Bunnings registers rival’s trademark in New Zealand: Why such tactics almost never work

Hardware chain Bunnings has attempted to secure the New Zealand trademark of its rival, Masters Home Improvement.

This follows reports in The Australian of Bunnings New Zealand registering a business called Masters Home Improvement less than a month after Woolworths announced the name of its hardware joint venture when it launched in Australia in July 2011.

Bunnings, which had $7.2 billion in revenue in the year to June 2012, is the dominant player in Australia’s $12 billion hardware retailing industry. In 2011, Woolworths announced it was launching a hardware superstore in a joint venture with US hardware store Lowe’s. In August, Woolworths CEO Grant O’Brien said the company had opened a new Masters store every two and a half weeks – an expansion rate “unmatched in the history of Australian retail”.

This has eaten into the market share of Bunnings, which is owned by Wesfarmers, the same company that owns another Woolworths arch-rival, Coles supermarkets.

Competition between the two has been fierce. In the past Masters CEO Don Stallings covertly accused Bunnings of attempting to coerce suppliers into not selling to Masters (a claim Bunnings has denied).

Bunnings also denies it registered the trademark Masters Home Improvement in order to stop its rival from expanding to New Zealand. “Bunnings has a number of exclusive ranges that use the word ‘master’ in their branding in New Zealand and it was commercially appropriate to protect them, and as such the trademark was registered in mid-2011,” a spokesperson said.

On June 1, less than a month after Woolworths announced that Masters Home Improvement was the name of its new hardware chain, Bunnings registered a business called Masters Home Improvement Limited in New Zealand. Its directors are the Bunnings CEO John Gillam, along with chief operating officer Peter Davis and New Zealand Bunnings head Jacqueline Coombes. Its 100 shares are entirely owned by Bunnings.

But the business name itself means little without the accompanying trademark for Masters. And that trademark is disputed between the two hardware chains.

Masters Home Improvement Australia registered the New Zealand trademark for Masters Home Improvement in June 2011. A month earlier (May 12) Bunnings had registered another trademark, for Masters Home Improvements (note the ‘s’ on ‘improvements’). Both trademarks were contested and revoked after being originally accepted. LeadingCompany understands there is currently no valid trademark for Masters Home Improvements in New Zealand.

As far as competitive spoilers go, for a large company to register the trademark of its competitor is unusual, says Anny Slater, the principle of boutique law firm Slaters Intellectual Property Lawyers.

Using a trademark to keep out a competitor isn’t illegal, she says, but there are measures in trademark law to stop it happening. Specifically, both New Zealand and Australian trademark law have for more than a decade prevented companies from registering trademarks “in bad faith” (ie having no intention to use them, or registering them merely to block a competitor).

“And, if such an application does get registered, there are measures to take the trademark registration off the record,” says Slater.

“If a competitor finds out about the bad-faith application before it is registered, you can oppose the grant of the trademark registration. That involves putting together a document that explains why you believe you have a better right to a trademark, with evidence supporting that.

“The other party has an opportunity to reply, and then there’s a hearing.”

The process is drawn out. Each party has a minimum of three months to respond to evidence presented, which means successfully opposing a trademark can take a year or two, unless the parties agree to settle.

While some seek to make money or block rivals by registering the website domain of big companies in various jurisdictions, it’s far less common for someone to go to the lengths of registering a trademark, especially when it involves large, well-known companies. 

“It does happen, but far less now, because of the bad faith element”, says Slater. “If a solicitor or trademark attorney knowingly registers for a trademark that belongs to someone else… there might be monetary or disciplinary measures.”

“Lawyers think twice before doing something like that,” she says.