Bay of Plenty Business News - September/October 2020

September/October 2020 BAY OF PLENTY BUSINESS NEWS 19
When IP rights are
bona vacantia
it ain’t no vacation
In my last article I wrote about the importance of doing thorough
due diligence on any business or asset acquisition. I recommended
drawing up a list of due diligence issues, including identifying and
verifying ownership of all intellectual property (IP) assets.
With this article I explore
a related issue
– the risk of IP rights
being bona vacantia after a
business’s assets have been
sold. Bona vacantia is Latin
and means “unclaimed goods”.
More broadly, it means
unclaimed property. “Property”
includes intangible assets
like trade marks, patents,
copyright, trade secrets and
designs.*
The issue of IP assets being
bona vacantia most commonly
arises in relation to registered
IP rights.
When does bona
vacantia apply?
Property owned by a company
(limited or unlimited) is
deemed to be bona vacantia if,
immediately before the company
is removed from the New
Zealand Companies Register
(the “Register”), the property
has not been distributed or disclaimed
by the company. (In
the context of IP rights, “distributed”
means assigned by
way of deed or otherwise in
writing to a new owner; “disclaimed”
means withdrawn,
cancelled or surrendered.)
On removal of the company
from the Register, ownership
rights in the property vest in –
pass to – the Crown.
The Crown takes ownership
of the property because
the company no longer exists
as a legal person and under
New Zealand law the property
must be owned by someone –
it cannot remain ownerless.
By way of example, if ABC
Limited owns a registered
trade mark, but does not assign
or cancel the registration before
the company is removed
from the Register, the Crown
will become the owner of that
registration on removal of the
company from the Register.
Similarly, if XYZ New
Zealand (an unlimited company)
owns a granted patent,
but does not assign or surrender
the patent before the company
is removed from the Register,
the Crown will become
the owner of that patent on
removal of the company from
the Register.
Can you get your
property back?
If property does vest in the
Crown, all is not lost. Property
can be recovered by a person
“who would have been entitled
to receive all or part of
the property, or payment from
the proceeds of its realisation,
if it had been in the hands of
the company immediately before
the removal of the company
from the New Zealand
register”.
The recovery process is not
a simple one, however, and
may involve restoring a company
to the Register. (I say
“may” because for registered
trade marks at least, entitled
persons can pursue a private
process directly with the Treasury,
which does not involve
restoring the company to the
Register.)
If the company is restored
to the Register, then, subject
to certain exceptions, any
property vested in the Crown
re-vests in the company as if
the company had not been removed
from the Register.
This ‘restoration without
interruption of right’ can be
pivotal in retaining and enforcing
IP rights – as a trade mark
owner in England found out
recently.
In Fit Kitchen Ltd & Anor
v Scratch Meals Ltd,** the
plaintiff, Fit Kitchen Limited
(“FKL”) successfully sued the
defendant, Scratch Meals Limited
(“SML”), for trade mark
infringement and passing off.
A key feature of the case was
whether the trade mark relied
on by FKL was valid.
FKL applied to register
its FIT KITCHEN logo trade
mark (“Trade Mark”) on 8 August
2016.
Unbeknownst to its director
at the time, the application was
made six days after FKL had
been removed from the UK’s
Companies Register for failing
to file its annual accounts. The
failure was due to an address
mix-up.
On discovering the company
had been removed, FKL’s
INTELLECTUAL PROPERTY ISSUES
> BY BEN CAIN
Ben Cain is a Senior Associate at James & Wells and a Resolution
Institute-accredited mediator. He can be contacted at 07 928 4470
(Tauranga), 07 957 5660 (Hamilton), and benc@jaws.co.nz.
director applied to restore the
company to the Register; the
company was duly restored on
11 December 2017.
In December 2016, while
FKL was not on the Companies
Register, however, SML
began using a similar FIT
KITCHEN logo mark; it did so
until November 2019.
1. In infringement proceedings
brought by FKL in the
Intellectual Property Enterprise
Court, SML argued,
among other things, that
FKL’s trade mark registration
was invalid because
on the date FKL applied
to register its trade mark it
was a dissolved company,
and a dissolved company
cannot apply for a trade
mark. Much to FKL’s relief,
the Court disagreed. Applying
very similar law to that
in New Zealand, the Court
found that as FKL was
deemed to have continued
in existence at all times, including
on 8 August, 2016,
the trade mark application
was properly made by FKL
and the Trade Mark belonged
to FKL.
Take homes
To avoid a significant headache,
all companies with IP
assets should ensure:
1. The company’s details on
the Companies Register are
correct;
2. The company keeps a detailed
register of all its IP
assets, whether registered/
granted or not;
3. The company’s contact details
for any IP assets on the
Intellectual Property Office
of New Zealand database
(and any other databases,
including domain name
registrars) are correct;
4. If the company has an IP
agent, the agent has up-todate
contact details for the
company; and
5. If the directors and shareholders
of the company intend
to wind the company
up, then in preparation for
removal from the Companies
Register, all IP assets
are assigned in the proper
fashion to a new owner/new
owners before removal.
If any readers of this article
require specific advice, or
know someone who does, then
contact James & Wells or your
nominated IP attorney. Don’t
leave it until it is too late.
• References:
* See the definition of “property”
in section 2 of the
Companies Act 1993.
** [2020] EWHC 2069
(IPEC).