No injunction till full trial in coffee copyright case

In Muzz Buzz Franchising Pty Ltd v JB Holdings (2010) Ltd and Ors [2012] NZHC 2490, the Franchisor of two “Muzz Buzz” drive-through coffee outlets (“plaintiff”) applied for an interim injunction against the owners of two “Jitta Buzz” drive-through coffee outlets in Auckland (“defendants”).

(Muzz Buzz is an established Australian franchise that has recently launched in New Zealand; Jitta Buzz is an independent New Zealand company – Ed.)

Despite the defendants (Jitta Buzz) opening their first outlet in August 2010 (Hillcrest) and another early in 2012 (Botany Downs), and the plaintiff’s (Muzz Buzz's) two franchised outlets opening in Mt Albert and Manukau in August 2012, the plaintiff sought to restrain the defendants from:

1. Infringing the plaintiff’s trade marks;
2. Using the plaintiff’s copyright; and
3. Passing off the plaintiff’s intellectual property in the conduct of the Jitta Buzz business.

The plaintiff owned the trade marks “Muzz Buzz” and “Buzz” in the same or similar classes to which the Jitta Buzz business was operating. The High Court noted that use of the word “buzz” and the colours of the respective logos (which the Court considered to have some similarity for the purposes of trade mark infringement, despite the plaintiff franchisor’s logo in question being unregistered) were sufficiently similar to raise a serious question to be tried in relation to trade mark infringement.

Regarding copyright infringement, the Muzz Buzz franchisor argued that Jitta Buzz copied its building shape and various aspects of the Muzz Buzz website. The High Court noted that while Muzz Buzz’s claims as to industrial design were not strong, it accepted that there was an objective similarity between the Jitta Buzz website and the Muzz Buzz website.

Citing particularly the use of the word “buzz” and the similar colours of the respective logos, and noting that confusion may be caused for an ordinary consumer, the Court also accepted that there was a serious question to be tried in relation to the allegation of passing off.

Despite the above conclusions, the High Court refused to grant the interim injunction. While the Muzz Buzz franchisor was said to have produced evidence suggesting a real prospect of success in a claim for a permanent injunction at trial (set down for March 2013) in relation to all three claims, the balance of convenience weighed against granting the interim injunction. The Court noted that if the interim injunction was granted within a relatively short period of time before the permanent injunction was to be considered at trial, the interim injunction may well have the practical effect of putting an end to the proceeding as the defendants would be required to take steps to change its logo, building design, website and other advertising to comply with the interim injunction, which would cause at least substantial disruption to the Jitta Buzz business.

We await the next instalment of this dispute with interest.

See also this 2009 article on the franchisor's responsibility to  protect the trademarks that franchisees have invested in.

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