THE ZONE CORPORATION LIMITED V AMERICAN EXPRESS MARKETING & DEVELOPMENT CORPORATION HC WN CIV-2011-485-1274

THE ZONE CORPORATION LIMITED V AMERICAN EXPRESS MARKETING & DEVELOPMENT CORPORATION HC WN CIV-2011-485-1274 [29 October 2012]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV-2011-485-1274[2012] NZHC 2814BETWEEN THE ZONE CORPORATION LIMITEDPlaintiffAND AMERICAN EXPRESS MARKETING &DEVELOPMENT CORPORATIONDefendantHearing: 23 October 2012Counsel: A H Brown QC for PlaintiffS B Shone for DefendantJudgment: 29 October 2012JUDGMENT OF SIMON FRANCE JIntroduction[1] The plaintiff has issued proceedings to prevent the defendant acting in a way which it submits would constitute infringement of the plaintiff's trademarks, and alsoallegedly amount to passing off and a breach of the Fair Trading Act 1986. On 7 September last year Dobson J issued interim orders retraining the defendant.1 The matter comes back to Court on another interlocutory issue, namely discovery.The substantive dispute[2] The plaintiff provides intellectual property services in New Zealand. These include the provision of advice, and attending to the requirements of registration. It1 The Zone Corporation Limited v American Express Marketing and Development CorporationHC Wellington CIV-2011-485-1274, 7 September 2011.has various registered trademarks with the word ZONE in them; one of particular significance is ZONE IP. The marks are registered in classes 35, 42 and 45.[3] The defendant has recently launched an initiative to create a web-based market for the trading of intellectual property assets. It seems the website will also be a resource for people seeking assistance with intellectual property issues. Providers of such services, such as the plaintiff, can contract with the defendant to be listed on the site as a registered service provider.[4] The reason why the parties collide is that the defendant is marketing its initiative under the label IP ZONE. The url for the site is www.ipzone.com. The plaintiff claims that if the market is made available to New Zealand under that name, and if the registered service providers are available to New Zealand businesses, or indeed include New Zealand listed providers, and they are accessed under the umbrella of IP ZONE, then there will be an infringement of its trademarks.[5] The plaintiff's pleadings allege there will be breaches of s 89 of the Trademarks Act 2002. Its claim is that the mark proposed to be used by the defendant is an identical mark to its own, in terms of s 89(1)(a), or is a similar mark in terms of s 89(1)(c), and it would be likely to deceive or confuse. A key component of s 89 is that the alleged infringer must be using its identical or similarsign "in the course of trade".[6] The defendant is New York based, but the site is intended to be a facility available to anyone who contracts to use it, wherever they are based. Further the defendant has applied to register the mark IP ZONE in numerous countries. An initial application in New Zealand has lapsed, but has been relodged quite recently. Whilst the defendant has not targeted New Zealand as a market, it accepts there is no impediment (other than now the interim orders) to a New Zealand based business accessing the site to obtain intellectual property assistance, to trade, or to become a registered service provider.The discovery dispute[7] An issue for the plaintiff is that it sought and obtained interim orders prior to the site becoming operational. It cannot therefore establish a breach because the orders prevent one occurring. What it must therefore do is show that the site would involve an infringement in its normal use if not constrained by the orders.[8] It is from this difficulty that the dispute over discovery arises. It is effectively a dispute over what is relevant.[9] Mr Brown QC submits that the plaintiff needs to understand how the site will work on a global basis. It is by this means that it can establish that, working that way and without constraints in relation to New Zealand, there will be a breach of theplaintiff's trademark rights because it will, in certain circumstances, amount to conduct in the course of trade in New Zealand. The plaintiff therefore seeks disclosure of everything that shows how the site will work and is intended to work. The defendant says it is a request for the irrelevant, and would be oppressive.[10] The material sought by the plaintiff is:(a) All internal corporate communications of the defendant and its associated entities concerning the IP ZONE website and initiative, including, without limitation, relating to future plans. Such documents will include:(i) Board minutes;(ii) E-mails; and(iii) Meeting notes.(b) All final executed versions of the agreements between the defendant and various entities concerning the IP ZONE website and initiative;(c) Complete lists of all participants in the IP ZONE initiative, including, without limitation, transactors, licensees and service providers;(d) Complete lists of all persons and entities approached by the defendant with a view to their participation in the IP ZONE initiative including, without limitation, any prospective or solicited transactors, licensees, and service providers; and(e) All marketing material concerning the IP ZONE initiative in any medium together with all documents illustrating past and prospective recipients of such material. This may include press releases, print, internet, or other advertising or sales pitch related material.[11] The defendant opposes any further disclosure. It submits:(a) It has deposed that it is aware of its disclosure obligations and has complied with them. There is no basis to go behind those affidavits;(b) Relevance for these proceedings is determined by the elements of a breach of s 89 of the Trademarks Act 2002, and the need for use in the course of trade in New Zealand. Therefore it is only material directly related to New Zealand that matters;(c) In terms of the intended scope of the project, the website is available for public search (albeit it is not yet operational). The plaintiff can see for itself the services being offered; and(d) The key issues under s 89 are whether the marks are identical or similar, and whether there is likely to be confusion or deception. These are matters of external perception, and therefore internal communications about how the defendant sees things are irrelevant.Decision[12] The defendant:Is offering a service to everyone, including New Zealand based individuals and businesses;Accepts there is no impediment to New Zealand use of the services provided under the IP ZONE umbrella; andHas applied to register IP ZONE in New Zealand.As the defendant accepts, the site is accessible from, and can be used in relation to, New Zealand. It must therefore be the case that the intended scope of the site, and the services it will offer, are relevant to these proceedings. It is only if New Zealand is somehow excluded, because, for example, a particular service is limited geographically to other regions, that a document or information becomes irrelevant for geographical reasons. I direct the defendant to review its compliance with its disclosure obligations in light of this definition of relevance.[13] I turn now to the specific matters raised.[14] First, I reject the defendant's submission that the Court should not go behindthe defendant's claims to compliance. The reason for this can be illustrated by reference to one of the topics highlighted by the plaintiff – marketing material. This seems an obviously reasonable request since it provides information sourced in the defendant as to how the defendant views the scope of its services. The plaintiff says it has only received a draft press release, a proposal, and a FAQ sheet. I enquired of Ms Shone what that meant about the defendant's perception of relevance and itsdisclosure obligations. The response was that the defendant considered that was all that was relevant. That leaves me with no confidence in the defendant's approach todiscovery, and accordingly I do not agree that the Court should accept thedefendant's assurances.[15] As I indicated at the hearing, I consider that many of the plaintiff's requestswere conceptually legitimate but cast too broadly. However, the defendant did not take a realistic view of the matter. It is in a position, given its knowledge of the process by which IP ZONE was developed, and how it is projected to evolve, to suggest ways to constrain the scope of discovery. However, it chose not to engage other than to unrealistically define relevance, and to broadly assert oppression without providing any evidence, or including detailed submissions on point. In my view an opportunity to better control their disclosure obligation was not taken.Internal communications[16] The scope of this request is far too broad, a point Mr Brown accepted in discussion. On its face it basically requires disclosure of all information that has existed in relation to the scheme from its outset. The thrust of the request is for information that discloses the scope and intended scope of the website. Upon reflection, I prefer an earlier iteration by the plaintiff of its request and under r 8.19 order that the defendant file an affidavit detailing, and make available for inspection:(a) Any document illustrating:(i) Any service currently provided or proposed to be provided by the defendant under the trademark IP ZONE; and(ii) Any market sector to which the defendant currently offers, or proposes to offer, its services under IP ZONE (whether by way of service providers listing on IP ZONE or otherwise).Marketing[17] The marketing request as identified above is reasonable, and the defendant is ordered under r 8.19 to prepare an affidavit detailing such material, and making it available for disclosure.Final contracts[18] The defendant initially provided draft contracts between itself and some service providers who were going to list on the site. It has now repented of that, and considers it was wrong to disclose them because they are not relevant. The plaintiff seeks the executed copies, plus copies of any further contracts entered into. There is no information as to the number of contracts, nor whether they are individual or follow a template.[19] This is an example of where the defendant might have assisted the Court and itself. I am unaware of the scale of this. I imagine that many of the contracts, given the nature and location of the service provider, could not realistically involve services relevant to New Zealand.[20] I asked Mr Brown to illustrate from the draft contracts how the information made available through them was relevant. It seemed to me that if this could be shown, then a copy of the executed agreement obviously should be disclosed. I was not satisfied that relevance had been shown and so decline to order disclosure of the final version of those contracts.[21] However, consistent with my earlier description of what is relevant, if contracts have been entered into with any entities that involve services that might be used by a New Zealand business or individual, they should be disclosed.Other matters[22] Given the first order made in relation to documents detailing current and proposed services to be offered, I do not presently see as relevant the list of entities approached by the defendant with a view to them participating in the IP ZONE. That is subject, of course, to the qualification that it would be relevant if the entity had a connection with the New Zealand market. However, such material would have beencaught under the defendant's original narrow conceptualisation of relevance, so it should already be disclosed if it exists. No other order is required.Conclusion[23] The defendant is ordered to reconsider disclosure in light of the description of relevant contained in [12].[24] The defendant is also directed to file an affidavit, in accordance with r 8.19, in relation to the matters identified in [16](a)(i) and (ii), [18] and [21].[25] The plaintiff is entitled to costs on this application._________________________Simon France JSolicitors:A H Brown QC, Auckland, email: andrew@andrewbrown.co.nzS B Shone, Baldwins Law Limited, Wellington, email: brigette.shone@baldwins.com