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Trademark genericism in Australia and New Zealand

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Kate Giddens of AJ Park explains the key differences between the Australian and New Zealand tests for genericism, and provides some takeaways for brand owners

Trademark genericism (or genericide) is when a registered trademark moves from identifying the origin of a product (i.e. Lego) and becomes a synonym for the category name, or definition of that good (i.e yo-yo).

There is a fine balance between being a market leader, where the trademark dominates the product category, and being susceptible to the brand becoming a generic name of the product.

An objective of any trademark registration system is to balance the interests of traders and consumers. Just as descriptive terms cannot be registered initially, the Australian and New Zealand Trade Marks Acts include provisions which allow for third-party proceedings to remove a registered trademark that has become generic.

The law in Australia and New Zealand

The Australian test is found in sections 24 and 87 of the Trade Marks Act 1995 (Cth). The test is whether the trademark has “become generally accepted within the relevant trade as the sign that describes or is the name of an article, substance or service”.

The Australian test is trade-focused. It is arguable that this imports a high standard of what is generally accepted as describing a product.

Members of a trade or industry can be expected to have a higher knowledge of the products in question than consumers, and to be familiar with industry-specific jargon and brand use (or misuse).

The New Zealand test is set out in section 66(1)(c) of the Trade Marks Act 2002 and is stated as: “in consequence of acts or inactivity of the owner, the trademark has become a common name in general public use for a product or service in respect of which it is registered.”

The “public” includes “those in the trade such as manufacturers and distributors as well as to end-consumers” (Tasman Insulation New Zealand Ltd v Knauf Insulation Ltd (the BATTS case) [2016] 3 NZLR 145). This audience is wider than that envisioned by the Australian test, and industry-specific knowledge of correct terms and product nuances is not needed, or relevant.

The practical difference between Australia and New Zealand may be the speed in which a trademark can become generic, particularly where New Zealand’s wider “general public” are more likely to adopt trademarks as generic terms than Australian members of a trade working with the trademark on a daily basis.

A connected world

Previously, it took many years for trademarks to become generic. We now live in a connected world. In the age of social media, the speed at which genericide is occurring has significantly increased.

In the case of the Pilates trademark, it took over 40 years for rights to be lost (Pilates, Inc v Current Concepts, Inc 120 F. Supp.2d 286). In comparison, trademark rights in Stimulation took only around eight years to be lost – the trademark being registered in May 1999 and revoked by January 2007 (Osotspa Co Limited v Red Bull GmbH, Decision of the OHIM Cancellation Division (C1020) 30 January 2007).

In Australian Health & Nutrition Association Limited t/a Sanitarium Health Food Company v Irrewarra Estate Pty Limited t/a Irrewarra Sourdough [2012] FCA 592,,the Court made the following observations:

“[the argument] about the word … having a meaning only in the USA suffers from an air of unreality… [T]he modern world is characterised by rapid communication and extensive cultural exchanges particularly from the USA in the form of films, television programs, music, books and travel…

Australians who watch American films and television programs, listen to American music, read American books and/or travel to America will undoubtedly be routinely exposed to many words which are commonplace in the USA and infrequently or less used in Australia. That does not mean the words have no meaning in Australia.”

What can owners do?

In both New Zealand and Australia, a trademark can remain on the register if the owner satisfies the Court that the descriptive use has not arisen through its own acts (or omissions) or fault (see Section 66(1)(c) of the New Zealand Trade Marks Act 2002 and Section 89(1)(c) of the Australia Trade Marks Act 1995 (Cth) respectively).

This causation element of genericism has been considered by the New Zealand Court of Appeal with reference to Kerly’s Law of Trade Marks and Trade Names:

  • A trademark owner is not required to eliminate all inappropriate use of the mark but has to take reasonable steps to ensure the mark retains its essential function.

  • While using a descriptor may help to stop a mark from becoming generic, there is no absolute requirement for the owner to do so.

  • The increased use of the internet may accelerate the process of a mark becoming generic, emphasising the need for owners to be more vigilant.

  • Any shortcomings in an owner’s action to protect use of its mark should be balanced against what the owner has done to promote correct use of its mark.

  • There are practical limits on the steps an owner is able to take. For example it is relatively straightforward to monitor and control the marketing and promotion of the products supplied to merchants. However, little could be done to prevent individuals using the term descriptively.

Practical steps owners can take are:

  • Have good internal brand guidelines and share those with trademark users.

  • Make sure its own use is exemplary.

  • Use the trademark with the ® or TM symbols.

  • Inform and educate traders on correct use.

  • Respond to incorrect use.

  • Use the trademark with the generic descriptor i.e Rollerblade inline skates.

  • File border protection measures.

  • Address misuse in a timely manner, including those by other traders or via popular resale websites and marketplaces.

There are many famous examples of leading registered trademarks that have lost their ability to act as a badge of origin, at least in some jurisdictions: aspirin, escalator, nylon, pilates, zipper and linoleum to name a few.

A market-leading or new product trademark does not have to suffer the same fate, as there are steps that can be taken before it is too late. The key is to act early, and to focus efforts to the relevant audience in each country.

Even in markets as closely aligned as Australia and New Zealand, that audience may be slightly different.

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