Muzz Buzz Franchising v JB Holdings (2010) Ltd [2012] NZHC 2490 involved an application for an interim injunction by Muzz Buzz, seeking to restrain the defendant, Jitta Buzz, from trademark infringement, breach of copyright and passing off. The High Court decision canvasses the rules that govern whether an interim injunction is to be granted and applies those rules to conclude that, although there was a serious question to be tried in relation to the claims made by the plaintiff, the balance of convenience did not weigh in favour of granting an interim injunction.

Muzz Buzz alleged that Jitta Buzz had deliberately set out to compete with Muzz Buzz and that their building outlet shape, colours, design, websites, Facebook page and brand name were all attempts to copy Muzz Buzz.

The Court concluded that there were serious questions to be tried in relation to all of the claims made by Muzz Buzz.  However, the Court also noted, when assessing the balance of convenience, that if the injunction were granted, in order to continue business, Jitta Buzz would be required to change its logo, building design, website and other advertising to comply with the injunction.  This would cause substantial disruption to Jitta Buzz's business and may even have the practical effect of putting an end to the proceeding.  If Jitta Buzz was required to change its branding then continuing the proceeding would become pointless, thereby allowing Muzz Buzz to short circuit the Court process.

The Court acknowledged that damages will rarely be an adequate remedy where there are allegations of likelihood of confusion in trade, whether in passing off claims, or in cases involving trade mark infringement, because of the difficulty in assessing damage to goodwill, reputation etc.  However, in light of the following factors:

  • Jitta Buzz was in a position to meet an award of damages if Muzz Buzz was successful in the substantive proceedings
  • Both businesses were relatively new in New Zealand and there was no real likelihood that Jitta Buzz could flood the market before the proceeding was to go to trial in six months time
  • Jitta Buzz outlets were geographically distant from the Muzz Buzz outlets which indicated that loss suffered by Muzz Buzz in terms of diversion of business would be less than it might otherwise be.

The Court concluded that if Muzz Buzz succeeded at trial, it would be possible to calculate damages and damages would be an adequate remedy.

The decision highlights that, even where an applicant for an interim injunction has strong legal arguments in favour of its claim, an injunction may nevertheless be refused.