“In 2013, it can hardly be doubted that New Zealand and Australia may, for the purposes of enforcing intellectual property rights, be regarded as one market.”
So said the Auckland High Court in the recent “Muzz Buzz” franchise case.
The take-out from this is that New Zealand businesses need to respect Australian trade marks, even if they are not used or registered here.
Muzz Buzz and Jitta Buzz
Muzz Buzz is a drive-through coffee business first established in Western Australia in 2002. It had expanded through most of Australia and was anticipating opening stores in New Zealand but had not done so (though it had registered two marks) when a local outfit established a look-a-like business called Jitta Buzz.
Muzz Buzz failed to get an interim injunction against Jitta Buzz but at the trial succeeded on all fronts – copyright infringement, trade mark infringement and passing off/Fair Trading Act breach.
Although Muzz Buzz did not need to rely on passing off, it is interesting that the judge also found for them on this ground and, in doing so, issued a timely warning to New Zealand businesses.
He referred to a 1987 case called Dominion Rent A Car, when the New Zealand Court of Appeal talked about spill-over reputation from Australia and the fact that it might not need much activity in the New Zealand market for a court to recognise rights in a mark so that the Australian owner could succeed in passing off.
The Auckland High Court judge in Muzz Buzz seemed to go a bit further: the fact that the reputation of the Australian business and its brand name on a website in Australia was accessible in New Zealand gave the Western Australian franchise a platform to sue in passing off in this country.
Chapman Tripp comments
It has long been a rule that trade marks are territorial in nature. That is, they can only give exclusive rights in the country in which they are registered or where they have been used and have acquired goodwill rights.
There have always been exceptions in both the trade marks and passing off laws but they have relied upon being able to prove that the IP holder has a reputation in New Zealand.
The implication of this case is that Closer Economic Relations, coupled with internet access, mean that a company with an Australian reputation might need little extra evidence to persuade a judge that a New Zealand company has misappropriated its trade mark even in the absence of the Australians having the mark registered here.