In this case, Stylez Ltd (Stylez) successfully sought to invalidate New Zealand trade mark registration 1195732 JONAH LOMU in the name of Nadene Lomu. While the result may seem intuitively unfair to the Jonah Lomu estate, the Assistant Commissioner’s reasoning appears to be sound.
Invalidity proceedings are used in New Zealand to seek cancellation of a trade mark that has already been registered. The effect is that the trade mark registration is removed as if it should never have been registered. The invalidity process is discussed in more detail below.
The mark at issue, JONAH LOMU, was registered for a wide range of goods and services in classes 3, 5, 14 and 41. The class 41 specification covered film and television production, which is relevant for the following reasons.
Background
As most people will already know, Jonah Lomu was a very famous New Zealand Rugby Union Player, and long term member of the national squad called the All Blacks. Mr Lomu tragically passed away in 2015. Nadene Lomu was Jonah Lomu's wife.
The context of this dispute revolves around Stylez’s plans to authorise the production of a documentary film about Jonah Lomu. For many years, Mrs Lomu has voiced her opposition to the proposed documentary.
In New Zealand, there are no relevant personality or publicity rights, and limited other legal options, by which Mrs Lomu or the Lomu estate may seek to prevent such a documentary film from being made. We covered this in an earlier article, here.
In 1997, Stylez entered an exclusive licence to use the trade mark JONAH LOMU, including in respect of television and film. This arrangement was formalised while Jonah Lomu was a director and shareholder of Stylez.
With Mrs Lomu’s agreement, the 1997 licence was varied in 2017. The variations included a modification to the “termination” clause. That same year, Stylez entered a deed of sublicence with Mrs Lomu. The 2017 deed granted Mrs Lomu a sublicense to use the trade mark JONAH LOMU in certain ways, which we discuss below.
Mr Christopher Darlow is the sole director and shareholder of Stylez. The decision contains various excerpts of Mr Darlow’s affidavit evidence.
Relevantly, paragraph [28] of the decision reveals that Stylez Limited brought the invalidation proceeding in response to a cease and desist letter it received from Mrs Lomu. Mr Darlow deposed that the cease and desist letter caused production of the LOMU documentary to be halted.
The law
Under New Zealand law, any "aggrieved person" may apply through the local Intellectual Property Office (IPONZ) to invalidate a registered trade mark.
The grounds for invalidity are generally the same as those under which a trade mark application may be opposed. Marks may therefore be invalidated on grounds including that use of the mark is likely to mislead or deceive, use of the mark is contrary to law, or that the mark was originally filed in bad faith.[1]
The onus is on the applicant for invalidity (Stylez) to convince IPONZ on the balance of probabilities that the registration (1195732 JONAH LOMU) is invalid.
The Trade Marks Act 2002 does not define “bad faith”. It is usually said to include dealings that would “fall short of the standards of acceptable commercial behaviour observed by reasonable and experienced [people] in the particular area being examined”.[2]
Bad faith is a serious allegation that must be clearly pleaded and supported by evidence.[3]
The pleadings
Stylez claimed that a 1997 exclusive licence agreement entitled it to broad use and control of the JONAH LOMU mark.
Accordingly, it argued that Mrs Lomu's registration 1195732 JONAH LOMU was invalid, on the grounds that at the time of filing, the registration was made in bad faith. It also argued that the registration was contrary to law.
In response, Mrs Lomu claimed that she was always intended to be the kaitiaki (guardian) of Jonah Lomu’s intellectual property, and that the shares of Stylez should be transferred to her as a residual beneficiary of Jonah Lomu's will.
She also claimed that the licence agreement had been terminated, and that the 2017 variation was “obtained unlawfully through undue influence and duress”.
The result
In essence, this dispute was largely contractual. The Assistant Commissioner’s overall conclusions were coloured by two key questions. Firstly, what was the effect of the 1997 exclusive licence (as varied in 2017) and the 2017 deed? And secondly, was the 1997 licence ever terminated?
The complete terms of the 1997 exclusive licence and the 2017 deed were not disclosed in the judgment.
However, the Assistant Commissioner emphasized that the 1997 License Agreement provides Stylez the exclusive right to the JONAH LOMU mark in relation to television and film. No one else, including Mrs Lomu, may use the JONAH LOMU mark in connection with these services without Stylez’ prior authorisation.
The Assistant Commissioner recorded that the related 2017 deed granted Mrs Lomu a sublicense for certain uses the JONAH LOMU trade mark, including use of the name on her fan webpage. But these sublicences did not include a right for Mrs Lomu to veto any television or film production (our emphasis):
[5] CRD and Stylez will in good faith inform and consult with Nadene in respect of any proposed use by it of the Rights … (including for the avoidance of doubt, but without limitation, any movie or television production). Nadene will not have a veto right but any input from Nadene will be taken into account within reason.
Overall, the Assistant Commissioner held that, despite benefitting from professional representation, Mrs Lomu was mistaken about the effect of the 1997 licence agreement, Mr Lomu’s will, and the 2017 deed. The 1195732 JONAH LOMU registration was accordingly made in bad faith.
While Mrs Lomu may have thought that she was entitled to the JONAH LOMU registration, a reasonable and experienced business person would have realised that the evidenced documents significantly limited Mrs Lomu’s rights to that mark.
The Assistant Commissioner held that Mrs Lomu’s intention in filing the application was not to provide additional protection for the legitimate exploitation of the JONAH LOMU trade mark by Stylez, but rather as an attempt to “get around” the consequences of the 1997 licence (as varied) and the 2017 deed.
Further, Mrs Lomu’s defence, that the 1997 licence (as varied) was terminated, was not substantiated by the evidence.
The Assistant Commissioner also found that the 1195732 JONAH LOMU registration was contrary to law, since at the time it was filed, Mrs Lomu could not have used the trade mark without Stylez’ written approval.
Key takeaways
Bad faith cases are frequently won on “breach of contract” grounds. A common example is where a distributor, in breach of the terms of their distribution contract, decides to register a trade mark that was originally coined by their manufacturer.
Here, Mrs Lomu was simply in breach of her contract with Stylez. As such, this case is, in some ways, a very routine application by IPONZ of the bad faith ground of invalidity.
Importantly, this case provides a cautionary tale of what can happen when a party signs a contract without a proper understanding of both its substantial terms, and its procedural or administrative mechanisms.
Significance of “exclusive” licence arrangements
As noted above, Mrs Lomu was found to be mistaken about the effect of the 1997 licence, including its exclusive nature.
In our experience, many persons (including lawyers) do not fully appreciate the effect of an exclusive licence. Under a true exclusive licence, no-one else, including the licensor, may use the intellectual property.
The rights granted to a licensee under an exclusive licence are often very similar actual ownership rights. For example, in some cases, an exclusive licence may authorise the licensee to take direct action in its own name against suspected misuse of its marks (which is exactly what has occurred here).
Overall, a properly drafted perpetual exclusive licence may grant rights that are virtually equivalent to the licensee taking an ownership interest. As such, exclusivity should not be surrendered lightly.
An exclusive licence may be contrasted with a “sole” licence, which allows the licensor to continue to use the relevant intellectual property.
Importance of following correct contractual process
Although the judgment did not go into detail on this point, there is some reference to Mrs Lomu attempting to terminate the 1997 varied licence, but allegedly failing to comply with the procedural formalities in the contractual termination mechanism.
If a contract specifies a method for terminating the contract, then this method must be followed to the letter.
Improper termination can result in a finding that the would-be terminating party has actually “repudiated” the contract (meaning it has wrongfully walked away from its obligations), entitling the other party to relief.
It may also be used as evidence of “bad faith”, since wrongfully walking away from a contract would almost always “fall short of the standards of acceptable commercial behaviour”.
Benefits of clear drafting
As noted above, bad faith cases are frequently won on “breach of contract” grounds. The clearer the wording of the relevant contract, the easier it will be for the invalidity applicant to convince IPONZ that the trade mark owner is in breach.
In this case, the two excerpts of the 1997 licence (as varied) are good examples of clear drafting.
The first excerpt clearly stated that, other than in connection with her fan page and accounts of her personal experiences, Mrs Lomu could only use the JONAH LOMU mark “as Stylez approves in writing on a case by case basis if the circumstances justify it”.
The second excerpt explicitly stated that Mrs Lomu “did not have a veto right” over what Stylez could do with the JONAH LOMU marks.
The excerpts were, essentially, a complete answer to Mrs Lomu’s contention in her cease and desist letter that Stylez was misusing the JONAH LOMU mark.
Other takeaways
Lastly, Mrs Lomu's evidence apparently included descriptions of legal advice she received. Although this evidence was seemingly immaterial to the Assistant Commissioner’s decision, this type of evidence is very risky to run as it may amount to a waiver of legal advice privilege.
Moving forward
Although Mrs Lomu has a statutory right of appeal to the High Court of New Zealand, it is unclear to us on what grounds an appeal might succeed.
If Mrs Lomu wishes to appeal, she has until approximately Monday 9 September (NZ time) to do so.
Excerpts of this article were first published by Asia IP in August 2024.
[1] Where a New Zealand trade mark has been registered for seven years, it will gain the "presumption of validity", which will reduce the number of grounds an invalidity applicant may plead. However, the presumption of validity is not relevant in the Lomu case due to the JONAH LOMU mark only being granted registration in May 2022.
[2] Gromax Plasticulture Ltd v Don & Low Nonwovens Ltd [1999] RPC 367 at 379.
[3] Zoggs International Ltd v Sexwax Inc [2013] NZHC 1494 at [36].
