UPDATE: Knauf, Fletcher return to court over long-running Batts dispute

UPDATED: Knauf, the German building materials firm, and Fletcher Building [NZX: FBU], New Zealand's dominant building supplies company, have returned to court for a cross appeal, the latest instalment of their long-running dispute over the use of the word "batts" to describe insulation.

Appearing in the Court of Appeal before Justices Tony Randerson, Christine French and Mark Cooper, the legal counsel for Fletcher's Tasman Insulation subsidiary, Julian Miles QC returned to the argument that Knauf's use of "batt" or "batts" on the packaging of insulation infringed the "Batts" trademark it has held since 1973.

The two building supplies companies are both appealing aspects of Justice Brendan Brown's May 2014 judgment, which refused a request from Knauf to revoke the trademark. In the same judgment, Justice Brown also limited Fletcher's claim of infringement of the trademark to the use of "batt" in the HTML code on the www.earthwool.co.nz website, which sold Knauf insulation, and said the use of the word in the installation instructions on the packaging didn't infringe trademark.

Dwarfed by 11-plus boxes of files and three large rolls of Knauf insulation, Tasman's Miles said the rival company first started importing its insulation into New Zealand in December 2010, originally in clear packaging labelled "loft roll". However, during 2011 Knauf began to bring in "what we understand was the same product with different packaging" which included instructions which referred to the product as "batts". Miles pointed out the difference using the three insulation rolls in the court room.

Miles argued that Knauf's use of "batts" on its packaging was a "deliberate" attempt to use Fletcher's trademarked term. He said the change from the original non-offending packaging to the inclusion of the term came after market research showed the widespread use of the term over the past four decades.

Knauf "knew (Batts) had a trademark, the only inference that you can draw from that is that they intended to undermine a trademark," he said. It was irrelevant how the term was used in other countries, as this dispute concerned only the New Zealand market.

Knauf, represented by Clive Elliott QC, is appealing Justice Brown's ruling that the "Batts" trademarked term for insulation is not generic.

In its submission Knauf argues Tasman was flawed in asserting "Batts" was a highly distinctive and iconic trademark, and it has always been a descriptive word to describe portions of insulation. There is no evidence Knauf set out to destroy the distinctiveness of "Batts" and Tasman's efforts to protect the mark were "too little, too late".

"Knauf submits that if traders have chosen not to use 'batts' it is reasonable to infer that this is because of a fear of being sued by Tasman rather than in express of implied acknowledgement of Tasman's proprietary assertions," Knauf said it its submission. The company points to CSR which had also applied to revoke the trademark use of the term as further proof it is considered a generic term.

The global insulation business said the use of "batt" and "batts" on its insulation bales imported into New Zealand was because of the genuine belief the word was descriptive. The original bales had been shipped from Russia and the USA, where the words are considered generic terms and it wasn't economical to manufacture product with New Zealand-specific packaging.

The hearing is set down for three days in the Court of Appeal, and is continuing.

(BusinessDesk)