New Zealand: Brand disputes—why go there? But if you do, strategy and evidence are key

Last Updated: 5 December 2012
Article by Sheana Wheeldon and Charlotte Henley

New Zealand businesses occasionally come to grief after "borrowing" an overseas brand that has not yet been launched here. For inhouse counsel, comparing two similar brands can be tricky. The surrounding circumstances and moral high ground can affect the outcome more than you might expect. We have two recent cases to share with you.

In the first, Jitta Buzz, a New Zealand drive-through coffee franchise business, adopted a name and branding similar to that of a successful Australian drive-through coffee franchise business, Muzz Buzz. In the second, a row over similar names for dog roll, brand heavy-weight Mars Corporation with their Optimum products found Roby Trustees' Optimize Pro brand a little too close for comfort. Did the courts agree?

Muzz Buzz v Jitta Buzz

The parties' respective core brands are:

Muzz Buzz (the Australian business) unsuccessfully applied for an interim injunction to prevent Jitta Buzz (the New Zealand business) using its name, website, Facebook page and other branding elements that Muzz Buzz said had been deliberately copied and were too close to its own material.

The timing was key. Jitta Buzz was first on the New Zealand market with an outlet open in August 2010, whereas Muzz Buzz only applied for its MUZZ BUZZ trade mark here in August 2011 and did not open a New Zealand outlet until August 2012.

Despite the thorny question of which business actually had the earlier rights and reputation in New Zealand (which does not seem to have been addressed in any detail) Justice Andrews found that there was a serious question to be tried in terms of trade mark infringement, passing off and copyright infringement. When you compare the two websites it's fairly easy to see why. However, Muzz Buzz failed on the balance of convenience test.

One factor contributing to this was the fact that the Jitta Buzz outlets were geographically distant from Muzz Buzz outlets. This caused the Judge to conclude that any loss by Muzz Buzz in terms of diversion of business would be less than it might otherwise have been. She also took into account the fact that a trial could take place as early as March 2013.

Because of the scale of Jitta Buzz's alleged copying, it would have been unable to simply change its brand but otherwise continue with "business as usual" until the trial. The Judge noted that an injunction would have required Jitta Buzz to change its logo, building design, website and other advertising in order to continue in business, which would have caused substantial disruption and might have had the practical effect of putting an end to the proceeding.

This is interesting reasoning. If Muzz Buzz was correct, the changes required to Jitta Buzz's material would have simply been a reflection of the extent of its copying. It seems surprising that a defendant who is infringing a plaintiff's IP rights on a substantial scale should be able to deflect an interim injunction, on the basis that the changes required to stop its infringement would significantly disrupt its business.

It will be interesting to see what the outcome of the trial is.

Lessons that can be taken from both sides of this dispute include:

  1. Muzz Buzz, as an already successful Australian franchise business with plans to enter the New Zealand market, could have strengthened its position by applying much earlier to register its trade mark and logos here.
  2. Jitta Buzz, as a local start up that at the very least appears to have been "inspired" by the Muzz Buzz model, could probably have avoided the headache of a High Court injunction application if it had chosen a more original name, and paid more attention to designing an original website and other materials.

OPTIMIZE PRO vs OPTIMUM

Even the Courts do not always agree on what amounts to a confusingly similar brand. In the recent 'pet food wars' Roby Trustees Ltd applied to register the following trade mark for dog roll:

Mars opposed the application, based on its registrations of OPTIMUM and OPTIMUM NUTRITION FOR LIFE. It was win (IPONZ) lose (High Court) win (Court of Appeal) for Roby. In the Court of Appeal, Roby was helped by some late evidence it was allowed to file, that showed other competitors' use of OPTI-brands on pet food. This cut across evidence from an expert Mars had relied on in the courts below, and may have hurt Mars' credibility in the Court of Appeal.

Roby will now be able to register and use its trade mark, but it has been a long (and no doubt costly) road. Important practical lessons to be taken from this case include:

  1. Where a brand has only limited distinctiveness, like the word OPTIMUM, it is easier for competitors to get close to it with impunity.
  2. Conversely, choosing a brand similar to that of a major competitor can elicit an aggressive response that will require considerable time and money to resolve.
  3. Even where witnesses are not normally cross-examined (as in IPONZ proceedings) evidence needs to be strategic and unassailable.
  4. Seemingly peripheral facts may influence decision makers. In this case before Roby filed its OPTIMIZE trade mark Mars had written to its trade customers to say it would stop producing chilled dog roll because it had been losing money in that market. This, along with the fact that Mars' evidence indicated dog roll was perceived as a low-end product, may have diluted Mars' case, which depended on the value of its OPTIMUM brand for pet food in general.

Who needs it?

Brand disputes turn on their facts and there are some unpredictable value judgments involved. Depending on which side of the fence you are on, simple rules for avoiding a brand dispute in the first place include:

  1. Register your key brands early and comprehensively.
  2. Before adopting a brand, carry out a thorough availability search of the Register and marketplace.
  3. If an overseas brand or business is your inspiration, tread very cautiously – an injunction application is an unnecessary cost and disruption even if successfully defended.
  4. When considering embarking on litigation, run a thorough "reality check" on the strength of your brand and the factual landscape, and be sure your evidence will hold up.

To discuss your IP rights enforcement, brand protection, copyright, patent infringement or Fair Trading Act/passing off issues, speak to our specialist team.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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