The plaintiff and defendants were major players in the New Zealand energy drinks market.  The plaintiff’s energy drink was marketed under the label V.  The defendants' energy drink label was RED BULL.  Both had competed in the New Zealand market for some 12 years.

In 2009 both the plaintiff and defendants released new energy shot products being small and more concentrated versions.  The defendants’ energy shot was marketed as RED BULL ENERGY SHOT and was sold in a blue and silver container using the same getup as its RED BULL Energy Drink product.  It was released to the trade in April 2009 and to the public from 6 August 2009.

The plaintiff’s energy shot was called V POCKET ROCKET and adopted features from its V range of products.  It was released to the trade from 15 June 2009 and to the public from 26/27 August 2009.

The defendants produced and distributed promotional material, including window decals and brochures, featuring the phrase A BLUE AND SILVER POCKET ROCKET. There was no such description used on the defendants’ product itself.  This slogan had been devised in the United States in about March 2009 and was generated independently of the plaintiff’s choice of name. 

The plaintiff sought an interlocutory injunction to restrain the defendants’ use of the term POCKET ROCKET and the slogan, contending that such use amounted to passing off and a breach of s9 of the Fair Trading Act 1986 (“misleading or deceptive conduct”).  The defendants alleged that there was no serious question to be tried under either cause of action.

In relation to passing off, the plaintiff asserted that some degree of flexibility as to the date of reputation was required and that it was enough for the plaintiff’s goodwill to exist as at the date of proceedings.  The defendants contended that the relevant date was the date of commencement of the conduct complained of and that they were first in the market.

As to s9 of the Fair Trading Act, the plaintiff asserted that it had established a reputation either at the date of issue of the proceedings (6 October 2009) or at the date of hearing (8 December 2009) and that it did not matter which party launched its product first so long as the plaintiff could show a reputation and a likelihood of misleading or deceptive conduct. 

The defendants claimed that (as with passing off) they were first in the market and their words and conduct could not amount to a misrepresentation because the plaintiff had no reputation or goodwill at the time of the objectionable conduct.

Held (refusing the interlocutory injunction)

Passing Off

(i)  The plaintiff raised no serious question to be tried.  The plaintiff must establish goodwill and reputation as at the date of commencement of the conduct referred to.  When the defendants’ use started in April 2009 or even at the later stages of 25-29 August 2009, the plaintiff had only entered the marketplace (26 or 27 August 2009) and had not established any reputation or goodwill in V POCKET ROCKET.  There was therefore no misrepresentation by the defendants.  The defendants were entitled to continue with conduct that was innocent in its inception. 

Cadbury-Schweppes Pty Limited v Pub Squash Co Pty Limited [1981] 1 All ER 213; Wineworths Group Limited v Comité Interprofessionel du Vin-Champagne [1992] 2 NZLR 327 followed; Habib Bank Limited v Habib Bank AG Zurich [1981] 2 All ER 650 referred to.

Section 9 Fair Trading Act

(ii)  It was incontrovertible that there was no misrepresentation in adopting a name at a point before any other trader had acquired a reputation in that name.  The defendants began to use their slogan before the plaintiff entered the market.  At that point, there was no conduct by the defendants that could be misleading or deceptive in relation to the plaintiff’s product. 

(iii)  At this interim stage, it might be an arguable proposition for the plaintiff that the defendants were not automatically immune in continuing to use the slogan merely because at the time they first began to use it the plaintiff did not have a reputation.  The most that could be said was that the plaintiff may have an arguable case.

(iv)  There were a number of factors in combination that led the Court to the conclusion that the plaintiff was unable to establish that the defendants’ use of the slogan was misleading or deceptive or likely to be misleading or deceptive to a reasonable number of that section of the public who were consumers or potential consumers of energy shot drinks.  Further there was no evidence of actual confusion in the marketplace after 3½ months side by side trading.

Magellan.Corp Ltd v Magellan Group Ltd (1995) 6 TCLR 598 discussed; Bonz Group Pty Ltd v Cooke (1996) 7 TCLR 206,Neumegen v Neumegen & Co [1998] 3 NZLR 310 referred to.

(v)  If both the plaintiff and defendants were to continue to use the phrase V POCKET ROCKET and BLUE AND SILVER POCKET ROCKET, there was sufficient and suitable distinction in the manner the phrase was used by each party so as to negative or minimise any potential for confusion in the marketplace. 

(vi)  The balance of convenience was fairly equal and in those circumstances there was justification for the status quo to be preserved. 

(vii)  There was no basis for the defendants being required to amend or remove from the market on an interim basis their promotional material in relation to their energy shot product.