Trademark use ruled unlawful

By PETER GRIFFIN IT writer

Listed IT company Advantage Group has lost a lengthy High Court trademark wrangle, forcing it to remove the "Advantage" name from parts of its business.

Advantage Group and Palmerston North-based Advantage Computers had been locked in legal action since October 1999, the latter seeking an injunction against Advantage Group to enforce trademarks it has held since 1992.

The ruling, which Advantage Group plans to appeal, does not mean the company must change its name, but it will have to alter branding and advertising in areas that overlap Advantage Computers' trademarks, which do not expire until 2013.

The trademarks cover everything from computer hardware and peripherals and computer retail services to computer programming, software design, computer consultancy and computer systems engineering.

Advantage Computers managing director Mark Ward said he was relieved that a drawn-out and expensive battle was finally over.

Ward, who bought the company in 1999 from Canadian Mark McGillivray, said the two Advantages had existed in harmony until 1999, when Advantage Group embarked on a tech acquisition spree, which led to the two becoming confused more often in the marketplace.

McGillivray had taken out trademarks on the name in relation to identical areas of business years before.

"He was always very concerned about protecting the brand and the goodwill associated with it," said Ward. "I have to take my hat off to him for doing it."

Justice Robert Chambers said Advantage Group might have been using the "Advantage" name sporadically from the 1980s, but not in similar fields to Advantage Computers.

Only the "significant change of commercial direction" by Advantage Group had led it to emerge as a competitor for the first time.

"The reason Advantage Group is now in difficulty is because it was not first in the field.

"They would have been able to prevent Advantage Computers from getting 'Advantage' registered as a trade mark in the first place."

Advantage Group was registered in August 1980 under the name Weightronic Systems (NZ) Ltd, changed to Weightronic Corporation in 1993, and then Advantage HDS Group in November 1994.

Throughout that period, it dealt mainly in electronic weighing systems and cash registers.

Advantage Computers, however, was incorporated under its name in November 1986, and was in the computer business from the word go.

Advantage Group's chief financial officer, Stewart McKenzie, was yesterday absorbing the 40-page ruling, and unable to say yet what products and services would be affected.

The ruling would do no "material damage" to Advantage Group's financial side, said McKenzie, but he admitted that the legal expenses in defending the case had been significant.

Two years ago Advantage Group had a $700,000 provision in its accounts for the dispute. McKenzie said that had since changed.

"There's no problem with the name Advantage Group; it really revolves around use of the trademark Advantage in fairly restricted areas of the business."

McKenzie said the thousands of "Advantage" branded eftpos terminals occupying shop counters, probably the company's most visible branding, would not be affected because they were not covered by the trademarks.

The ruling also allows for Advantage Computers to pursue damages from its larger rival.

Rochelle Hume, a senior associate and trademarks expert at law firm Phillips Fox, said calculating the extent of damages would be a difficult task if Advantage Computers chose to take that path.

"If it's a counterfeiter, it's easy to see the benefit they gain from using the name, but with competitors it's more difficult.

"[Advantage Computers] may feel it's enough to stop the use of the name and to get, say, 80 per cent of legal costs back," said Hume, who added that companies, especially those operating in e-commerce and software, were becoming more active in registering trademarks.

Advantage Computers

Advantage Group

Intellectual Property Office of NZ