FRUCOR BEVERAGES Ltd v RED BULL GMBH and Anor HC AK

JurisdictionNew Zealand
CourtHigh Court
JudgePotter J
Judgment Date12 February 2010
Neutral Citation[2010] NZHC 264
Docket NumberCIV 2009-404-006525
Date12 February 2010

[2010] NZHC 264

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2009-404-006525

IN THE MATTER OF Passing Off and Breach of the Fair Trading Act

BETWEEN
Frucor Beverages Limited
Plaintiff
and
Red Bull Gmbh
First Defendant

And

Red Bull New Zealand Limited
Second Defendant
Counsel:

J G Miles QC and K Duckworth for the plaintiff

A H Brown QC and S Wheeldon for the defendants

Application for an interim injunction to restrain Red Bull GMBH from using the term “Pocket Rocket” — use of “Pocket Rocket” in advertising of energy drinks — whether Red Bull GMBH's use of the term constituted passing off — whether use of the term constituted misleading or deceptive behavior under s9 Fair Trading Act 1986 — whether Frucor Beverages had established a reputation or goodwill with regards to “Pocket Rocket”.

Held: F Ltd had launched their product first, but they had only just entered the marketplace when RB began using the term in its promotional material and could not be said to have established any goodwill or reputation in the public market. There was no misrepresentation in adopting the same term at a point before another trader had acquired a reputation in that name. RB began using the term in trade marketing before F Ltd released its product. It was arguable that once F Ltd entered the marketplace the continued use of the term could create confusion, but there was no evidence of this. RB only used the term in promotional material but not on the product itself and it was consistently shown alongside the distinctive Red Bull blue and silver packaging. Each party used the term in a sufficiently distinct manner which would have minimised any potential confusion, RB had no plans to use the term on the product itself and the products had co-existed in the market place for a number of years without confusion. F Ltd had failed to establish that RB's conduct was deceptive or misleading. There was no serious question to be tried and the balance of convenience justified the status quo prevailing. While F Ltd may have had a successful claim under s9 FTA, F Ltd had failed to establish any deceptive or misleading conduct that would justify the interim injunction. Application dismissed.

JUDGMENT OF Potter J

On application for interim injunction

TABLE OF CONTENTS

Introduction

[1]

Plaintiff's application for injunction

[9]

Injunctions: applicable principles

[11]

Factual background

[12]

Is there a serious question to be tried?

[25]

Passing off

Pleadings

[27]

Elements of passing off

[33]

Has Frucor established reputation or goodwill?

[37]

Discussion

[45]

Section 9 Fair Trading Act

Pleadings

[51]

Elements of misleading and deceptive conduct

[55]

Misrepresentation

[58]

Deceptive or misleading conduct?

[91]

Balance of convenience

[107]

Overall justice

[118]

Result

[120]

Costs

[121]

Introduction
1

The plaintiff and defendants are both manufacturers of energy drinks. Both are major players in the New Zealand energy drinks market. Frucor has the major market share, but its percentage share is contested. The plaintiff's energy drink is marketed under the V label. The defendants? energy drink is marketed under the RED BULL label.

2

In 2009 both parties released on the New Zealand market an “energy shot”, a smaller, more concentrated version of an energy drink. The plaintiff's energy shot product is marketed as V POCKET ROCKET. The product's presentation follows that of other energy drink products of the plaintiff. It adopts the V emblem which features on the plaintiff's range of products. As described by Peter Lamb, the Chief Financial Officer of the plaintiff, in his affidavit dated 6 October 2009, the pocket rocket product “… is able to leverage off the popularity of V”. The container is coloured green. Mr Lamb says that green V has always been the biggest seller for the plaintiff.

3

The defendants? energy shot product is marketed in a blue and silver container on which there appears in red and white lettering RED BULL ENERGY SHOT.

4

The energy shot products of the plaintiff and defendants are shown in schedule A attached to this judgment.

5

The defendants have also produced and distributed promotional material including window decals and brochures which feature the phrase A BLUE AND SILVER POCKET ROCKET. This material is shown in schedule B. Item B1 is the window decal. Item B2 is the brochure and Item B3 is a media pack contained in a jeans pocket. Each of these items makes reference to A BLUE AND SILVER POCKET ROCKET. There is no such description on the defendants? energy shot product.

6

The defendants? energy shot product was released to the trade in April 2009 and to the public from 6 August 2009.

7

The plaintiff's energy shot product was released to the trade from 15 June 2009 and to the public from 26/27 August 2009. (The date varies in some of the evidence and the statement of claim.)

8

The plaintiff pleads that the defendants? use of the words or term POCKET ROCKET in its promotional material constitutes passing off and is a breach of s 9 of the Fair Trading Act, 1986.

Plaintiff's application for injunction
9

The plaintiff's application for interim injunction seeks an order from the Court:

Until the further order of the Court an interim injunction issues restraining the defendants and their servants, contractors, agents, marketers and distributors from using the name POCKET ROCKET or any name so resembling the name POCKET ROCKET as to be likely to cause a misrepresentation.

10

The defendants oppose the application. They say that there is no serious question to be tried under either of the plaintiff's causes of action, passing-off or breach of s 9 of the Fair Trading Act 1986. The defendants also plead that, contrary to the plaintiff's pleadings and affidavits, the plaintiff's product is promoted and sold as V POCKET ROCKET.

Injunctions: applicable principles
11

The principles are well established by the authorities of American Cyanamid Co v Ethicon Ltd [1975] AC 396 and Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129. The Court must consider:

  • a) Whether there is a serious question to be tried;

  • b) Where the balance of convenience lies;

  • c) The Court must then take a step back and consider the overall justice of the case.

Factual background
12

Both parties prepared a timeline which reflected the affidavit evidence. A timeline is attached to this judgment which is based on that provided by the plaintiff, extended to include items which appeared in the defendants? chronology but not in the plaintiff's timeline.

13

As the timeline shows, by March 2009 both the plaintiff and the defendants (in conjunction with their American sister company) were engaged in the development of an energy shot product.

14

In early March 2009 Adrian Blake of Frucor came up with the name POCKET ROCKET for Frucor's energy shot product.

15

At about the same time, Red Bull US was toying with a suggestion from its advertising agency for a slogan “A pocket rocket for your pocket”. This slogan was reworded to “The Blue-Silver Pocket Rocket” by Christopher Carter and another employee of the first defendant.

16

There appears to be no dispute that the development of the POCKET ROCKET name or phrase was generated independently by the plaintiff and the defendants at approximately the same time.

17

In April 2009, Red Bull launched its energy shot product in the United States. Some promotional material included reference to BLUE SILVER POCKET ROCKET. Later in April, Red Bull proceeded with an internal marketing phase in New Zealand and from the end of April presented externally to various leading clients in New Zealand. This continued through May and June. The presentations included reference to BLUE SILVER POCKET ROCKET.

18

Through May, Frucor was conducting market research and preparing commercial marketing material. On 25 May 2009, Frucor filed a trade mark application for POCKET ROCKET in the name of Alexandra Coats, which was later assigned to Frucor. In June, Frucor registered domain names: www.vpocketrocket.co.nz and www.vpocketrocket.com.

19

By mid-June Frucor was ready to present its product to the trade and in the latter part of June through to 1 July 2009 embarked on a series of presentations to leading clients.

20

On 15 July 2009 Red Bull became aware that Frucor was intending to call its new energy shot product POCKET ROCKET. The information came from an unconfirmed industry source. In late July Red Bull became aware of the application in the name of Alexandra Coats for registration of the trade mark POCKET ROCKET in New Zealand.

21

Frucor says that it did not become aware of Red Bull using POCKET ROCKET until 19 August 2009. By that time Red Bull had completed presentation to the trade, issued promotional material including the phrase BLUE SILVER POCKET ROCKET, made its first delivery to an Auckland convenience store and applied for a New Zealand trade mark for BLUE SILVER POCKET ROCKET.

22

In the period 25-29 August 2009 Red Bull circulated the promotional material which is in schedule B to this judgment.

23

On 26/27 August 2009 Frucor's energy shot product was released to the public, followed by an intensive promotional campaign.

24

Red Bull continued with the promotion of its energy shot product including distribution of flyers containing the phrase BLUE AND SILVER POCKET ROCKET.

Is there a serious question to be tried?
25

The threshold test was expressed in Re Lord Cable (Dec'd) [1976] 3 All ER 417 at 431 as requiring the plaintiff to satisfy the Court...

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