Quick Quiz – who has a crocodile logo on the clothes they make? Check the answer here…

BUSINESS BRIEFS: The tail of two crocodiles, Business tax proposals announced, Attempt to structure around the Overseas Investment Act proves costly.

The ‘tail’ of two crocodiles

Lacoste recently successfully defended its rights in the Court of Appeal (1) to its trade mark which depicts both a crocodile and the word ‘crocodile’ (mark 70068) despite it never actually having used the mark.


Crocodile International Pte Limited had applied to have Lacoste’s mark revoked on the ground of non-use under 66(1)(a) of the Trade Marks Act 2002. Lacoste argued that its use of its other, more familiar mark, constituted use of mark 70068 under the Act’s extended definition of ‘use’ which includes ‘use in a form differing in elements that do not alter the distinctive character of the trademark in the form in which it was registered.’


In making its decision, the Court of Appeal agreed with the High Court that it should first assess the points of difference between Lacoste’s familiar mark that has been used and the mark as registered (70068). It must then ascertain if the differences alter the distinctive character of the mark as registered (70068).

The court held that the differences between mark 70068 and its more familiar mark were insignificant and did not alter the distinctive character of mark 70068, which was dominated by the image of a crocodile. It held the use of the word ‘crocodile’ added nothing to the distinctiveness of the mark.

Despite the result of this case, it’s important to remember to ‘use’ your registered trade mark to prevent claims of this nature being brought by your competitors.

(1) Crocodile International Pte Limited v Lacoste [2016] NZCA 111

Business tax proposals announced

In April 2016, the Prime Minister announced a package of proposals to simplify business tax, many of which will benefit small and medium-sized businesses. Some of the key tax proposals include:

  • A new pay-as-you-go option for paying provisional tax for small businesses with less than $5 million annual turnover. This will give small businesses an alternative to the current system which requires three annual provisional tax payments. In order to take advantage of the proposal, businesses will need to use a cloud-based accounting system linked to the Inland Revenue such as Xero.
  • Changes to the ‘use-of-money interest’ rules that govern the interest paid to taxpayers for overpayment of tax and interest charged for underpayment. The practical effect is that the changes will eliminate or reduce use-of-money interest for the majority of taxpayers.
  • Contractors will be able to elect their own withholding tax rate to better reflect their circumstances and reduce the impact of provisional tax.
  • Certain penalties will be removed, including the current 1% monthly penalty for new debt. However, immediate penalties and interest charges for late payments will still apply.

New legislation is likely to be introduced later in 2016 and most of the proposals have a planned implementation date of 1 April 2017.

Attempt to structure around the Overseas Investment Act proves costly

A recent case (2) serves as a reminder of the wide application of the overseas investment regime and a warning against attempts to try and structure deals around it.

Carbon Conscious New Zealand Limited (CCNZ) needed to buy some land to meet its planting obligations for a carbon credits scheme. The land was sensitive under the Overseas Investment Act 2005. However CCNZ (a subsidiary of an Australian company) did not have the time it would have required to get consent – it needed to buy the land to start its planting in time to meet those obligations.

After taking advice an arrangement was entered into which involved a new company (Katey LR) being incorporated with the CCNZ general manager’s wife as the sole shareholder and director. That company bought the land and entered into some contractual arrangements with CCNZ which included giving CCNZ an option to buy the land.

These arrangements made the two companies associates under the Act, the result being that there was an acquisition of sensitive land by an associate of an overseas person without consent which is in breach of the Act. The High Court looked at a number of factors including the nature of the breach, the nature of any damage caused or gain made and whether the breach was intentional, inadvertent or negligent. The court ultimately ordered CCNZ to pay a penalty of $40,000 (after applying a 50% reduction for its admission of liability and co-operation) and $6,000 in costs.
New Zealand’s overseas investment regime is intentionally broad in its application. Any attempt to structure around it is unlikely to succeed, and carries with it the potential for significant penalties.

(2) LINZ v Carbon Conscious New Zealand Limited and Katey LR Investments Limited [2016] NZHC 558

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