A successful Australian drive-through coffee franchise trading as Muzz Buzz has obtained permanent injunctions against a New Zealand company which established two  similar drive-through coffee outlets in Auckland under the label 'Jitta Buzz'. See Muzz Buzz Franchising Pty Limited v JB Holdings (2010) Limited [2013] NZHC 1599.

The Australian franchise claimed that the New Zealand company's choice of brand name, building shape, colours, design, website, uniforms, Facebook page and other brand identifiers were a deliberate attempt to see how close they could go to the Muzz Buzz franchise without actually being an identical copy. In seeking injunctive relief, the franchise claimed that the New Zealand company had:

  • breached its copyright in the design elements of the Muzz Buzz kiosks and Muzz Buzz's website;
  • breached its trade marks;
  • been passing off the plaintiff's intellectual property in the design features of the business as the defendants' own; and
  • engaged in misleading or deceptive conduct in breach of section 9 of the Fair Trading Act 1986.

The New Zealand company rejected these claims, denying that they had appropriated the Muzz Buzz branding and emphasing that Muzz Buzz was not present in the New Zealand market when the first Jitta Buzz outlet was established in November 2010. 

Breach of copyright

On the evidence, the court found no difficulty in concluding that the New Zealand company had decided to capitalise on the success of the Muzz Buzz brand in Australia by copying the essential elements of the brand "in the belief that being the first to brand drive-through coffee outlets in New Zealand in that manner entitled them to do so. "The court found that the comparable size and shape of the buildings did not establish a breach of copyright, but the similarities between the appearance of the Jitta Buzz kiosks and the wording, layout, colour scheme and placement of the elements of the Muzz Buzz "look and feel" displayed on the facades of its kiosks were sufficient to make out a breach of copyright. The same held for Jitta Buzz's website which was also markedly similar in appearance and in some cases had identical text.

Breach of registered trade marks

Although, the Australian franchise had not set up its first outlet in New Zealand until 2012, it had registered various trade marks in New Zealand which included the words "Muzz Buzz" and combined image/text logo shortly after it had set up its business in Australia. The court found that the franchise was entitled to injunctive relief under the Trade Marks Act for the use of the words "Jitta Buzz" in respect of the facades of its kiosks and in other media such as the website. The words Jitta Buzz used in relation to the drive through retailing of coffee were likely to deceive or confuse customers about whether the service and products are identical or, at least, whether there is a link or association between the two businesses and their goods and services.

Passing off

The Australian franchise was also successful under the allegation based on the tort of passing off. This required the franchise to prove that there had been injury or likely injury to its business or its goodwill. Once again the court did not consider the fact that Jitta Buzz had been operating in Auckland for two years before Muzz Buzz entered the New Zealand market as in anyway assisting Jitta Buzz's position. In Justice Toogood's view "it can hardly be doubted that [in 2013] New Zealand and Australia, may for the purposes of enforcing intellectual property rights, be regarded as one market." As such, the fact that Muzz Buzz had registered a trade mark in "Muzz Buzz" in New Zealand before the New Zealand company opened its first Jitta Buzz outlet and had a well established reputation in Western Australia and elsewhere, including in New Zealand, through internet access was sufficient to establish the goodwill and reputation of Muzz Buzz in New Zealand.

Breach of the Fair Trading Act

Justice Toogood also found that the establishment of the New Zealand company's business was in breach of section 9 (conduct in trade which is likely to mislead or deceive) of the Fair Trading Act given the similarity between the brands and the resulting likelihood for confusion.

Injunctive relief

The court has not stopped the New Zealand company from operating its drive-through coffee businesses but it has been prevented from operating them in breach of the Australian franchisee's intellectual property rights. This includes a permanent injunction form using the words "Jitta Buzz" or any similar words and from displaying or using any text or images which are similar in appearance to the text images used by the Muzz Buzz franchise.

Comment

Although this is a particularly stark example of copying an overseas brand, the case does highlight a number of factors to be considered when establishing a business brand. Researching the local market to ensure that you will not be infringing another business's intellectual property rights should be at the top of the list. In this instance, a search of the trade mark register would have disclosed that Muzz Buzz had possible intentions to enter the New Zealand market at some stage. Also, the court's findings on goodwill and passing off regarding the integration of the Australian and New Zealand markets suggests that New Zealand businesses may need to extend their intellectual property search further afield. The decision also makes it more important for New Zealand businesses considering expansion into Australia to establish trade mark rights in Australia as early as possible.