Muzz Buzz secures caffeine hit (and permanent injunction) over Jitta Buzz

New Zealand

In Muzz Buzz Franchising Pty Limited v JB Holdings (2010) Limited ([2013] NZHC 1599, June 28 2013), the High Court has awarded a permanent injunction in favour of Muzz Buzz Franchising Pty Limited, a drive-through coffee business, against its New Zealand-based competitor Jitta Buzz. The decision provides a good illustration of what to do, and what not to do, as a small business looking to gain a foothold in the Australasian market.

Muzz Buzz registered the words BUZZ and MUZZ BUZZ, and the distinct coffee cup and word logo as trademarks in New Zealand in 2004 after having created a successful business in Western Australia.

The first Muzz Buzz New Zealand franchise was opened in 2012 in Auckland.

Meanwhile, the defendant had earlier opened its first Jitta Buzz drive-through coffee business in Auckland in late 2010. In mid-2012 the defendant opened a second franchise, also in Auckland.

When viewed side by side, the similarities were unmistakable.

The defendant’s evidence was that Jitta Buzz was chosen for its reference to ‘the jitters’ or a need for caffeine and the ‘buzz’ that resulted from drinking it. The court was not convinced that the defendant had independently arrived at the Jitta Buzz brand and get-up for its coffee kiosks. Justice Toogood held that the “defendants saw what they believed was an opportunity to capitalise on the success of the Muzz Buzz brand in Western Australia. I am satisfied that they decided to appropriate it to themselves for use in New Zealand by copying the essential elements of the brand, while stopping short of creating complete identicality.”

In simple terms, the defendant utilised too many aspects of Muzz Buzz’s intellectual property without sufficient modification. The wording, layout, colour scheme and placement of the respective elements on the kiosks meant the “look and feel” of the kiosks and the wording was too similar. In copyright terms, the defendant copied “the essence” of the plaintiff’s works.

Parties considering expanding their business throughout Australasia should take a bean from the Muzz Buzz book. Here is how the plaintiff placed itself in a strong market position:

  • It established its trademark rights early, through consistent use and registration of its trademarks in Australia and New Zealand;
  • It invested promotional expenditure wisely, integrating key brand elements on its website and its Facebook page to enhance and establish its reputation beyond Australia;
  • It sponsored the Perth Wildcats basketball team, which regularly travelled to Auckland to play the New Zealand Breakers. This ensured additional exposure to the New Zealand public of the Muzz Buzz brand, either through live games or televised coverage;
  • It recorded instances of actual confusion, including evidence from the Perth Wildcats caption who saw a Jitta Buzz kiosk and assumed it was associated with the plaintiff and evidence from a company officer who had mistaken a Jitta Buzz kiosk for a Muzz Buzz kiosk. In both instances, the differing word ‘Jitta’ had not been noted, or considered a distinguishing factor. This evidence played an important role in Justice Toogood’s findings; and
  • It acted quickly once it knew of the defendant’s activity, allowing it to obtain an interim injunction and prevent any further unlawful action by Jitta Buzz from an early stage.

The case should serve as a warning when drawing on Australian or other foreign businesses for inspiration, even if you aim to be first to market in New Zealand. Always investigate the local market before commencing business. A simple search of the trademark register might disclose that another party already has rights in your intended market.

Kate Giddens and Brigette Shone, Baldwins, Wellington

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