A trade name dispute between Fonterra and a New Zealand stock feed and animal health products company could be headed for the High Court.
The issue arose last year after Fonterra announced it was revamping its retail, on-line and other services to farmers under a new brand, Farm Source, with the aim of connecting more closely with its suppliers in the dairy regions.
Farm Source is being structured around more than 70 local hubs based on the co-operative's RD1 trading stores, with the first of the new hubs launched in Methven, in Canterbury, last year.
But the Fonterra rebranding has upset another New Zealand company, Source NZ. It has had that name registered as a trademark since 2003, and has traded since then under the name Source in the supply of stock feed, animal health products and related consultancy services.
Managing director Warren Morritt said he contacted Fonterra chairman John Wilson after learning about the rebranding and had had meetings with other Fonterra representatives.
"Our concerns have been around confusion of the names. Since 2003, when we started trading as Source New Zealand, the market place has referred to us as Source, and when Fonterra decided to rebrand RD1 as Source or New Zealand Farm Source, we believed there would be confusion over the market calling them Source as well, or the new RD1 Source," Mr Morritt said.
"Fonterra denied that would happen but time has shown, since the rebrand, the market place is already referring to New Zealand Farm Source solely as Source and talking about going to their Source Stores.
"So there's confusion in the market place, including among Fonterra's own shareholders. That's costing us business, and that's what our issue is."
Mr Morrit said Source NZ had started legal action, with the dispute set down for a hearing in the High Court in Auckland next March.
"We've had to spend a considerable amount of money to get this far, in terms of legal costs, and it's pretty disappointing really. At the end of the day, Fonterra could have rebranded to any name rather than choosing the name that we've had registered and used and invested considerably in since 2003, or one that clearly cuts across our trade marks," he said.
"It surprises me a company as big and sophisticated as Fonterra would roll out a rebrand without actually understanding their brand position
"We have always been open to finding a sensible solution negotiating a settlement with Fonterra and hope that one can be achieved, particularly in light of the difficult times the dairy industry is currently going through. But if one can't be found, it will be the High Court that has to decide the matter, and that's set for a two-week hearing in Auckland in March next year."
In the meantime, some of Fonterra's applications to register Farm Source as a trade mark are on hold.
Fonterra confirmed in a statement it was in a dispute with Source NZ and its parent company, Intelact, over the use of its Fonterra Farm Source trademark.
Farm Source stores director Jason Minkhorst said Fonterra was confident of its position. It had challenged the registrations of Intelact's SourceNZ and SourceWorld trademarks, and would defend the claims made against it.
Fonterra Farm Source was more than a rebranding of its 71 stores, he said. It combined service, support, rewards, digital technology and financial options for its farmers, connecting our farmers with the collective strength of the Co-operative.