Benchmark Case highlights differences between Trademarks Acts

New Zealand

In Mitre 10 (New Zealand) Ltd v Benchmark Building Supplies Ltd (Case 521-SW02), the High Court has ruled that the defendant's comparative advertising infringed the plaintiff's trademark rights in contravention of the Trademarks Act 1953. A new act will come into force in August and had the case been decided under that legislation, there may well have been a different outcome.

Case law stemming from the Trademarks Act 1953 suggests that comparative advertising is conduct that is likely to infringe a registered trademark. However, it has also highlighted a specific defence allowing comparative advertising where the advertiser uses an identical trademark on similar goods or services, or a similar mark on identical or similar goods or services, if the use is not likely to cause confusion or deception. The defence does not apply where the advertiser uses an identical trademark on the same goods or services for which the mark is registered.

The case at hand involved two competing chain stores. Mitre 10 (New Zealand) filed a complaint against Benchmark Building Supplies, arguing that comparative advertising used in three of its Bunnings Warehouse stores infringed its trademark rights. The complaint referred to Benchmark's practice of displaying copies of Mitre 10 brochures in showcases near the entrance to its stores. Coloured stickers were said to have been placed adjacent to selected items in the brochures. On the stickers were written the words "Bunnings' price" followed by a New Zealand dollar sum. The Bunnings' price shown was lower than the price in the brochure for the specified goods. Mitre 10 also contended that Benchmark had made several errors in the brochure display. The shelf price and the ultimate selling price of the Bunnings product were higher than the price shown on the sticker, and in some cases the product sold by Bunnings was different from that advertised by Mitre 10.

The High Court upheld Mitre 10's complaint stating that Benchmark had "stood on the shoulders of Mitre 10" and that the brochures were "an instrument of denigration". Thus, Benchmark's use of the brochures was unfair and it was also arguable that the use infringed some of Mitre 10's trademarks.

The new Trademarks Act 2002 is due to come into force in late August this year. It is likely that it will change the legal approach to comparative advertising and had the Benchmark Case been decided under the new law, there may well have been a different outcome.

Section 94 of the new act provides that there is no infringement where comparative advertising uses registered trademarks. There is a proviso that if such use is not in accordance with honest practices in industrial or commercial matters it must be treated as infringing if it, without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of a mark. Therefore, pursuant to Section 94, Benchmark's comparative advertising using Mitre 10's trademarks may not have infringed those marks. Mitre 10 would have been powerless unless the use fell within the proviso. However, the errors made by Benchmark, including incorrect prices and comparisons made to different products than those advertised by Mitre 10, may have been caught by the proviso.

It will be interesting to see the courts' approach to comparative advertising when the new act comes into force.

Kate Duckworth, Baldwin Shelston Waters, Wellington

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