Anheuser-Busch Inc v Budweiser Budvar National Corporation HC Wellington CP 361/97
[2001] NZHC 553
•1 June 2001
IN THE HIGH COURT OF NEW ZEALAND
WELLINGTON REGISTRY CP 361/97
UNDER The Trade Marks Act 1953
The Fair Trading Act 1986
IN THE MATTER OF (i) Registered Trade Mark Infringement
(ii) Passing Off
(iii) Breach of the Fair Trading Act
(iv) Revocation of Registered Trade Marks
BETWEEN ANHEUSER-BUSCH, INCORPORATED
Plaintiff
AND BUDWEISER BUDVAR NATIONAL CORPORATION
First Defendant
AND BEER FORCE INTERNATIONAL (1993) LIMITED
Second Defendant
Hearing: 30 April - 11 May 2001
Appearances: B W F Brown, QC, with G F Arthur for plaintiff
J G Miles, QC, with B M Sullivan and D Laurenson for first defendant
No appearance for second defendant
Judgment: 1 June 2001
JUDGMENT OF DOOGUE J
Table of Contents
Paragraph Number
Introduction [1]
Genesis of dispute in New Zealand [5]
General background [12]
Summary of evidence [20]
AB’s evidence [20]
BB’s evidence [28]
Issues [29]
Claim for revocation of BB’s trade marks [30]
Relevant provisions of the Act [30]
Relevant principles [33]
AB’s case under s 17(1) [51]
AB’s case under s 17(2) [53]
AB’s case under s 16 [54]
Assessment of AB’s case independently of BB’s evidence [55]
BB’s case in respect of revocation [65]
Conclusion in respect of revocation arguments [71]
Trade mark infringement claim [72]
Conclusion in respect of trade mark infringement claim [93]
Passing off claim [94]
Fair Trading Act claim [106]
Decision [108]
Costs [109]
Postscripts [110]
Introduction
[1] In southern Bohemia there is a town known as Ceske Budejovice in the Czech language and Budweis in the German language. The town is now in the Czech Republic but for much of its history has been under German-speaking rulers. As a result, it is known by both names.
[2] This case has its origins in 1876 when brewers in St Louis, Missouri, USA, called their beer “Budweiser”, a name derived from Budweis. This has led to a century of dispute between the American brewer that uses the names “Budweiser” and “Bud” and the Czech brewer that has its brewery in Ceske Budejovice/Budweis and uses the names “Budejovicky Budvar”, “Budweiser Budvar” and derivatives. The dispute is primarily about the use of the name “Budweiser” and derivatives from and alternatives for the name. However, it has spilled over into a secondary dispute about the distinctly Czech names used by the Czech brewer. As there is no international forum for the settling of the disputes, the battle has been pursued in the courts of the countries to which the competing brewers export their products, with different results depending on the factors relevant in the particular country. Each side uses such weapons of intellectual property law as it can mount. The dispute sometimes manifests itself in a form similar to the present case. In this small country far from the major markets of the world the American brewing giant seeks to prevent the smaller Czech brewer using the names “Budejovicky Budvar”, “Budweiser Budvar”, “Budejovicky”, “Budweiser” and “Budvar”. For its part the Czech brewer does not challenge the American brewer’s rights to its marks in its names “Budweiser” and “Bud” but insists it is entitled to use its mark in the Czech name “Budejovicky Budvar” and its registered name in the English language, “Budweiser Budvar, National Corporation”.
[3] The American brewer is the plaintiff, Anheuser-Busch, Incorporated (“AB”). It brings proceedings against the Czech brewer, Budweiser Budvar, National Corporation (“BB”), the first defendant. AB claims that BB, in selling certain of its beers in New Zealand, has infringed the plaintiffs registered trade marks, passed off its beers as AB’s, and contravened the provisions of the Fair Trading Act 1986. AB also seeks rectification of the Register of Trade Marks in respect of the name “Budejovicky Budvar” registered by BB. BB denies these claims. It says its use of the words “Budejovicky Budvar” is in conformity with its registered trade marks and that such marks are not invalid. To the extent that BB uses the words “Budweiser Budvar” on its beer sold in New Zealand it says that it is part of its registered name and is neither in breach of AB’s registered trade marks nor that such use gives rise to AB’s other claims.
[4] The second defendant, which sold BB’s beer in New Zealand for a period, abides the result of the dispute between the brewers. AB seeks no relief in respect of it. There will be no further direct reference to the second defendant.
Genesis of dispute in New Zealand
[5] AB registered the trade mark “Bud” in New Zealand in 1964 and the trade mark “Budweiser” in 1984 for goods including beer. The marks are registered under the Trade Marks Act 1953 (“the Act”) in the following forms:
150926 and 231287 BUDWEISER
75141 and 231288 BUD
[6] BB does not challenge AB’s rights to those trade marks in these proceedings.
[7] BB registered the mark “Budejovicky Budvar” in script and label forms with effect from 20 November 1996. Those marks included beer. Those marks are as follows:
269744-7 BUDEJOVICKY BUDVAR form:
269748 Label form:
[8] By chance AB did not oppose the registration by BB of its marks.
[9] AB has sold its beer in New Zealand branded with its marks since at least 1980. The beer has been sold by the bottle or in six-bottle packs. Until November 2000 the word “Bud” in white on a red background was highlighted on labelling on the neck of a brown bottle (“AB’s old bottle”). From November 2000 the neck label changed and the word “Budweiser” and not “Bud” is now highlighted. On the body of the bottle there is a label with the word “Budweiser” in blue on a white background highlighted. In November 2000 the print face used for the word “Budweiser” in the two places where it is prominent on the labelling was changed (“AB’s new bottle”). Examples of AB’s labels are shown on the annexures to this judgment: AB1, AB’s old bottle, and AB2, AB’s new bottle.
[10] BB sold its beer in New Zealand from 1996 to 1999 in a brown bottle in a four bottle pack. Until May 1998 the words “Budejovicky Budvar”, in accordance with BB’s registered mark, were highlighted in red on white background in the middle of the labelling on the body of the bottle. In the lower part of the label in clear white but not prominent print on a red background were the words “Budweiser Budvar” above the words “National Enterprise” (“AB’s old label”). From May 1998 the label has been changed, in particular in respect of the lower part. The name of BB in English, “Budweiser Budvar, National Corporation”, is now present in one line. In the lower part of the label both before and after May 1998 there were the words “Brewed and bottled by the brewery” above and the words “Ceske Budejovice (Budweis) Czech Republic” below the language descriptive of BB. The neck label has throughout contained the words “Budejovicky Budvar”. There is also a label on the part of the bottle opposite the main label containing the words “Budejovicky Budvar” in accordance with the registered mark. Packaging for the packs of four beer bottles has contained similar wording. Examples of BB’s labels are shown on the annexures to this judgment: BB1, BB’s old bottle, and BB2, BB’s new bottle.
[11] Since the Copyright (Removal of Prohibition on Parallel Importing) Amendment Act 1998 came into force on 19 May 1998, parallel importing has led to beer of BB being imported by agencies unconnected with BB. This has resulted in the importation into New Zealand of beer in bottles with labelling similar to the above but with the words “Budweiser Budvar”, instead of “Budejovicky Budvar”, and “Budweiser” prominent on the label. AB has commenced legal proceedings against one importer of such beer but not others. BB agreements with its distributors throughout the world have a provision prohibiting the on-sale of its products by such distributors to other countries. An example of the labels found on bottles sold in New Zealand as a result of parallel importing is shown on annexure BB3 to this judgment.
General background
[12] AB is the largest brewer of beer in the world. It has been using the name “Budweiser” since 1876 and the name “Bud” since 1958. In 1998 it was the world’s eighth largest exporter of beer. It promotes its beer as representative of America and associates it with activities and products of atypically American kind. Its mark “Budweiser” is registered in about 125 countries and its mark “Bud” in about 130 countries.
[13] BB is the third largest Czech beer brewer and the largest Czech exporter of beer. In 1998 it was the world’s 25th largest exporter of beer. It and its predecessor have also been producing beer since the 19th century using the mark “Budweiser”. The predecessor of BB, Cesky akciovy pivovar, signed a declaration in 1911, for consideration, acknowledging AB’s right to use the name “Budweiser” in certain parts of the world but did not waive “its right to mark its own products with the word “Budweiser” . . . for identifying the geographical origin of its beer products in selling or causing such products to be sold anywhere . . .”. So far as New Zealand is concerned, BB has limited its exports to the products labelled as already described. As already mentioned, the names “Budejovicky” and “Budweiser” come from the name of the town where the beer is brewed. The name “Budvar” takes the first syllable of that name and the second syllable of the name “pivovar”, the Czech word for brewery. BB’s beer is clearly marked as a Czech product.
[14] BB first registered its mark “Budvar” in 1930 and it has used it consistently ever since. Its mark “Budejovicky Budvar” was first registered in 1967.
[15] On 1 February 1967 BB’s registered name, which had had several manifestations since its predecessor had been created in 1895, became “Budejovicky Budvar, narodni podnik”. The name was also registered in other languages, namely English: “Budweiser Budvar, National Corporation”; French: “Budweiser Budvar, Enterprise Nationale”; German: “Budweiser Budvar, Nationalunternehmen”. BB holds registered trade marks in the name “Budweiser Budvar” in at least 44 countries and in the name “Budejovicky Budvar” in at least eight countries.
[16] Because of a variety of factors such as the value of the New Zealand dollar, the beers of both AB and BB sell in New Zealand at comparable prices approximately three times that of popular cheap New Zealand beers. They form part of a highly competitive and substantial local market in beers. There are approximately 600 beers in the market. Beers are commonly available through two distinct markets. One market, known as the off-licence trade, sees the beer sold for consumption elsewhere, through supermarkets, liquor wholesalers, wine resellers and liquor stores generally. Products are displayed on shelves and more often than not the end purchaser will make a self-selection based on visual appearance and take the chosen selection to a check-out counter. The other market, known as the on-licence trade, sees the beer normally consumed at the point of sale, at cafés, bars, restaurants, clubs and hotels. There the chosen product will normally be requested orally either directly or from a product list. The range of names used for beers is diverse, but there is often a considerable apparent commonality in the types of names and packaging used, particularly in respect of layout and colour.
[17] The competitiveness of the New Zealand market in export beers is underlined in part by the fact that, despite AB’s names “Budweiser” and “Bud” being widely known in New Zealand through television, overseas travel by New Zealanders and considerable promotion and advertising, sales to date have not been substantial. Approximately 10,000 to 20,000 24-bottle cases have been sold per annum since 1984. Advertising and promotion have consumed a significant portion of turnover.
[18] The extent to which AB’s “Budweiser” name is known in New Zealand is exemplified by a market survey, to which there will be subsequent reference, which established that approximately 85% of those surveyed were aware of AB’s Budweiser beer. There is no dispute that AB’s trade marks “Budweiser” and “Bud” are both known and used in New Zealand.
[19] Because of this litigation, BB’s “Budejovicky Budvar” beer is not at present normally available in New Zealand and BB has little market data before the Court. There is no suggestion that its name is well known in New Zealand, although there is evidence of a recognised niche market. The beer was available for a little over three years between September 1996 and early 2000. By 1999 the exclusive distributor had 200 customers and imported just 3,000 cases. There is evidence of the parallel importing of BB’s “Budweiser Budvar” beer to this year. I accept, however, that BB has only sold its beer under that mark to countries where it holds a registered mark or has applied for one.
Summary of evidence
AB’s evidence
[20] AB’s evidence fell into five distinct categories. First, there was evidence from two representatives of AB and from a representative of their New Zealand importer. These witnesses outlined the background to the dispute and to AB’s position in New Zealand. The last of the three has substantial experience in the New Zealand liquor industry. He held different views on certain aspects of the beer industry in New Zealand from those expressed by certain of the witnesses for BB. Ultimately, however, I consider the differences were largely matters of emphasis and perception rather than in respect of facts important to the present case.
[21] The second class of witnesses called on behalf of AB were two private investigators who had made purchases of “Budweiser Budvar” products of BB entering the country through parallel importing and not through BB.
[22] The third class of witnesses were witnesses as to and arising from a market survey conducted on behalf of AB. The survey was designed by a professor in a School of Marketing and International Business, in conjunction with the principal of a market research company. The stated intention was to assess the reaction of the New Zealand packaged beer purchasing/drinking public to the branding of the bottled beer product called “Budejovicky Budvar”, and in particular whether the consumers considered the beer to be branded “Budweiser” or somehow associated with or connected to Budweiser beer. It is unnecessary to analyse the survey in any great detail. In the form in which it was administered some 511 interviews were accepted as meaningful. The group was gender equal. The group interviewed had to have purchased or consumed packaged beer within the past three months. They were then asked whether they had bought one of 10 named beers, the list excluding both AB’s and BB’s products. They were then asked whether there was any other beer that they had bought or consumed. Those interviewed were shown three bottles of beer, of which BB’s new bottle was one, for 30 seconds. The group interviewed did not know why they were being shown the bottles. The bottles were then removed from sight. After two further unrelated questions they were then asked whether they could recall the bottles they had been shown. If a respondent indicated that one of the bottles was similar to Budweiser, or in some other way indicated similarity with Budweiser, the person was asked “Would you expect a connection or association between Budweiser and the product you describe as . . . . .?”. They were later asked whether they had previously heard of Budweiser beer. Some 85% said “yes”. A small group of those interviewed, 4.1% of the sample, recalled the “Budejovicky Budvar” beer as “Budweiser” and directly associated its name with “Budweiser”. A further 6.1% thought there was some connection or association between the beer they had seen and a name similar to “Budweiser” or “Bud”. Only four of those interviewed recalled the sample bottle as either “Budvar” or “Budejovicky” as against the 10.2% of those surveyed who saw some connection between the bottle shown to them and the Budweiser brand. BB’s new bottle shown to those interviewed did have the words “Budweiser Budvar, National Corporation” on the lower part of the label.
[23] A different sub-set of witnesses relating to the survey were those responsible for its administration. It is unnecessary to refer to their evidence. A different sub-set again were six of the persons interviewed, all of whom had seen some connection between the bottle shown to them and the name Budweiser.
[24] The fourth type of evidence was from a professor of linguistics. He gave evidence as to the likely pronunciation of the name “Budejovicky” and expressed the opinion that the likelihood was that that multi-syllablic word, difficult for New Zealand speakers to pronounce, could be clipped or shortened to “Bud”. The professor had not been asked to consider the name “Budvar” but accepted that it would be a “perfectly easily pronounceable word in New Zealand”. He accepted that if the name “Budvar” was used there would be little likelihood of any confusion in speech patterns with the names “Budweiser” or “Bud”. He was not asked, and did not deal with, the question of how New Zealand speakers would normally handle two worded names in speech. Although it surprised him in terms of the label that “Budejovicky Budvar” would be called “Budvar” it did not surprise him linguistically as “Budvar” was clearly the more pronounceable word of the two for English speakers in New Zealand. (This was consistent with evidence of actual usage in New Zealand to which I will refer later.)
[25] The final category of evidence for AB was from a psychologist, who gave evidence as to how human perception and conclusions can occur without conscious processing or active thought and how humans relied upon schemas to reach conclusions. He expressed the opinion that a typical New Zealand consumer would be confused with the label “Budejovicky Budvar” beer and would be likely, because of the name “Budweiser” at the foot of the label on BB’s new bottle and the existence of the first syllable “Bud” in both of the names “Budejovicky Budvar”, to associate the bottle with AB’s product.
[26] Viewing AB’s evidence overall, the thrust of it was that from the results of the survey or by virtue of a linguistic approach or a psychologist’s approach a typical prospective New Zealand purchaser of packaged beer would be likely to be confused on seeing the Budejovicky Budvar product into believing that it was AB’s Budweiser product, or associated with AB’s product, because of the common first syllable, the difficulties of the words in English and the familiarity with the American brand. Having regard to the evidence of the professor of linguistics and the psychologist in particular, AB’s case was that there had to be a real likelihood of confusion between AB’s marks and products and those of BB.
[27] AB produced no evidence of actual confusion between either “Budejovicky Budvar” or “Budweiser Budvar” and “Budweiser” or “Bud”.
BB’s evidence
[28] BB’s evidence was of a very different nature from that called for AB. It once again fell into separate categories. The first class of witnesses comprised four company representatives. Significantly they included its General Director, who holds the most senior position in BB, and the chief of BB’s export department, along with an archivist historian and a member of the legal staff. The second type of evidence was from the Managing Director of the second defendant. The third class of witnesses, eight in total, were the proprietors or managers of specialist off-licence and on-licence premises that have stocked BB’s products. The fourth class of witnesses were two persons with expertise in respect of beer and the beer market and who were writers and commentators in respect of it. The fifth category of evidence was from a marketing and communications consultant, who commented upon the evidence of the linguist, psychologist, and distributor called on behalf of AB. The final type of evidence called on behalf of BB was from an associate professor of marketing who took issue with AB’s market survey and said no reliance could be placed upon it.
Issues
[29] AB put its positive claims against BB first and its claim for rectification of the Register of Trade Marks last. However, logically the claims are best dealt with in reverse order, as Mr Brown’s final submissions recognised. Unless there is a basis for rectifying the Register of Trade Marks, then BB’s use of its registered names is lawful and the only issues remaining will be whether it has used the name “Budweiser Budvar” and whether such use gives rise to AB’s other causes of action.
Claim for revocation of BB’s trade marks
Relevant provisions of the Act
[30] Section 41:
“41. General power to rectify entries in register
(1) Any person aggrieved . . . by any entry made in the register without sufficient cause, . . . may apply in the prescribed manner to the Court . . . and the Court . . . may make such order for . . . expunging, . . . the entry as the Court . . . may think fit.”
[31] Section 16(1):
“16. Prohibition of registration of deceptive, etc., matter
(1) It shall not be lawful to register as a trade mark or part of a trade mark any scandalous matter or any matter the use of which would be likely to deceive or cause confusion or would be contrary to law or morality or would otherwise be disentitled to protection in a Court of justice.”
[32] Section 17:
“17. Prohibition of registration of identical and similar trade marks
(1) Subject to subsection (5) of this section, no trade mark shall be registered in respect of any goods if it is identical with or similar to a trade mark belonging to a different proprietor and already on the register in respect of -
(a) The same goods; or
(b) Similar goods; or
(c) Services that are similar to such goods, -
if use of the first-mentioned trade mark is likely to deceive or cause confusion.
(2) Subject to subsection (5) of this section, no trade mark shall be registered in respect of any goods if the trade mark (or an essential element) is identical or similar to or a translation of a trade mark which is well-known in New Zealand (whether through advertising or otherwise) -
(a) As respects those goods or any similar goods; or
(b) As respects any other goods if use of the first-mentioned trade mark would be taken as indicating a connection in the course of trade between those other goods and the proprietor of the well-known trade mark, and would be likely to prejudice the interests of such proprietor, -
where use of the first-mentioned trade mark would be likely to deceive or cause confusion.”
Relevant principles
[33] As BB’s mark is registered, the onus lies on AB to establish that the mark should not have been registered because of the provisions of s 16(1) or s 17 of the Act. The time at which the issue should be determined is the time of the application for the mark on 20 November 1996. The fact that the mark is registered is of some relevance, although less than if the registration of the mark had been disputed. (To the extent the Privy Council says the prior registration is of “substantial weight” in Hannaford & Burton Ltd v Polaroid Corporation [1976] 2 NZLR 14 at 17, I note it but bear in mind the decision to register is at large in this proceeding and cannot turn on the weight to be given to the prior registration.)
[34] There is no dispute the propositions expressed by Richardson J in Pioneer Hi-Bred Corn Company, v Hy-Line Chicks Pty Ltd [1978] 2 NZLR 50, 60, 61, 62 in respect of s 16 of the Act are, in general, applicable. The first is not relevant in the present case but the others are. They are:
“(2) On an application for registration the rights of the parties are to be determined as at the date of the application. The evidence as to likelihood of deception or confusion must relate to the position at that time.
(3) The concern is with the possible future use of the mark in respect of goods coming within the specification applied for: registration gives the holder protection to that extent.
(4) The section is not concerned with the particular mode of presentation of the product adopted or proposed to be adopted by the applicant, but with the use of the mark in any manner which may be regarded as a fair and proper use of it (Hack’s Application (1940) 58 RPC 91, 103; Smith Hayden & Co Ltd’s Application (1945) 63 RPC 97).
(5) In considering the likelihood of deception or confusion all the surrounding circumstances have to be taken into consideration, including the circumstances in which the applicant’s mark may be used, the market in which his goods may be bought and sold and the character of those involved in that market.
(6) But, it is the use of the mark in New Zealand that has to be considered and association of a similar mark with another trader in overseas countries or market is irrelevant, except in so far as it bears on the likelihood of deception or confusion in the New Zealand market.
(7) It is in relation to commercial dealings with goods that the question of deception or confusion has to be considered, and the persons whose states of mind are material are the prospective or potential purchasers of goods of the kind to which the applicant may apply his mark and others involved in the purchase transactions.
(8) For a mark to offend against s 16 it is not necessary to prove that there is a commercial probability of deception leading to a passing off or infringement action. Detriment or financial loss to an opponent need not be established. It is sufficient if the result of the registration of the mark will be that persons to whom the mark is addressed are likely to be deceived or confused. “Deceived” implies the creation of an incorrect belief or mental impression and causing “confusion” may go no further than perplexing or mixing up the minds of the purchasing public (New Zealand Breweries Ltd v Heineken’s Bier Browerij Maatschappij NV [1964] NZLR 115, 141). Where the deception or confusion alleged is as to the source of the goods, deceived is equivalent to being misled into thinking that the goods bearing the applicant’s mark come from some other source and confused to being caused to wonder whether that might not be the case.
(9) The test of likelihood of deception or confusion does not require that all persons in the market are likely to be deceived or confused. But it is not sufficient that someone in the market is likely to be deceived or confused. A balance has to be struck. Terms such as “a number of persons” (Jellinek’s Application), “a substantial number of persons” (Smith Hayden & Co Ltd’s Application), “any considerable section of the public” (New Zealand Breweries Ltd v Heineken’s Bier Browerij Maatschappij NV), and “any significant number of such purchasers” (Polaroid Corporation v Hannaford & Burton Ltd) have been used. As Cooke J put it in his judgment in this case:
“The varying terminology in the judgments is a reminder that it is not always necessary that large numbers of people should be, or should probably be, of the state of mind in question: rather it is a question of the significance of the numbers in relation to the market for the particular goods” ([1975] 2 NZLR 422, 429).
(10) Where goods are sold or may be sold to the general public for consumption or domestic use, the judge or officer making the decision is entitled to take into account his own experience and his own reactions as a member of the public, as will as evidence from other members of the public, when considering whether buyers would be likely to be deceived or confused by use of a trade mark. But where the goods are of a kind not normally sold to the public at large, but are ordinarily sold and expected to be sold in a specialist market consisting of persons engaged in a particular trade, evidence of persons accustomed to dealing in that market as to the likelihood of deception or confusion is essential (GE Trade Mark [1973] RPC 297, 321; [1972] 2 All ER 507, 515).”
[35] It was noted by Richardson J in that case, at 61, that the exact relation between ss 16 and 17(1) is not easy to assess:
“By way of illustration nothing is said as to the manner in which the ameliorating provisions of s 17(2) may fall for consideration under s 16. Clearly s 16 has a wider scope than s 17. Whereas s 17 is concerned with the comparison between two rival marks relating to the same goods or description of goods of which one is already on the Register, s 16 is not so limited. It extends to cases where the public is likely to be deceived or confused merely by the mark in question (Bali Trade Mark [1969] RPC 472, 500; [1969] 2 All ER 812, 830, per Lord Wilberforce).”
[36] I did not discern any particular differences between the parties in respect of the principles to be applied in relation to the different sections, notwithstanding that there were considerable differences between them as to the application of those principles and the extent of them.
[37] Other relevant principles are traversed in detail in Kerly’s Law, of Trade Marks and Trade Names (12th edn), particularly Chapter 17 (subject to the legislative differences between the United Kingdom and New Zealand), and in Brown and Grant: the Law of Intellectual Property in New Zealand, particularly in Chapter 2 at 2.39 ff.
[38] In Hannaford & Burton Ltd v Polaroid Corporation, at 18, the Privy Council noted that the questions for decision in a case such as the present where both s 16 and s 17 are involved were as posed by Evershed J in Re Smith Hayden & Co Ltd’s Application (1945) 63 RPC 97, 101. The questions can be adapted for the present case in the following way:
1. Having regard to the actual use of the marks “Budweiser” and “Bud” in November 1996 on AB’s bottled beer, is the Court satisfied that “Budejovicky Budvar”, if used in a normal and fair manner in connection with bottled beer, would be reasonably likely to deceive or cause confusion among a substantial number of person (s 16(1)?
2. Assuming use by AB of its trade marks “Budweiser” and “Bud” in a normal and fair manner for bottled beer, is the Court satisfied that there would be a reasonable likelihood of deception or confusion among a substantial number of persons if “Budejovicky Budvar” was used in a normal and fair manner also for bottled beer (s 17(1) and (2))?
I read the word “substantial” in the way explained by Richardson J in the Pioneer Hi-Bred Corn Company case under (9) in paragraph [34] above and so use it hereafter.
[39] As Brown and Grant: The Law of Intellectual Property in New Zealand notes:
“The “normal and fair use” is to be taken notionally in respect of both the applicant’s and opponent’s marks [under s 17(1)]; whereas the use to be considered under s 16 is actual use of the cited mark. [para 2.50, p 72]”
[40] AB submits that as it has block letter registrations it has protection to use the name in any way of representing it: In the Matter of Morny Ltd ‘s Trade Marks (1951) 68 RPC 131, 145. Nevertheless this would have to be subject to it being “used in a normal and fair manner”: see Hannaford & Burton Ltd v Polaroid Corporation.
[41] There is no dispute that for the purpose of s 17 the actual style of use by either AB or BB of their marks is irrelevant and also that differences in bottle packaging, price, type of beer or other differences in actual use are irrelevant. AB’s actual use of its marks is relevant for the purposes of s 16 but the other matters just enumerated remain irrelevant.
[42] The relevant factors that are taken into account when assessing whether or not there is a reasonable likelihood of deception or confusion among a substantial number of persons in respect of marks are as stated in Re Pianotist Co’s Application (1906) 23 RPC 774, 777, a decision that has stood the test of time:
“You must take the two words. You must judge of them, both by their look and by their sound. You must consider the goods to which they are to be applied. You must consider the nature and kind of customer who would be likely to buy those goods. In fact, you must consider all the surrounding circumstances; and you must further consider what is likely to happen if each of those trade marks is used in a normal way as a trade mark for the goods of the respective owners of the marks. If, considering all those circumstances, you come to the conclusion that there will be a confusion - that is to say, not necessarily that one man will be injured and the other will gain illicit benefit, but that there will be a confusion in the mind of the public which will lead to confusion in the goods - then you may refuse the registration, or rather you must refuse the registration in that case.”
[43] Those words have been adopted and followed again and again, although they are often paraphrased and turned into numbered criteria: see, for example, New Zealand Breweries Ltd v Heineken’s Bier Browerij Maatschappij NV [1964] NZLR 115, 139; Polaroid Corporation v Hannaford & Burton Ltd [1975] 1 NZLR 566.
[44] I accept the following submissions for AB:
14. The Court must be careful to make allowances for imperfect recollection and the effect of careless speech. Little purpose is served by a meticulous examination of the words letter by letter and syllable by syllable: Polaroid v Hannaford [1975] 1 NZLR 566, 571.
15. In De Cordova v Vick Chemical Co (1951) 68 RPC 103, Lord Radcliffe said (at 105, line 54):
“. . . a mark is infringed by another trader if, even without using the whole of it upon or in connection with his goods, he uses one or more of its essential features”
and at 106, line 11, quoting Lord Cranworth LC in Seixo v Provezende (1866) LR1 Ch 192 at p 197:
“If the goods of a manufacturer have, from the mark or device he has used, become known in the market by a particular name, I think that the adoption by a rival trader of any mark which will cause his goods to bear the same name in the market, may be as much a violation of the rights of that rival as the actual copy of his device.”
and at 106, line 21:
“It is more useful to observe that in most persons the eye is not an accurate recorder of visual detail, and that marks are remembered rather by general impressions or by some significant detail than by any photographic recollection of the whole.”
[45] I further accept that, because of the tendency of English speakers to clip and abbreviate words and to emphasise the first syllable and slur later syllables, the first syllable, in respect of a single word at least, can have more importance than later syllables: see Brown and Grant: The Law of Intellectual Property in New Zealand, paragraph 2.56; Kerly, Chapter 17, para 17-13.
[46] For present purposes I also accept, as has been submitted for AB, that confusion or deception can arise where marks appear to be related, so that it might be thought that the marks denoted related products from the same source: Shanahan: Australian Law of Trade Marks (2nd edn), pp 181, 182. As the author notes, that can arise where a trader adopts a series of marks with a common element and another mark containing that element is used by a competitor.
[47] I further accept that a purchasing member of the public is reliant upon his or her own perception or recollection, often unassisted by the opportunity of side by side comparison: Reckitt and Coleman Products Ltd v Borden Inc and Ors (1990) 17 IPR 1, 8 (Lord Oliver). As was said by Lord Radcliffe in de Cordova & Ors v Vick Chemical Co, 106:
“The likelihood of confusion or deception in such cases is not disproved by placing the two marks side by side and demonstrating how small is the chance of error in any customer who places his order for goods with both the marks clearly before him, for orders are not placed, or are often not placed, under such conditions. It is more useful to observe that in most persons the eye is not an accurate recorder of visual detail, and that marks are remembered rather by general impressions or by some significant detail than by any photographic recollection of the whole.”
[48] I also accept the caveat that a Judge’s view as to the likelihood of deception is not always reliable and that it depends on the evidence: Neutrogena Corporation & Anor v Golden Limited & Anor [1996] RPC 473, 482 (Jacob J).
[49] I note the Privy Council’s view that when two marks have been circulating side by side for about four years that can be of importance when considering any inferences to be drawn from a lack of evidence of actual confusion: Hannaford & Burton Ltd v Polaroid Corporation [1976] 2 NZLR 14 at 17-18.
[50] There was a clear dispute between the parties as to what constitutes the surrounding circumstances for the purpose of the consideration of the marks. AB argued that it included the presence of “Budweiser Budvar” beer in New Zealand and overseas market-places and the requirement of Regulation 4(1)(c) Food Regulations 1984 that the “Trading name and business address of the manufacturer or seller or packer of the article, or of the owner of the rights of manufacture, or of the principal or the agent of any of them” appear on the label. BB takes issue with this. It notes that parallel importing was not possible in 1996. It emphasises that it is the marks that have to be compared in their New Zealand context. In the first instance I treat AB’s argument as sustainable. I revisit the issue in paragraph [70] below.
AB’s case under s 17(1): use of “Budejovicky Budvar”
[51] The plaintiff contends that use of the BUDEJOVICKY BUDVAR trade mark will deceive or cause confusion for a number of cumulative reasons:
(i) BUDEJOVICKY BUDVAR has dual first syllable use of BUD. It is deceptive or confusing because it will be associated with the registered trade mark BUD.
(ii) BUDEJOVICKY BUDVAR will be abbreviated in use to BUD or to BUDVAR. Both abbreviations are deceptive or confusing with BUD.
(iii) The abbreviation to BUD or BUDVAR is also deceptive or confusing with BUDWEISER.
(iv) Due to the presence of BUDWEISER BUDVAR beer in the New Zealand and overseas market-places and the words “Budweiser Budvar” on the defendant’s BUDEJOVICKY BUDVAR bottle, consumers understand that BUDEJOVICKY is the equivalent to BUDWEISER.
(v) AB’s trade marks BUDWEISER and BUD are a “family”. It is deceptive or confusing for BB to use a trade mark with (repetitious) use of the BUD syllable/prefix from that family.
[52] It is submitted for AB that on a comparison of the marks, while they may be visually distinctive when viewed together, there will inevitably be confusion or a likelihood of deception in other circumstances for the following reasons:
1. New Zealanders will struggle to pronounce “Budejovicky Budvar” so that the first syllable assumes an even greater importance than normal. The first syllable, it is said, would be pronounced in the same way as AB’s mark “Bud”.
2. There will be a focus on Bud because of the heavy underlining under that part of “Budejovicky” and the existence of “Bud” as the first syllable of both words comprising the trade mark. The psychologist who gave evidence would expect the New Zealand consumer to notice the familiar “Bud” repeated on the label, see “Bud” as an abbreviation of “Budejovice” and therefore “Budejovicky”. Marketing will cause a presentation as “Bud”. The repetitive presence of “Bud” will inevitably cause deception or confusion, at least as to whether “Budejovicky Budvar” is from the same source as “Budweiser”. The use of the word “Budvar” adds to the confusion for the same reasons.
3. Beer is bought by the consumer for self-consumption and on behalf of others, whether in an off-licence or an on-licence. A person, asked to buy a Budweiser or a Bud beer, would be perplexed on seeing “Budejovicky Budvar” as to whether that was what they were sent out to purchase. A person asking for “Bud” or “Budweiser” and being presented with “Budejovicky Budvar” would be unlikely to express surprise.
4. The pronunciation evidence and effect resulting from the clipping of beer names is well established. Various single-worded named beers were known by their first syllable or an extended first syllable, including “Bud” for “Budweiser”. At least one two-worded named beer, “Stella Artois”, was known by its first name.
5. The professor of linguistics expected “Budejovicky” to be clipped to “Bud” or “Buddie” or possibly “Bude”. (But see paragraph [24] above.) This was confirmed by three of those interviewed in the market survey.
6. BB’s trade mark will be abbreviated by some to “Bud”, a trade mark identical to that for which AB has a registration, thus being likely to deceive or cause confusion.
7. If BB’s trade mark is abbreviated to “Budvar” it is equally likely to result in deception or confusion as being similar to “Bud” or “Budweiser”. It is submitted that “var” is non-distinctive and adds nothing meaningful to “Bud” to the typical New Zealander. “Budvar” takes the essential feature of “Bud”. At the very least, it is said, there must be a risk of oral confusion between “Budvar” and “Bud”.
8. “Budvar” and “Budweiser” have the same first syllable, the same ending consonant and the same middle “v” sound. Thus on an imperfect recollection test confusion would follow.
10. Given normal and fair use by AB of its marks “Bud” and “Budweiser”, the introduction of “Budejovicky Budvar”, if it is distinguished at all, will be assumed to be from the same family of marks as AB’s. There will be confusion as to source as there are no other “Bud” beers on the New Zealand market.
11. In assessing the issue under s 17(l), it is appropriate to take into account the state of the market-place as the Court has to take into account all the surrounding circumstances. BB has to take the New Zealand consumer and market as it finds it, and indeed as it has caused it.
12. Wherever New Zealand consumers have come into contact with “Budweiser Budvar” beer in New Zealand or overseas there will be greater opportunity for deception or confusion because they will mentally switch “Budejovicky” to “Budweiser”. Consumers do not and cannot distinguish between the two.
13. To the extent BB’s old bottle contained on it “Budweiser Budvar” in prominent print, a particular subset of the New Zealand population was being sensitised to confusing “Budejovicky” with “Budweiser”.
AB’s case under s 17(2): use of “Budejovicky”
[53] So far as s 17(2) is concerned, it is submitted that “Budweiser” is unarguably one of the world’s best-known brands and that “Budejovicky” is simply a Czech translation of it. It is therefore submitted there is a likelihood of confusion arising from the use of the translated word.
AB’s case under s 16: use of “Budejovicky Budvar”
[54] It is submitted that much of the evidence and submissions relating to s 17 also applies to s 16. In addition, it is submitted that the market survey established confusion of “Budejovicky Budvar” beer with “Budweiser” beer either directly or indirectly through the name being associated with “Budweiser”.
Assessment of AB’s case independently of BB’s evidence
[55] There can be no visual confusion between the competing marks and any confusion could only result from imperfect recollection or aural confusion resulting from the assumption that somehow BB’s mark could be regarded as “Bud” or “Budweiser” or be associated with one of those marks.
[56] The registered form of “Budejovicky Budvar” is in a stylised script with the letters joined and the opening letters given particular emphasis, and with the noticeable feature of the Czech diacritical elements above the “e” and the “y” of “Budejovicky”. Critically, the mark is for two words not one. AB’s argument depends upon the two words being likely to be reduced to a single syllable. There is no evidence whatever of that occurring or being likely to occur within the trade or the market. Certainly the professor of linguistics did not suggest that that might occur. If there is any shortening of two words, it appears to be more likely to be to whichever word the English speaker is more comfortable. On the New Zealand market the evidence relating to “Stella” Artois was the most significant, with that name being abbreviated not to a single syllable but to the first name, “Stella”. One can reasonably postulate that if the name were “Artois Stella” the New Zealand purchaser would still have taken the name easiest for the English speaker, namely “Stella”. An analogous two-worded name referred to in the trial was “Jim Beam”, where there was acceptance the latter name alone might be used to describe the product.
[57] When the multi-syllabled, double-barrelled name “Budejovicky Budvar” has no immediate similarity either visually or orally with either “Budweiser” or “Bud” other than the common first syllable, there is and can be no real likelihood of confusion.
[58] The professor of linguistics had not been asked to consider both names but accepted that a New Zealand speaker would have little difficulty with the word “Budvar”, as the evidence established in respect of actual usage. “Budvar” has two short and crisp syllables, making it far less likely that it would be abbreviated in the same way as longer words such as “Budweiser”. As the professor of linguistics acknowledged, the word “Budejovicky” is such a mouthful for the English speaker that it is difficult to know how it would be abbreviated by a New Zealand English speaker. The professor did not challenge the view that the New Zealand English speaker would have little difficulty with the short name “Budvar”. He did not address how New Zealand English speakers would approach a name consisting of two foreign words. The evidence of the professor of linguistics was more supportive of BB’s case than AB’s.
[59] The evidence from the market survey was directed not to the marks but to BB’s new bottle. Even allowing and assuming that the survey had some relevance for the present issues, which BB disputes, the survey did not, to my mind, come near to establishing that there would be a reasonable likelihood of deception or confusion arising among a substantial number of persons if “Budejovicky Budvar” was used in a normal and fair manner for bottled beer. At the very most it showed that a small and certainly not a substantial or significant number of New Zealanders might, through poor recollection in a non-purchasing situation, confuse or associate “Budejovicky Budvar” with “Budweiser” when the word “Budweiser” was also on the object presented to them.
[60] The psychologist’s evidence is equally unhelpful to AB in respect of this part of the case. BB disputes the admissibility of his evidence upon other grounds, but, even taking it at face value, his evidence, which was addressed to BB’s new bottle, relied not only on the presence of the first syllable “Bud” in both words but on the presence of “Budweiser” upon that bottle.
[61] Thus none of AB’s evidence is supportive of its contentions that there would be a reasonable likelihood of deception or confusion among a substantial number of persons in respect of the marks.
[62] I regard it as of some significance that AB not only called no evidence of any confusion from its distributors but that its exclusive distributor until July 2000 had in fact purchased BB’s products from BB’s exclusive distributor. This is at the very least an indication that AB’s own distributor was not overly concerned that there might be confusion between the competing marks.
[63] Put at its strongest, AB’s case in respect of ss 16 and 17(l) relies upon the proposition that, because of imperfect recollection, a potential purchaser of “Budweiser” or “Bud” would be likely to confuse it with “Budejovicky Budvar” through association dependent on the common first syllable “Bud”. I recognise, as the evidence from one interviewee in the market survey indicated, that there will always be a possibility of a confused customer. However, there is no evidence from which I could reasonably infer that a substantial or significant number of persons would be so confused. It is clear if the marks are together there could be no confusion. I cannot accept there is a likelihood of confusion if a person seeking AB’s mark is confronted with BB’s mark. AB has simply failed to satisfy me on the balance of probabilities in respect of the test in relation to either s 16 or s 17(1).
[64] In respect of s 17(2) I regard AB’s case as even more fundamentally flawed. There can be no more likelihood of confusion under this section as a result of “Budejovicky” and “Budweiser” being comparable words in the Czech and German languages than there can be under s 16 or s 17(1).
BB’s case in respect of revocation
[65] Having regard to the conclusions already reached, it is unnecessary to refer to BB’s case in any detail. However, upon the assumption that this will just be a staging post in this particular litigation between the parties, which seems to have little to do with the protection of the public, I will summarise it. If necessary I would have accepted BB’s evidence and case in preference to that of AB.
[66] BB’s evidence supported and established the acceptance by the professor of linguistics that “Budejovicky Budvar” would be likely to be shortened not to “Bud” but to “Budvar”, as in practice this is what has occurred over the last few years. That evidence established that, despite the parallel importing, confusion between the marks is unknown. I recognise that, as was noted in the Neutrogena case, complaints do not necessarily surface within the trade. However, in the Neutrogena case there was substantial evidence of actual complaints, if not from trade sources. Here there is no such evidence. Here, BB’s evidence came from a variety of merchants dealing directly with the public, and in at least one case dealing with AB’s product as well as BB’s product. It established that there was no aural confusion and no known clipping of the words “Budejovicky Budvar” or the word “Budvar” to “Bud”. This evidence goes to negate AB’s line of argument that “Budejovicky Budvar”, particularly if reduced to “Budvar”, would be referred to as “Bud”. As I have already noted, there is simply no evidence of that arising, either through imperfect recollection or otherwise. It is a legitimate inference that evidence of lack of confusion in the years subsequent to 1996 would be equally applicable to the circumstances pertaining to the time the mark was applied for.
[67] The trade evidence and experts also established that there had been an increasing sophistication within the New Zealand beer drinking market. Consumers have become aware of the increasing number of beers of different brands, a number with unpronounceable names, from different countries. Thus the surrounding circumstances in 1996 established, at the very least, that there would be increasing sophistication in consumer choice and a reduction in the likelihood of consumer confusion. The professor of marketing called by BB noted that the very high percentage of awareness of the “Budweiser” mark in AB’s market survey in itself reduced the likelihood of confusion as it was not an uninformed market.
[68] In respect of AB’s psychologist witness, it was submitted that he had not qualified himself as an expert in respect of his opinion evidence. He had, it was said, qualified himself to give evidence as to the theories of perception and schema of which he spoke but not as to the application of those theories to particular market situations. Thus, to the extent that he drew conclusions from his own observations, he was in no better position than anyone else aware of the same theories as there was no empirical evidence to support his assertions. I would have accepted these submissions if I had been required to do so. I did not regard the psychologist as having qualified himself to do other than speak of the theory of perception and of schema. To the extent he expressed views on the application of the theories to the market place, they were based on personal surmise and not empirical data. He was speaking of probabilities in respect of the perceptions of beer purchasers without having qualified himself to do so. His postulates in respect of the relevant schema could be no better than anyone else’s uninformed by empirical research. Indeed, I would add that in fact I found the evidence of BB’s marketing and communications consultant witness far more persuasive generally. I would have accepted his evidence in preference to the theoretical evidence of AB’s psychologist witness. It was based upon experience of the market place.
[69] Mr Miles also submitted that upon an analysis of the seven interviewees from the market survey who gave evidence it was obvious there was no real confusion on their part, particularly if they had been placed in a market purchase situation. While I accept the general thrust of the argument, I also accept Mr Brown’s retort that initial confusion cannot be put right at a later stage. However, of more importance to me is the fact that the interviewees in the market survey were not being faced with a market situation and that the degree of confusion, even in an artificial situation, was slight. It seemed to me to be clear that, faced with a market situation, the degree of confusion had to be less. Purchasers with a brand awareness will be looking for the known mark, and the likelihood of confusion with a distinctly different mark, even by association, is remote. The market survey simply did not address the reality of a market situation. In any event, I would again accept the evidence of the associate professor of marketing called on behalf of BB to the effect that the degree of confusion which existed in the market survey was no greater than one would have expected in any survey of its kind. While I will return to that survey, for present purposes neither it nor the interviewees called as a result of it advanced AB’s case at all but rather negated it.
[70] I have referred earlier in paragraph [50] above to the issue of whether or not the parallel importing of BB’s other product and the consequences of Regulation 4(l)(c) Food Regulations 1984 were part of the surrounding circumstances for the consideration of the marks. Mr Miles submitted that they were not. I was content in the first instance to deal with the plaintiff’s case upon the basis that they were, so that my views on the primary issues should not be clouded by a technical consideration. So far as Reg 4(1)(c) of the Food Regulations 1984 is concerned, it seems to me that as part of New Zealand law in November 1996 it would have to be part of the surrounding circumstances in respect of the consideration of the marks. However, the content of the regulation cannot and does not assist AB. The particular method of conformity with its requirements cannot be necessarily inferred. The notional use of BB’s proposed mark cannot postulate a particular method of compliance with the regulation. The existence of the regulations does not therefore assist AB. The method adopted by BB of complying with the regulation must be irrelevant in respect of the notional consideration of its proposed mark. So far as the parallel importing of BB’s other product is concerned, there is no evidence that it was known in November 1996 that an amendment was to be made to the Copyright Act permitting parallel importing into New Zealand. In any event, even if that had been known, it could not be postulated in November 1996 that any parallel importing of any product of BB would take place in any particular way, so that what subsequently occurred could not be relevant for the purposes of a consideration of BB’s mark on a notional use basis in November 1996. Thus, if need be, I would have upheld Mr Miles’s submissions on both these points. As Hannaford & Burton Ltd v Polaroid Corporation makes clear what has occurred subsequent to November 1996 when the two marks have been on the market may be of assistance in evaluating the likelihood of confusion in November 1996 but not upon the basis that in November 1996 BB’s products were upon the New Zealand market in a particular form.
Conclusion in respect of revocation arguments
[71] AB has not shown in regard to the questions posed above in paragraph [38] in respect of ss 16 and 17 that there would be reasonable likelihood of deception or confusion among a substantial or significant number of persons if “Budweiser Budvar” was used in a normal and fair manner for bottled beer at the time of its registration in November 1996. This result means that in respect of BB’s use of its mark “Budejovicky Budvar” AB’s claims for infringement of its trade mark in “Bud” and “Budweiser” and for passing off and for breach of the Fair Trading Act must fail. However, that is not an end to other aspects of AB’s claims, to which I now turn.
Trade mark infringement claim
[72] AB alleges that BB’s use of “Budejovicky Budvar” on the neck label, the front label and back label of both BB’s old and new bottles and of “Budweiser Budvar” on the bottom of the front label of both bottles breaches both AB’s registered trade marks. To the extent that BB is using “Budejovicky Budvar” on its main label and back label in accordance with its registered mark, the claim, as I have already indicated, fails. It is necessary, however, to consider the balance of the claim, relating as it does to the words “Budejovicky Budvar” on the neck label and “Budweiser Budvar” on the bottom of the front label. While the neck label is common to both BB’s old bottle and BB’s new bottle, I have already noted that there was a difference between the bottom labels.
[73] So far as the use of the words “Budejovicky Budvar” on the neck label is concerned, the claim inevitably fails for much the same reasons as AB’s claim for revocation of BB’s marks fails. It is unnecessary to say more about that aspect of the claim.
[74] In relation to the bottom labels, AB relies upon ss 8(1) and 8(l A) of the Act. They provide:
“8. Right given by registration in Part A, and infringement thereof
(1) Subject to the provisions of this section, and of sections 11 and 12 of this Act, the registration (whether before or after the commencement of this Act) of a person in Part A of the register as proprietor of a trade mark (other than a certification trade mark [or collective trade mark) in respect of any goods or services shall, if valid, give or be deemed to have given to that person the exclusive right to the use of the trade mark in relation to those goods or services.
(1A) Without limiting subsection (1) of this section, the right conferred by that subsection shall be deemed to be infringed by any person who, not being the proprietor of the trade mark or a registered user of it using by way of the permitted use, uses in the course of trade -
(a) A sign identical with it in relation to any goods or services in respect of which the trade mark is registered; or
(b) A sign identical with it in relation to any goods or services that are similar to any goods or services in respect of which the trade mark is registered, if such use would be likely to deceive or cause confusion; or
(c) A sign similar to it in relation to any goods or services that are identical with or similar to any goods or services in respect of which the trade mark is registered, if such use would be likely to deceive or cause confusion, -
and in such manner as to render the use of the sign likely to be taken -
(d) As being use as a trade mark; or
(e) In a case in which the use is use upon goods or in physical relation to goods or in an advertising circular or other advertisement issued to the public relating to goods, as importing a reference to some person having the right either as proprietor or as registered user to use the trade mark or to goods with which such a person is connected in the course of trade; or
(f) In a case in which the use is in relation to services or in an advertising circular or other advertisement issued to the public relating to services, as importing a reference to some person having the right either as proprietor or as registered user to use the trade mark or to services with which such a person is connected in the course of trade.”
[75] “Sign” is defined as including a word. “Trade mark” is defined as meaning any sign or any combination of signs capable of being represented graphically and capable of distinguishing the goods of one person from those of another person. It is noted that the Trade Marks Amendment Act 1994, from 1 January 1995, effected a material change to the definition of “trade mark”. It is no longer a requirement for a sign to be used to indicate a connection in the course of trade for there to be trade mark use. It is emphasised that all that is required is that it be capable of distinguishing the goods of one person from those of another person. (It was noted by the parties that there have been further amendments to the definitions of “sign” and “trade mark” from 1 April 2000 but acknowledged that the amendments are not material for present purposes.)
[76] There is no dispute that the test for registered trade mark infringement requires a comparison with AB’s trade marks as registered with BB’s mark as it appears in actual use. As in respect of the application for revocation of BB’s registered mark, it is a comparison of normal and fair use of AB’s trade mark with, in this instance, the actual use by BB. Aspects of marketing, style and the like are of no more relevance under this head than under the revocation head.
[77] Two sections of the Act are of particular significance in respect of the present argument, namely ss 12 and 13. They read:
“12. Saving for use of name, address, or description of goods or services
No registration of a trade mark shall interfere with -
(a) Any bona fide use by a person of that person’s own name or of the name of that person’s place of business, or of the name, or of the name of the place of business, of any of that person’s predecessors in business; or
(b) The use by any person of any bona fide description of the character or quality of that person’s goods or services, not being a description that would be likely to be taken as importing any such reference as is mentioned in paragraph (e) or paragraph (f) of subsection (1A) of section 8 of this Act or paragraph (e) or paragraph (f) of subsection (3A) of section 47 of this Act.
13. Infringement by use of name of company
In an action for infringement of a trade mark it shall not of itself be a defence that the infringement arose from the use of the name under which a company has been registered.”
[78] AB does not accept that BB was using its corporate name in terms of s 12. It asserts that not only is “Budweiser Budvar” being used by BB as a trade mark or sign capable of distinguishing BB’s goods from those of another but that its very use is to so distinguish them.
[79] It is further submitted for AB that s 13 expressly provides that it is not of itself a defence to an infringement action that the infringement arose from the use of the name under which a company has been registered. It is said that the use of “Budweiser Budvar” will be taken as importing a reference to a person having the right to use “Budweiser” as a trade mark.
[80] AB asserts that in relation to both AB’s old bottle and AB’s new bottle the prominence given to “Budweiser Budvar” on the bottom label is such that the viewer would see the use not as a manufacturer’s name but as a brand. It is submitted the proper consideration is how the use is perceived by potential purchasers: Mainland Products Ltd v Bonlac Foods (NZ) Ltd [1998] 3 NZLR 341. It is sufficient if it will convey trade mark significance to a substantial number of the potential customers. It is submitted that the market survey results show that even for BB’s new bottle a substantial number of prospective customers perceive the use of “Budweiser” as being a trade mark.
[81] It is submitted for AB that BB’s export director essentially admitted that it was not clear that “Budweiser Budvar” was used as a company name upon BB’s old bottle. However, it is submitted for AB that even BB’s new bottle retains the words in a bold form to attract the eye and to be easier to read than the words immediately above and below them. Therefore it is said they are not protected by s 12.
[82] It is submitted that ss 11, 12 and 13 of the Act create a regime of “non-interference” by trade mark rights and that the non-interference with the use of one’s own name requires a bona fide use by a person of that person’s own name or that person’s place of business. AB contends that BB’s use of “Budweiser Budvar” is not bona fide, not by a person, not use of BB’s own name and not use of BB’s place of business. It is noted that “bona fide use” has been defined as meaning:
“the honest use by the person of his own name without any intention to deceive anybody or without any intention to make use of the goodwill which has been acquired by another trader. [Kerly, 12th edn, para 15-33]”
[83] AB contends that the selection of the name Budweiser Budvar, National Corporation was not bona fide in 1967 or now and therefore any use by BB of that name cannot itself be bona fide use. It says the name was not selected in good faith.
[84] I do not intend to traverse what I regard as the trifling evidence upon which AB bases this last submission. It is not based upon any evidence of substance. It is an invitation to the Court to infer that BB is endeavouring to deceive consumers and to trade on the goodwill of AB. Having regard to BB’s history, the declaration in 1911, BB’s registration of the name “Budweiser Budvar” in many European countries, the geographical location of Budejovice/Budweis, and its linguistic and political history, I regard the assertion by AB that BB is not acting bona fide in the way alleged as unworthy of it. BB or its predecessor has clearly regarded itself as entitled to use the term “Budweiser” since the 19th century, and “Budvar” has been used by it since 1930. I unhesitatingly reject the suggestion the name “Budweiser Budvar” has been used by BB other than bona fide.
[85] It is submitted that as BB’s old bottle does not contain even its registered name, but contains the terms “Budweiser Budvar” and “national enterprise”, that cannot be bona fide use of its name. Once again I reject the assertion. I accept the explanation that an error was made and that BB had intended to use its registered name. I am certainly not prepared to infer from all the evidence before me, which is substantial, that the use of the name was not bona fide.
[86] I am surprised at the submission that the defendant’s use of “Budweiser Budvar” was not by a “person”. I appreciate there is a distinction between s 12, which refers to “person” and s 13, which refers to “a company”, but it has never previously been suggested that the use of the word “company” in s 13 excludes the normal meaning of the word “person” in s 12 as including an individual or a company: see, for example, Parker Knoll Limited v Knoll International Limited [1962] RPC 265. See also the definition of “person” s 29 Interpretation Act 1999:
“29. Definitions
In an enactment, -
. . .
Person includes a corporation sole, a body corporate, . . .”
[87] I therefore reject that submission for AB.
[88] I turn to the submission that the bottom label is not the use of BB’s own name. A distinction has to be clearly drawn between BB’s old bottle and BB’s new bottle. So far as BB’s new bottle is concerned, I have no doubt whatever that it is the use of BB’s own name. Unlike on BB’s old bottle, there is no highlighting of the words “Budweiser Budvar”. It is true all the words in the name “Budweiser Budvar, National Corporation” are slightly more prominent than the words above, “Brewed and bottled by the brewery”, or the words below, “Ceske Budejovice (Budweis) Czech Republic”. However, it is clearly a representation of BB’s name, and I reject the submission that the prominence given to it is such that the viewer would see its use not as the name but as a brand. Certainly there is no evidence that anyone took the name or part of the name of the company on BB’s new bottle as being the use of the word “Budweiser” as a trade mark. So far as BB’s new bottle is concerned, I consider that its representation of its registered name has the protection of s 12(a) of the Act.
[89] If that results in some confusion, so be it: Parker Knoll Limited v Knoll International Limited [1962] RPC, 265, 275.
[90] So far as BB’s old bottle is concerned, the position is different. While I am sure that BB intended to represent its name upon the bottle, it did not do so. Instead it highlighted the words “Budweiser Budvar” and in smaller words below had the words “national enterprise”, an English version of its French name, no doubt intending to reflect the words “National Corporation” but not doing so and not showing the name as a whole.
[91] I must therefore conclude that BB’s use of the term “Budweiser Budvar” on BB’s old bottle is not a use by it of its name, and it cannot obtain the protection of s 12 of the Act.
[92] There has understandably in the context of the case been little emphasis upon the particular mark on the bottom label of BB’s old bottle given that BB has declared that it has no intention whatever of continuing with that bottle in New Zealand. There is therefore no evidence whatever as to whether “Budweiser Budvar” on the bottom label of BB’s old bottle is a mark identical with AB’s marks or so nearly resembling one or other of them as to be likely to deceive or cause confusion. Once again the onus of proof is on AB. In the absence of any evidence establishing on the balance of probabilities that the words “Budweiser Budvar” have been taken as a mark, I cannot find for AB. BB’s trading with its old bottle has been so limited that the consequences would in any event be de minimis. I think the best approach is to declare that BB’s old bottle did not have the protection of s 12 and that, while it has not been established in the present proceeding that BB’s old bottle has infringed AB’s marks, any future use of BB’s old bottle would be likely to lead to an opposite conclusion. I should record that BB has undertaken in its evidence not to re-use its old bottle in New Zealand.
Conclusion in respect of trade mark infringement claim
[93] No infringement has been made out.
Passing off claim
[94] The requirements to establish passing off have been summarised by Lord Oliver in Reckitt & Colman Limited v Borden Inc (1990) 17 IPR 1, 7:
“The law of passing off can be summarised in one short general proposition - no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying get-up (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff’s goods or services. Secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff’s identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. For example, if the public is accustomed to rely upon a particular brand name in purchasing goods of a particular description, it matters not at all that there is little or no public awareness of the identity of the proprietor of the brand name. Thirdly, he must demonstrate that he suffers or, in a quia timet action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods or services is the same as the source of those offered by the plaintiff.”
[95] There is no dispute as to the first element, and it is accepted that AB has an established goodwill or reputation in its brand name.
[96] Given the conclusions already reached, AB cannot establish a misrepresentation by BB to the public, whether or not intentional, leading or likely to lead the public to believe that either BB’s old bottle or BB’s new bottle are the goods of AB. My conclusions in respect of the revocation proceeding and the use of the name “Budejovicky Budvar” are conclusive in that respect. BB is using its own trade mark in a way in which it is entitled to use it. There are no other extraneous elements such as get-up upon which AB could rely in the present case to establish a claim independently of the language upon the bottles.
[97] I have to say that even if I had found there was a real likelihood of confusion between the competing trade marks amongst a substantial or significant number of New Zealanders, with consequences for trade mark revocation and trade mark infringement, I would not have held for AB under this cause of action. There is a distinction between the likelihood of confusion between marks and the unintentional unfair representation of a product leading or likely to lead the public to believe that the goods are the goods of the plaintiff. I say unintentional in this context as I am satisfied beyond doubt that there was no intention on the part of BB to present either its old or new bottles in a form leading or likely to lead the public to believe that BB’s goods were the goods of AB. All the evidence establishes that BB’s intention has been quite otherwise and that the problems underlying this litigation flow from both AB and BB having justifiable claims to the use of the name “Budweiser”.
[98] In the present case, when one looks at the wider features that are relevant in respect of the passing off claim, I do not consider that AB could have succeeded in any event. The two beers are different in type if not in price bracket. They are generally aimed at different markets. The strategy of promotion is quite different. AB’s beer promotes its American image and it is known by that image. BB’s beer promotes its Czech image, and the language on its bottle underlines that. If AB had felt that there was a risk of BB’s product being confused with its product, then it is ironic that in 2000 it changed its label on its new bottle to one closer in font style to BB’s than had previously been the case.
[99] AB’s case under this head and its Fair Trading Act claim relied primarily upon the market survey evidence and the evidence of the psychologist, combined with that of the professor of linguistics. I say no more about the evidence of the professor of linguistics or the evidence of the psychologist, except to note that if the psychologist were correct then I would have expected the market survey to have shown a far greater degree of confusion than in fact occurred in the peculiarly artificial circumstances in which it was conducted. As already noted, some 85% of those surveyed had a knowledge of the Budweiser brand through exposure to it by way of television and other. Notwithstanding that, and notwithstanding the apparently low level of knowledge of BB’s beer, only about 10% of those surveyed associated BB’s beer with Budweiser. When those surveyed were shown only three beers, and one of the three beers was BB’s new bottle, one could have reasonably expected a very much higher degree of confusion if the psychologist’s propositions were correct.
[100] I have until now treated the market survey as having some general credence. I have done that to enable AB’s claims to be considered on the best basis. As already noted in various places, I felt that the survey results undermined AB’s claims rather than promoted them, and that was on a best basis relating to the survey. In this case, as in so many others where surveys have been used, the validity of the survey becomes an issue almost disproportionately important in respect of the true issues for determination. Without going into the technical criticisms of the survey made by BB’s expert witness in this area, I found the survey of very little assistance. Whether or not it was fundamentally flawed, as she postulated, I do not have to decide. Some of her criticisms seemed to me to be completely valid, and others more arguable. However, in at least two respects I agreed with her assertions. First, the survey was as far removed from a practical purchasing situation as the presence of a number of bottles before me in the courtroom. It had nothing to do with the likelihood of imperfect recollection of “Bud” or “Budweiser” marks or AB’s product when trawling the shelves of a supermarket or a liquor wholesaler or the like and being confronted not by a six-pack of “Budweiser” but by a four-pack of “Budejovicky Budvar”. Nor did it have anything to do with an equally imperfect recollection of “Bud” or “Budweiser” or AB’s product in an on-licence premises and being faced with a beer list that nominated “Budejovicky Budvar” or just “Budvar”. These are but examples of the true market situation in which prospective purchasers might have found themselves. I find it almost inconceivable that in respect of a survey where some 85% of the surveyed group had a knowledge of “Budweiser” and of its American connection there could be anything more than minimal confusion in a true market situation. The survey simply did not address such a situation. I would also note that this case is very different from cases such as the Reckitt and Coleman Products Ltd v Borden Inc and Ors and Neutrogena Corporation & Anor v Golden Limited & Anor cases upon which AB not unnaturally placed some emphasis. The survey was conducted in an artificial and unrealistic context simply too far removed from that in which actual consumer decision-making would be made: compare Unilever plc v Johnson Wax Ltd [1989] FSR 145, Interlego AG v Croner Trading Pty Ltd (1991) 102 ALR 379, and State Government Insurance Corporation v Government Insurance Office of NSW (1991) 101 ALR 259.
[101] I was also particularly concerned with the use of a clear leading question, question 5, in the course of the survey. It was apparent from the evidence that it was used on a number of occasions when it should not have been. That occurred in respect of some of the interviewees upon whom AB relies for purported confusion. If there was an allowance for the misuse of the leading question, the level of apparent association between BB’s bottle in the artificial situation that existed and AB’s name would have reduced significantly.
[102] I do not find it necessary to address whether or not the survey represented a fair cross-section of the relevant public when it took any purchaser of packaged beer within the last three months. It was noted both AB’s and BB’s products are priced at a level likely to attract a minority of purchasers and not every purchaser of packaged beer. I saw some substance in this criticism and in an associated criticism that the gender mix in the sample was unlikely to reflect the gender mix of prospective purchasers of the products of either AB or BB. These sorts of criticisms merely underline the difficulty of achieving a fair survey. They undermined rather than destroyed what little relevance the survey had.
[103] Other criticisms related to the method by which the survey was conducted, with reference to interviewer conduct, awareness that the survey was to be used in litigation, and technical matters such as the survey response rate, the audit rejection rate and the interpretation of the survey. I see no reason to comment upon these matters given what I have already said.
[104] It is apparent that in any purchasing situation there is always the risk that a small number of purchasers will be misled. However, there is no evidence in the present case to establish that any substantial number of purchasers, or a significant number of retail purchasers, would be likely to be confused into purchasing BB’s old or new bottle when looking for AB’s old or new bottle.
[105] AB simply did not satisfy me that the requisite misrepresentation has occurred or would occur.
Fair Trading Act claim
[106] AB alleges a breach of ss 9, 10, 13 and 16 of the Fair Trading Act 1986. Sections 9 and 10 deal with misleading or deceptive conduct generally. Section 13 deals with false representations as to approval, endorsement or affiliation. AB accepts that it must establish an awareness of its trade mark and that the conduct must be likely to mislead or deceive when encountered by recent members of a significant section of the public: Bonz Group Pty Ltd v Cooke (1996) 7 TCLR 206. AB’s case is that the likelihood of consumers being misled or deceived arises on the same basis as for its passing off claim, and that in particular consumers are likely to be misled into believing that “Budejovicky Budvar” is brewed by or licensed by the brewer of “Budweiser” beer. It is submitted that BB’s use of “Budejovicky Budvar” and of “Budweiser Budvar” is a false application of AB’s trade mark and a forging of it. AB’s claim relates to the wording at the bottom of BB’s bottles as well as in its main label. As was stated by Cooke P in Taylor Bros Ltd v Taylors Group Ltd [1988] 2 NZLR 1, 39:
“It is not enough that the conduct causes a state of wonder or doubt in the minds of people about, for example, the identity or otherwise of two businesses. The line in the latter respect can be a fine one, we think, for if the Court is satisfied (on the balance of probabilities) that some consumers will wonder, it may at times not be difficult to take the further step of concluding that some are likely to be misled; but of course this is not necessarily so.”
[107] As is submitted for BB, the requirement of AB under the Fair Trading Act claim is to show misleading or deceptive conduct. This AB simply cannot do. Everything said before is equally applicable to this head of claim.
Decision
[108] All AB’s claims fail. There will be judgment for the defendant. There will, however, be a declaration that BB’s old bottle does not have the protection of s 12 of the Act.
Costs
[109] BB is entitled to costs in accordance with category 3 of the Third Schedule to the High Court Rules, such costs to be calculated in accordance with Table C of the Fourth Schedule of those Rules. BB is also entitled to its reasonable disbursements including the reasonable travel and accommodation costs of its Czech and other witnesses. In the event of there being any dispute as to the costs and disbursements to which BB is entitled, they are to be fixed by the Registrar in accordance with the above Schedules.
Postscripts
[110] This case exemplifies what was said by Gault J in Mainland Products Ltd v Bonlac Foods (NZ) Ltd [1998] 3 NZLR 341, 343, that claims of passing off and under the Fair Trading Act add little in a case such as the present to what is truly a trade mark case. This case was about marks and unless AB could succeed in respect of them it could have no successful basis of claim.
[111] I have deliberately not named the witnesses. Their identity is irrelevant to the conclusions reached. I see no reason why any of them should be caused possible embarrassment by the terms of these reasons for judgment, when the nature of their evidence, if not the views expressed, was not necessarily their responsibility.
ANNEXURE AB 1
ANNEXURE AB2
ANNEXURE BB1
ANNEXURE BB2
ANNEXURE BB3
Solicitors
A J Park & Son, Wellington, for plaintiff
Henry Hughes & Co, Wellington, for first defendant
Keegan Alexander Tedcastle & Friedlander, Auckland, for second defendant
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