Flujo Sanguineo Holdings Pty Ltd v Merisant Company
Jurisdiction | New Zealand |
Judge | Woolford J |
Judgment Date | 23 June 2021 |
Neutral Citation | [2021] NZHC 1505 |
Docket Number | CIV-2017-404-001185 |
Court | High Court |
IN THE MATTER OF Passing off, the Fair Trading Act 1986 and the Trade Marks Act 2002
[2021] NZHC 1505
Woolford J
CIV-2017-404-001185
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA
TĀMAKI MAKAURAU ROHE
Fair Trading, Intellectual Property — claim in passing off, breach of the Fair Trading Act 1986 and trademark infringement — misleading and deceptive conduct — visual getup — the parties were rival manufacturers of natural sweetener products derived from stevia leaves as a sugar substitute — Trade Marks Act 2008
D L Marriott for Plaintiff
C Elliott QC, J B Rutter and L E Royers for First, Second and Fourth Defendants
This judgment was delivered by me on Wednesday, 23 June 2021 at 4:30 pm
pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
This is an intellectual property (IP) dispute between two rival manufacturers of natural sweetener products derived from stevia leaves as a sugar substitute. The plaintiff sues the defendants in 1) passing off, 2) breach of the Fair Trading Act and 3) infringement of its trademark.
The plaintiff, Flujo Sanguineo Holdings Ltd (Flujo), is an Australian company that owns the IP relating to a range of natural sweetener products called Natvia. Flujo is part of a small closely held group of companies. Two of Flujo's wholly owned subsidiaries have manufactured and marketed Natvia products throughout New Zealand since July 2010. Natvia products are exclusively distributed in New Zealand by Acorn Group Limited.
The first defendant, Merisant Company, is an American corporation based in Chicago. It is the controlling entity behind the worldwide Merisant group of companies, which includes the second and third defendants. The third defendant, against whom Flujo has now discontinued proceedings, is the Swiss company Merisant Company 2 Sarl, which manufactures a range of natural sweetener products called Naturals and owns all Merisant Group's non-US IP. The second defendant, Merisant Australia Pty Ltd, is a wholly owned subsidiary of the third defendant. Merisant Australia Pty Ltd authorises the distribution of Natural products in New Zealand through the fourth defendant, New Zealand Sugar Company Ltd (NZ Sugar). Hereinafter the first and second defendants are referred to together as ‘Merisant’.
In brief, Flujo says that its product, Natvia, is marketed in packaging with a distinctive get-up. 1 Flujo alleges that Merisant unfairly gained market share for their Naturals products, at Natvia's expense, by changing the packaging of the Naturals products to a design that incorporated a misleading combination of key features from the Natvia get-up. This has led to causes of action in passing off and breach of the Fair Trading Act. Flujo also alleges that using “Naturals” as a trademark infringes its registered trademark “Natvia”.
Natvia is the name of a natural sweetener product that was developed by Flujo's principal, Mark Hanna, with the assistance of his business partner, Sam Tew, in 2008–2009 in response to the growing awareness of the detrimental health effects of artificial sweeteners. It uses an extract from the leaves of the Stevia plant, which is 250 to 300 times sweeter than sugar. It is produced and packaged in a form very similar to sugar through the use of a blending and bulking agent, erythritol, thus making it attractive to consumers as a sugar substitute. Stevia was approved as a food additive in Australia and New Zealand in August 2008.
Natvia products were released at retail in Australia in February 2010 and have been sold by the major New Zealand supermarket chains since July 2010. When first introduced, Natvia products were packaged in a predominately white and green get-up. In mid-2010, the packaging was changed to a more distinctive get-up, which Flujo says was quite unlike anything used by any competing products at that time. Flujo's range of Natvia products includes a 40 stick box (containing 40 2g sachets or sticks), a tablet pack and a 200g or 300g canister.
Flujo says that the Natvia get-up comprises a number of distinctive features that individually and in combination made the Natvia packaging completely distinctive from that used by any competitor, at least prior to the introduction of Naturals by Merisant. According to Flujo, Natvia's get-up comprises:
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(a) a recycled packaging appearance with a natural earthy feel and theme utilising a green, brown, and light beige colour scheme with a somewhat rustic styling and layout;
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(b) the most prominent feature being a centrally located banner or device featuring the words “the 100% Natural Sweetener” in a brown and light beige colour way and in a larger font than all remaining text on the package and with the word “Sweetener” positioned below;
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(c) an image of a green leaf depicted towards the top of the device;
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(d) the product trademark, located in the top left corner of the get-up, comprising:
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(i) the word Natvia in a stylised brown lower case font, and
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(ii) a leaf image; and
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(e) pink ‘call-out’ blocks to highlight brand elements and/or laudatory epithets.
Flujo says that the Natvia get-up was immediately successful and that the new packaging coincided with the beginning of a period of rapid growth for Natvia in New Zealand and elsewhere. They claim that this period of growth continued until early 2016, when Naturals was repackaged, after which Natvia sales immediately began to decline.
Flujo says it has taken three years for Natvia to overcome the effect of the repackaging of Naturals and resume its growth trend. Natvia products now account for 60–70 per cent of the New Zealand market for natural sweetener products and almost 25 per cent of the total market for sugar substitutes (which also includes artificial sweeteners).
Merisant's range of Naturals products have been sold in New Zealand since October 2013. The range includes a 40 stick box (containing 40 1.5g sachets or sticks) and a tablet pack, but also includes a 40g jar and a 250g crunch product with a spout. Two of the four products (the stick box and crunch product) had a large “100% natural low calorie sweetener” claim on the front of the pack and bore the Naturals trademark vertically down the left hand side of the front of the pack. The other two products (the granules jar and tablet pack) bore the Naturals trademark horizontally across the top of the pack. Flujo had no complaint about the original 2013 packaging.
In January 2016, Merisant launched a redesigned Naturals stick box. It had intended to launch the redesigned packaging across the entire Naturals range, but when Flujo issued infringement proceedings in May 2016, Merisant asked its manufacturer to keep any future production of Naturals products, other than sticks, in the 2013 packaging for the time being. The principal product at issue is therefore the Naturals stick box in comparison with the Natvia stick box.
Proceedings were initially filed in 2016 by Flujo Holdings Pty Ltd (Flujo Holdings), another corporate entity within the same group of companies as Flujo. At the time, Flujo Holdings owned all of the Natvia IP. The IP was later transferred to Flujo.
Prior to trial, Flujo Holdings applied for an injunction restraining Merisant and NZ Sugar from using the new packaging for the Naturals products pending disposition of its claim of passing off, breach of the Fair Trading Act 1986 and infringement of its trademark. Courtney J dismissed the application for an injunction in a decision dated 2 August 2016. 2
It is instructive to set out in full Courtney J's reasoning that Flujo Holdings had not established a serious issue for trial.
...[24] As I have discussed, Flujo particularly relies on its “the 100% natural sweetener” slogan coupled with the prominent speech bubble device and its green/beige/brown colour scheme as distinctive of its brand. It asserts that the Naturals packaging utilises these (and other) features in such a similar way that confusion or deception either has or is likely to occur.
[25] I accept that the packaging is similar but the evidence does not satisfy me that there is a serious question that the Naturals packaging has or is likely to lead to confusion as to whose product it is. Like the Natvia product, the Naturals product is sold in a slightly rectangular packaging, though the shape is closer to square than the Natvia box. Like the Natvia product the most distinctive features of the Naturals packaging are the prominent device in the middle of the box featuring the slogan “100% natural sweetener” and the colour scheme. However, to my eye, neither those nor the other features are sufficiently like those of the Natvia product to be likely to cause confusion.
[26] The central device is dark brown with beige text, the opposite of the Natvia packaging, which is beige with dark brown text. The Naturals device is a stylised rectangular plaque shape, compared with Natvia's (almost) round speech bubble.
[27] Although the colour scheme of the Naturals packaging is, like Natvia's, beige, brown and green, these colours are used differently. Mid-beige is the background colour on the Naturals box whereas light beige on the Natvia box is used for the speech bubble device. Green on the Naturals box is used only for text and call-out boxes whereas the Natvia box features bright green as the background colour. Brown on the Naturals box appears in a solid block as the central device whereas on the Natvia box it is used only for text. Overall, the Naturals box impresses as being predominantly brown and the Natvia box as predominantly green.
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Flujo Sanguineo Holdings Pty Ltd v Merisant Company
...HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE CIV-2017-404-001185 [2021] NZHC 1505 IN THE MATTER OF Passing off, the Fair Trading Act 1986 and the Trade Marks Act 2002 BETWEEN FLUJO SANGUINEO HOLDINGS PTY LTD Plaintiff AND MERISANT COMPANY First......