Waikato Business News August/September 2020

WAIKATO BUSINESS NEWS August/September 2020
35
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 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.
What is bona vacantia?
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means withdrawn,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
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.
In infringement proceedings
brought by FKL in the
Intellectual Property Enterprise
Court, SML argued,
among other things, that 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 07 957 5660
(Hamilton), 07 928 4470 (Tauranga) and benc@jaws.co.nz.
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:
(a) the company’s details on
the Companies Register are
correct;
(b) the company keeps a
detailed register of all its IP
assets, whether registered/
granted or not;
(c) 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;
(d) if the company has an IP
agent, the agent has up-todate
contact details for the
company; and
(e) 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!
*Refer the definition of ‘property’
in section 2 of the Companies
Act 1993
** [2020] EWHC 2069 (IPEC)
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