Welcome to the Spring edition of Commercial eSpeaking; the last issue for 2023.
In this edition, our main story focuses on the Mainzeal case where the Supreme Court found that four directors had traded recklessly and while the company was insolvent.
We hope you enjoy reading this e-newsletter, and that the content is both interesting and useful.
If you would like to talk more about any of the topics covered, or indeed on any legal matter, please don’t hesitate to contact us.
Business briefs
Lego wins trade mark dispute with Zuru
The recent High Court decision in Zuru v Lego[1] is a reminder to all businesses that any use of another trader’s registered trade mark carries significant legal risk.
The issue arose when Zuru used the words ’Lego brick compatible’ on the packaging for its Max Build More building brick toys. Lego argued this infringed its registered trade marks.
Zuru attempted to rely on defences that it used Lego’s mark in ‘comparative advertising’ and to ‘indicate the intended purpose’ of its product. The Trade Marks Act 2002 permits the use of another trader’s registered trade mark for these purposes, provided such use is ‘in accordance with honest practices in commercial matters.’
The court rejected the ‘comparative advertising’ defence, finding the statement did not actually compare Zuru’s and Lego’s products in any way.
The court also found that Zuru’s use of ‘Lego’ did alert customers to a characteristic of Zuru’s bricks in that they were compatible with Lego’s bricks, but it was not done in accordance with honest practices. Relevant factors leading to this conclusion included:
- Zuru intended to gain market share from Lego by selling similar products at a cheaper price
- There were concerns that Zuru’s actions were a ploy to strengthen Zuru’s legal action against Lego in the USA, and
- Zuru did not obtain prior consent from Lego or advise Lego of its intention to use Lego’s trade mark.
The court determined that Zuru’s use of Lego in the compatibility statement was a deliberate attempt to leverage off Lego’s established reputation and infringed Lego’s registered trade mark rights.
If you are considering using another trader’s registered trade mark for any reason, we recommend you talk with us early on. Otherwise, you could be on dangerous, and expensive, ground.
Start preparing for the Incorporated Societies Act 2022
At long last the Incorporated Societies Act 2022 will come into full force on Thursday, 5 October 2023, replacing its predecessor after 115 years.
Societies can re-register under the 2022 Act from this date, and must do so by 5 April 2026 or they will cease to exist.
When applying to re-register, all societies must file a new or updated constitution that complies with the new legislation.
Other key changes under the 2022 Act include:
- All societies must have a governing body
- Officer duties have been set out, and are comparable to, director duties under the Companies Act 1993
- A person must give consent to become a member of a society
- Annual general meetings must be held, and financial statements and annual returns must be filed, within six months of the society’s balance date, and
- Every society must have a dispute resolution process set out in its constitution.
The Incorporated Societies Regulations were released this month. Every society should be drafting or reviewing its constitution in preparation for re-registration. Under s30(A) of the Charitable Trusts Act 1957, existing trust boards incorporated under that Act, need not re-register under the 2022 Act, but can elect to do so if they wish.
If you need a hand in doing this for your society, please don’t hesitate to be in touch – we are here to help.
ESG and directors: The Companies (Directors’ Duties) Amendment Act 2023 becomes law
The Companies (Directors’ Duties) Amendment Act 2023 was passed on 3 August 2023 and is now in force.
The legislation clarifies that company directors may consider matters other than profit maximisation when assessing what is in the best interests of the company such as, for example, environmental, social and governance matters.
The Act has attracted criticism from, amongst others, the Ministry of Business, Innovation and Employment; the New Zealand Law Society; and the Institute of Directors, with many arguing the new legislation will have a marginal impact, if any.
In any event, it acts as a signpost to directors clarifying that profit maximisation is not the only consideration when discharging their duties to act in the best interests of the company.
[1] Zuru New Zealand Ltd v Lego Juris A/S [2023] NZHC 1808.
DISCLAIMER: All the information published in Commercial eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are the views of the authors individually and do not necessarily reflect the view of this firm. Articles appearing in commercial eSpeaking may be reproduced with prior approval from the editor and credit being given to the source.
Copyright © NZ LAW Limited, 2021. Editor: Adrienne Olsen. E: adrienne@adroite.co.nz. M: 029 286 3650. ISSN 1174-2658 (Print) ISSN 2744-3973 (Online)