NORTH FACE APPAREL CORPORATION V SANYANG INDUSTRY COMPANY LIMITED CA638/2012 [2014] NZCA 398

NORTH FACE APPAREL CORPORATION V SANYANG INDUSTRY COMPANY LIMITED CA638/2012 [2014] NZCA 398 [15 August 2014]IN THE COURT OF APPEAL OF NEW ZEALANDCA638/2012[2014] NZCA 398BETWEEN THE NORTH FACE APPARELCORPORATIONAppellantAND SANYANG INDUSTRY COMPANYLIMITEDRespondentHearing: 15 April 2014Court: Randerson, Harrison and French JJCounsel: G Arthur and L C Carter for AppellantM C Warburton and C A Warburton for RespondentJudgment: 15 August 2014 at 10 amJUDGMENT OF THE COURTA The appeal is dismissed.B The cross-appeal is dismissed.C The appellant is ordered to pay 50 per cent of the respondent's costs on a Band A basis for a standard appeal together with usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Harrison J)Introduction[1] Sanyang Industry Co Ltd (Sanyang) applied to the Intellectual Property Office to register a trade mark for four different classes of goods.1 The North Face Apparel Corp (North Face) opposed the application for registration for one class only on the ground that Sanyang was not the owner of its proposed mark. Followinga defended hearing, an Assistant Commissioner of Trade Marks granted Sanyang'sapplication.2[2] Collins J dismissed North Face's appeal from the Assistant Commissioner'sdecision.3 He was satisfied that Sanyang owned the mark. North Face now appeals to this Court. Sanyang cross-appeals against the Judge's threshold finding that NorthFace has used one of its unregistered marks for some items within the contested class before Sanyang applied for registration.Background[3] The background facts can be stated shortly.[4] Sanyang is a Taiwanese company which manufactures a wide range of products including cars, motorbikes and parts and accessories. Recently it has added clothing and other apparel to its range of goods.[5] As Collins J observed:[13] Sanyang ha[s] explained that its original trade mark was a stylisedmoving arrow incorporated into the letter "Y" of its SYN trade mark. Thearrow was adopted to indicate forward movement of its motor cycles and motor vehicles. In 2006 Sanyang developed its trade mark which it describes as being a stylised arrow. Sanyang says that its trade mark is simply a modernised version of the trade mark it used from 1954 to 2006.[6] Sanyang applied to register its mark under classes 7, 16, 25 and 35 of the Ninth Edition of the International Trade Mark Classification System adopted as part1 Trade Marks Act 2002, s 32(1).2 Sanyang Industry Co Ltd v The North Face Apparel Corp [2012] NZIPOTM 3 [IPONZ decision].3 The North Face Apparel Corp v Sanyang Industry Co Ltd [2012] NZHC 2259 [HC decision].of the Nice Agreement. North Face's opposition to registration was restricted to class 25 only, which covers:Clothing; swimsuits; shirts; beachwear; vests; tee-shirts; coveralls; coats; liveries; footwear; scarves; neckties; headwear; earmuffs; socks; mittens; waistbands; all included in this class.[7] Sanyang's device mark, which the Assistant Commissioner accepted for registration, is as follows:[8] North Face is a well-established company operating from California. It produces and sells worldwide clothing and equipment used by mountaineers, trampers, snow sport participants and travellers. It has developed a number of trade marks for products. Its most prominent mark is this one:[9] North Face's opposition to Sanyang's application was based upon its development and use of two other marks, being:(a) the S device mark:(b) the S device and word mark, or composite mark:[10] North Face claimed that it had used its marks on or in relation to items of clothing and related apparel distributed in New Zealand since September or October 2007. The company claimed use by: (a) its S device mark alone on or in relation to gloves and mittens; and (b) its composite mark, with the S device above the "Summit Series" mark, on or in relation to jackets, parkas, pants, overalls, gloves and mittens.Assistant Commissioner's decision[11] North Face's notice of opposition was based on six discrete grounds, namely that the proposed mark: (a) was likely to deceive or cause confusion;4 (b) would be contrary to the provisions of the Fair Trading Act 1986;5 (c) would also be contrary to the law against passing off;6 (d) would otherwise be contrary to law;7 (e) was identical or similar to North Face's well known mark or an essential element of it;8and (f) was not owned by Sanyang due to North Face's prior use.9 As we shall explain, it is significant that North Face ultimately confined its opposition to the last ground.[12] The Assistant Commissioner was satisfied that North Face had established use of its composite mark in New Zealand before 22 January 2008 (the date of Sanyang's application for registration).10 However, when used within the composite mark, the S device mark could not be separated from the Summit Series mark, and there was no evidence of use of the device mark alone. North Face's expedition apparel, equipment and footwear catalogues showed its use of the composite mark for jackets, parkas, pants, overalls, gloves and mittens.11[13] The Assistant Commissioner found that on a visual comparison the composite mark and Sanyang's mark were not substantially identical.12 In particular: (a)4 Trade Marks Act, s 17(1)(a).5 Section 17(1)(b).6 Section 17(1)(b).7 Section 17(1)(b).8 Section 25(1)(c).9 Section 32(1).10 IPONZ decision, above n 2, at [24]–[29].11 At [26].12 At [35].North Face's composite mark comprises two essential features: the device and the words "Summit Series"; (b) the position of the words "Summit Series" helps toanchor the device mark above it so that the device must be viewed from a particularperspective; (c) the words "Summit Series" give the trade mark context by implying that its centre is a summit; (d) the incomplete circle in the North Face trade mark may give the impression of a highly stylised "S" which might stand for "Summit" or "Series"; and (e) Sanyang's trade mark was three dimensional and reminiscent of a badge of a motor vehicle and had a "metallic, and therefore industrial, appearance".13High Court[14] While the Assistant Commissioner and Collins J both found that North Face used its composite mark for two items of class 25 goods (gloves and mittens) before 22 January 2008, they differed on the nature and extent of North Face's use of its S device mark before that time. The Judge, contrary to the Assistant Commissioner, found that the two components of the composite mark – the S device and word marks – could be uncoupled.14 Based on North Face's provision of a sales catalogue in New Zealand in 2007, Collins J found that North Face owned the S device mark for gloves and mittens.15 However, he rejected its argument that it owned Sanyang'sproposed mark. Mr Arthur challenges that finding. Mr Warburton supports it but challenges the first finding.[15] At North Face's urging, Collins J applied the test of whether the North Face S device mark was the same or substantially identical to the Sanyang mark.16 He accepted that a side by side comparison was appropriate,17 following Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd.18 By that approach the Court isrequired to have regard to "similarities and differences and the importance of these assessed having regard to the essential features of the registered mark and the total impression of resemblance or dissimilarity that emerges from the13 At [32]–[34].14 HC decision, above n 3, at [35].15 At [35].16 At [36]–[39].17 At [38].18 Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407.comparison".19 The Judge noted that such a comparison was discouraged where the issue was whether trade marks were deceptively or confusingly similar20 but observed there were some common features of the two tests.21 Applying the substantial identity approach, he was satisfied that Sanyang owned its mark. We shall return to his reasons later in this judgment.Appeal[16] Two related issues arise on North Face's appeal and Sanyang's cross-appeal. First, what was the nature and extent of North Face's use of its composite and S device marks in New Zealand before 22 January 2008? Second, depending in part on the answer to the first, did North Face own Sanyang's proposed mark?(1) Ownership by prior use[17] North Face's appeal centres around the statutory concept of ownership of its trade mark by use. These principles, upon which we will elaborate, apply:(a) Only the person claiming to be the owner of the mark can register it.(b) A person cannot claim to be the owner of the mark if another person has previously used that mark.(c) Another person has previously used that mark if it was used as a trade mark and the use was public.(a) Ownership, use and registration[18] Rights of ownership are governed by s 32 which provides:32 Application: how made(1) A person claiming to be the owner of a trade mark may, on payment of the prescribed fee (if any), apply in the prescribed manner (if any) for the registration of the trade mark 19 At 414.20 HC decision, above n 3, at [39].21 At [40].[19] The explanatory note to a 2005 amendment Bill reveals the words "claiming to be the owner" were added in order to clarify "that it is the owner of the trade mark who applies for its registration".22 In turn, "owner" is now defined, in s 5(1), in the following way:owner,—(d) in relation to an unregistered trade mark, means the person who owns all of the rights in the mark[20] The Trade Marks Act 1953 referred to a "proprietor" rather than an owner.However, the High Court has accepted,23 and we agree, that "proprietorship" isequivalent to its newer counterpart, "ownership". Academic commentary adds that"it is generally accepted that the principles applicable to a valid claim toproprietorship under the 1953 Act continue to apply to ownership in respect of the2002 Act".24 Thus decisions under the old Act (including this Court's most relevant decision in Aqua Technics)25 apply directly to this appeal.[21] The applicant for registration carries the onus of proving ownership.26 As a matter of interpretation, a person "claiming to be the owner" must justify its claimand establish its right.27 Accordingly, the applicant should be in possession of a proprietary right which if questioned can be substantiated.28[22] In order to establish ownership, the applicant must establish that it is the first person to use the mark in New Zealand;29 and that, if challenged, there is no prior use by another party.30 Counsel diverge on what constitutes "use" in this context. As we have noted above at [16], proof of use requires two qualifying elements.22 Statutes Amendment Bill (No 5) 2005 (249–1) (explanatory note) at 12.23 Chettleburgh v Seduce Group Australia Pty Ltd [2012] NZHC 2563 at [47]–[49].24 Ian Finch (ed) James and Wells Intellectual Property Law in New Zealand (2nd ed, Thomson Reuters, Wellington, 2012) at 417.25 Aqua Technics Pool and Spa Centre New Zealand Ltd v Aqua-Tech Ltd [2007] NZCA 90.26 Hi-Bred Corn Company v Hy-Line Chicks Pty Ltd [1978] 2 NZLR 50 (CA) at 61, followingPolaroid Corp v Hannaford & Burton Ltd [1975] 1 NZLR 566 (CA) at 569.27 North Shore Toy Co Ltd v Charles L Stevenson Ltd [1973] 1 NZLR 562 (SC) at 571.28 Re Vitamins Ltd's Application [1956] RPC 1 (Ch) at 12,; Chettleburgh, above n 23, at [33].29 Aqua Technics, above n 25, at [12]–[18].30 Aqua Technics, above n 25, at [12]–[18].[23] One qualifying element is that the use must be public.31 In this respect the threshold is low; a single use may suffice.32 It is irrelevant that the user's mark is not known to ultimate purchasers provided a retailer or distributor has that knowledge. Evidence of marketing a product in New Zealand is sufficient. The legal position is summarised in this passage from the Laws of New Zealand:33The use need not be sufficient to establish a reputation in New Zealand. While the issue is a question of fact, as little as one order for sale and dispatch of goods by the foreign trader to New Zealand, or an offer to trade in the goods, such as an advertisement of the goods after a decision to offer the goods in New Zealand, can be sufficient to show proprietorship of the trade mark in New Zealand. [24] Mr Warburton submits that the law requires more to establish public use; and that a single use is not necessarily enough, relying on the proposition that in a rare case the use may be so inconsequential that it should be ignored as minimal.34[25] We disagree. In Mr Warburton's submission, use in a catalogue without evidence of a sale does not satisfy the public use test. However, the test is use, not sale. We repeat that the threshold is low. Use of a mark in an advertisement of goods constitutes a use for this purpose because it is a common method of indicating that certain goods are available for sale.35 As this Court found in Aqua Technics, a catalogue advertising a swimming pool in the context of the evidence in that case was sufficient to establish ownership.36[26] North Face relied upon its "Fall 2007" catalogue together with some invoicesto prove its use of both the composite and S device marks for goods. The catalogue advertised three different styles of gloves or mittens bearing the S device mark. Collins J found that the catalogue was distributed in New Zealand.37 Mr Warburton challenges that finding. He points out that North Face has not provided primary31 Aqua Technics, above n 25, at [17].32 Aqua Technics, above n 25, at [46] and Thunderbird Products Corp v Thunderbird Marine Products Pty Ltd (1974) 131 CLR 592 at 602.33 Laws of New Zealand Intellectual Property: Trade Marks (online ed) at [38] (footnotes omitted).34 Colorado Group Ltd v Strandbags Group Pty Ltd [2007] FCAFC 184, (2007) 164 FCR 506 [Colorado (FCAFC)] at [5].35 Malibu Boats West Inc v Catanese (2001) 51 IPR 134 (FCA) at [31]–[34].36 Aqua Technics, above n 25, at [20], [43] and [54].37 HC decision, above n 3, at [32].evidence of the date or extent of distribution of the catalogues. In the absence of that evidence, he submits, the Court should draw an adverse inference.[27] We agree with the Judge. An employee of North Face's New Zealanddistributor, Ms Murray, gave evidence in a statement before the Assistant Commissioner of supply of some pairs of mittens in New Zealand on or before 30 October 2007. While the invoices do not prove that the mittens supplied by North Face were imprinted with the S device mark, they do show sales of other products contained within the catalogue which also featured North Face's marks. Areasonable inference can be drawn that the goods supplied were those advertised in the Fall 2007 catalogue.[28] Ms Murray also referred to the "Fall 2007 catalogue that was distributed in New Zealand". Mr Warburton submitted that Ms Murray's evidence contains manydefects and omissions, making it unsafe and unreliable. However, Ms Murray was not cross-examined, from which we can infer that Sanyang accepted the truth of her evidence of distribution, however brief it was.[29] Moreover, as Mr Arthur points out, the catalogue was clearly intended for use in this country because it listed North Face's New Zealand sales offices. The reasonable inference is that it would have been promptly distributed here at the time of publication, contemporaneously with the products shown in it becoming available for sale – that is, September or October 2007. Accordingly, we agree with Collins J that North Face has proved distribution of the catalogue in New Zealand before 22 January 2008.[30] The other qualifying element of use is that the mark must be used in relation to goods to indicate a connection in a course of trade between the goods and the owner.38 Mr Warburton submits that North Face did not use the S device mark as a trade mark for the purpose of indicating the necessary degree of connection. That is because the evidence of use of the mark on the mittens is so small that it is extremely difficult to see.38 Aqua Technics, above n 25, at [21].[31] However, we are satisfied from our own examination of the catalogue that North Face's S device mark is clearly displayed on at least three pairs of gloves. Additionally, we are satisfied the company used the composite mark in the catalogue to advertise a range of other goods including jackets, pants, ski suits, vests and gloves. The presence of the words "Summit Series" and the S device mark whereused in catalogues shows a connection between the goods and North Face.[32] The real issue in this context, to which we shall return, is whether North Face's S device mark was ever used as a mark in its own right for apparel other than gloves and mittens.(b) The extent of North Face's ownership[33] The question is then whether North Face's ownership is limited to its S device mark for gloves and mittens. Or does it, as Mr Arthur submits, extend to the other items advertised in the catalogue because the composite mark includes the S device?[34] To succeed in that proposition, North Face must establish that its use of the composite mark gives it ownership of the S device mark for all items in the extended class 25 category of apparel. By this means North Face seeks to use its S device mark alone as the comparator with Sanyang's mark. North Face claims the composite mark is a compilation of two separate marks; its use of the composite mark is, it says, actually a use of the two separate components as well. An adverse answer to that proposition would severely limit North Face's right of challenge.[35] The test to be applied is settled. A composite mark can comprise the use of an identifiable trade mark provided the mark creates a "separate and distinctcommercial impression from the other components of the image".39 The question then is whether it could be said of the separate and distinct mark that it performs a trade mark function. Provided that the two components are not combined in a way that renders the individual marks indistinguishable, the validity of each mark is not39 Aqua Technics, above n 25, at [38], approving Colorado Group Ltd v Strandbags Group Pty Ltd (No 2) (2006) 69 IPR 281 (FCA) at [8]. This Colorado decision itself cited BP plc v Woolworths Ltd (2004) 212 ALR 79 (FCA) at [64].affected.40 So it is possible, Mr Arthur submits, for North Face's S device mark to stand alone as a trade mark notwithstanding that it is used in conjunction with its Summit Series word mark.[36] Both counsel cited authorities41 but they were decided on their facts. The only material assistance they provide is their affirmation of the legal test which we have already identified. Determination of this question in the present appeal is ultimately a matter of impression based upon proven evidence.[37] Contrary to Collins J, we are satisfied based on our own assessment that the component parts of the composite mark are not divisible. However, we do agree with the Judge that the words "Summit Series" anchor the composite mark with the words emphasised by the mountain peak image created by the inner lines of the S device, which form into an apex.42 In other words, as the Assistant Commissionerfound, the words "Summit Series" give the S device context by implying that thecentre of the device is a summit, the incomplete circle of which the summit forms the centre.43 That could give the impression of a highly stylised "S", possibly standing for either or both of "Summit" or "Series".44 The S device does not operate separately.[38] We are not satisfied that the device creates a separate and distinct commercial impression from the words "Summit Series" where they appear below.(c) Same kind of thing[39] This conclusion leads us to Mr Arthur's fallback submission thatNorth Face's ownership of the S device mark for gloves and mittens extends to ownership of the mark for all items in class 25 on the ground that they are the same kind of thing.45 Collins J agreed (obiter) with that submission.4640 Phillip Morris Products SA v Marlboro Canada [2010] FC 1099 at [217].41 Including The Coca-Cola Co v Frucor Soft Drinks Ltd [2013] NZHC 3282 at [102]–[106] andSpecsavers International Healthcare Ltd v Asda Stores Ltd [2014] FSR 4 (ECJ) at [24].42 HC decision, above n 3, at [44].43 IPONZ decision, above n 2, at [32].44 IPONZ decision, above n 2, at [32].45 In Re Hicks' Trade Mark (1897) 22 VLR 636 (SC) at 640.46 At [45]–[48].[40] In reliance on English authority,47 Mr Arthur submits that the appropriate test for determining whether two products are the same kind of thing should be reformulated. He says the proper touchstone is to inquire what is a fair description which will be used by the average consumer, or by the trade,48 of the products for which the proprietor has used the mark. Mr Arthur accepts that the underlying policy, both statutory and at common law, is to ensure that rights of ownership are not unreasonably narrowed or unduly wide.[41] Mr Arthur's primary submission is based on the premise that North Face'sfirst use of its S device mark extended to mittens, gloves, jackets, pants, vests and ski suits. He says the average consumer or member of the trade would define these items collectively as clothing, entitling North Face's S device mark to protection in relation to all items in class 25.[42] While we accept that a right of registration is not limited precisely to goods or services on which the mark has been used, and that a reasonable generalisation is appropriate,49 we agree with Ms Warburton that Mr Arthur's reformulation of the testis unduly wide. She correctly submits that Mr Arthur's proposed test has never been applied in ownership cases. In that context the only variation allowed between goods that can be said to be the same kind of thing is in size, shape or name.50[43] In our judgment North Face's ownership of its S device mark must be restricted to other goods which are essentially identical to mittens and gloves. The fact that those two items are specifically identified along with the other items in class 25 does not answer the point. Identification of items within a single wider generic category does not mean they are the same kind of thing. All the items within class 25 are not essentially identical: for example, it could not be said that mittens are the same kind of thing as swimwear or coveralls. At best, it could only be said that these items fall within the general category of apparel.47 Animal Trade Mark [2003] 3 EWHC 1589 (Ch) at [19].48 Mr Arthur relied on Sky Network Television Ltd v Skyfiber Inc [2012] NZHC 3559 at [26] for this additional element. However, that case was determined in the different statutory context of revocation for non-use of a registered trade mark.49 Advantage Group Ltd v Advantage Computers Ltd [2002] 3 NZLR 741 (CA) at [21].50 Colorado (FCAFC), above n 34, at [14].[44] The statutory framework also supports Ms Warburton. A person claiming to be the owner who wishes to register the mark must register it for use in respect of"particular goods".51 More particularly, the Commissioner is unable to register a trade mark for all goods and services included in a class "unless the specification is justified by the use of the sign".52 For all these reasons, this aspect of North Face'sappeal must therefore fail.(2) North Face's ownership of Sanyang's mark[45] The second major issue is whether North Face is the true owner of Sanyang'smark. Collins J's finding that North Face owned its S device mark in New Zealand for gloves and mittens prior to Sanyang's registration application is not decisive.53However, our finding that North Face's ownership of the mark is restricted to those two items limits materially the arguable scope of the company's opposition and gives some perspective to what is now in narrow contention between the parties.[46] Mr Arthur accepts that the test applied by the Assistant Commissioner and Collins J of whether the two marks are the same or substantially identical is appropriate where the Court is considering identical marks, often because one party has selected a trade mark used overseas by another party.[47] However, on appeal Mr Arthur seeks to introduce a variation on that test for the facts of this case. He submits that Sanyang does not own its proposed mark for class 25 items because it incorporates or subsumes North Face's S device mark andfor that reason the former is substantially identical. He says that the test is satisfied by a visual and conceptual comparison. If the marks are identical, the first mark has inevitably been taken. But, where the marks are not completely identical, the proper inquiry is whether the property has been taken. In argument he accepted a gloss to the effect that property would not be taken to the extent that it was unrecognisable within the proposed mark; the use of the incorporated mark had to be apparent.51 Trade Marks Act, s 32(1).52 Section 32(2).53 HC decision, above n 3, at [22]–[35].[48] Mr Arthur's submission is significant because it represents a substantialdeparture from North Face's case as previously argued. As noted,54 its originalopposition to Sanyang's application was based on six grounds. It elected not to pursue before the Assistant Commissioner the particular grounds that Sanyang'sproposed mark would cause confusion or it was identical or similar to North Face'smark or an essential element of it. North Face's argument was limited to the ground that Sanyang did not own the mark because of North Face's prior use of it. On an appeal against the registration of a trade mark, no further grounds are permitted except with leave other than those stated by an opponent.55 There is nothing on the record to suggest that North Face was given leave to expand on its grounds.[49] It is not clear to us how North Face nevertheless centred its argument in opposition before the Assistant Commissioner and Collins J on applying the Shellcomparative test,56 requiring a determination of whether the marks were the same or substantially identical. Nor is it clear why we should accept a reformulation of that test based on the concept of taking.[50] In our judgment there is a short answer to Mr Arthur's submission. It is that North Face has failed to prove that its prior use of the S device mark gave itownership of Sanyang's mark; that is, that it owned the identical mark and all the rights in it which Sanyang applied to register. Indeed, given his reformulated test, Mr Arthur did not attempt to make out this proposition. His argument was focused on the default position that the two marks were not completely identical.[51] We are satisfied that Mr Arthur's proposed test is not only contrary to the plain words of the statute but is unsupported by authority. In an opposition based on s 32 of the Act, the enquiry is not whether Sanyang's mark apparently took, included, incorporated or absorbed North Face's S device mark. It is simply whether Sanyang owns its mark, by which we mean an identical mark.[52] The statutory test of ownership requires Sanyang to establish that it possesses all the proprietary rights in its mark. In determining whether the company satisfied54 See above at [11].55 Trade Marks Act, s 172(3)(a).56 Shell Company of Australia, above n 18.that requirement, it is most significant that North Face abandoned before the Assistant Commissioner its grounds of opposition that (a) Sanyang's proposed markwas likely to deceive or cause confusion or (b) was identical or similar to North Face's mark or a central element of it. North Face's challenge was instead limited to the ground of ownership by virtue of prior use, a ground which we have rejected. It would be contrary to the statutory scheme and allow North Face unreasonably wide grounds of challenge if it could nevertheless now raise a ground of substantial identity to deny Sanyang's right of ownership. In the absence of any other valid ground of opposition we accept that Sanyung has satisfied its statutory burden of showing that it owns all the rights in its proposed mark.[53] We add that, even if it is still open to North Face to rely on the test of substantial identity as a means of challenging Sanyang's claim to ownership of itsproposed mark, and if contrary to our earlier finding the two components of North Face's composite mark can be uncoupled, we endorse Collins J's findingsbased on a visual comparison of Sanyang's proposed mark and the S device mark.Leaving aside the Judge's reliance on differences in colour, which Mr Arthur challenges but which we need not decide, we endorse the following findings:57Visual comparison(3) The visual layout of the two trade marks also provides a significant point of difference between the two trade marks:(a) the Sanyang trade mark is designed to be used so that the central part of the device gives the impression of an arrow moving from a left to right direction.(b) by contrast, The North Face device mark is designed to represent the image of a mountain peak. When viewed from the angle at which it is designed to be seen, The North Face device mark is not"substantially similar" to the Sanyang trade mark.57 HC decision, above n 3, at [42]–[43].Conceptual comparison(4) There are significant conceptual differences between the two trade marks:(a) the Sanyang trade mark does have a metallic appearance that is reminiscent of the type of badge that one might expect to see on a vehicle. One can see that the Sanyang mark is an evolution of the arrow concept that underpinned the trade mark it used between 1954 and 2006.(b) by contrast, The North Face device mark depicts a mountain peak that is clean and pristine.Side by side comparison[43] Even if the approach which I have taken towards assessing the two trade marks is incorrect, and, if the correct approach is to adhere strictly to a"side by side" comparison, then I would reach exactly the same conclusion. When compared side by side, I believe that the visual differences between the two trade marks results in a conclusion that the two trade marks are not"substantially identical". [54] In argument Mr Arthur did not attempt to challenge these findings, preferring instead to rely on his reformulated test which we have rejected. It follows that this ground of challenge to the decision must fail. We add on the substantially identical test that in our judgment the three dimensional and metallic features of Sanyang'smark are reminiscent of the automobile industry. By contrast North Face's S device mark represents a mountain peak and its two dimensional, simpler appearance is reminiscent of mountain conditions for which its products are suited.[55] To this conclusion we add two points. One is that if we had found for North Face on this ground we would have given Sanyang leave to amend its application, to limit its mark to class 25 clothing "excluding gloves and mittens".58The other is to add our endorsement of Collins J's obiter finding that on a comparison of North Face's composite mark and Sanyang's proposed mark:[44] North Face is on even weaker ground when a comparison is madebetween the Sanyang trade mark and North Face's device and word trademark. The words "Summit Series" which appear at the foot of the devicesection of the device and word trade mark clearly anchor the trade mark. This layout of The North Face device and word trade mark re-emphasises the58 Trade Marks Act, s 38(1).mountain peak image which North Face is conveying with its device and word trade mark. The North Face device and word trade mark, is, in my assessment quite different from the Sanyang trade mark for the reasons explained by the Assistant Commissioner in her decision. I wouldaccordingly endorse the Assistant Commissioner's decision when sheconcluded that the Sanyang trade mark and The North Face device and word trade mark are not substantially similar.Summary[56] In summary we are satisfied that:(a) North Face has established ownership by prior use of its S devicemark for gloves and mittens prior to the date of Sanyang's applicationfor registration of its proposed mark.(b) North Face's ownership of its S device mark for gloves and mittens does not extend to ownership of the same mark for other items of apparel within class 25.(c) North Face has also established ownership by prior use of its composite mark for other items of apparel but its composite mark is not divisible and the S device mark does not operate as a separate component.(d) In the absence of proof that its S device mark was identical toSanyang's proposed mark, North Face could not oppose Sanyang'sclaim to ownership of its mark.(e) Even if a test of substantial identity was nevertheless arguable, North Face's S device and Sanyang's proposed mark are not substantially identical.(f) The Assistant Commissioner, upheld by Collins J, was correct to grantSanyang's application for ownership of its proposed mark.Result[57] The appeal and cross appeal are dismissed.[58] In substance Sanyang has succeeded. However, our finding that North Faceused one of its trade marks on some items means Sanyang's cross appeal has failed. It is appropriate in these circumstances to award Sanyang a reduced figure for costs. North Face is ordered to pay 50 per cent of Sanyang's costs on a Band A basis for a standard appeal together with usual disbursements.Solicitors:A J Park Law, Wellington for AppellantAcacia Law, Wellington for Respondent