In a recent case an Australian franchisor of drive-through coffee outlets operating under the trade mark Muzz Buzz was able to stop a New Zealand operator trading under the name Jitta Buzz. Although the defendant was active in New Zealand well before the plaintiff, the court considered it had copied the business model and overall presentation from the plaintiff's Australian operation. The defendant's behaviour in this respect appeared to be sufficient to sway the court despite the strength of the plaintiff's causes of action being prima facie dubious.
Justice Toogood found that the defendants set out deliberately to copy and compete with the plaintiff's business, and that their choice of brand name, building shape, colours, design, website, uniforms, Facebook page and other brand identifiers were deliberate attempts "to see how close they can go" to the Muzz Buzz get-up without being identical copies.
Toogood found that the defendant's conduct amounted to passing off and breach of the Fair Trading Act (consumer protection legislation that prohibits misleading or deceptive conduct in the course of trade). He considered that Australia and New Zealand may be regarded as one market and that the plaintiff therefore had a reputation in New Zealand from its use of Muzz Buzz in Australia. He went on to hold that it was likely there would be serious dilution of the plaintiff's goodwill through an erroneous association with the defendant.
The plaintiff was also successful on the grounds of trade mark infringement, with the judge finding the defendant's use of Jitta Buzz infringed the plaintiff's registration for Muzz Buzz. Finally, the plaintiff succeeded on the grounds of copyright infringement due to the "striking similarity…in the appearance of the kiosks…from the colour scheme of the buildings and graphics; the text content; and the placement of the various elements" along with some text copied from the Muzz Buzz website.
With the exception of some of the copyright material, the plaintiff's causes of action did not appear strong. The fact the defendant commenced trading in New Zealand well before the plaintiff gives cause to doubt the passing off and Fair Trading Act claims. Nor do the trade marks appear overly similar, sharing only the element Buzz, which has at least some descriptive connotations in relation to coffee. This decision demonstrates that when satisfied a defendant has behaved unethically, New Zealand courts may be prepared to stretch the letter of the law to reach an equitable outcome. The decision should serve as a warning to anyone considering imitating an international trader's business in New Zealand.
On its face, it would be a concern if a trader in New Zealand could breach the Fair Trading Act or be found to be passing off based on a third-party reputation in Australia. A typical clearance search to see if a mark is available for use in New Zealand would not include a search in Australia. It is not clear how the case would have been decided if the similarity was incidental, rather than intentional.
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