In the first decision of 2015¹, Assistant Commissioner for Trade Marks Natasha Alley looked at an application for a Certification Trade Mark. This was not the usual Intellectual Property of New Zealand (IPONZ) case of two parties arguing about whether their trade marks would be confused by the public, but the applicant for a trade mark appealing the Examiner’s decision to reject their application to register a certification mark.

What is a certification mark?

Certification marks are rare, but extremely useful. They are usually registered by government departments or industry bodies. Individual companies are then authorised to use the trade mark only if they meet the criteria set by the trade mark owner.

One well known example is Business NZ’s “Buy New Zealand Made” campaign. The logo has changed a little over the years, but only businesses who meet their criteria are allowed to use one of these trade marks on their goods:

Other familiar examples are the Qualmark for accommodation, and the “energy star” for appliances:

Foods are often the subject of certification marks, with organisations such as the Coeliac society or the Jewish council certifying foods as suitable for consumption by their constituents. More commercially, the Invercargill City Council can certify true Bluff Oysters, and the Waiheke Wine Growers Society can certify wine from their island:

These monopoly protections were obtained by registration of a certification trade mark. The mark must be registered by an independent body, who can impartially assess applicants to determine whether they meet the standards required to be allowed to use the mark. These are not arbitrary standards – a copy of the regulations determining who can use the trade mark, and how it can be used, must be provided to, and approved by, IPONZ as part of the registration process. This enables any member of the public who sees the mark to look up the regulations to find out what standard the mark certifies as having been met.

It is the need for impartiality that means most certification marks are registered by incorporated societies, councils or associations. They are external to the traders, and able to independently determine who meets the necessary standard to be allowed to use the certification trade mark.

UL LLC’s application

The case before the Assistant Commissioner was different, because it was made by a company, UL LLC. According to its website UL is a global independent safety science company offering expertise across three strategic businesses: commercial and industrial, consumer and UL ventures.

UL had a trade mark registration for their own services, which include testing and inspection of various products, equipment, devices, material and systems. They now wished to register a certification mark for services including “quality control”. As a certification mark, this meant that UL would be assessing other companies, and if they were good enough at quality control, UL would let them use the certification mark.

Legal issue

A certification trade mark may not be registered in the name of a person who carries on a trade in services of the kind certified.² Considering the meaning of this phrase for the first time, the Assistant Commissioner broke the enquiry down into two questions:

1. Are any of the services of the same kind?
2. Does the applicant carry on a trade in the services?

The wording of this section does not appear to have ever been considered in any earlier case.

Services of the same kind

The Assistant Commissioner found that “similar” services should be held to be services of the same kind. She was then able to rely on the case law relating to “similar” services.

In comparing the applicant’s “testing and inspection” services with “quality control”, the Assistant Commissioner considered the dictionary definitions of the words, and found clear commonalities. Counsel for the applicant argued that “testing and inspection” meant “certification services”, and the Assistant Commissioner tended to agree that “certification services” would not conflict with “quality control”. However, since those words were not actually used, the Assistant Commissioner found that “testing and inspection” services are similar to “quality control”.

Carrying on a trade in the services

In determining whether UL carries on a trade in testing and inspection services, the Assistant Commissioner referred (among other things) to cases under the Fair Trading Act 1986 considering whether conduct was “in the course of trade”. She determined “trade” has a broad meaning; the circumstances of the particular case, the public interest, and the statutory scheme are relevant.

There was no direct evidence as to whether or not the applicant carries on a trade in testing and inspection services. The evidence provided by the applicant was in the form of a statutory declaration stating that it did not carry trade in quality control services, and the regulations governing use of the proposed certification mark. However, the Assistant Commissioner also considered the existing trade mark registration to be prima facie evidence that the applicant carries on a trade in testing and inspection services.

The Assistant Commissioner considered the impression the public register gives to consumers to be important. The existing registration contained (as required) a statement at the time that UL intended to use the trade mark in New Zealand in respect of testing and inspection services. This was found to be a direct representation to the consuming public. The impression created is not one of independence and impartiality.

Conclusions

The Assistant Commissioner concluded that:

• “testing and inspection” services are of the same kind as “quality control” services;
• the applicant carries on a trade in “testing and inspection” services; and
• therefore the certification mark could not be registered (in its present form).

No appeal was filed.

Effects for UL

The IPONZ Examiner has effectively given UL a choice – cancel the existing registration for its “testing and inspection” services, and the certification mark can be registered, or restrict the services for which the certification mark can be used. The latter is not a desirable option for UL.

If UL wishes to keep its certification mark application at is present scope, they will need to address the existing registration for their own services. One proposed option (rejected by IPONZ) was a memorandum on the existing registration to the effect that the company does not trade in the services for which registration of the certification mark is sought.

It may be possible for UL to apply to restrict the specification of services for their existing trade mark to “testing and inspection for the purposes of certification”, but this would only be accepted if IPONZ agreed that it narrowed, rather than broadened, the existing specification. Another option is to cancel the existing registration, and file a fresh application for “certification services”. However, this would result in the loss of 17 years of registered rights.

The Assistant Commissioner agreed the present difficulty was the result of an anomaly in the system, and agreed that a certifying body should have the right to protect its own trade mark for the certification service it provides. The problem here is that one of the processes being tested and inspected for certification is itself a process for quality control, and therefore of the same kind. None of the examples of certification marks above would have experienced such a difficulty.

Points to remember

• An independent organisation that certifies goods or services can register a certification mark as a sign of quality. The use of the mark can be controlled, and licence fees charged to cover regular inspection costs.
• The certifier can also protect their own reputation as a certifying body.

1. UL LLC’s Application [2015] NZIPOTM 1
2. Section 14(b), Trade Marks Act 2002