PORTACOM V PORT A ROOM AND ANOR HC AK CIV 2007-404-2536

PORTACOM V PORT A ROOM AND ANOR HC AK CIV 2007-404-2536 6 December 2007IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2007-404-2536BETWEEN PORTACOM NEW ZEALAND LIMITED Plaintiff AND PORT A ROOM LIMITED First Defendant AND J C PARTRIDGE Second Defendant Hearing: 28 November 2007 Appearances: M A H MacFarlane & M A A Recordon for Plaintiff C L Elliott for Defendants Judgment: 6 December 2007JUDGMENT OF KEANE JThis judgment was delivered by Justice Keane on 6 December 2007 at 4pm pursuant to Rule540(4) of the High Court Rules.Registrar/ Deputy Registrar Date:Solicitors: Hesketh Henry, Auckland D Gates, Whangaparaoa, Auckland[1] Portacom New Zealand Limited, and its preceding entities, have produced, sold and hired out portable buildings, under the brand name 'Portacom', throughout New Zealand for the past 25 years. PNZL is New Zealand's leading supplier, commanding perhaps 65 percent of the national market. It has four registered 'Portacom' trademarks. It trades under the byline 'The Flexible Building Solution Specialists'. [2] Port A Room Limited was incorporated in November 2006 but has still to trade. It carries the name of the product 'Port A Room', associated with which is the byline 'Portable Building Solutions', that Joseph Partridge, himself or his company, Tuakau Autos Limited, Pukekohe, launched in July 2005. Since then direct sales in the Pukekohe area, or through the Trade Me website, have averaged one a month. [3] In November 2006 PNZL's managing director learned from a Trade Me listing that it had a new competitor; a competitor he concluded that was targeting PNZL's market by adopting a brand, and byline, deceptively or confusingly similar to its own. In that advertisement, furthermore, the supplier, then only identified as Aptek, claimed that the product was 'also known as Portacom Port a com Portacomm'. [4] On 16 November PNZL's solicitors wrote to Aptek at the address given on its own website. 'Port A Room', they said, while not identical to 'Portacom', was very similar, as were the goods and services to which each related. Use of 'Port A Room', they said, infringed PNZL's trademarks in breach of the Trademarks Act 2002, was in breach of the Fair Trading Act 1986 and gave rise to an action in passing off. They urged Aptek to cease and desist. Within six days Mr Partridge's patent attorney replied on behalf of Aptek, denying any infringement. 'Port A Room', he said, was merely descriptive of rooms that are portable. The prefix 'Port A' was commonplace. It was used by many brands across a range of products. [5] Coincidentally, PNZL was then contesting another emerging competitor's application to register the trade name 'Porta Cube'. That application was heard by the Assistant Commissioner of Trademarks on 21 November. PNZL decided not to pursue Aptek until a decision was given. That took longer than anticipated. On 7May 2007, deciding that it could afford to wait no longer, PNZL brought this action. That day, coincidentally the Assistant Commissioner declined the 'Porta Cube' application; a decision Portacom says that supports its present stance. [6] Contending that 'Port A Room' is a deceptive and misleading brand that erodes the distinctiveness of its own mark, 'Portacom', and causes damage to its reputation and loss of sales, PNZL seeks an immediate interim injunction and orders requiring that 'Port A Room' be removed from all the defendants' marketing materials and that any materials in which that brand is presently to be found be delivered up. [7] PARL and Mr Partridge oppose any such orders as unjustifiable and oppressive. Their brand and PNZL's mark, they say, are quite distinct, as are the respective markets. It is no accident, they say, that PNZL did not discover their product until 15 months after its launch and has not been able to point to any instance of confusion. [8] They intend to counterclaim, they say, seeking an order revoking PNZL's trademarks. 'Portacom', they say, is not or has ceased to be, as it relates to the portable building market, a distinctive mark identifying PNZL's products. It is or has become merely descriptive and generic. It is now used in that market to describe any building that is portable, regardless of manufacturer, vendor or hirer.Principles of relief[9] To succeed in this application for interim relief PNZL must establish that there is a serious question to be tried, and that the balance of convenience lies in favour of granting of relief. Ultimately, the overall justice of the case must be considered: Klissers Farmhouse Bakeries Limited v Harvest Bakeries Limited [1985] 2 NZLR 140 (CA) 142. [10] As to whether there is a serious question to be tried, the issue is whether there is 'a tenable combination of resolutions of the issues of law and fact on which the plaintiffs could succeed': Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) PtyLtd [1976] VR 309, 311 Lush J. As to where the balance of convenience lies, that can also be described as the 'balance of the risk of doing an injustice': Cayne v Global Resources plc [1984] 1 All ER 225 (CA), 237, May LJ. That the interim relief PNZL seeks is in part mandatory is also a factor. A fair level of assurance is called for that any such grant of interim relief will be vindicated at trial: Locabail International Finance Limited v Agroexport [1986] 1 All ER 901. [11] This is not a case, I should say also, like Provident Financial v Halifax Building Society [1994] FSR 81, where PNZL is at risk of being 'swamped' unless relief is granted. The converse seems rather the case. There is a risk that PARL, a small emergent competitor, may lose the benefit of its investment in brand and byline, even its place in the market, however modest, before the merits are gone into.Nature and strength of PNZL case[12] There is no issue that PNZL's predecessors, during the late 1970s and early 1980s, responding to the 'Think Big' projects, pioneered the manufacture, sale and hire of portable buildings in New Zealand. Or that in 1980 the first of the four trademarks was registered in a class including portable buildings, or that in 1991 a second mark was registered extending to supply and hire, or that in 2001 two further marks were registered. Or that the original two marks have been renewed more than once. [13] There is no issue that PNZL sells and hires throughout New Zealand a range of transportable buildings from the simple and standard to the large and complex mostly to businesses of some size and for a wide variety of purposes. In the construction sector they are used as site offices, lunch rooms, temporary worker accommodation, equipment shelters. In the education sector they are used as classrooms, ablution blocks, changing rooms. They are used also as baches and the like. [14] There is no issue that these buildings, however used, are marked with the 'Portacom' mark, or that the mark is displayed on signs and has figured in every White and Yellow Pages telephone directory throughout New Zealand for at least 15years. Or that the mark has been promoted through public sponsorship, advertising and industry magazines and other publications, or that since 2000 PNZL has maintained a website on which the mark figures prominently. Finally, it is undisputed, PNZL's business has grown throughout the life of the brand and significantly. [15] Issue is joined immediately PNZL asserts that 'Port A Room' is so similar to 'Portacom', as are the products and services to which each relates, that all classes of customer, old customers as well as new, could be deceived or confused as to which is which and induced to believe that they are buying PNZL's product when they are not – the contention underpinning each of PNZL's four causes of action. For the purpose of this application it will be enough to focus on the first.Trademark infringement - principles[16] PNZL's first cause of action, infringement of copyright, rests on s 89(1)(c) of the Trademarks Act 2002, which says:A person infringes a registered trademark if the person does not have the right to use the registered trademark and uses in the course of trade a sign - (c) Similar to the registered trademark in relation to any goods or services that are similar to any goods or services in respect of which the mark is registered if that use would be likely to deceive or confuse.[17] To 'deceive' is to mislead to the true source of goods; to 'confuse' to cause to wonder as to that source. Whether the one or the other is 'likely', objectively speaking, that is more probable than not, depends on whether a significant proportion of consumers, not all or even the majority of consumers, could be deceived or confused: Pioneer Hi-Bred Corn v Cov Hy-Line Chicks Pty Ltd [1978] 2 NZLR 50, 62. [18] The two marks in question are to be compared as they would be encountered in the usual circumstances of trade, by look and by sound, remembering that especially when a purchase is made orally, particularly by telephone, the purchaser will not have the products side by side and be relying on memory: Anheuser-Busch vBudweiser Budvar National Corporation [2003] 1 NZLR 472, 491. And in the comparison to be made such pragmatic principles as the following apply. [19] How words are pronounced can be significant. In New Zealand Breweries Ltd v Heinekens Bier Browerij Maatschappij NV [1964] NZLR 115, 141, Turner J remarked on 'the tendency of New Zealanders to clip and slur final syllables'. Clipping and slurring last syllables is evidently not confined to New Zealand; a consideration that tends to make the first syllable primary: London Lubricants (1920) Ltd's appn (1925) 42 RPC, 264, 279.[20] In the comparison to be made the similarities, especially those dominating, will usually be most significant, not the differences: VB Distributors v Matsushita Electric Industrial Co Ltd (1999) 9 TCLR 349, 357 – 358. Where, however, one element in the marks compared is held in common, especially any that is dominant, that can make the distinctive aspects more important: Broadhead's Application(1950) 67 RPC 209, 215. [21] Whether the marks being compared, registered or not, do more than describe the product or services to which they relate generically, whether they identify distinctively a particular product and its producer, can be even more significant: V B Distributors (supra). In The European Ltd v The Economist Newspaper Ltd [1998] FSR 283, 290 Millett LJ said:Where descriptive words are included in a registered trademark, the courts have always and rightly been exceedingly wary of granting a monopoly in their use.[22] If then one element in a mark is descriptive and generic, like 'cola' in the soft drink market, or 'rain' in products using water, that element takes a second place in the comparison: Coca Cola Canada v Pepsi Cola Canada (1942) 59 RPC 127, 133;Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536, 539. Where an element is commonplace, used in various contexts, that is something consumers can be assumed to know: Mid Sydney Pty Ltd v Australian Tourism Co Ltd [1998] 90 FCR 236, 246.[23] These principles, highly pragmatic as they are, do not always point in the same direction. They can be in tension with one another. Ultimately all such issues are for the Court. In Anheuser-Busch (supra) Gault P said at 488, para [66], speaking of whether a mark might be prohibited from registration because it was too similar to an existing mark, but with equal force here:The comparison of trademarks to ascertain whether there is deceptive or confusing similarity 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.Marks and logos compared[24] PNZL contends that 'Port A Room' is so similar to 'Portacom' as to be likely to deceive or confuse. Each has three syllables, the first two of which 'port' and 'a', are dominant, and the third 'com' and 'room' share a similar vowel sound and the same last consonant. Even though not visually identical, they sound similar and that, PNZL says, is enough. Many orders are placed by telephone by persons unfamiliar with the brand. 'Portacom' and 'Port A Room', PNZL contends, moreover, both dominate their logo and each associated byline shares the words 'building solutions'. The 'Port A Room' logo may refer to the Aptek website, but that is in small print. [25] PNZL's analysis, PARL and Mr Partridge contend, ignores this distinction. 'Portacom' runs the three syllables together, particularly the first and second. 'Port A Room' gives each a distinct value. In each moreover the first two syllables, that are common to both, dominate; the third has a different vowel sound. 'Portacom', they contend, may use as a byline 'The Flexible Building Specialists' but also uses 'Building Solutions' beneath that and does not treat that as a byline. Associated with 'Port A Room' may, they accept, be the byline 'portable building solutions', but their logo also links their mark explicitly to Aptek. [26] This comparison does, I consider, favour PNZL to this extent. It does raise a serious question to be tried. In the 'Porta Cube' case, on just such a comparison, the Assistant Commissioner concluded that 'Porta Cube' was so similar to 'Portacom' as to be liable to confuse, if not deceive. That has to be persuasive. There, however,'Porta Cube' carried the onus and there are two issues in this case that may set it apart. One is whether 'Portacom' has ceased to be distinctive and has become generic. The other is whether, even if the products are essentially indistinguishable, the markets differ.Mark generic[27] The element the two marks share, the dominant element, 'Porta' or 'Port A', PARL and Mr Partridge contend, is not or is not any longer distinctive in the market. It is no longer understood to identify only PNZL's products. It identifies the feature that all products in that market share, their portability. It is or has become descriptive and generic. [28] The trademark register and telephone directories, they say, show what wide appeal it has. The following marks have been or are currently registered or used in the course of trade: Portal-Lock, Porta-Homes, Porta-Bach, Porta-Build, Portaloo or Port-A-Loo, Port-A-Cabin, Porta-Showers and Porta-Cube. And there is also this irony. PNZL has a sub-brand 'Portalodge', which it argues increases the likelihood that customers will confuse 'Port A Room' and other brands using the word 'Porta' with 'Portacom'. PARL and Mr Partridge, by contrast, contend that by introducing this sub-brand PNZL itself has diluted its own mark. [29] PNZL, in this context I consider, at least faces this difficulty. In a brochure that it has issued, carrying at the foot of each page the assertion 'Portacom is a trademark of Portacom New Zealand Limited', there is a section in which this statement appears:The name 'PORTACOM' is often mentioned when discuss ing any modular, transportable building. However, be assured there is only one. PORTACOM is the originator of relocatable buildings and as such they have been providing cost effective quality buildings for many years.[30] The brochure then outlines the advantages of buying the Portacom product as opposed to any others and that theme is captured more succinctly still on PNZL's website in the sentence 'There is only one genuine Portacom and now we offer so much more'. This marketing strategy can only have been designed to counter thedanger that the mark has ceased to be distinctive and the word has become merely descriptive and generic.Common or distinct markets[31] PNZL can reasonably assert, I consider, that the modular units that the defendants manufacture, sell and hire out are in essence indistinguishable from its own and that, in that sense, they have entered its market. But that is not enough by itself. The question is whether it is then likely, objectively speaking, that a significant proportion of consumers in that market could be deceived or confused. There PNZL faces greater difficulty. [32] PNZL, as it says itself, sells and hires out, throughout New Zealand, the portable buildings it manufactures. It has as much as 65 percent of the national hire market. It supplies the significant players in the construction and education sectors. Its competitors, by contrast, do not come close. PARL, Mr Partridge presently, scarcely has a toe in the market. Sales in the two and a half years since the 'Port A Room' launch have averaged one a month, and appear mostly to have been in the Pukekohe area; a highly local, even niche, market that PNZL does not through any close outlet serve. That PNZL did not become aware of the 'Port A Room' product until 15 months after the launch, and the absence of any actual confusion, is equally telling. [33] This reality was recognised in the submissions for PNZL. Its fear is not the effect of deception or confusion now but the possibility of one or the other should 'Port A Room' products begin to appear in greater numbers. Its fear is presently more hypothetical than real.Balance of convenience and justice[34] The result is, I consider, that PNZL is not well placed to claim either the benefit of the balance of convenience, or that interim relief is called for in the interests of justice. [35] PNZL does have an arguable case but not of such overwhelming strength that relief could be justified on that basis alone. The argument is certainly open to the defendants that, whether or not 'Port A Room' is so similar to 'Portacom' as to be deceptive or confusing, 'Portacom' has ceased to be distinctive and has become generic. More to the point, as things stand, it is unlikely that a significant number of consumers in the market could, objectively speaking, be deceived or confused by the 'Port A Room' mark. The markets in which the two marks figure are still too far apart. [36] Nor, and essentially for the same reasons, do I consider the interests of justice favour interim relief. The 'Port A Room' product has now been on the market for two and a half years. That this application for interim relief is only now being heard may be explicable, as PNZL says. A peremptory grant of interim relief now, after the passing of such a length of time, however, remains incongruous. More, it could have the effect of nullifying a two and a half year investment in a nascent business and prevent the merits being gone into when clearly they should be. [37] In this I have not ignored the fact that PNZL is far better placed than PARL and Mr Partridge to answer any claim in damages. Any loss to PNZL, however, has to be notional at most. As I said earlier, this is the antithesis of a swamping case.Conclusion[38] PNZL's application for interim injunctive relief, and related orders, is declined. The case is to be set down as soon as practicable in a Duty Judge List to be timetabled promptly to hearing. The defendants are entitled to costs, as I should have thought at scale 2B. If that cannot be agreed PNZL's memorandum must be filedwithin seven working days of the issue of this decision and the defendants' reply within the seven working days after. _____________ P.J. Keane J