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• 4. Trademark Law Treaty

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Background

65. The aim of the Trademark Law Treaty 1994 [link to WIPO website] (the "TLT 1994") is to make national trade mark registration systems more user-friendly. This is achieved through the simplification and international harmonisation of procedures. It does not, however, attempt to harmonise substantive trade mark law, such as the grounds upon which registration of a trade mark may be refused.

66. Article 2 prescribes that the treaty applies to trade marks consisting of visible signs³ other than holograms. The TLT 1994 does not, however, apply to collective trade marks or certification trade marks. In addition, the provisions of TLT 1994 do not apply to any action before a board of appeal or other review body constituted in the framework of a Trade Marks Office or for any action in inter partes proceedings.

67. The majority of the provisions of the TLT 1994 relate to the procedures of trade mark offices. These can be divided into three main phases: application for registration, changes after registration and renewal. The rules concerning each phase are constructed to make it clear what a trade mark office can and cannot require from an applicant or owner of a trade mark.

68. The TLT 1994 was concluded in 1994 and is open to all Member States of WIPO. There are currently 33 countries party to the TLT 1994, including some of New Zealand's leading trade partners, such as Australia, Japan, the United States and a number of European Union countries like the United Kingdom and Germany. Other trade partners, such as Singapore and Chile, are taking steps to accede.⁴ While New Zealand is a Member State of WIPO, it has not acceded to the TLT 1994. The Trade Marks Act 2002 does, however, incorporate many of the standards prescribed by the TLT 1994.

Trademark Law Treaty 2006

69. Over the last few years the TLT 1994 has been under review by WIPO's Standing Committee on the Laws of Trademarks, Industrial Designs and Geographical Indications [link to WIPO website] ( "the WIPO Committee"). The WIPO Committee has been developing a range of amendments to expand the scope of TLT 1994 to provide for: an Assembly of States and organisations who join the treaty (which will facilitate the future development and maintenance of the treaty); electronic filing; recording of trade mark licences; limitations on mandatory representation; and relief measures in respect of time limits. At the same time the breadth of the treaty is to be expanded to cover new forms of marks such as holograms, position marks, sound marks and olfactory marks. Such amendments have been developed with the view to establishing international best practice.

70. The WIPO Committee [link to WIPO website] completed its review in April 2005 and developed amendments to the TLT 1994. WIPO is organising a diplomatic conference for March 2006 [link to WIPO website] to consider adopting the proposed amendments. The expanded treaty will be a new treaty, the Trademark Law Treaty 2006 (the "TLT 2006"). The draft text of the TLT 2006 for the diplomatic conference is available.

71. This part of the discussion paper considers whether New Zealand should amend the Trade Marks Act and the Regulations to adopt the standards specified in the draft text of the TLT 2006 and, if so, whether it would be in New Zealand's interests to accede to the TLT 2006 if it is concluded at the diplomatic conference in March 2006.

72. The failure of the TLT 1994 to provide for an Assembly to facilitate development and maintenance of the treaty and its inability to provide for recent developments in respect of types of trade marks (such as holograms) and electronic communications, are two of the reasons why it is unlikely to be in New Zealand's interests to join the TLT 1994. This discussion paper does not therefore consider accession to the TLT 1994.

73. Accession to the TLT 2006 would not, however, be necessary to enable the adoption of some or all of the standards to be specified in the treaty. Any country that does not join the TLT 2006 is free to adopt any or all of the standards set out in the TLT 2006 under its national law.

74. New Zealand's trade marks legislation already anticipates a number of standards and requirements to be prescribed by the TLT 2006, especially in the areas concerned with applications for the registration of trade marks, representation and address for service, filing date, multi-class applications, classification of goods and services, communications, and duration and renewal of registrations.

75. There are, however, several areas where the Trade Marks Act would require amendment to enable implementation of the provisions of the TLT 2006. These are the provisions governing changes in ownership; relief measures in case of failure to comply with time limits; and the registration of a person as a trade mark licensee. The provisions in the TLT 2006 governing these areas are considered in detail below.

Change of Ownership

Trade Marks Act 2002 Requirements

76. Under section 82 of the Trade Marks Act a person who has acquired the ownership of a trade mark ("the new owner") must apply to the Commissioner of Trade Marks ("the Commissioner") for a change of ownership. In addition, Regulation 146 prescribes the information that must be supplied by the new owner in an application to register his or her ownership to the trade mark. An application for change of ownership must relate to a single registration of a trade mark.

TLT 2006 Requirements

77. Article 11 of the TLT 2006 prescribes the proposed requirements and standards that a State or organisation party to the treaty (the "Contracting Party") would be able to require in order for its trade marks office to accept an application to change the ownership of either an application to register a trade mark or a trade mark registration. A trade marks office would be required to accept an application for a change of owner from either the previous owner or the new owner. A Contracting Party may also require that an application to contain an indication of the type of assignment or transmission (e.g. assignment, merger, or other ground) and a copy of document evidencing the change of ownership. Where the change of ownership relates to several trade marks, a single application would be sufficient provided the previous owner and new owner are the same for each application to register a trade mark application or trade mark registration.

78. In addition, where a trade mark is registered in the name of several co-owners, Contracting Parties may require that any co-owner in respect of which there is no change in ownership give his or her express consent to the change in ownership.

Summary of the Minimum Changes Needed to the Trade Marks Act

79. It would appear therefore that the Trade Marks Act and its associated regulations would require amendment to comply with the requirements of the TLT 2006. The Trade Marks Act would need to be amended to allow an application for change of ownership to be also filed by the previous owner, not just the new owner. In addition, provision would also need to be made to explicitly allow a single application for change of ownership to relate to more than one trade mark registration or application for registration of a trade mark.

80. Regulation 146 would need to be amended to remove the requirements that an application for change of ownership must include the following information:

• a description or representation of the trade mark in question;
• the effective date that the change of ownership took place; and
• a statement that the licensee has been notified of the change of ownership, in the case where a change in ownership has resulted in the cancellation or amendment of a registration of a licence.

Relief Measures in Case of Failure to Comply with Time Limits

Trade Marks Act 2002 Requirements

81. The Trade Marks Act provides relief by way of an extension of time in the case of failure to comply with a time limit. Specifically, regulation 32 provides that the Commissioner may, if satisfied in a particular case that there are genuine and exceptional circumstances that justify an extension of time, extend the time specified under any regulation for an act to be completed. In extending the time, the Commissioner may also stipulate the terms and conditions on which the extension is granted.

82. An extension of time may be sought at any time either before or after the expiry of the time limit concerned, except where the Regulations provide that a time limit must not be extended. Apart from the some of provisions governing inter partes proceedings, there are two specific circumstances of interest in respect of the TLT 2006 where the Regulations stipulate that the time must not be extended. These are regulation 43 relating to additional classes that may be added after filing an application for registration of a trade mark;⁵ and regulation 62 relating to the deadline specified under regulation 61 (of not less than 12 months) to respond to a notice of non-compliance issued under section 41 of the Trade Marks Act.⁶

TLT 2006 Requirements

83. Article 14(1) of the TLT 2006 permits the Contracting Party to provide a person (i.e. an applicant, owner or interested person) who is about to fail to comply with a time limit an opportunity to request an extension of time. Where a person has failed to comply with the time limit concerned, however, Article 14(2) of the TLT 2006 would require a Contracting Party to provide that person with at least one of the following relief measures:

• an extension of the time limit to complete the outstanding matter;
• continued processing with respect to the application or registration;⁷
• reinstatement (or restoration) of the rights with respect to the application or registration.

84. Rule 9(1) of the TLT 2006 Regulations defines the requirements that a trade marks office may require concerning requests for extensions of time under Article 14(2). These requirements are discussed in more detail below.

85. Under Rule 9(4) of the TLT 2006 Regulations there would be a number of circumstances where the Contracting Party would be exempted from the requirement of providing a relief measure in accordance with the Article 14. These would include:

• when a relief measure has already been granted for the time limit concerned;
• for filing a request for a relief measure;
• for payment of a renewal fee;
• for an action before a board of appeal or other review body constituted in the framework of a trade mark office;
• for an action in inter partes proceedings;
• for filing a declaration which, under the law of the Contracting Party, may establish a new filing date for a pending application; and
• for the correction or addition of a priority claim.

Before Failure to Meet a Time Limit

86. Where a person is about to fail to comply with a time limit, the TLT 2006 permits Contracting Parties to provide relief to that person, on request, by way of an extension of the time limit concerned. In this situation, the only condition that a Contracting Party would be permitted to impose on the granting of the extension of time is that the request be filed with the Office prior to the expiry of the time limit concerned.

After Failure to Meet a Time Limit

87. Under the TLT 2006, where a Contracting Party provides for an extension of time as a relief measure for failing to meet a time limit, it must allow the request to be filed after the time limit has expired and extend the time limit for a reasonable period of time from the date of filing the request for the extension. The Contracting Party may, however, require that the must be filed within the period of not less than two months from the expiry of the original time limit. A fee for making a request for an extension of time may be required by a Contracting Party.

88. The TLT 2006 does not, however, define what length a "reasonable" extension of time should be. This is left to Contracting Parties to determine. In determining the length of the extension of time that should be granted, the Contracting Party would need to take into consideration the matter for which the time limit was provided for in the first instance, the need for the outstanding matter to be completed in a timely manner and the likely impact upon parties who might have an interest in that matter.

Summary of the Minimum Changes Needed to the Trade Marks Act

89. The Commissioners discretionary power under regulation 32 to grant extensions of time, which is described above in paragraph 81, would therefore need to be amended if New Zealand was to comply with the requirements and standards of the TLT 2006. Regulation 32 would need to be amended so that it only applied to a limited number of time limits, such as for an action in relation to a hearing or for an action in inter partes proceedings, in accordance with the exceptions specified under rule 9(4) of the TLT 2006 Regulations.

90. In addition, a new extension of time provision would need to be added to the Regulations. This provision would need to ensure that only one extension of time of reasonable length would be granted by the Commissioner when the request for the extension of time was filed within a specified time period (of not be less than two months) after the expiry of the time limit. For any subsequent requests for an extension of time, the provisions of regulation 32 could apply to such requests.

91. Furthermore, the current prohibition under regulations 43 and 62 against a request for an extension of time being made after the time limit concerned had expired would need to be amended to allow for at least one extension of time to be granted in accordance with the new provision described in the preceding paragraph for granting an extension of time.

Registration of a Person as a Trade Mark Licensee

92. Consideration of accession to the TLT 2006 also provides an opportunity to undertake a review of the provisions under the Trade Marks Act concerning the registration of a person who is not the owner of a trade mark as a licensee in relation to any of the goods or services in respect to which the trade mark is registered. This section considers the differences between the Trade Marks Act and the TLT 2006, and looks at how some other jurisdictions provide for the registration of trade mark licences.

Trade Marks Act 2002 Requirements

93. The registration of a person as a licensee of a trade mark is voluntary under the Trade Marks Act. Under section 83 both the owner of the trade mark and the licensee must jointly apply to have the licensee registered. The Commissioner must be supplied with a statutory declaration (made by the owner or some person authorised to act on the owner's behalf) that the person proposing to be registered as a licensee of the trade mark is entitled to be registered as a licensee. An application to register a person as a trade mark licensee may only be made in respect of a single trade mark registration.

94. Regulation 148 requires that in addition to providing the statutory declaration, an application for registration of a person as a licensee must contain: the licensee's name and address; the registration number; the trade mark or representation of the trade mark being licensed; the licensee's agent (if relevant); the goods and services to which the licence relates; and any conditions relating to the licence.

95. The consequences of licensee registration are:

• the licensee's use of the trade mark is deemed to be use by the owner of the trade mark for the purposes of the non-use provision under sections 65 to 68;
• it gives a licensee the right to take proceedings against any infringement of the trade mark and to take steps to prevent the importation of infringing goods (through the filing of a border protection notice with the New Zealand Customs Service), but only if the owner of the trade mark refuses or neglects to do so within two months after being called upon by the licensee. In the case of the licensee taking infringement proceedings, the owner automatically becomes a defendant. The owner is not, however, liable for costs if he or she does not take part in the proceedings.

Amendment or Cancellation of a Licensee Registration

96. Under section 86 the owner of the trade mark may apply to alter the registration of the licensee. Regulation 150 requires that an application filed by the owner contain information identifying: the trade mark and its registration number; the licensee; the goods or services of the trade mark for which the licensee's registration is to be cancelled; the goods or services for which the licensee's registration is to continue; any proposed alteration of the licence (such as new conditions); and a statement that the owner has notified the licensee.

97. Either the owner or the licensee may apply to cancel the registration of the licensee. Where the owner applies to cancel the registration of the licensee, the owner must send a copy of the application to the licensee.

98. Regulations 154 and 155 allow the licensee to intervene to prevent the cancellation or alteration of the registration of the licensee. The Commissioner may refuse the application for either cancellation or alternation of the registration of the licensee, cancel the licensee's registration or amend the licensee's registration subject to any conditions, amendments, modifications or limitations the Commissioner thinks fit.

99. Under section 87(2)(c) of the Trade Marks Act provision is made for any person, other than the trade mark owner and the licensee, to apply to the Commissioner to cancel the registration of a licensee. The grounds upon which such a person may apply to have the registration cancelled are:

• that the licensee has used the trade mark in a way that is not the permitted use, deceives or confuses, or is likely to deceive or confuse;
• that the owner or the licensee misrepresented, or failed to disclose, some fact material to the application for the registration, or that the circumstances have materially changed since the date of registration; and
• that the registration should not have been effected having regard to the rights vested in the applicant by virtue of a contract in the performance of which the applicant has an interest.

100. This provision has been carried over from section 37(8) of the Trade Marks Act 1953. While there have been no applications made under section 87(2)(c) by a third party to cancel the registration of a person as a licensee, there was one application under section 37(8) of Trade Marks Act 1953. The application in question involved a dispute between two licensees and the trade mark owner where both licensees claimed to be the sole licensee in New Zealand.

The TLT 2006

101. Under the TLT 2006 the matter of whether a trade mark licence should be registered is left to the national laws of the Contracting Party. If a Contracting Party does, however, provide for the registration of trade mark licences, the TLT 2006 prescribes maximum requirements that a Contracting Party may demand in respect of a request for registration of a licence or a request to amend or cancel a licence that has been previously registered.

102. A Contracting Party may require a request for registration of a licence to be accompanied by an extract of the licence contract indicating the rights being licensed (certified by a notary public or any other competent public authority) or an uncertified statement of the licence signed by both the owner and the licensee.

103. The TLT 2006 also prescribes limitations on the effects of not registering a licence. A Contracting Party may not:

• allow the failure to register a license to affect the validity of the registration of the trade mark which is the subject of the licence;
• require the registration of a licence as a condition for any right that the licensee may have under national law to join infringement proceedings initiated by the trade mark owner or obtain by way of such proceedings, damages resulting from an infringement of the trade mark; or
• require the registration of a licence as a condition for the use of a mark by a licensee to be deemed to constitute use by the trade mark owner.

Other Jurisdictions

Australia

104. In Australia the registration of a licence may be made under Part 11 of the Trade Marks Act 1995 as a voluntary record of a claim to an interest or right in a trade mark. Such a request must be jointly made by both the trade mark owner and the person claiming the interest or right in the trade mark.

105. Under section 26, subject to any agreement between the trade mark owner and the licensee to the contrary, the licensee may bring an action for infringement of the trade mark:

• at any time with the consent of the owner;
• on any occasion that the owner refuses to bring such an action; or
• after the end of a two month period, if the registered owner has failed to bring such an action during that period.

106. The licensee may also give Customs a border protection notice objecting to the importation of goods that infringe the trade mark, or may revoke such a notice.

107. If the licensee brings an action for infringement of the trade mark, the licensee must make the owner of the trade mark a defendant in the action. The owner is not, however, liable for costs if he or she does not take part in the proceedings.

108. An application to alter or cancel the particulars of a licence (as a claim to an interest or right in the trade mark) may be made by the owner, the licensee, or both together. Where the owner applies to cancel or alter the licence without including the consent of the licensee, the Registrar of Trade Marks must notify the licensee and provide that person the opportunity to oppose the alteration or cancellation of the licence.

109. Third parties may not apply to cancel the registration of the licence agreement.

United Kingdom and Singapore

110. Both countries provide that licence agreements can be voluntarily recorded on the register of trade marks as "registrable transactions". Until an application is made to register the licence agreement, however, the licensee does not have the protection specified under legislation for licensees.

111. Either the owner or the licensee can apply to register, alter or cancel the registration of the licence. In the case of a licensee making the application, supporting documentary evidence must accompany the application. Where the owner applies to cancel the registration of the licence, the Registrar must notify the licensee and give the licensee the opportunity to oppose the cancellation. Third parties cannot apply to cancel the registration of the licence.

112. Protection is afforded to two types of licence agreements: exclusive and non-exclusive licences. Subject to the licence agreement, an exclusive licence may provide the licensee the same rights and remedies as if the trade mark had been assigned to the licensee. An exclusive licensee may also initiate infringement proceedings without first requesting the trade mark owner to do so on licensee's behalf. Non-exclusive licensees must first ask the trade mark owner to initiate infringement proceedings, and then only after the trade mark owner refuses or fails to do so within a two month period may the licensee take action.

113. Where the licensee initiates infringement proceedings the licensee may not, without leave of a court, proceed with the action unless the trade mark owner is either joined as a plaintiff or added as a defendant. Where the owner is added as a defendant, the owner is not liable for any costs in the action unless the owner takes part in the proceedings

114. Either the trade mark owner or the licensee may file a border protection notice with Customs.

United States of America

115. In the United States of America a person may voluntarily seek to register a licence in the US Patent and Trademarks Office Assignment Database. The ability of a licensee to take infringement proceedings is governed exclusively by the license agreement, rather than being regulated under legislation.

Discussion

116. During the 1990s' review of the licensing provisions in the Trade Marks Act 1953,⁸ there was general agreement amongst stakeholders that the law should be amended to recognise and permit all use of a trade mark by licensees whether a person was registered as a licensee not. In addition, stakeholders considered that the registration of the licensee was desirable so that these could be searched by the public and interested parties. Registration was also regarded by stakeholders as being beneficial from the owner's point of view, as it could prevent unwarranted allegations of non-use. To encourage registration of licensees, stakeholders considered that it was necessary to continue to provide that only a person registered as licensee could sue for infringement where the owner failed to take action.

117. The Trade Marks Act 2002 reflects these views expressed by stakeholders by providing for the voluntary registration of a person as a licensee, but the only permitting those persons registered as licensees to take action to prevent infringement of the trade mark or to file a border protection notice with the New Zealand Customs Service and then only when the owner has failed to take action.

118. While there are some general benefits arising from encouraging the registration of a person as a licensee, there are also some costs for trade mark owners and their licensees. In addition to the administrative and compliances costs associated with registering a person as a licensee, there is perhaps more significant costs for trade mark owners and, in particular, for their licensees associated with barriers under the Trade Mark Act preventing the licensee not being able to take action against the infringement of the trade mark or the importation of infringing goods. These costs are likely to be more acute for the licensee of a trade mark where the owner resides overseas. Under these circumstances it may be difficult for the licensee to persuade the overseas owner to take prompt action to stop infringement.

119. Where there is infringement of the trade mark, the sole benefactor of the licensing provisions would therefore appear to be the trade mark infringer. In addition, having barriers in the way of licensees taking action against infringers is not in the interests of consumers, as the Trade Marks Act is not fore filling its purpose of facilitating the provision of consumer information on the source and quality of a given product or service.

120. Furthermore, allowing third parties to challenge the registration of a person as a licensee because of inappropriate use of the trade mark appears to be outmoded, especially given that it is no longer mandatory for licensees to be registered. Cancelling the registration of a person as a licensee does not address how the trade mark is being used by the licensee, since the registration of the licensee is not a requirement under the Trade Marks Act for the licensee to use the trade mark. Under these circumstances the only person likely to benefit from cancelling the licensee's registration would appear to an infringer of the trade mark, since the licensee would be prevented from taking proceedings to stop the infringement.

121. If the trade mark owner has allowed the licensee to use the registered trade mark in such a way that the trade mark becomes vulnerable to removal from the register of trade marks because the trade mark is no longer capable of functioning as a trade mark (e.g. its use is deceiving or confusing or it has become a generic term for the goods or services provided), the appropriate penalty would appear to be removal of the trade mark from the register and not cancellation of the registration of a person as a licensee.

Proposal for Amending the Trade Marks Act 2002

122. It is proposed to align the licensing provisions under the Trade Marks Act with the TLT 2006, whilst also to aligning the licensing provisions with the equivalent provisions under the Australian Trade Marks Act 1995. The Act would continue to provide for the registration of licencees on a voluntary basis. The request for registration of a licensee would be able to be made by either the trade mark owner without any supporting documents or by the licensee with suitable supporting documents.

123. In addition, subject to any agreement between the trade mark owner and the licensee, a licensee would be permitted to commence infringement proceedings and to file a border protection notice with the New Zealand Customs Service (and to revoke such a notice):

• at any time with the consent of the owner;
• on any occasion that the owner refuses to bring such an action; or
• after the end of a two month period, where the owner has been asked to take action but has failed to bring such an action during that period.

124. An application to alter or cancel the particulars of a registered license would be able to be made by the owner, the licensee, or both. Where the owner or licensee applied to cancel or alter the registration of licencee without including the consent of the other person, the Commissioner would be required to notify the other person and provide them the opportunity to oppose the alteration or cancellation of the registration of the licence.

125. It is also proposed that the provisions under section 87(2)(c) allowing third parties to apply to cancel the registration of licence would be repealed.

Accession to the TLT 2006

126. The Trade Marks Act and its associated Regulations already anticipate many of the standards and requirements of the TLT 2006. Adopting the remaining standards and requirements would continue to build on the measures adopted under the Trade Marks Act to simplify and internationally harmonise registration procedures in order to reduce costs, especially business compliance costs, and to ensure that New Zealand's trade mark regime takes account of international developments.

127. Accession to the TLT 2006 would also, to a certain extent, formalise New Zealand's adoption of TLT 2006 standards and requirements. In addition, accession would send a clear signal of New Zealand's commitment to the simplification and international harmonisation of trade mark registration procedures and to reducing the administrative and compliance costs associated with the registration of trade marks.

128. Furthermore, while accession is not a requirement to collaborate in the development of best practice or the harmonisation of registration procedures, it would provide a suitable vehicle under which New Zealand could further explore collaboration and harmonisation with other countries and organisations on a multilateral basis.

129. A key feature of the TLT 2006 is that while it seeks to simplify and harmonise trade mark registration procedures and requirements, it does not harmonise substantive trade mark law. No amendment would therefore be required to Part 2 of the Trade Marks Act, which set out the absolute and relative grounds for refusing registration of a trade mark or those provisions governing when a registered trade mark may be cancelled, revoked or declared invalid. In addition, the government's ability to achieve specific policy objectives in respect of the registration and use of trade marks within New Zealand would not be constrained through accession to the TLT 2006.

130. A possible disadvantage arising from accession to the TLT 2006 would be an obligation on New Zealand to maintain the Trade Marks Act and its associated Regulations aligned with any future development and amendment of the TLT 2006. It is not anticipated, however, that there would be any development or amendment of the TLT 2006 in the short to medium term following adoption of the Articles and Rules of the treaty at the diplomatic conference in March 2006. Firstly, the treaty is newly developed and reflects the result of several years work by the WIPO Committee to update and modernise the TLT 1994. Secondly, the TLT 2006 has been developed with the objective of minimising the impact of technological developments on procedures prescribed within the treaty.