACTAZINis not phonetically identical, with which the Commissioner agreed.35 Pharmazensubmits that the likely natural pronunciation of the marks would be:(a) ACT – Te – Fen; and(b) ACT– a – Zin.[50] Pharmazen submits the sound "Te-Fen" is very different from the sound "a-Zin".[51] Anagenix submits phonetically, the "A" and "I" as the middle syllable of thewords will be pronounced the same, the "Z" and "PH" (pronounced "F") are verysimilar sounds, and the "IN" and "EN ", coming at the end of the word, sound identicalor very similar. Mr Johnson for Anagenix has given evidence that:ACTAZIN is pronounced with the emphasis on the first syllable, that is as'ACT-uh-zin'. ActiPhen is pronounced with the same emphasis – that is, as'ACT-uh-fin'.[52] The differences in the pronunciation of ActiPhen and ACTAZIN will, ofcourse, depend on the way in which they are pronounced. The Commissioner did not34 At [22].35 Pharmazen, above n 1, at [60].accept the evidence that the words are phonetically identical. She did, however,consider that there was a substantial degree of similarity.36[53] While the first syllable of each is phonetically identical, the second and thirdhave a difference, namely the "A" and "I". Mr Johnson gave evidence that "ActiPhen"would be pronounced similarly to "hyphen" and "pathogen". Pharmazen, on the otherhand, points to the capital P in the middle of "ActiPhen" as placing a differentemphasis on the last syllable and making it more pronounced than in the examples of"hyphen" and "pathogen". This would give it more of a "fen" (as opposed to a "fin")sound.Conceptual/descriptive comparison[54] Pharmazen submits that the prefix ACT is a descriptive component, as it refersto actinidia delciosa, the botanical name for kiwifruit, and is also an abbreviation forthe word ACTIVE. Pharmazen submits ACT is used as a descriptive syllable in therelevant market, for example the mark "Zyactinase" (a freeze-dried extract fromkiwifruit) incorporates "acti" into its name, at a North American tradeshow fornutraceutical products 49 brands had "Act" in the brand name and, in Australia, thereare a number of health supplement products or brand names with "act" or "acti" in thename, the majority of which are available for purchase in New Zealand too.[55] Pharmazen relies on Platinum Homes Ltd v Golden Homes for the authoritythat if a mark includes a descriptive, generic, or common word, then the other parts ofthe mark that are different take on more significance for consumers.37 Further, thecourts have accepted that some similarities are simply the result of common industrypractices, and one trader cannot claim exclusivity to matters common to the trade.38Pharmazen therefore submits that as "ACT" is commonly used in the healthsupplement industry to describe kiwifruit products, the remainder of the marks to becompared is "iPhen" and "AZIN", which are dissimilar both phonetically and visually.36 At [60].37 Platinum Homes (NZ) Limited v Golden Homes (1998) Limited HC Wellington CIV-2005-485-1870, 11 August 2006 at [20].38 New Zealand Breweries, above n 15, at 140.[56] Anagenix submits that neither mark has any conceptual or descriptive meaningor difference. Anagenix disputes the evidence of Pharmazen and submits that of all ofthe other products on the New Zealand and Australian markets made from dried NewZealand kiwifruit powder and sold as aids to digestion, ACTAZIN is the only onewhose name begins with Act. Mr Johnson for Anagenix submits that the productslisted by Mr McIntosh for Pharmazen either do not relate to products which consist ofor contain kiwifruit, or are references to the enzyme "Actinidin".[57] Anagenix submits that though ACT- originates from the botanical name forkiwifruit and its active enzyme Actinidin, not everyone is aware of this fact. In anycase, there is no practice in the industry of giving kiwifruit powder products namesreferring to Actinidin. This was unique to Anagenix.Discussion[58] I find there are both visual and aural similarities of the marks. Accepting thefair and notional use of the marks as they might be represented (as ACTAZIN andACTIPHEN), I find the marks look similar, and I consider most New Zealanderswould be likely to pronounce the words as "ACT-i-fen" and "ACT-i-zin", which wouldmake them phonetically extremely similar, with the only difference being "f" asopposed to "z".[59] It is also relevant, in my view, that the first syllable of a mark is usually themost important for comparison. This was the observation of the Court of Appeal inNV Sumatra Tobacco Trading Co v British American Tobacco (Brands) Inc, where theCourt of Appeal referred to Sargant LJ's observation in London Lubricants (1920)Ltd's Application that:39The tendency of persons using the English language to slur the termination ofwords also has the effect necessarily that the beginning of words isaccentuated in comparison and, in my judgment, the first syllable of a wordis, as a rule, far the most important for the purpose of distinction.39 NV Sumatra Tobacco Trading Co v British American Tobacco (Brands) Inc [2010] NZCA 24,(2010) 86 IPR 206 at [32], citing London Lubricants (1920) Ltd's Application (1925) 42 RPC 264at 279.[60] I consider the placement of "Act" at the beginning of each of the marks is thefocus of a person's recollection of a product and, with the monophthong vowelfollowing the word "Act", makes the final syllable of lesser importance.[61] Further, I consider the descriptive nature of the prefix "ACT-", as being thebotanical name of kiwifruit, is not commonplace or common knowledge. There is noconceptual meaning to either mark, making it more difficult to distinguish the marksas they do not imply any specific meaning.[62] I therefore find that the trade marks are similar.[63] I turn, then, to the third issue and that is whether the use of the trade markwould be likely to deceive or confuse.Issue Three: whether the trade mark would be likely to deceive or confuse[64] The law on this aspect of s 25(1)(b) is well-settled and agreed between theparties. The deception or confusion is as to the origin of the goods or services inquestion. The question of how many people must be confused does not require thatall persons in the market are likely to be deceived or confused, but rather a significantor considerable section of the public be confused.40[65] 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 theapplicant's mark come from some other source and confused to being caused towonder whether that might not be the case."41 The relevant perspective is of theaverage consumer in the relevant market.42 The onus is on Pharmazen to disprove thelikelihood of deception or confusion, not on Anagenix to establish that deception orconfusion is likely.4340 Paul Sumpter Trade Marks in Practice (4th ed, LexisNexis, Wellington, 2018) at 99.41 Pioneer Hi-Bred Corn Company v Hy-Line Chicks Pty Ltd [1978] 2 NZLR 50 (CA) at 62, thoughit should be noted that this case was concerned with the old s 17(1)(a) equivalent.42 Intellectual Reserve Court of Appeal, above n 20, at [48].43 At [69].[66] How this law is to be interpreted is however a source of disagreement betweenthe parties. Pharmazen submits that the first question must be to identify the relevantmarket and Anagenix's use of its trademark ACTAZIN in that relevant market. AsAnagenix is not in the New Zealand market, Pharmazen submits there is no possibilitythat the registration of Pharmazen's trade mark in the New Zealand market could beconfused with Anagenix's mark, and the s 25(1)(b) test cannot be satisfied. This isconsistent with the Commissioner's finding under s 17(1)(a) that there is no likelihoodof confusion or deception because Anagenix does not have a reputation in the NewZealand market.[67] However, Anagenix submits that, unlike s 17(1)(a), the test under s 25(1)(b)does not require an assessment of the current trade mark's actual use or reputation inthat relevant market. Rather, it requires an assessment of a notional use of the twomarks in the relevant market. The assessment should therefore be undertaken withoutreference to the actual marks and in this case it does not require an assessment of theNew Zealand market. The market referred to in the authorities is an assessment of thepersons to be considered in estimating whether the resemblance between the marks islikely to deceive and those persons who are likely to become purchasers of the goodsupon which the marks are used.44[68] Both parties agree that under s 17(1)(a), the assessment of "likely to deceiveor confuse" does require an assessment of the current trade mark's use and reputationin the relevant market.[69] The Commissioner appears to have taken the approach that Anagenix contendfor on appeal. She noted (footnote omitted):71. In summary [on s 25(1)(b)], I consider on the evidence available thata significant number of persons in the relevant market looking at the opposedACTIPHEN mark in the absence of the ACTAZIN mark would be likely to becaused to wonder whether the ACTIPHEN mark was the same as, or relatedto, the ACTAZIN mark.72. In reaching this conclusion, I have been persuaded by the fact that thegoods of the opposed mark are very similar to the goods of the opponent'smark, and by my conclusion as to the overall similarity of the marks, asdiscussed above.44 New Zealand Breweries Ltd, above n 15, at 120.75. As the opponent has succeeded on its first ground of opposition, it isunnecessary for me to go on to consider the remaining grounds. Had I beenrequired to determine whether registration of the opposed mark wouldcontravene s 17(1)(a), I would have concluded that there was insufficientevidence of awareness of the ACTAZIN mark in the relevant New Zealandmarket to satisfy the reputational threshold under s 17(1)(a).76. The reason for this is that, as the applicant submits, the evidencedemonstrates that the opponent has not sold or marketed its product in NewZealand since 2012.[70] The real issue of contention is whether the Commissioner's findings under s25(1)(b) and s 17(1)(a) are so inconsistent as to be wrong. Pharmazen submits this isthe case as, while the placement of the onus may be distinct in relation to sections 17and 25, "the principles involved are not distinct and must be approached in aninternally consistent manner." The Commissioner, Pharmazen submits, failed to dothis.[71] Although many of the authorities dealing with these two sections apply thetests interchangeably and rarely conclude differently on the two sections,45 there is infact a difference between the approach to each of the assessments under ss 17(1)(a)and 25(1)(b). As Anagenix have submitted, the context of the s 25(1)(b) inquiry isbroad. It requires any fair and notional use of the trade marks to be considered.46 Thisis in contrast to s 17(1)(a), where the comparison is between the actual use of thecurrent trade mark and a notional use of the applicant's mark.47[72] In Anheuser Busch Inc v Budweiser Budvar National Corporation, the Courtof Appeal stated the position as follows:[30] On his comparison of the trade marks themselves Doogue J correctlyrecognised that he was required to consider not the actual use of the BB marksbut a notional use. The test of likely deception or confusion under [the 1953Act equivalent of s 25(1)(b)] is applied to any fair use of each mark in relationto any of the goods covered by the registration. Under [the 1953 equivalentof ss 17(1)(a) and 25(1)(c)] the comparison is between the actual use of the45 See for example Intellectual Reserve High Court, above n 20 at [53]; New Zealand Milk Brands,above n 8, at [56]-[57]; and NV Nutricia v Cambricare New Zealand Ltd [2012] NZHC 1344 at[55].46 Anheuser-Busch Inc, above n 23, at [30], although discussing the old sections in the Trade MarksAct 1953, this analysis has been applied to the new equivalent sections in the Trade Marks Act2002 in Cadbury UK Ltd v J H Whittaker & Sons Ltd [2014] NZHC 816 at [56].47 Anheuser-Busch Inc, above n 23, at [30]; and Cadbury UK Ltd, above n 46, at [56].AB mark (which is encompassed by the notional fair use) and any fair use ofthe BB marks.[66] The comparison of trade marks to ascertain whether there is deceptiveor confusing similarity contrary to [s 25(1)(b)] so as to establish a ground forremoval of registrations is an entirely notional exercise. It contemplates anyfair use of the marks in relation to any of the goods covered by theregistrations. Opinion evidence that the marks are or are not confusinglysimilar is of limited value. That is for the Court. Evidence of what actuallyis occurring in the marketplace reflects particular forms of use and cannot fullyanswer the question.[73] This has since been applied by this Court, in British American Tobacco(Brands) Inc v NV Sumatra Tobacco Trading Co.48 In discussing the differencesbetween the approach called for under s 17 and s 25, Clifford J found:49[41] First, and as acknowledged in Pioneer Hi-Bred, it is necessary unders [17(1)(a)] but not under s [25(1)(b)] for the opponent to registration toestablish what is described as a "sufficiently substantial reputation in the NewZealand market to lead to the possibility that goods covered by the proposedtrade mark would be identified with the opponent" (at 62).[44] Conversely, under s [25(1)(b)] the comparison is between theregistered mark(s) and the mark sought to be registered, and no reputationneed be established.[45] Secondly, the comparison to be made under s [25(1)(b)] differs fromthat under s [17(1)(a)] in that the enquiry under s [25(1)(b)] is an entirelynotional exercise. The Court must consider whether the use of each of therespective trademarks in a normal and fair manner would be likely to causedeception and confusion. By comparison, where the similarity with theopponent's mark is the basis on which the opponent submits the applicant'smark will be likely to "deceive or confused" under s [17(1)(a)], thecomparison which must be made is between the actual use of the opponent'smark with the notional use of the applicant's mark (with that notional usebeing in a "normal and fair manner").48 British American Tobacco (Brands) Inc v NV Sumatra Tobacco Trading Co HC Wellington CIV-2007 485-2814, 11 November 2008.49 See also N V Sumatra Tobacco Trading Co v British American Tobacco (Brands) Inc [2012] NZCA24 at [77] where the Court of Appeal upheld the difference between the approaches to the twosections, though in relation to the s 17(1)(a) assessment held that Clifford J set the evidential onustoo high; all that the opponent needs to show is "awareness", "cognisance", or "knowledge" of themark in the relevant market.[74] The key principle is that when a trade mark holder is relying on s 25(1)(b), itsown actual use and reputation are not relevant. The Court is therefore not required toconsider the actual use of Anagenix's trade mark.[75] ACTAZIN is a registered trade mark in New Zealand. Anagenix has paid forthe rights to any fair and notional use of that mark in the New Zealand market. ThatAnagenix currently have no product on the New Zealand market is irrelevant to thefair and notional assessment of their mark under s 25(1)(b). It has a registration andan export market, and under s 25(1)(b) it is able to stop a conflicting mark beingregistered without having a reputation in the New Zealand market. This is in contrastto the s 17(1)(a) assessment where Anagenix's actual use of the mark ACTAZINbecomes relevant.[76] On this assessment, I find that the use of each of the respective trademarks ina normal and fair manner would be likely to cause deception and confusion. Bothcompanies' products are dried kiwifruit powder made from New Zealand greenkiwifruit, sold for use as an ingredient in dietary supplements. Promotional materialfor both products emphasises the products as sourced from New Zealand and madefrom New Zealand kiwifruit. The hypothetical context in which the s 25(1)(b)assessment is undertaken includes the New Zealand retail market where consumersmay be aware of ACTAZIN as a dietic kiwifruit substance or ingredient in thewholesale market, and where manufacturers of dietary supplements may be aware ofACTAZIN as the dried kiwifruit powder product of Anagenix. Both consumers andmanufacturers who come across another dried kiwifruit powder product under thename ActiPhen are likely to at least be caused to wonder whether ActiPhen isACTAZIN, particularly because of the visual and aural similarities of the marks. ThatAnagenix are not currently selling ACTAZIN products in New Zealand is of norelevance to the fair and notional use of the mark that they are entitled to under theirtrade mark registration.[77] I find that Pharmazen has not satisfied their onus of proving, on the balance ofprobabilities, that the use of ActiPhen would not be likely to deceive or causeconfusion under s 25(1)(b). I find that the Commissioner was correct when she upheldAnagenix's opposition that a significant number of persons in the relevant marketlooking at the opposed ActiPhen mark would be likely to be caused to wonder whetherthe ActiPhen mark was the same as or related to the ACTAZIN mark.[78] I also find that the absence of any evidence as to the size and nature ofAnagenix's reputation in the New Zealand market is an irrelevant consideration in thes 25(1)(b) assessment. Such a factor is relevant to a s 17(1)(a) assessment, which onthe evidence the Commissioner found was not met. This does not detract from theanalysis under s 25(1)(b). The focus of s 17(1)(a) is on actual use of the registeredmark in the New Zealand market, while the focus in s 25(1)(b) is on any fair andnotional use of both marks in the New Zealand market.[79] I uphold the Commissioner's finding that Anagenix succeeds on its ground ofopposition under s 25(1)(b). The Commissioner's finding that Anagenix wasunsuccessful under s 17(1)(a) of the Act is not inconsistent with her s 25(1)(b)findings.Result[80] The appeal is dismissed.[81] Costs are awarded to the respondent on a 2B basis, with reasonabledisbursements to be approved by the Registrar.Cull JSolicitors:Wynn Williams, Christchurch for the Appellant