March 2013... Where an infringement of intellectual property is discovered, an interim injunction offers the opportunity to stop the infringement in its tracks until the infringement claim can be tried in Court. In deciding whether to grant an interim injunction the Court will balance the harms to each party which would result from the grant or denial of the injunction. The recent case of Muzz Buzz Franchising Pty Ltd v JB Holdings Ltd is a good example of how a Court will weigh up the interests of both parties in deciding whether or not to grant an injunction.
Muzz Buzz is an international franchise chain which operates drive-through coffee outlets. In 2012 it opened two outlets in Auckland (one in Mt Albert and one in Manukau). JB Holdings also operates two drive-through coffee outlets in Auckland under the trade name Jitta Buzz. The first Jitta Buzz outlet was opened in 2010 in Hillcrest and the second in 2012 in Botany Downs.
Muzz Buzz alleged that Jitta Buzz had copied its building outlet shape, colours, design, websites, Facebook page and brand name, a claim which Jitta Buzz denied. Muzz Buzz commenced Court action against Jitta Buzz in late 2011 and a trial was set down for late March 2013. In August 2012 Muzz Buzz applied to the High Court for an interim injunction to restrain Jitta Buzz from infringing its intellectual property.
In deciding the injunction case the key questions which the Court considered were firstly “Is there a serious question to be tried?” and secondly, if so “Where does the balance of convenience lie?”
Muzz Buzz had registered the “Muzz Buzz” and “Buzz” trademarks in relation to coffee drive-through services. The Court found that the Jitta Buzz colours and the use of the word “buzz” were sufficiently similar to the Muzz Buzz trademarks to raise a “serious question” to be tried as to breach of trademark.
The Court held that Muzz Buzz’s case regarding infringement of its building design (both companies use a curved design) was not strong but found that there was an objective similarity between the Jitta Buzz website and the Muzz Buzz website and therefore also a “serious question” to be tried as to breach of copyright.
Muzz Buzz provided an affidavit from a customer who said he saw a Jitta Buzz outlet and thought it was affiliated with Muzz Buzz. The Court accepted that there was also a “serious question” to be tried as to passing off (misrepresenting that one’s goods or services are affiliated with another).
The Court then considered the relative hardship to the parties of granting or refusing the injunction (the “balance of convenience” test) and noted that if the injunction were granted, Jitta Buzz’s business would be substantially disrupted. To continue in business Jitta Buzz would have to change its logo, building design, website and other advertising to comply with the injunction. If Jitta Buzz were required to change its branding, the infringement trial would become pointless and this would short circuit the Court process.
The Court indicated that both businesses were relatively new in New Zealand and there was no real likelihood that Jitta Buzz could flood the market before the infringement case could be decided in a full trial in March 2013 (a relatively short time from the injunction hearing in September 2012). The Court also noted that the Jitta Buzz outlets are geographically distant from the Muzz Buzz outlets therefore the risk of diversion of business would be less than it might otherwise be.
The Court held that if Muzz Buzz were to succeed at the infringement trial, damages would be able to be calculated and would be an adequate remedy for any loss it may have suffered. The Court therefore concluded that the balance of convenience weighed against granting the interim injunction and dismissed the application.