Brands Limited v Bed Bath 'N' Table Pty Limited
[2023] NZHC 1766
•7 July 2023
NOTE: SALES FIGURES IN PARAGRAPH [323] HAVE BEEN REDACTED FOR COMMERCIAL CONFIDENTIALITY REASONS. IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2018-485-0971
[2023] NZHC 1766
UNDER the Trade Marks Act 2002 IN THE MATTER
of Trade Mark Registration No. 1011884 (BED BATH ‘N’ TABLE)
BETWEEN
BRANDS LIMITED
First Plaintiff
BED BATH AND BEYOND LIMITED
Second Plaintiff
BBB RETAIL LIMITED
Third PlaintiffAND
BED BATH ‘N’ TABLE PTY LIMITED
First Defendant
BED BATH ‘N’ TABLE NZ PTY LIMITED
Second Defendant
Hearing: 25 July 2022–12 August 2022 Counsel:
K T Glover, J Oliver-Hood and J J Kim for Plaintiffs G F Arthur and L Carter for Defendants
Judgment:
7 July 2023
JUDGMENT OF ELLIS J
BRANDS LTD & ORS v BED BATH ‘N’ TABLE PTY LTD & ANOR [2023] NZHC 1766 [7 July 2023]
Table of Contents
Para Nos
BED, BATH, TABLE AND BEYOND: A BRIEF CHRONOLOGY............ [10]
Early days........................................................................................................... [10]
The 1994 trade mark applications.................................................................... [14]
The narrative resumes....................................................................................... [25]
The 2014 trade mark applications.................................................................... [30]
The dispute begins............................................................................................. [36]
Logos................................................................................................................... [45]
BBT[46]
BBB[47]
INVALIDITY..................................................................................................... [54]
The Part 2 grounds relied on here and the relationship between them [56]
The invalidity claim based on s 25(1)(b).......................................................... [65]
Which of the 2014 trade marks has priority?[70]
The admissibility of BBB’s survey evidence[91] The structure of the survey and the potential for priming [103]
An area participants would not otherwise consider [104]
Question order effects [105]
Question wording effects [106]
The absence of controls [107]
The survey population [108]
Conclusion on admissibility [109]
Does BBT’s 2014 trade mark relate to goods and services that are the
same as, or similar to those covered by BBB’s 1994 trade mark?[115]Confusing similarity?[124]
Simple similarity [128]
The disclaimer and non-distinctiveness [134]
Why does non-distinctiveness matter? [148]
Evidence of actual confusion [155]
My own experience [170]
Conclusion [174]
Section 25(1)(c)................................................................................................. [177]
Honest concurrent use..................................................................................... [181]
The extent of pre-existing use[187]
Degree of confusion likely to ensue[197]
Honesty of use[198]
The relevant standard [198]
Honesty of use in fact [200]
Proof of confusion[216]
Relative inconvenience[217]
Conclusion[221]
Section 17(1)(a)................................................................................................. [223]
Reputation[231]
Deception and confusion: principles[235]
Relevant market and circumstances of trade[237]
Likelihood of deception and confusion by a substantial number of persons [238]
Section 17(1)(b)................................................................................................ [247] Is honest concurrent use available in a s 17 case?......................................................... [249]
Discretion.......................................................................................................... [278]
INFRINGEMENT.......................................................................................... [279]
Section 93.......................................................................................................... [282]
Section 89(1)(c)................................................................................................. [286]
Section 95 – own name defence...................................................................... [291]
Can a company avail itself of s 95?[293]
Honest practices?[303]
PASSING OFF AND BREACH OF THE FTA............................................. [307]
Relevant principles........................................................................................... [311]
Passing off[312]
Fair Trading Act[316]
BBB’s claims and my approach to them........................................................ [319]
Goodwill............................................................................................................ [321]
Misrepresentation............................................................................................ [329]
Absence of distinctiveness[331]
Get-up and the colour green[337]
Honest concurrent use..................................................................................... [342]
Conclusion........................................................................................................ [345]
AFFIRMATIVE DEFENCES........................................................................ [347]
COUNTERCLAIMS...................................................................................... [355]
SUMMARY AND RESULT........................................................................... [356]
[1] For over 15 years the New Zealand owned companies trading as Bed Bath & Beyond (collectively, BBB) have been competing with the Australian owned companies trading as Bed Bath ‘N’ Table (collectively, BBT) in the New Zealand manchester and homewares market.
[2] Since 1994, BBB has been the registered owner in New Zealand of the trade mark “BED BATH & BEYOND” (the BBB 1994 trade mark).1 It also has another, identical, trade mark with a deemed registration date of 9 June 2014 (the BBB 2014 trade mark), in relation to additional classes of goods and services.
[3] BBB should not, although may, be confused with the quite separate North American company Bed Bath and Beyond (BBBUS), which has been operating “big-box” stores selling manchester and home products in the United States and elsewhere for over 50 years.2 BBBUS is owned by Liberty Procurement Co Inc (Liberty).3
[4] BBT has been the registered owner of the trade mark “BED BATH ‘N’ TABLE” in Australia since 1976, and in New Zealand since 4 June 2014 (the BBT 2014 trade mark).4
[5]Neither party opposed the registration of the other’s 2014 trade mark.
[6] The days in which BBB and BBT tolerated each other’s existence in the relevant New Zealand and Australian markets have passed. BBB now seeks the deregistration of BBT’s 2014 trade mark on four separate grounds and, if successful in that endeavour, a finding that BBT’s use of that mark in New Zealand has, from the outset, infringed BBB’s registered trade mark(s). Additionally, BBB asserts BBT’s
1 The first plaintiff, Brands Limited, owns the “BED BATH & BEYOND” trade marks, and licenses them to the other two plaintiffs. The second plaintiff, Bed Bath and Beyond Limited, operates the stores throughout the country. The third plaintiff, BBB Retail Limited, runs the online store.
2 As will be discussed shortly, it is not in dispute that the founders of BBB chose to copy the BBBUS name when establishing the BBB business in New Zealand. BBBUS has recently filed for bankruptcy in the United States.
3 The longstanding existence, and international reach, of BBBUS adds an unusual layer to the issues of confusion and deception that arise in this case.
4 There is a dispute as to this date which is discussed and resolved later in this judgment.
use of its trade mark here constitutes passing off and breaches the Fair Trading Act 1986 (the FTA).
[7] As well as refuting BBB’s claims and advancing a numerous positive defences, BBT has counterclaimed that, if the court concludes the BBB and BBT trade marks are confusingly similar then it is the BBB registered trade marks that are invalid.5
[8] The plethora of claims, defences and sub-issues goes some way to explaining the regrettable time it has taken me to complete this judgment.
[9] This judgment relates to the question of liability only, with a remedies hearing (if necessary) to come. BBB nonetheless seeks injunctive relief in the meantime.
BED, BATH, TABLE AND BEYOND: A BRIEF CHRONOLOGY
Early days
[10] Bed Bath N’ Table Pty Ltd is a wholly owned subsidiary of Domestic Textile Corporation (DTC) which is, in turn, a wholly owned subsidiary of The Dempsey Group Pty Ltd. Prior to 1991 that company had been known as Sleeping Beauty Holdings Pty Ltd, which began trading in 1959. Mr Jonathan Dempsey is now the sole director and shareholder of the Dempsey Group; the business was started by his father.
[11] Bed Bath N’ Table Pty Ltd itself was first registered as an Australian company in 1976 and it opened its first store (in Dandenong, Victoria) that year. Since then, BBT has continuously traded under that name and mark in Australia. The BBT trade mark was first registered in Australia in 1995. The specified goods and services in
5 A number of the pleaded defences were abandoned in the course of the proceedings: waiver, estoppel, acquiescence and delay as defences to the invalidity claim; the revocation counterclaim regarding the BBB 1994 trade mark; prior continuous use as a defence to trade mark infringement; and waiver as a defence to trade mark infringement. BBB also points out that BBT appeared to rely on defences in closing that were not pleaded and that there are costs issues arising from these changes in position by BBT. The question of costs will, however, need to be addressed separately from this judgment.
the trade mark were, in terms of the Nice Classification System, class 24 (goods) and class 42 (services).6
[12] Back in New Zealand, the BBB business began in 1995, under the name “Linen for Less”. The business comprised the three plaintiff companies. Messrs Murray Carter and Fred Bart are directors of all three companies, and Mr Trevor Brown is a director of two of them.7 In its early years, BBB was run in conjunction with Shanton Apparel, a business also owned and run by Messrs Carter and Bart.8 Manchester retailing (the sale of household linen and cotton items, such as cloths, towels and sheets) was the original focus of the Linen for Less business. At first, it was essentially a factory outlet selling seconds and over-runs.
[13] In time, Messrs Carter and Bart developed plans to expand the Linen for Less business into homewares, and to move from a discount range towards a more standard retail offering.
The 1994 trade mark applications
[14] On 2 March 1994, another of Mr Bart’s companies, Australasia Dyers Ltd (ADL), applied to register the word mark “BED BATH & BEYOND” in New Zealand in relation to services falling under class 42 of the Nice Classification System.
[15] Mr Bart freely acknowledged that he was already aware of the BBBUS brand at this time, and he and Mr Carter decided that “BED BATH & BEYOND” would also be a good name for their business in New Zealand.
[16] Then, on 15 August 1994, Bed Bath N’ Table Pty Ltd filed three New Zealand applications for the registration of “BED BATH N’ TABLE” as a word mark (application nos. 239988, 239989 and 239990).
6 This classification system derives from the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks 828 UNTS 11849 (as amended on September 28, 1979). The specific goods and/or services specified in the trade marks here will be detailed later in this judgment.
7 Mr Brown is the Chief Executive of the second plaintiff, and director of the first and third plaintiffs.
8 Linen for Less was part of the Shanton Group of companies. Mr Brown joined the Shanton Group as Financial Controller in May 1996.
[17] At the time these applications were made, the Trade Marks Act 1953 (the TMA53) was still in force.
[18] During 1995, ADL’s application was examined by the Intellectual Property Office of New Zealand (IPONZ). On 24 October that year IPONZ wrote to ADL’s trade mark lawyers, raising three matters:
(a)a perceived conflict with the applications filed by BBT;
(b)the breadth of the specified services; and
(c)the descriptive and non-distinctive nature of the words “bed” and “bath” when used in relation to retail and wholesale services concerned with beds and baths specifically, which suggested the need for a “disclaimer”.9
[19] ADL’s agents (Pipers) replied to IPONZ on 24 April 1996, pointing out that ADL’s application had five months’ priority over BBT’s applications but agreeing:
(a)to notify BBT of ADL’s application;
(b)to narrow the specified services; and
(c)to disclaim the words “bed” and “bath” separately, and apart from, the mark.
[20] In late June 1996, after further correspondence, IPONZ wrote to Pipers advising that the BBB 1994 mark:
… will be advertised before acceptance under Section 27(1) proviso in Journal No. 1406 due for issue on 26 July 1996 subject to notice being given in the usual manner to the proprietor(s) of Registration/Application no(s):
9 The possibility of a disclaimer where a trade mark contains “matter common to the trade or otherwise of a non-distinctive character” was contemplated by s 23 of the TMA53. Its significance here will be considered later in this judgment.
239988 - BED BATH N’ TABLE
239989 - BED BATH N’ TABLE
239990 - BED BATH N’ TABLE
[21] Attached to the letter was a copy of the advertisement, which included the proposed disclaimer. The advertisement read: 10
BED BATH & BEYOND
Advertised before acceptance, Section 27(1) (proviso) Proposed to be used by the proprietor
Registration of this mark shall give no right to the exclusive use of the words “BED” and “BATH”
234645. 2 March 1994. Class 42: wholesaling and retailing of
textiles, linen and other napery; clothing, headgear and footwear; toiletries, soaps, perfumery and cosmetics.
AUSTRALASIA DYERS LIMITED, a New Zealand company of 18 Weka Street, Otahuhu, Auckland, New Zealand, manufacturers and merchants. …
[22] On 9 September 1996, BBB’s agents advised BBT’s New Zealand trade mark attorneys (AJ Park) of the application and its right to oppose.
[23] Four months later, BBT abandoned its own trade mark applications in New Zealand. It took no steps to oppose ADL’s application.
[24] In due course, IPONZ accepted ADL’s mark (registration no. 234645) and it was registered on 24 February 1997. The deemed date of registration was the filing date—2 March 1994. The specified goods and services were class 42: wholesaling and retailing of textiles, linen and other napery; clothing, headgear and footwear; toiletries, soaps, perfumery and cosmetics and the disclaimer on the mark was that:
Registration of this mark shall give no right to the exclusive use of the words “BED” and “BATH”.
10 The application was due to be advertised on 26 July 1996, but due to an error by IPONZ was not advertised until a month later (27 August).
The narrative resumes
[25] During 1996 and 1997, Linen for Less began to rebrand under the name Bed Bath & Beyond. At that point Linen for Less were operating 11 stores in New Zealand. The rebrand appears to have been complete by around 2005.
[26] By 2006 BBT had almost 40 stores across Australia and was looking at expanding its operations to New Zealand. This appears to have prompted BBB to approach BBT with an offer to sell the BBB business to them. Although there was an exchange of information and some preliminary negotiations, these went nowhere.
[27] In the context of these negotiations, a letter was written by Mr Syd Holm, on behalf of BBB, to Mr Dempsey (Managing Director of BBT) and Mr Andrew Marcum (BBT’s then General Manager). In the letter, Mr Holm referred to:
(a)the existence of 22 BBB stores in New Zealand;
(b)the “strong synergies” between BBT and the BBB business; and
(c)BBB’s awareness of BBT’s plans to expand into New Zealand and “the similarity of name, branding, product range and target market”.
[28] As I have said, no sale of BBB to BBT eventuated. BBT opened its first New Zealand store, in Sylvia Park, in March 2007.
[29] By 2014:
(a)there were 97 BBT stores open in Australia and nine in New Zealand;
(b)BBT had launched its online store in Australia (in November 2013) but, at that point, did not deliver to New Zealand; and
(c)BBB had 51 stores open in New Zealand and a webstore for online sales.
The 2014 trade mark applications
[30] On 4 June 2014, BBT filed an international trade mark application in Australia, for registration of the word mark “BED BATH ‘N’ TABLE” in relation to the following classes of goods and services:11
(a)class 20: furniture;
(b)class 24: fabric and textiles including (but not limited to) bed and household linen and towels, furniture covers, curtains and curtain holders together with retailing and wholesaling services in relation to giftware, bathroom products, furniture, laundry baskets and kitchen ware; and
(c)class 35: retailing, wholesaling and mail order services in relation to textiles and textile goods, including bed and table covers, giftware, bathroom products, furniture, laundry baskets and kitchen ware.
[31] The application designated China, the UK, Singapore and New Zealand as the countries in which international registration was sought.
[32] A few days later, on 9 June, BBB applied for registration in New Zealand of the word mark “BED BATH & BEYOND” in respect of the following classes of goods:
(a)class 20: furniture, beds and bedding, goods not included in other classes made of various specified substances (wood, cork, reed etc);
(b)class 21: kitchen, household, cosmetic, toilet and gardening utensils;
(c)class 24: textile fabrics and textile goods including bedclothes, furnishings and manchester; and
11 The international trade mark application process, and the details of the specific goods and services to which the registrations relate, is discussed in more detail later in this judgment.
(d)class 25: clothing, footwear and headgear.
[33] The marks were advertised in the normal way, and neither party opposed the other’s application.
[34] IPONZ eventually registered both BBT’s and BBB’s trade marks (numbered 1011884 and 999330 respectively). The registration dates recorded in the IPONZ register are 4 June 2014 (BBT) and 9 June 2014 (BBB) which, on their face, mean the BBT mark has priority.12
[35] There is, however, now a dispute about what is the ‘correct’ registration date of BBT’s 2014 trade mark. BBB says the right date is 1 January 2015 (the date the international application was received by IPONZ from the Word Intellectual Property Organisation (WIPO)) and that BBB’s 2014 trade mark therefore has priority over BBT’s. This is relevant to both the claims of invalidity and the claim of infringement under the Trade Marks Act 2002 (the TMA02). It is therefore an issue requiring resolution in these proceedings and I return to it later in this judgment.
The dispute begins
[36] Although this is a matter of dispute, the seeds of the parties’ conflict over the use of their respective marks may have been sown in 2015, when Liberty applied to register the BBBUS trade mark in Australia. That application was opposed by BBT.13 The resulting decision refers to evidence given by Mr Dempsey for BBT about confusion between the two brands by both suppliers and customers, despite there being no BBBUS stores in Australia at that time. Registration of the BBBUS trade mark was refused, on the grounds that the evidence had established BBT’s significant reputation in Australia, and the use of BBBUS’s mark in Australia would be likely to deceive or cause confusion.
12 Of course, the BBB 1994 trade mark remains registered and has priority over subsequent ones.
13 Re opposition by Bed Bath N' Table Pty Ltd to registration of trade mark application 1624537
(35) BED BATH & BEYOND in the name of Liberty Procurement Co. Inc [2017] ATMO 108. BBT’s opposition was grounded in the Australian equivalent to s 17(1)(a) of the TMA02, not the equivalent to s 25(1)(b).
[37] Next, BBB successfully sought registration of the trade mark “BED BATH & HOME” in New Zealand and then applied for registration of the same mark in Australia. In October 2017, BBT’s lawyers wrote to the lawyers for BBB saying:
We consider that the trade marks BED BATH & HOME and BED BATH AND HOME (the Marks) are deceptively similar or confusingly similar to the Registered Trade Marks. Should your client offer for sale or sell bed linen, manchester, homewares and soft furnishings under the Marks without our client’s authorisation we consider this would constitute an infringement of our client’s Registered Trade Marks under s.120 of the Trade Marks Act 1995 (Cth) and s.89 of Trade Marks Act 2002 respectively
[38]By that time, BBT had opened its online store in New Zealand.14
[39] In 2018, BBT opposed an application by Brands Ltd to register the “BED BATH & BEYOND” trade mark in Australia. BBT again relied (among other things) on its pre-existing reputation there. And Mr Dempsey again made a declaration in support of BBT’s opposition in which he said:
… the Opponent considers any use by the Applicant of the BED BATH & BEYOND trade mark in Australia in respect of the retailing of homewares and related goods will lead to consumer confusion and that such use constitutes an infringement of the BED BATH ‘N’ TABLE Mark.
[40]And in terms of evidence of actual confusion he observed:
… customers sometimes confuse the BED BATH N’ TABLE Mark with the trade mark BED BATH & BEYOND in the name of Brands Limited. Now annexed hereto … are copies of emails which involve customers or other third parties who are aware of Brands Limited’s BED BATH & BEYOND trade mark contacting our [customer service officers], seemingly in the belief that Bed Bath N’ Table is connected with Brands Limited’s Bed Bath & Beyond business or after having seen the website for Brands Limited’s Bed Bath & Beyond business.
[41] After also referring to evidence of confusion with BBBUS, Mr Dempsey concluded:
Given the significant reputation of the Opponent in the BED BATH N’ TABLE Mark in relation to the goods and services of the Registered Trade Marks and the level of confusion currently arising between the BED BATH N’ TABLE Mark and the BED BATH & BEYOND trade mark, I am extremely concerned
14 The online store opened in April 2017. BBB says this increased confusion for customers and was the impetus for these proceedings. BBB also say that BBT were first told of its intention to bring trade mark invalidity proceedings in November of that year.
by the potential for further confusion in the market place and damage to the BED BATH N’ TABLE business should the Opposed Applications proceed to registration.
[42] In December 2018, BBB filed a without notice application seeking the invalidation of the BBT trade mark in the New Zealand High Court. In June 2020, the claims for trade mark infringement, passing off and fair trading claims were added to the proceedings.
[43] At the time of hearing, BBB was operating over 50 physical stores across the country together with its online store.15 It has stores in Auckland, Wellington and Christchurch and Hamilton, as well as in some smaller cities and towns. The physical stores fall into two categories:
(a)standard BBB retail stores; and
(b)the larger BBB Homestores, which stock a wider range of homeware products.
[44] BBT now operates 15 stores across New Zealand. It has stores in Auckland, Wellington, Christchurch and Hamilton.
Logos
[45] The logos used by the parties are not directly relevant to the trade mark issues in this case because the relevant trade marks are word marks. But they are material to the FTA and passing off causes of action and so it is useful to note them at the outset here.
BBT
[46] In the mid-1990s, BBT began using the logo set out below. This logo has been used continuously since its adoption in Australia and entry into the New Zealand market:
15 There had been a BBB website before then.
BBB
[47] BBB, however, have had multiple iterations of their logo since commencing business in New Zealand. Starting in 1997, the BBB logo was as follows:
[48] The ‘Linen for Less’ branding continued to feature into the early 2000s, and by 2003 BBB had applied to register in Australia the logo it was using at the time:
[49] In 2005, BBB then moved to a depiction of their logo closely resembling the version used today, with a shift to the dark green colour scheme. This was also the logo used when BBB first began its online retailing offering:
[50] By the 2010s, the logo used by BBB was amended slightly to that which is currently used online and in brochures:
[51] Although it is unclear exactly when it came into use, the following “stacked” version was also used in brochures by the mid-2010s:
[52] In summary, the main colour scheme used in the BBB business is dark green, with lighter green accent points and white lettering. On the evidence before the court, BBB first began to use the colour green (initially in its lettering) in 2001. The shift to a predominantly green colour-scheme then happened sometime between 2001 and 2005. BBT also make use of a dark green colour in their branding and have been continuously doing so since 1990.
[53] It is against the above chronology and background that I turn to consider the various claims, defences and sub-issues in this case. A “road map” can be found in the form of the table of contents at the beginning of this judgment.
INVALIDITY
[54] BBB seeks a declaration that BBT’s 2014 trade mark is invalid. Trade mark invalidity is governed by ss 73 to 75 of the TMA02. Relevantly:
(a)under s 73, the court may, on the application of an aggrieved person, declare the registration of a trade mark is invalid to the extent that the trade mark was not registrable under pt 2 of the Act at the deemed date of its registration;
(b)s 74 provides that if the registration of a trade mark is declared invalid, it is to be treated as if it had not been registered; and
(c)s 75 deems a trade mark to be valid seven years after the deemed date of registration unless (among other things) the trade mark should not have been registered on any of the grounds set out in s 17(1) or (2).16
[55] In this case BBB filed its initial invalidity application in December 2018, around three and a half years after BBT’s 2014 mark was registered.17 The “limited indefeasibility” provided by s 75 therefore has no application here.
The Part 2 grounds relied on here and the relationship between them
[56] To succeed on its invalidity claim, BBB bears the burden of showing that the BBT trade mark was not, in 2014, registrable under pt 2 of the TMA02. To do this, BBB relies on ss 17(1)(a), 17(1)(b), 25(1)(b) and 21(1)(c), all of which appear in pt 2.
16 Section 75 would therefore appear to deem valid trade mark that should not have been registered under s 25 once seven years have elapsed.
17 The issue around BBT’s priority date will be discussed in more detail shortly.
[57]Section 17 relevantly provides:
17 Absolute grounds for not registering trade mark: general
(1)The Commissioner must not register as a trade mark or part of a trade mark any matter—
(a)the use of which would be likely to deceive or cause confusion; or
(b)the use of which is contrary to New Zealand law or would otherwise be disentitled to protection in any court; …
…
[58]And ss 25(1)(b) and (c) provide:
(1) The Commissioner must not register a trade mark (trade mark A) in respect of any goods or services if—
…
(b)it is similar to a trade mark (trade mark C) that belongs to a different owner and that is registered, or has priority under section 34 or section 36, in respect of the same goods or services or goods or services that are similar to those goods or services, and its use is likely to deceive or confuse; or
(c)it is, or an essential element of it is, identical or similar to, or a translation of, a trade mark that is well known in New Zealand (trade mark D), whether through advertising or otherwise, in respect of those goods or services or similar goods or services or any other goods or services if the use of trade mark A would be taken as indicating a connection in the course of trade between those other goods or services and the owner of trade mark D, and would be likely to prejudice the interests of the owner.
[59] It is trite that s 17 has a different purpose from s 25. Section 17 is concerned with consumer protection, rather than protecting the proprietary rights of competing trade mark holders, which is the focus of s 25. In that sense:
(a)the grounds in s 17 are referred to as “absolute” in that they are focused on qualities inherent in the applicant’s mark itself;
(b)the grounds in s 25 are referred to as “relative” because they are focused on the relative interests of competing trade mark holders.
[60] It is fair to say that it is claims based on ss 17(1)(a) and/or 25(1)(b) that occupy the most space in the relevant authorities and it was certainly those two provisions that were the principal focus in this case. While it will be necessary in due course also to consider ss 17(1)(b) and 25(1)(c) it seems useful to make some more specific prefatory remarks about the difference between the two key provisions.
[61] Both s 17(1)(a) and s 25(1)(b) are focused on confusion or deception arising from the anticipated or notional fair use of the trade mark for which registration is sought or, in an invalidity claim, whose registration is challenged. But the base comparator for each is different. Section 17(1)(a) is predicated on establishing an awareness of or reputation in the opponent/aggrieved person’s mark and comparing that with the notional fair use of the mark seeking registration. By contrast, s 25(1)(b) requires no pre-existing reputation or existing use; the comparison is between the notional fair use of both marks.
[62] In cases where opposition to registration or a challenge to validity is based on an existing mark, s 25(1)(b) will usually be the principal focus. That is because, as just noted, s 17(1)(a) is predicated on establishing an existing awareness of or reputation in the opponent/aggrieved person’s mark, whereas s 25(1)(b) requires no such pre-existing use (the focus being on the notional fair use of both marks).
[63] In this case, however, reliance by BBB on s 17(1)(a) assumes some separate importance. That is because BBT has pleaded the s 26(b) “honest concurrent use” exception to unregistrability. But BBB says that exception is—as a matter of law— unavailable where a trade mark is unregistrable under s 17.
[64] Because of that issue it is convenient to address the invalidity claims under s 25(1), and the s 26(b) defence, first. If, in that context, I find honest concurrent use is not made out on the facts, it would strictly be unnecessary to consider the legal question of its application in relation to an invalidity challenge under s 17.
The invalidity claim based on s 25(1)(b)
[65] To reiterate for convenience, s 25(1)(b) provides that the Commissioner must not register a trade mark in respect of any goods or services if:
… it is similar to a trade mark (trade mark C) that belongs to a different owner and that is registered, or has priority under section 34 or section 36, in respect of the same goods or services or goods or services that are similar to those goods or services, and its use is likely to deceive or confuse; …
[66]The core issues arising for determination under s 25(1)(b) are:
(a)whether BBT’s 2014 trade mark was registered in respect of goods or services that are the same as or similar to those covered by BBB’s trade mark(s);
(b)whether BBT’s 2014 trade mark similar to BBB’s trade mark(s); and
(c)whether the fair notional use of BBB’s trade mark(s) and BBT’s 2014 trade mark is likely to deceive or confuse a substantial number of persons in the relevant market.
[67] The last two questions are, or can be, closely related; the question of similarity will often govern the issue of confusion. For that reason in some cases, the questions are considered in a more interrelated way. As this Court said in The Coca-Cola Company v Frucor:18
… each of the tests articulated by the Courts tend to run together, and any attempt to differentiate between them is largely a matter of semantics. Much will depend upon the facts of any given case. If the defendants’ sign is obviously not similar to the registered trade mark, then it will not generally be necessary to go on to consider whether or not use of the defendants’ sign is likely to deceive or confuse. On the other hand, where the mark and the sign are similar, it will generally be appropriate to consider the issues of similarity and deception and confusion together, because the extent of the similarity is likely to inform the decision whether there is a likelihood of deception and confusion. The Court in such cases can make a global assessment, taking into account the similarity of the mark and the sign, when determining whether the use of the sign will be liable to deceive or confuse. When a global assessment is called for, then the Court will apply the various tests relevant to deception and confusion which have been discussed in the authorities, including by Richardson J in Pioneer Hi-Bred. It will do so from the perspective of the average consumer in the relevant market.
[68]I propose to adopt something of a “global assessment” here.
18 The Coca-Cola Company v Frucor Soft Drinks Ltd [2013] NZHC 3282, (2013) 104 IPR 432 at [154].
[69] But before turning to that assessment, there are two prior issues. The first relates to the respective priority dates of BBB’s and BBT’s 2014 trade marks, which is relevant to core issue [66](a), above. The second relates to the objection taken by BBT to the admissibility of evidence relating to a survey conducted on behalf of BBB for the purposes of establishing confusing similarity between the competing marks. That is relevant to (b) and (c).
Which of the 2014 trade marks has priority?
[70] Based on the priority dates recorded in the Trade Marks Register (the Register), BBT’s 2014 trade mark has priority over BBB’s 2014 trade mark. On that basis, it would be only BBB’s 1994 trade mark (and the narrower class of services specified in it) that is strictly relevant when considering whether those services are the same as the goods and services specified in BBT’s 2014 trade mark, for the purposes of s 25(1)(b).19
[71] But BBB says the priority dates in the Register are wrong and that, as a matter of law, BBB’s 2014 mark has priority over BBT’s. BBB submits the s 25(1)(b) comparative exercise should include the wider classes of goods and services specified in its later mark.
[72] The difference that priority dates might make can, perhaps, best be understood by reference to the table below. That table indicates how a comparison between the services to which BBB’s 1994 trade mark relates and the goods and services to which the BBT 2014 trade mark relates might be different from a comparison between the goods and services covered by both BBB’s trade marks and the goods and services covered by BBT’s trade mark.
19 The question of similarity of goods and services, however, invites a wider inquiry.
Services covered by BED BATH & BEYOND’s 1994
registration
Goods and services covered by 2014 BED BATH N’ TABLE’s
2014 registration
Goods and services covered by BED BATH & BEYOND’s 2014
registration
Former Class 42: wholesaling and retailing of textiles, linen and other napery;
wholesaling and retailing of clothing, headgear and footwear;
wholesaling and retailing of toiletries, soaps, perfumery and cosmetics.
Class 20: Furniture;
Class 24: covers (loose) for furniture; furniture coverings of plastic; mattress covers;
curtain holders of textile material, curtains of textile or plastic; door curtains; net curtains;
Bath linen, bed clothes, bed covers, bed covers of paper, bedspreads; coverlets (bedspreads); dish towels for drying; face towels of textile; eiderdowns; household linen; linen (bed), linen (household); pillowcases; quilts; runners (table); serviettes of textile; table cloths (not of paper), table linen (textile), table mats (not of paper), table napkins of textile; towels of textile; sheets (textile); brocades; calico, calico cloth; canvas for tapestry or embroidery; cloth; cotton fabrics; crepe (fabric); damask; fabric; felt; flannel; jersey (fabric); linen cloth, material (textile); non- woven textile fabrics; silk (cloth); taffeta (cloth); upholstery fabrics; woollen cloth, woollen fabric; textiles for blinds; embroidery fabric.
Class 35: Retailing, wholesaling and mail order services in relation to textile and textile goods, including bed and table covers,
Class 20: Furniture, mirrors, picture frames; beds; bedding (except linen) in this class, mattresses, pillows and cushions; sleeping bags; sleeping mats and airbeds; goods not included in other classes made of wood, cork, reed, cane, wicker, horn, bone, ivory, whalebone, shell, amber, mother of pearl, and substitutes for all these materials or of plastics.
Class 21: Household and kitchen utensils and containers (not of precious metal or coated therewith); brushes in this class; articles for cleaning purposes; glassware, porcelain, and earthenware not included in other classes; cooking utensils.
Class 24: Textiles and textile goods not included in other classes; manchester; bed, bathroom, kitchen and household linen; pillow cases; duvets; duvet covers; blankets; table covers; towels in this class; curtains of all kinds in this class.
Class 25: Clothing, footwear and headgear.
Retailing, wholesaling and mail order services in relation to soap,
Retailing, wholesaling and mail order services in relation to giftware,
Retailing, wholesaling and mail order services in relation to bathroom products (not including soap) including soap dishes, shower curtains,
Retailing, wholesaling and mail order services in relation to furniture and laundry baskets,
Retailing, wholesaling and mail order services in relation to kitchen ware,
including cutlery and crockery.
[73] As will be evident from the earlier narrative, BBT obtained registration in New Zealand by filing an international trade mark application in Australia and nominating New Zealand as one of the countries in which the trade mark would have effect. Although that is undoubtedly the process contemplated by the Madrid Agreement Concerning the International Registration of Marks (the Madrid Protocol, discussed further below),20 the question raised by BBB is whether the Protocol has properly been incorporated into New Zealand law.
[74] Before considering that issue, however, it is useful to begin with a brief overview of the international trade mark registration process, and its implementation in this country.
[75] The first developed method for international registration of trade marks is contained in the Paris Convention for the Protection of Industrial Property, which provides (among other things) that trade marks applied for by nationals from all member countries have a right of priority in other member countries, provided an
20 Madrid Agreement Concerning the International Registration of Marks 828 UNTS 11852 (as amended on September 28, 1979).
application is made in that country within six months from the date of the first filing in the home country.21 In other words, subject to the six month time limit, the date of registration in the second (foreign) country is deemed to be the date of registration in the first (home) country.
[76] This is the rule that is (rather inelegantly) reflected in the present s 36 of the TMA02,22 which provides:
36 Priority of application to which convention country application relates
(1)A person who has applied for the registration of a trade mark in a convention country (whether before or after it became a convention country), …, is entitled to registration of his or her trade mark in priority to other applicants, and the registration has the same date as the date of the application in the convention country if the application is made within 6 months after the date of the convention country application.
(2)Subsection (1) applies only in respect of the first application for the trade mark that is made in a convention country by a person and does not apply to any subsequent applications for the trade mark by that person.
(3)The use of the trade mark in New Zealand during the 6-month period referred to in subsection (1) does not affect the priority of the application for the registration of the trade mark to which the convention country application relates.
[77]The phrase “convention country application” is defined in s 5 as:23
… an application for the registration of a trade mark that is made in a convention country (whether before or after it became a convention country) and that is, in accordance with the—
(a)terms of a treaty between 2 or more convention countries, equivalent to an application made in any one of those convention countries; or
(b)law of any convention country, equivalent to an application made in that convention country
[78] So in order for BBT to have had the benefit of the s 36 (Paris System) process, it would need separately to have applied for registration in New Zealand within
21 Paris Convention for the Protection of Industrial Property 828 UNTS 11851 (as revised on September 28, 1979), arts 4A and 4C. Both New Zealand and Australia are member countries.
22 The predecessor to s 36 in the TMA53 (s 73) is considerably clearer in its terms.
23 Australia is a “convention country”.
six months of its first (1995) application in Australia. BBT therefore accepts that s 36 is inapplicable and would not support the priority of its 2014 trade mark here.
[79] Under the Madrid Protocol, a different process is contemplated: the holder of, or applicant for, an existing trade mark (known as a basic mark) who is domiciled in or has a relevant connection with a member of the Madrid System can file a single international application in its “Office of Origin”. The application designates other Madrid System member countries in which the applicant wishes its trade mark to be registered. Next:
(a)the Office of Origin submits the application to the International Bureau (WIPO);
(b)where WIPO is satisfied that the application complies with the relevant international requirements, the mark is recorded in the International Register and published in the WIPO Gazette of International Marks;
(c)WIPO then notifies the Offices of each of the members designated in the international application; and
(d)although a designated member state has the right to refuse protection within the specified time limit (generally 12 months), absent such a refusal, the protection of the mark in each of the designated members is then the same as if the mark had been filed directly with the Office concerned and runs from the date of international registration.
[80] In 2011, s 199A was inserted into the TMA02. It’s object was to authorise the making of regulations for the purpose of giving effect to the Madrid Protocol. Section 199A provides:
199A Regulations: Madrid Protocol
(1)The Governor-General may, by Order in Council, make regulations for the purpose of giving effect in New Zealand to the Madrid Protocol, including providing for any of the following:
(a)making applications for international registration by way of the Intellectual Property Office of New Zealand as office of origin:
(b)procedures to be followed where the basic New Zealand application for registration ceases to be in force:
(c)procedures to be followed where the Intellectual Property Office of New Zealand receives from the International Bureau, or any body specified in the regulations, a request for extension of protection to New Zealand:
(d)the effects of a successful request for extension of protection to New Zealand:
(e)transforming an application for an international registration, or an international registration, into a national application for registration:
(f)communicating information to the International Bureau:
(g)requiring fees to be paid in respect of applications for international registrations, extensions of protection, and renewals, and prescribing the amounts of those fees:
(h)the application of the following provisions to a protected international trade mark (New Zealand):
(i)section 105 (unjustified proceedings):
(ii)subpart 2 of Part 4 (criminal proceedings):
(iii)subpart 3 of Part 4 (border protection measures).
(2)Regulations under this section are secondary legislation …
[81] The Trade Marks (International Registration) Regulations 2012 (the 2012 Regulations) were promulgated accordingly. Their express purpose was to “give effect to” the Madrid Protocol in New Zealand.
[82] Regulation 12 of the 2012 Regulations addresses the question of priority. It relevantly states:
12 Priority
(1)Section 36 of the Act entitles the holder of an international registration designating New Zealand to the registration of his or her trade mark in priority to other applicants.
(2)The manner of claiming the priority conferred under section 36 of the Act must be determined in accordance with the Madrid Protocol and the Madrid Protocol Regulations.
(3)The date on which the holder is entitled to priority is—
(a)the date of the international registration, in the case where the request for extension of protection to New Zealand is mentioned in the international application; or
…
[83] It may be observed at this point that reg 12(1) does not seem accurately to reflect the import of s 36 of the TMA02. Section 36 does not refer to the “holder of an international registration designating New Zealand” at all. Rather, s 36 sets out the circumstances in which an applicant for, or holder of, a trade mark in a convention country will be accorded priority in New Zealand. Those circumstances are where:
(a)a person has applied for registration of a trade mark in a convention country; and
(b)the application in the convention country is the first application made by the person in that country; and
(c)an application for registration is also made by that person in New Zealand within six months of the date of the convention country application.
[84] Those circumstances (the need for two separate applications made within a specified period) are, of course, different from the circumstances in which priority is accorded to an international registration under the Madrid Protocol processes.
[85] It is no doubt for this reason that reg 12(2) suggests that s 36 is somehow being amended or at least side-lined by reg 12(3). Indeed, the possibility of inconsistency between the TMA02 and the 2012 Regulations is recognised by reg 4, which provides:24
24 Emphasis added.
For the purpose of these regulations, the Trade Marks Regulations and the Act apply, to the extent applicable and with all necessary modifications, to any holder of an international registration designating New Zealand and any holder of a protected international trade mark (New Zealand), unless and to the extent that—
(a)these regulations provide otherwise; or
(b)any provision of the Trade Marks Regulations or the Act is inconsistent with—
(i)the Madrid Protocol; or
(ii)the Madrid Protocol Regulations.
[86] It is, however, a generally accepted presumption of statutory interpretation that Parliament does not intend primary legislation to be suspended, amended, or repealed by statutory regulation. The exception is where Parliament enacts an express empowering clause (known as a Henry VIII clause).25 That this continues to be the position in New Zealand was made clear by the Supreme Court in Zaoui v Attorney-General: 26
Except with the antecedent authority of Parliament, subordinate legislation cannot repeal or interfere with the operation of a statute … Since we have found no power, express or implied, for the Executive to limit the scope of the legislation in this way, we need to examine the consequence for the prescribed form. The appropriate approach is to prefer a construction fulfilling the legislative purpose, rather than one contrary to it.
[87] So, BBB says that s 199A does not clearly authorise regulations that override provisions of the TMA02. If that is right, reg 12—and the priority it purports to afford—would be ultra vires.
[88] Although I understand that argument, I think the better view is that s 199A of the TMA02 is a Henry VIII clause. It expressly contemplates the promulgation of regulations that give effect in New Zealand to the Madrid Protocol, including regulations that stipulate the effects of a successful request for extension of protection to New Zealand and regulations that transform an application for an international
25 Philip Joseph Joseph on Constitutional and Administrative Law in New Zealand (5th ed, Thomson Reuters, Wellington, 2021) at [2.5.6(2)].
26 Zaoui v Attorney-General [2005] 1 NZLR 577 (SC) at [87].
registration, or an international registration, into a national application for registration. Those ideas are central to the Protocol. And reg 12 does precisely those things by specifying that, in the case where the request for extension of protection to New Zealand is mentioned in the international application, the priority date is the date of the international registration.
[89] To interpret s 199A as not authorising that would fly in the face of its clear purpose and would potentially be inimical to New Zealand’s international standing and obligations.27 Moreover, I am far from persuaded that (in the event of a finding of invalidity) that BBT’s application could somehow simply be transmogrified into a domestic application, with a priority date of 1 January 2015 (that being the date of receipt of the application by IPONZ in New Zealand from WIPO).
[90] I will therefore proceed on the basis of the priority dates as currently recorded in the Register: the BBT 2014 trade mark has priority over the BBB 2014 trade mark. The goods and services to be compared for the purposes of s 25(1)(b) are those specified in BBB’s 1994 trade mark and those specified in BBT’s 2014 trade mark.
The admissibility of BBB’s survey evidence
[91] BBB commissioned Buzz Channel, a market researcher, to undertake a survey aimed at Exploring brand awareness and confusion ‘Bed Bath & Beyond’ and ‘Bed ‘Bath N’ Table.28 The survey used an ‘online panel’ methodology and was completed by 1,188 adults aged over 18, living in New Zealand. It was conducted between 26 and 30 March 2020.
[92] The first section of the survey consisted of ‘demographic’ questions, such as the participant’s place of residence, age, gender, employment status and type of work, income bracket and ethnicity/cultural background. Only those who responded that they lived outside of New Zealand, were under the age of 18, or whose job involved
27 As I indicated to the parties by way of minute issued after the hearing, had I reached a different conclusion I would, in light of the wider international context, have invited the Commissioner to make submissions on the issue.
28 For obvious reasons, this was not the title of the survey as presented to the participants.
market research were excluded at that point. The second section contained the substantive survey questions:
Q1: Which, if any, of the following retailers had you heard of before taking this survey?
The Warehouse
Warehouse Stationery
Bed Bath & Beyond
Bed Bath N’ Table
Farmers
Kmart
Briscoes
Noel Leeming
Rebel Sport
None of these
Q2: And which, if any, of these retailers have you visited in the past 12 months (either online or in-store)?29
The Warehouse
Warehouse Stationery
Bed Bath & Beyond
Bed Bath N’ Table
Farmers
29 Only the names and logos of the retailers the respondent had selected in the previous question appeared in this list.
Kmart
Briscoes
Noel Leeming
Rebel Sport
None of these
[93] The next three questions were asked in a randomised order. Participants were instructed “[f]or the next few questions we’re interested in your first impression, it doesn’t matter if it’s right or wrong.” The participants were asked to list their answers, to each question, or to type ‘none’ or ‘don’t know’. The three questions were:
Q3. Are there any retailers in New Zealand which you think are owned by or have the same owners as Bed Bath N’ Table?
Q4. Are there any retailers in New Zealand which you think are owned by or have the same owners as the Warehouse?
Q5. Are there any retailers in New Zealand which you think are owned by or have the same owners as Kmart?
[94] The final three questions were control questions again asked in randomised order. They were:
Q6. Now thinking specifically about the following retailers: Bed Bath N’ Table and Bed Bath & Beyond, which of the following do you believe?
They are separate businesses with different owners; They have the same owners; or
Don’t know.
Q7.Now thinking specifically about the following retailers: Kmart and Farmers which of the following do you believe?
They are separate businesses with different owners; They have the same owners; or
Don’t know.
Q8. Now thinking specifically about the following retailers: The Warehouse and Warehouse Stationery which of the following do you believe?
They are separate businesses with different owners; They have the same owners; or
Don’t know.
[95] Buzz Channel analysed the responses to the survey and evidence was given by Buzz Channel’s then general manager (Ms Brocklehurst) about this. The survey’s key findings included:
(a)Thirty-nine per cent of the respondents were aware of both BBB and BBT. Forty-nine per cent were aware only of BBB, and three per cent were aware of only BBT. Nine per cent of the respondents were unaware of either.
(b)Twenty six per cent of participants responded to the “unprompted’ question about whether they believed BBT has the same owners as any other retailer in New Zealand by identifying “Bed Bath & Beyond” (or some variant of those words).
(c)When prompted, 45 per cent of the participants indicated a belief that BBB and BBT have the same owners, 25 per cent believed they were separate businesses with different owners, and 30 per cent did not know.
(d)The control questions indicated that participants closely associated similar names (the Warehouse and Warehouse Stationery) with shared ownership and connection, and dissimilar names (Kmart and Farmers) with separate ownership.
(e)Participants who believed there was a connection between BBT and BBB were located nationwide and across different demographic groups.
[96] BBB says the survey provides “compelling evidence” that consumers consider BBB and BBT business to be connected in trade, and that the “more anecdotal instances of confusion in evidence are not simply isolated instances”. BBB submits the survey illustrates a widespread misunderstanding among the general purchasing public in New Zealand that the parties are connected, and that this misunderstanding most likely arises because of similarities in their names.
[97] In support of these propositions, BBB also called Mr Duncan Stuart (a research consultant) who confirmed that, in his opinion, the survey would lead to impartial and robust results and that the structure and methodology used was sensible and realistic. He said the questions did not direct the participants’ answers or invite them to speculate. Mr Duncan Shand (the managing director of an Auckland-based creative advertising agency) who was called to respond to BBT’s expert, Professor Gendall, was of a similar view.30
[98] Judicial assessment of survey evidence often involves consideration of the “Whitford Guidelines”, taken from Whitford J’s 1984 judgment in Imperial Group plc v Philip Morris Ltd.31 Although the Guidelines do not have binding status here, they are useful indicators of reliability and, in many ways, simply reflect good practice.32 The Guidelines are that:
30 BBT took direct issue with the admissibility of Mr Shand’s evidence and with the relevant expertise of both BBB’s witnesses.
31 Imperial Group Plc v Philip Morris Ltd (1984) RPC 293 (Ch).
32 Mr Glover pointed out that this Court has held, on at least three occasions, that alleged failure to comply strictly with the Guidelines does not necessarily render a survey inadmissible: Auckland Regional Authority v Mutual Rental Cars (Auckland Airport) Ltd [1987] 2 NZLR 647 (HC) at 658-9; Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (HC) at 132-3; Bunnings Ltd v Commerce Commission [2019] NZHC 3340 at [53]–[65].
(a)the interviewees must be selected so as to represent a relevant cross-section of the public;
(b)the size of the survey must be statistically significant;
(c)the survey must be conducted fairly;
(d)all surveys carried out must be disclosed including the number carried out, how they were conducted, and the totality of the persons involved;
(e)the totality of the answers given must be disclosed and made available to the defendant;
(f)the questions must not be leading nor should they lead the person answering into a field of speculation he would never have embarked upon had the question not been put;
(g)the exact answers and not some abbreviated form must be recorded;
(h)the instructions to the interviewers as to how to carry out the survey must be disclosed; and
(i)where the answers are coded for computer input, the coding instructions must be disclosed.
[99] The admissibility of the survey, the evidence based upon it and the relevant expertise of BBB’s experts was the subject of a sustained attack by BBT. The survey evidence (including that of BBB’s experts) was therefore received by me at trial on the basis that admissibility would be determined later, in this judgment.
[100] The starting point for BBT’s attack was the submission was that a survey can only be relevant and (so) admissible if it is capable of establishing facts upon which an expert can then express an opinion that is substantially helpful to the Court. I agree with that submission.
[101] Here, BBT says the survey was so unreliable and had so many flaws that any expert evidence relying upon it could not be of substantial help. In effect, BBT says the survey’s failure to comply with (a), (c) and (f) of the Whitford Guidelines is a clear indicator of this unreliability.
[102] The basis for these submissions was the evidence of BBT’s own expert, Professor Gendall, who is a former Professor of Marketing at Massey University and one of New Zealand’s leading experts on forensic surveys.33 His criticisms can conveniently be considered under six headings.
The structure of the survey and the potential for priming
[103] Professor Gendall said that, by listing retailers in questions 1 and 2 before asking the more ‘important’ questions, participants would be most likely to ‘compute’ their answers to the later common ownership questions from the information with which they had already been provided. Such “priming” means (he said) we cannot know whether the 26 per cent of participants who thought BBT was owned by the same entity as BBB is a true reflection of this belief, or, whether some or all of the participants were led to that conclusion by the survey process itself. In support of this he pointed out that:
(a)despite the electronic randomisation of the order in which the retailers were listed, for 40 per cent of the participants the BBT and BBB logos would either have been next to one another or separated by just one other retailer;
(b)when participants were then asked ‘unprompted’ whether they believed BBT was commonly owned with any other business, they had already been asked about BBB and whether they had visited a BBB store in the past 12 months; and
33 He is presently an Emeritus Professor at Massey and a Senior Research Fellow at the University of Otago.
(c)the absence of open-ended ‘why’ question in the survey (participants were not asked to explain their answers) meant there was no way of assessing the level of priming that occurred, or the number of participants who believed there was a relationship between the two parties simply because of the similarity of names or logos.
An area participants would not otherwise consider
[104] Professor Gendall opined that whether BBB and BBT were in shared ownership is not something that many, if any, of the participants would have actively considered before being asked to speculate about that in the survey. He says this is evidenced by the high proportions of ‘none’ and ‘don’t know’ answers to the initial question about the ownership of BBT stores. He explained that the structure of the survey “normalised” the idea of common ownership, implying that it was common.
Question order effects
[105] By the time participants were asked the ‘unprompted’ question—whether they thought BBT had any common ownership with another retail brand in New Zealand— they had already answered one or two other questions about common ownership. By the time respondents answered the second, ‘prompted’ question—whether there was co-ownership between BBT and BBB—they had already been asked between three and five questions on common ownership. Professor Gendall said that the repetitive questions about shared ownership may, in fact, have prompted participants to say they believed BBT and BBB had common ownership.
Question wording effects
[106] Professor Gendall described the final three questions as ‘forced choice’ questions. Forced choice questions effectively present only two alternative answers when there is potentially more than two. Here, participants had the choice of answering either that the two retailers being compared were ‘separate businesses with different owners’ or that the two retailers ‘have the same owners’. This choice ignores the possibility that participants might think that the retailers are separate businesses but with the same owner. Professor Gendall said it could not be predicted how any
such participants would answer the binary questions asked (which box they would tick).
The absence of controls
[107] Professor Gendall also took issue with the control measures used in the survey; he said no attempt was made to use controls to estimate the level of unavoidable confusion and to discount this from reported associations between BBB and BBT. The ‘control’ questions here involved comparing Kmart with Farmers—two well-known brands with no common ownership—and the Warehouse with Warehouse Stationery—two well-known brands with well-known common ownership. Accordingly, the questions were really ‘knowledge’ questions because they are questions to which participants would likely have known the answer. They are not control questions assessing perceptions as to common ownership assumed because of similar names.
The survey population
[108] Professor Gendall said that, in order for a forensic survey to be of assistance to the Court, the sample must represent the relevant population. The survey here assumes the relevant population is any member of the New Zealand general public. His view was that a more logical survey population would have been those who had purchased, or planned to purchase, the sort of items sold at BBB and BBT. The fact that a wider population was used meant the survey could wrongly have included respondents who had no interest in manchester, no interest in BBT or BBB or their ownership, or no involvement in purchasing manchester.34
Conclusion on admissibility
[109] The use of surveys as a means of assessing consumer confusion in cases such as this is notoriously fraught. In a trademark infringement context, for example, the
34 Dr Gendall referred here to dicta from Sexwax Inc v Zoggs International [2014] NZCA 311, [2015] 2 NZLR 1 at [65] that “[t]he correct focus is on the awareness of the [opponent’s] mark in relation to prospective purchasers of the goods to which the mark attaches …”. I use the term “manchester” here as a shorthand description of the products sold by BBB and BBT.
Court of Appeal of England and Wales has held that survey evidence is “generally of little or no value”.35 As that Court has explained:36
… the difficulty that such surveys so often encounter is that they do not adequately reproduce real world conditions, and the questions are often posed in such a way as to put things in the consumer’s mind which would not naturally occur to them.
[110] Although the New Zealand courts have tended to adopt a more pragmatic approach, there have been cases here where surveys have been criticised for asking the wrong kinds of questions.37 Overall, however, the approach has been that survey evidence is admissible, leaving the court to determine the weight the evidence should be given in the particular case.38
[111] In this case, however, I found Professor Gendall’s evidence cogent and compelling. His evidence was put to BBB’s survey witnesses who agreed with a number of the points he made. As well, I agree with Mr Arthur KC that there are problems with the relevant expertise of Mr Shand and Mr Stuart. I do not mean to suggest that they are not experts in their own fields, I am just not sure their fields were the right ones here.
[112] There may also be some further difficulties with accepting the reliability of the survey’s most basic findings—that more of those surveyed had “heard” of BBB than BBT. As well as the problem of the relevant survey population identified by Professor Gendall, the fact of the matter is that BBT does not operate (other than virtually) nationwide. Unlike BBB, it has stores only in the main centres and it may well be that consumers who live in those main centres (and have seen both a BBB and a BBT store) would more readily perceive the differences between them. It is perhaps hardly surprising, then, that a national survey yielded the result it did.
[113] As well, the survey does not seem to me to take account of the fact that BBBUS is, as I have said, a well-established very large US corporation with international brand
35 Interflora Inc v Marks & Spencer plc [2012] EWCA Civ 1501, [2013] 2 All ER 663 at [135]-[141]. See also Kate Swain and others Surveying Trade Mark Surveys Managing Intellectual Property (online ed, February 2013) at 49
36 JW Spear & Sons Ltd v Zynga (No 2) [2015] EWCA Civ 290, [2016] 1 All ER 226, at [162].
37 Mainland Products Ltd v Bonlac Foods (NZ) Ltd [1998] 3 NZLR 341 at 350 (CA).
38 Levi Strauss & Co v Kimbyr Investments Ltd [1994] 1 NZLR 332 (HC) at 364.
recognition, including (I am sure) in New Zealand. So how could it reasonably be concluded with any certainty at all that those participants who answered question one by saying they had “heard of” BBB were not, in fact, thinking of BBBUS?
[114] But regardless of these last points, and for the reasons given by Professor Gendall, I do not consider the survey results are capable of constituting facts that are sufficiently reliable to form a proper basis for evidence of the kind sought to be given by BBB’s experts here. In my later consideration of the issues of confusing similarity in this case, I therefore propose to put that evidence to one side.
Does BBT’s 2014 trade mark relate to goods and services that are the same as, or similar to those covered by BBB’s 1994 trade mark?
[115] The starting point for a comparison of goods and/or services for the purposes of s 25(1)(b) is what is shown in the Register: the goods and/or services specified in BBT’s 2014 trade mark and the goods and/or services specified in BBB’s 1994 trade mark. But the way that goods and services have been classified is not conclusive.39 Self-evidently, an assessment of the similarity of the relevant goods and services invites a wider inquiry and is a question of fact to be determined on a case by case basis.40 A practical approach is to be taken, looking at the respective goods or services from a business and commercial point of view.41
[116] In conducting this inquiry, it is usual to consider the factors set out in British Sugar Plc v James Robertson & Sons Ltd:42
(a)respective uses of the goods or services;
(b)the respective users of the goods or services;
(c)the physical nature of the goods;
39 J Lyons and Co Ltd’s Application [1959] RPC 120 at 128; Gromax Plasticculture Ltd v Don & Low Nonwovens [1999] RPC 367; J & J Abel Ltd v R Jaimeson and Co Ltd [1926] NZLR 565 at 584.
40 J Lyons and Co Ltd’s Application, above n 39, at 128.
41 For example in Gutta-Percha & Rubber Manufacturing Co (Toronto) Limited’s Application (1909) 26 RPC 84.
42 British Sugar Plc v James Robertson & Sons Ltd [1996] RPC 281 at 296–297.
(d)the trade channels through which they are sold, whether they are found together in self-service stores such as supermarkets; and
(e)the extent to which the goods or services are competitive.
[117] Because of my conclusion about the relevant priority dates, it is only BBB’s 1994 trade mark that is relevant for the purpose of this analysis. That mark related only to services, namely:
Wholesaling and retailing of textiles, linen and other napery; clothing, headgear and footwear; toiletries, soaps, perfumery and cosmetics.
[118] BBT’s 2014 trade mark includes, but is not limited to, a specification of similar services, namely:
Retailing, wholesaling and mail order services in relation to textile and textile goods, including bed and table covers, giftware, bathroom products including soap dishes, shower curtains, soap, furniture and laundry baskets, kitchen ware, including cutlery and crockery.
[119] In terms of the British Sugar factors, services of the kinds specified in both marks would be provided in the same or similar ways, the respective users of the services are likely to be the same or similar and the services could therefore reasonably be seen as competitive.
[120] As well, BBT’s 2014 trade mark covers a number of categories of goods that might be expected to be the subject of the retailing or wholesaling services specified in its 1994 mark:
Bath linen, bed clothes, bed covers, bed covers of paper, bedspreads; brocades; calico, calico cloth; canvas for tapestry or embroidery; cloth; cotton fabrics; coverlets (bedspreads); covers (loose) for furniture; crepe (fabric); curtain holders of textile material, curtains of textile or plastic; damask; dish towels for drying; door curtains; eiderdowns; fabric; face towels of textile; felt; flannel; furniture coverings of plastic; household linen; jersey (fabric); linen (bed), linen (household), linen cloth, material (textile); mattress covers; net curtains; non-woven textile fabrics; pillowcases; quilts; runners (table); serviettes of textile; sheets (textile); silk (cloth); table cloths (not of paper), table linen (textile), table mats (not of paper), table napkins of textile; taffeta (cloth); towels of textile; upholstery fabrics; woollen cloth, woollen fabric; textiles for blinds; embroidery fabric.
[121] As I understood it, BBT accepts that specified goods of these kinds (“textile, linen and other napery” and “toiletries, soaps, perfumery and cosmetics”) can fairly be said to be similar to the services specified in the BBB 1994 trade mark (which relate to the retailing of such goods). I agree with that.
[122] But Mr Arthur denied that the remainder of the goods and services covered by the BBT 2014 trade mark specification were similar to the services specified in the BBB 1994 trade mark. In so far as he was referring to the retailing wholesaling and mail order services relating to furniture and kitchenware, and to goods that could be described as furniture or kitchenware, I also agree with that submission.43
[123] The effect of that finding is twofold. First, it will be a somewhat more limited class of goods and services that provides the context for the discussion of confusing similarity that follows. And secondly, any invalidity of the BBT trade mark (and any infringement) would not extend to the trade mark as it relates to any dissimilar goods and services.
Confusing similarity?
[124] The next s 25(2)(b) question (whether the competing marks are confusingly similar) involves asking whether a substantial number of persons in the market for the relevant goods and services are likely to be confused by the use of BBT’s mark.44 This requires an assessment of the fair and notional use of BBT’s mark with the fair and notional use of BBB’s mark. As the Court of Appeal observed in Anheuser Busch v Budweiser Budvar National Corporation:45
[66] The comparison of trade marks to ascertain whether there is deceptive or confusing similarity … is an entirely notional exercise. It contemplates any fair use of the marks in relation to any of the goods covered by the registrations. Opinion evidence that the marks are or are not confusingly similar is of limited value. That is for the court.
43 To be clear, I would not regard textiles for use in the kitchen (tablecloths, napkins and tea towels, for example) as kitchenware. Those types of product are, in my view, is included in the term “napery” and so are covered by or similar to the services included in BBB’s 1994 specification.
44 As a matter of fact, it seems BBT has only opened stores in the main centres in New Zealand, whereas BBB trades in a number of smaller centres as well. But I proceed on the basis that fair and notional use here involves use in the relevant market nationwide, and online.
45 Anheuser Busch Inc v Budweiser Budvar National Corp [2003] 1 NZLR 472 (CA) [Budweiser].
[125] The difference between the concepts of “deception” and “confusion” was considered by the Court of Appeal in Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Ltd.46 In that case (which was concerned with the TMA53 equivalent of s 17, rather than s 25) Richardson J, said:47
“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 … 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.
[126] The likelihood of confusion is accepted to be a lower threshold than the likelihood of deception so that will be the focus of the analysis that follows.48
[127] Although, as noted earlier, I propose to take a more global approach to the questions of similarity and likely confusion, it is useful to structure the discussion under the following subheadings:
(a)simple similarity;
(b)the disclaimer and the price of non-distinctiveness; and
(c)the evidence about confusion (including my own experience).
Simple similarity
[128] Both trade marks are word marks. The relevant comparison is therefore between the words:
BED BATH & BEYOND BED BATH ‘N’ TABLE
46 Pioneer Hi-Bred Corn Co v Hy-Line Chicks Pty Ltd [1978] 2 NZLR 50, [1979] RPC 410 [Pioneer].
47 At 423
48 New Zealand Breweries Ltd v Heineken’s Bier Browerij Maatschappij NV [1964] NZLR 115 at 123.
[129] In Pharmazen Ltd v Anagenix IP Ltd the Court of Appeal confirmed that the relevant principles to be applied when assessing similarity were as follows:49
(a)the Court should consider the marks in their entirety; the overall or net impression of the marks should be considered;
(b)while differences between two marks may be significant, it is the similarities which are most significant, whether visual, audible, distinctive, or conceptual;
(c)the impression or idea conveyed by the marks is important in assessing how they will be recalled; the idea of a mark is more likely to be recalled than its precise details;
(d)comparison is not of the opponent’s mark with the mark of the applicant when taken side by side, but taking into account imperfect recollection in all the circumstances in which the products might be sold; and
(e)the marks are to be compared as they would be encountered in the usual circumstances of trade.
[130]Here:
(a)both marks begin with the alliteratively memorable combination of words: “bed, bath”;
(b)in both marks, the words “bed” and “bath” are used not in a directly descriptive way (discussed further below) but in what is known as an indirectly descriptive way;
(c)in other words, each mark indirectly refers to the products sold by the trade mark owner—products for the bedroom and products for the bathroom;
(d)in BBB’s mark the words “bed, bath” are followed by “’n”, which undoubtedly signifies “and”;
(e)in BBT’s mark the words “bed, bath” are followed by “and”;
49 Pharmazen Ltd v Anagenix IP Ltd [2020] NZCA 306, (2020) 157 IPR 198 at [47].
(f)in BBB’s mark the words “bed, bath ‘n” are followed by the two syllable, word “beyond”;
(g)in BBT’s mark the words “bed, bath and” are followed by the two syllable word “table”;
(h)just as the word “beyond” reinforces the alliterative flavour of the BBB mark as a whole, the second syllable of “table” (“ble”) reinforces the alliterative flavour of the BBT mark as a whole;
(i)in the context of BBB’s mark, the word “beyond” is intended to refer, and would reasonably be construed as alluding to, “goods for use in other rooms in a house”;
(j)in the context of BBT’s mark, the word “table” is intended to refer, and would reasonably, be construed as alluding to “goods for use in the kitchen and/or dining room”;
(k)reading all the words in BBB’s mark together, they convey the impression or idea of “goods for use in the home”;
(l)reading all the words in BBT’s mark together, they convey the impression or idea of “goods for use in the home”;
(m)there is therefore considerable visual (four words, the first three of which are effectively identical and in identical order) and aural (four words, the first three of which are effectively identical and the last of which has two syllables) similarity between the two marks;50 and
(n)the marks are likely to be encountered in similar circumstances (retail outlets operated by the parties, and the branding and advertising of the goods sold there).
50 Although the cases emphasise that a side-by-side comparison is not required (because it may cause over-emphasis on dissimilarity) as Mr Glover submitted, a comparison of that kind reinforces the extent of similarity here.
… We consider it likely, however, that the purpose was to address the concern [raised by the Evans Commission], but in a different manner, by putting it beyond doubt that registration of a company under a name containing a trade mark does not in itself constitute a defence. Anticipating perhaps in 1953 that the recommendation [to amend the Companies Act] would also be adopted, and the Registrar of Companies given a new power to refuse registration of a name comprising a registered trade mark, Parliament apparently felt it necessary to counter any suggestion that, if the Registrar allowed registration, that was in itself a defence. …
[300] But Gault P took the view that s 13 was intended to deprive companies of the benefit of s 12(a). He reasoned that the words “of itself” simply indicated that companies were still entitled to avail themselves of the other defences in the TMA53, such as prior continuous use (section 11(2)).
[301] Had it not been for the later enactment of the TMA02 (and the repeal of the TMA53) I would unquestionably be bound by the majority view and BBT would be entitled to avail itself of the own name defence, subject only to the requirement of good faith. But s 91 of the TMA02 is slightly different from s 13. In particular, the key words “of itself”—the words relied on by the majority in Budweiser—have been removed.
[302] While small, I consider this change was pointed. It follows I do not agree with BBT that Parliament could or should have been even more explicit about excluding companies from the ambit of the defence. It also follows that I do not consider the defence would be available to BBT here.137
135 Budweiser, above n 45.
136 At 149.
137 The use of its own name remains, however, relevant to the question of honest concurrent use, as discussed earlier in this judgment.
Honest practices?
[303] If, contrary to my conclusion above, the s 95 defence is available to companies, I would then need to consider whether the use by BBT of its company name has been “in accordance with honest practices in … commercial matters”.
[304] In Tasman Insulation NZ Ltd v Knauf Insulation Ltd, the High Court endorsed the principles articulated by Arnold J in the English High Court as to the meaning of “honest practices.”138 I do not, however, think I need to set them out here. Not only are they largely a matter of common sense, but in light of my earlier findings in relation to honest concurrent use, I would have little difficulty in finding BBT’s use was in accordance with such practices here.
[305] Notably, the present is a very different case (for example) from Tasman Insulation New Zealand itself. On appeal, the Court of Appeal said:139
We are satisfied that the proper inference to draw from Knauf’s conduct as a whole is that it set out in an aggressive manner to undermine the distinctive character of Tasman’s valuable and widely recognised trade mark. It did so with full knowledge of the existence of Tasman’s trade mark and the detrimental effects Tasman was likely to suffer to its trade mark as well as the likely damage the company would suffer in the market place.
[306] So if I am wrong in my earlier conclusions that (a) there has been no infringement here and (b) the own name defence was unavailable to BBT, I would find the defence made out: BBT’s use of its name in this case was in accordance with honest practices.
PASSING OFF AND BREACH OF THE FTA
[307] Despite my conclusions on invalidity and infringement, I am required to consider BBB’s claims of passing off and for breach of ss 9 and 13 of the FTA.140
138 Tasman Insulation NZ Ltd v Knauf Insulation Ltd [2014] NZHC 960, (2014) 108 IPR 162 at [246], citing Samuel Smith Old Brewery (Tadcaster) v Lee (t/a Cropton Brewery) [2011] EWHC 1879 (Ch), [2012] FSR 7 at [114].
139 Tasman Insulation NZ Ltd v Knauf Insulation Ltd [2015] NZCA 602, [2016] 3 NZLR 145 at [210].
140 Section 88 of the TMA provides that noting in the Act affects the law relating to passing off or rights under FTA.
Failure to establish trade mark infringement does not, by itself, preclude these claims being established.
[308] One way in which the FTA and passing off causes of action are different from the TMA02 causes of action is that the marks and get-up, as seen in actual use by both parties, can also form part of the relevant comparison. For example:141
Where marks are used in colour and have a reputation in respect of such use, it may undoubtedly affect the likelihood of deception that the colours are or are not the same. This is often a circumstance of great importance in relation to passing off.
[309] Conversely, the relevant threshold—customers being likely to be misled—is a higher standard than under the TMA02; mere confusion will not suffice. As noted in Genesis Energy v Z:142
It is not enough that members of the public are merely caused to wonder if services offered by the defendant are services of the plaintiff. This is of course a question of degree: there will be some mere wonderers and some assumers. There will normally be passing off if there is a substantial number of the latter even if there is also a substantial number of the former.
[310] Nevertheless, there are also differences between the two causes of action, as discussed by Fisher J in Tot Toys Ltd v Mitchell.143 Those potentially relevant for present purposes are:
(a)there is no need to prove damage to the plaintiff under the FTA, whereas damage is an essential element of passing off;
(b)the standing requirements are also stricter for passing off: any interested person can enforce the FTA, but an action in passing off can only be brought by a plaintiff whose goodwill has been infringed;
141 James Mellor and others (eds) Kerly’s Law of Trade Marks and Trade Names (16th ed, Sweet and Maxwell, London, 2018) at [20-010].
142 Genesis Energy Limited v Z Energy Limited [2021] NZCCLR 19, at [114]; citing Glaxo Wellcome UK Ltd v Sandoz Ltd [2019] EWHC 2545 (Ch).
143 Tot Toys Ltd v Mitchell [1993] 1 NZLR 325 (HC).
(c)the usual tortious remedies are available for passing off, whereas under the FTA the remedies are discretionary and restricted to those specified in ss 41–43; and
(d)defences of an inter partes nature that apply to an action in passing off will not necessarily also apply to an action under the FTA.
Relevant principles
[311] While passing off is a tort of a private nature and the FTA is a consumer protection measure, the two are often treated similarly by the courts: where passing off is established, breach of the FTA is typically also made out.
Passing off
[312]The tort of passing off is essentially one of injury to goodwill. It represents:144
... a compromise between two conflicting objectives, on the one hand the public interest in free competition, on the other the protection of a trader against unfair competition by others.
[313] The question is whether the “bounds of appropriate commercial behaviour have been overstepped to the detriment of a party who has an interest the law protects”.145
[314] The three elements needing to be established to succeed in an action for passing off are well established. They are that:146
(a)there is goodwill attached to the plaintiff’s name, mark or get-up;
(b)the defendant has made some form of misrepresentation as to the source of its goods or services which has deceived or misled, or is likely to deceive or mislead the public; and
144 Dominion Rent A Car Ltd v Budget Rent A Car Systems (1970) Ltd, above n 80, at 420.
145 National Mini Storage Ltd v National Storage Ltd [2017] NZHC 1775, at 108; citing Vancouver Community College v Vancouver Career College (Burnaby) Inc 2017 BCCA 41.
146 See for example Tot Toys Ltd v Mitchell, above n 143, at [16]
(c)damage has been or is likely to be caused to the plaintiff’s business, reputation or goodwill as a result.
[315] Damage may consist of the diversion of customers from the plaintiff’s business to that of the defendant, damage to the plaintiff’s reputation, or dilution of the plaintiff’s goodwill by virtue of the two names no longer being sharply distinguished.147
Fair Trading Act
[316]Sections 9 and 13 of the FTA relevantly provide:
9 Misleading and deceptive conduct generally
No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
…
13 False or misleading representations
No person shall, in trade, in connection with the supply or possible supply of goods or services or with the promotion by any means of the supply or use of goods or services,—
(b)make a false or misleading representation that services are of a particular kind, standard, quality, or quantity, or that they are supplied by any particular person or by any person of a particular trade, qualification, or skill, or by a person who has other particular characteristics; or
…
(e) make a false or misleading representation that goods or services have any sponsorship, approval, endorsement, performance characteristics, accessories, uses, or benefits; or
[317] In the present case, I do not consider the claim under s 13 adds anything to the claim under s 9. BBB has effectively combined them in its pleading; both are centrally concerned with the same misleading conduct (a misrepresentation). Accordingly, I do not propose to consider s 13 separately further in this judgment.
147 Taylor Bros Ltd v Taylors Group Ltd [1988] 2 NZLR 1 (HC) at 15.
[318] As far as s 9 is concerned, the following general principles emerge from the relevant authorities:148
(a)s 9 requires an objective inquiry: the likelihood of the defendant’s conduct misleading or deceiving the hypothetical reasonable person;
(b)it is not necessary to show that the defendant’s conduct has actually misled or deceived anyone, or that the defendant intended to mislead or deceive although evidence of those matters will typically strengthen the plaintiff’s case;
(c)“likelihood” means a “real risk of the consequence ensuing”; it must be more than a mere possibility, but it need not be more probable than not;
(d)the class of consumers towards whom the conduct is directed must be taken into account in assessing whether it is likely to mislead or deceive;
(e)although it is not necessary that every person in the relevant group is likely to be misled or deceived by the impugned conduct, it is not enough to show that only a small percentage might be; the question is whether a “significant” number of persons in that group are likely to be misled or deceived;149
(f)the Court must take into account the effect of the conduct upon the reasonable consumer in all the relevant circumstances; such a consumer will not lack perception and can be expected to possess a reasonable degree of common sense;
(g)a misrepresentation, either by words or by conduct, is at the heart of an allegation that s 9 has been breached; and
148 National Mini Storage Ltd v National Storage Ltd (NZHC), above n 145, at [44]-[51].
149 See also Neumegen v Neumegen & Co [1998] 3 NZLR 310 (CA) at 328.
(h)where the alleged misrepresentation is founded in a similarity to the trading name of the plaintiff’s company, the company’s trading name must have acquired a reputation among a class of consumers as denoting the plaintiff company’s goods or services (in other words, there must be goodwill in the company’s trading name).
BBB’s claims and my approach to them
[319] Here, BBB says its business has acquired considerable goodwill in the name “Bed Bath & Beyond” in New Zealand. It alleges that BBT’s use of the name “Bed Bath N’ Table”, in conjunction with its use of dark green and plain font, amounts to a misrepresentation by BBT that BBT’s goods and/or services are from the same source and/or connected to BBB’s business. BBB says members of the public have been and will continue to be confused or deceived into thinking that BBT’s goods and services are owned, operated, sponsored, approved, endorsed, licensed or authorised by and/or connected BBB.
[320] As that claim—and my summary of the relevant principles—indicate, in a case where the impugned conduct involves the use of similar trading names, goodwill and misrepresentation are at the heart of both the claim of passing off and the FTA claims.150 So I propose to consider the central parts of those claims: goodwill and the question of whether there has been a misrepresentation (or misleading/deceptive conduct) together.
Goodwill
[321] It is unclear to me whether BBB seek to establish either passing off or breach of the FTA before 2014. Some earlier date (such as the date when BBT began trading in New Zealand) was neither pleaded nor the focus of submissions. So I proceed on the basis that 2014 and onwards is the relevant time period. As it happens, the date chosen would make no difference to the outcome in any event.
150 Putting to one side, at least for now, the prior non-issue of standing and the potentially later issue of defences and remedies.
[322] In the context of the s 17 invalidity claim I have already accepted that, as at June 2014, BBB had a reputation in the BBB mark in relation to certain retail services and related goods. To recap, however, BBB was by then a well-established, nationwide retailer and brand. It had traded using the name “Bed Bath & Beyond” since 1996-97, with the origins of the business dating back to 1993-94. There were between 47 and 51 stores from the start of 2013 until the start of 2015.
[323] In terms of post-June 2014 goodwill, BBB says, and I accept that its quarterly sales information across all of BBB’s stores between July 2009 and June 2018 give a snapshot of the growth in number of stores over this period. Although the quarterly sales information (store by store) is confidential and commercially sensitive a sense of that growth can be obtained by reference to its annual sales figures between July 2014 to June 2020:
Jul 2014 – Jun 2015 NZ$X
Jul 2015 – Jun 2016 NZ$X
Jul 2016 – Jun 2017 NZ$X
Jul 2017 – Jun 2018 NZ$X
Jul 2018 – Jun 2019 NZ$X
Jul 2019 – Jun 2020 NZ$X
Total Jul 2014 – Jun 2020 NZ$X
[324] I also accept that BBB has engaged in extensive advertising and promotional activities throughout this period. Its brochures have borne the name Bed Bath & Beyond since 1997. Those brochures have been delivered to homes and inserted into major metropolitan and regional newspapers, as well as being available in stores on a monthly basis from 2007. BBB has undertaken significant television advertising in New Zealand from 2014 onwards (and before), including during primetime.
[325] The following is a summary of BBB’s advertising statistics and costs from 2014 to 2018:
(a)in 2014, 1,010 advertisements at a cost of $1,021,702 (calculated using data available across 60 of 365 days);
(b)in 2015, 2,061 advertisements at a cost of $2,868,258 (calculated using data available across 164 of 365 days);
(c)in 2016, 2,994 advertisements at a cost of $3,371,804 (calculated using data available across 215 of 365 days);
(d)in 2017, 4,075 advertisements at a cost of $3,834,915 (calculated using data available across 207 of 365 days); and
(e)in 2018, 2,866 advertisements151 (calculated using data available across
135 of 212 days, as the advertising report was processed on 20 August 2018). 152
[326] As well, there is the substantial traffic on the BBB website, which was established in 2009 and has been offering online sales since September 2012. Between 21 July 2013 and 19 August 2015, there were 921,901 new visitors to the BBB website, and 1,529,090 separate sessions or visits, resulting in 12,726,242 total page views. The number of customers on BBB’s database has grown substantially. Data showing the increase in the number of members of the BBB&Me loyalty club formed part of the evidence at trial, but are confidential.
[327] In terms of get up, I also accept that the words BED BATH & BEYOND and various shades of the colour green have been used prominently for, and in, all Bed Bath & Beyond stores since the early to mid-2000s.
[328] So I have no difficulty in finding that BBB can establish goodwill here. But whether it has been damaged is a different question, largely turning on the question of misrepresentation. If I find the alleged misrepresentation made out, BBT accepts that damage to BBB’s goodwill would follow.
151 The cost for the 2018 period was not available.
152 Combined, these figures show a total of 13,006 advertisements at a cost of $22,193,358 (excluding the 2018 costs). There has, of course, been further television advertising beyond from 21 August 2018 to present.
Misrepresentation
[329] As I have said the alleged misrepresentation here is, in essence, that by the use of its own name and get up, BBT has misrepresented that it was the same as, associated with or endorsed by BBB.
[330] This aspect of the claim is potentially more problematic. As with the trade mark causes of action, the difficulties arise from an absence of distinctiveness and the related question of honest concurrent use, which is also a defence to passing off. And although (as noted earlier) the FTA contains no such defence, it is clear that the principles underlying that defence could negate FTA liability. As will be discussed shortly, if there has been honest concurrent use, there may have been no relevant misrepresentation at all.
Absence of distinctiveness
[331] Where, as here, the alleged misrepresentation involves trading under a name said to be misleadingly or deceptively similar to the plaintiff’s trading name, different considerations will apply depending upon whether the plaintiff’s name is truly distinctive of its business, or is descriptive of the service it provides. As noted earlier, one of the leading authorities is undoubtedly Office Cleaning Services v Westminster Windows and General Cleaners Ltd, which was itself a passing off case. To reiterate, however, the key points made in the passage from that decision set out at [150] above are that:153
(a)where a trader adopts words in common use for his trade name some risk of confusion is inevitable;
(b)that risk must be run; otherwise the first user would be allowed unfairly to monopolise the words;154
153 Office Cleaning Services v Westminster Windows and General Cleaners Ltd, above n 61
154 See also National Mini Storage Ltd v National Storage [2018] NZCA 45, (2018) 131 IPR 538 at [22].
(c)comparatively small differences will be regarded as sufficient to avert confusion; and
(d)a greater degree of discrimination may fairly be expected from the public where a trade name consists wholly or in part of descriptive words.
[332] Similarly, in the context of consumer protection legislation, it has been said that granting an effective monopoly over purely descriptive words in circumstances where other traders have a reasonable and legitimate interest in using those words in their business is (absent some improper motive) both anti-competitive and contrary to the intention of such legislation. So, in Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd Stephen J said:155
To allow this section of the Trade Practices Act to be used as an instrument for the creation of any monopoly in descriptive names would be to mock the manifest intent of the legislation. Given that a name is no more than merely descriptive of a particular type of business its use by others who carry on that same type of business does not deceive or mislead as to the nature of business described.
[333]And Stephen J’s dicta were endorsed in Dominion Rent A Car Ltd:156
There is a price to be paid for an eloquently descriptive trade name. Its very descriptiveness tends to make it not truly distinctive of any particular business. “The risk of confusion must be accepted”, as Stephen J put it, “to do otherwise is to give to one who appropriates to himself descriptive words an unfair monopoly in those words and might even deter others from pursuing the occupation which the words describe”. This principle does not altogether rule out the possibility that by usage the descriptive words may become distinctive of the business ... but it means that true distinctiveness is especially hard to establish.
[334] Similarly, in Airport Rentals Ltd v Airport Car Rentals (Southern) Ltd (also a passing off and FTA case), Tipping J said:157
As a general rule the more distinctive a trading name is, both in itself and as identifying the plaintiff’s business, the further away competitors must keep in the names they adopt. On the other hand, if the plaintiff’s trading name is
155 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 18 ALR 639 at 648.
156 Dominion Rent A Car Ltd v Budget Rent A Car Systems (1970) Ltd, above n 80, at 408 (emphasis added).
157 Airport Rentals Ltd v Airport Car Rentals (Southern) Ltd (1995) 6 TCLR 664, 665.
generic or descriptive (ie made up of words which describe common things and are in common use) the nearer the competitors may approach. In the second type of case only small distinctions may be enough to avoid passing off or conduct which can be impugned under the Fair Trading Act 1986. Cases of this kind involve not only a comparison of the names themselves, but other factors, including the length of time the plaintiff’s name has generally been identified with the plaintiff, the similarity of the markets in which the competing parties are trading, the sophistication of those markets, and the circumstances in which the defendant has come to use the name of which the plaintiff complains.
[335] For a wholly or partly descriptive name or word to be protected, it must usually have acquired a secondary meaning; otherwise an element of confusion with the defendants’ name is the price for the use of descriptive words in the plaintiff’s. And even where secondary meaning can be established, it does not automatically create a licence to restrict comparatively minor variants on that name.158
[336] In the present case, I did not understand BBB to say that the descriptive words used in its name had acquired a secondary meaning and become distinctive of (only) its business. No doubt that was a sensible recognition of the difficulties inherent in doing so; any such submission would be contrary to the evidence. Rather, the focus appeared to be on disputing that the relevant words were truly descriptive, or at least denying that they were descriptive enough to mean that they must bear some risk of confusion. I have rejected that submission for the reasons I have already given.
Get-up and the colour green
[337] As noted earlier, there is another aspect to the question of similarity when it comes to passing off and breach of the FTA, because those claims also involve, as noted, consideration of get up. The main focus here is the parties’ respective logos, which I have set out at [46] to [51] above.
[338] I am unable to agree with BBB that the respective get-ups support its case here. In my view the logos are not especially similar and, if anything, detract from any suggestion of a relationship between the two operations. Despite the fact that they (now) both use the colour green, the shades are quite different and nor are they employed in the same way. The logos used by BBB since around 2005 use two tones
158 National Mini Storage Ltd v National Storage Ltd [HC], above n 145, at [75].
rather than one. Moreover the emphasised (and now differently coloured) ampersand (&) is a real focus of the BBB logo whereas there is no attention drawn to BBT’s “‘N”, which is in the same size and font as the rest of the words. Moreover, the BBT logo is entirely capitalised and the BBB one is not. Until 2005 the BBB logo used a serif font but the BBT font has always been sans serif.
[339] BBB’s Mr Brown accepted that differences of this kind matter. When shown the BBBUS logo (which is “stacked” in a somewhat similar way to the BBB logo shown earlier at [51]):
Mr Brown said he considered this logo to be sufficiently different from BBB’s (despite using exactly the same words and ampersand) that no one would mistake them.
[340] And even if I was of the view that the logos were similar I tend to agree with Mr Arthur that the similarities are largely the result of changes made by BBB to its logo over the years. Although the majority of the changes were made prior to BBT’s entry into the New Zealand market, the arguably critical one seems to me to be the move to all the words (bed, bath, beyond) being in white on a uniform green background. On the evidence before the Court that did not occur until 2010 or later. By then BBT had already been operating in New Zealand for three years.
[341] So in light of these matters I find no misrepresentation here. BBT has done no more than represent that its own mark and getup are associated with its own business. As Oliver LJ said in Habib Bank Ltd v Habib Bank AG Zurich:159
159 Habib Bank Ltd v Habib Bank AG Zurich [1981] 1 WLR 1265, 1275. See also Colorado Group Ltd v Strandbags Group Pty Ltd [2006] FCA 160, (2006) 67 IPR 628 at [52].
... where you find that two traders have been concurrently using in the United Kingdom the same or similar names for their goods or businesses, you may well find a factual situation in which neither of them can be said to be guilty of any misrepresentation. Each represents nothing but the truth, that a particular name or mark is associated with his goods or business.
Honest concurrent use
[342] Strictly speaking, honest concurrent use is a defence to passing off, but not to a breach of the FTA.160 But it may, nonetheless, well be relevant both in terms of the existence (or not) of the necessary misrepresentation (in both causes of action) and in the exercise of remedial discretion under the FTA.161
[343] Here, I have in effect found that there was no misrepresentation by BBB because it was honestly using its own mark to do no more than signify a connection with its own business. Even if I am wrong in that I have also independently found that honest concurrent use would be available on the facts as a defence to the invalidity claim under s 25(1)(b) of the TMA.
[344] It inexorably follows that I would, if necessary, also find the defence made out in relation to passing off and, if necessary, as militating against the grant of relief under the FTA.
Conclusion
[345] Despite my acceptance that BBB has considerable goodwill—and reputation in the name “Bed, Bath & Beyond” in the relevant New Zealand market, in my view there has been no misrepresentation by BBT and so no damage to BBB’s goodwill here. As before, that is because of the general lack of distinctiveness in the key part of the BBB mark and the importance in that context of small distinctions. Those important small distinctions (which I have discussed in more detail in relation to the
160 In a passing off context it was most notably made out in Dominion Rent A Car Ltd (above n 80) where Cooke P approved the observations of Lord Diplock in General Electric Co (Of USA) v General Electric Co Ltd [1972] 1 WLR 729 (HL) at 406 that, at common law, a proprietor of a mark was entitled to use it, notwithstanding confusion, unless their own dishonesty or other wrongful conduct played a part in making the mark deceptive.
161 As Fisher J recognised in Tot Toys Ltd v Mitchell, above n 143, at 370, it is open to the Court in exceptional cases to deny a remedy: “… on the grounds that the deception would have no real impact upon consumers and/or that an injunction would be contrary to their interests.”
trade mark claims) are amplified in the passing off and FTA claims by what I consider to be the relative distinctiveness of the respective get ups.
[346] These findings suffice to dispose of both the claims for passing off and under the FTA and they are dismissed, accordingly.
AFFIRMATIVE DEFENCES
[347] BBT has pleaded estoppel, acquiescence and laches as defences to the trade mark infringement claim and the same defences (together with waiver) in response to the claims of passing off and FTA breach.162 Because I have found no infringement, no passing off and no FTA breach I need deal with them only briefly here.
[348] There was no dispute that defences of this kind are potentially available in an intellectual property context, although an intellectual property case in which such a defence has succeeded is less easy to find. The defences failed—even in the face of a deliberate and strategic delay of more than 10 years—in Electrolux Ltd v Electrix Ltd.163 And they failed, too, in Wham-O MFG Co v Lincoln Industries and Intellectual Property Development Corporation v Primary Distributors New Zealand Ltd (IPDC).164
[349] In the latter case the Court of Appeal confirmed that—as held in Electrolux— mere delay cannot give rise to a finding of acquiescence or laches and rejected the submission that Wellington City Council v New Zealand Law Society stood for the proposition that prejudice can simply be inferred from delay.165 The Court referred to the Supreme Court’s decision in Eastern Services Ltd v No 68 Ltd166 (a case relied on
162 As noted earlier, a pleading of waiver in relation to infringement was abandoned.
163 Electrolux Ltd v Electrix Ltd [1954] 71 RPC (trade mark infringement by the longstanding use by a proprietor of an unregistered mark). Although the defence of acquiescence was rejected, the Court declined to order injunctive relief in order to give the defendant the opportunity to apply for registration of the “Electrix” mark, on the basis of honest concurrent use.
164 Wham-O MFG Co v Lincoln Industries [1984] 1 NZLR 641 (CA) (a case of copyright infringement) and Intellectual Property Development Corporation v Primary Distributors New Zealand Ltd [2009] NZCA 429, [2010] 2 NZLR 729 (trade mark infringement).
165 Wellington City Council v New Zealand Law Society [1990] 2 NZLR 22 (CA); Intellectual Property Development Corporation v Primary Distributors New Zealand Ltd above n 164 at [64].
166 Eastern Services Ltd v No 68 Ltd [2006] NZSC 42, [2006] 3 NZLR 335.
by Mr Arthur in the present case) and said: “there was no suggestion by the Supreme Court that mere delay could lead to a denial of a remedy in any other context”.167
[350] The defences have seen slightly more success in the context of passing off and the FTA. Acquiescence was found established in Dominion Rent A Car Ltd where the Court held that by assisting the defendant in its early operations in New Zealand, the plaintiff had acquiesced in the defendant’s use of the ‘Budget’ mark in such a way as to make it unconscionable for it to claim relief.168
[351] . And a defence of acquiescence to passing off/breach of the FTA was found established (in the alternative) at first instance in National Mini Storage Ltd v National Storage Ltd.169 But the Court of Appeal later disagreed, because the defence was predicated on the existence of an obligation to speak, which was absent in that case.170
[352] In the present case, the first iteration of these proceedings was filed almost 12 years after BBT began operating in New Zealand and four and a half years after the registration of its trade mark here.
[353] It is, I think, worth noting that none of the intellectual property cases in which laches and acquiescence have been raised involved a defendant which, itself, had a registered trade mark covering the relevant goods and services at the time of the infringement. And it is at least arguable that—in the context of the trade mark registration process—there was something akin to an obligation to speak. That process involved public advertising and an express (statutory) opportunity to speak, afforded to any opponent of registration. Certainly BBB’s silence in those circumstances could be seen as pointing more clearly towards acquiescence than silence usually does. I have discussed the question of prejudice already.
[354]In the end, however, that is not an issue I need to decide and I do not do so.
167 Intellectual Property Development Corporation v Primary Distributors New Zealand Ltd above n 164 at [65].
168 Dominion Rent A Car Ltd v Budget Rent A Car Systems (1970) Ltd, above n 80, at 415.
169 National Mini Storage Ltd v National Storage Ltd [HC], above n 145.
170 National Mini Storage Ltd v National Storage [CA], above n 154, at [81]
COUNTERCLAIMS
[355] BBT’s counterclaims are contingent on the Court finding that the BBB and BBT marks are confusingly similar. In light of my finding that they are not, I do not need to consider those claims further.
SUMMARY AND RESULT
[356]My key findings can be summarised as follows:
(a)BBT’s 2014 trade mark has priority over BBB’s 2014 trade mark;
(b)BBB has not established that the registration of BBT’s 2014 trade mark is invalid on any of the grounds pleaded;
(c)if I am wrong about that, BBT would have a defence of honest concurrent use in relation to the invalidity claim made under s 25(1)(b), but not to the invalidity claim under s 17(1)(a) (or s 17(1)(b));
(d)because the registration of BBT’s 2014 trade mark is not invalid, s 93 of the TMA02 precludes BBB’s trade mark infringement claim;
(e)if I am wrong about invalidity (and s 93 does not therefore apply) BBT would not have an “own name” defence under s 95 of the TMA02;
(f)although BBB has established considerable goodwill in the relevant New Zealand market, it has not established liability in either passing off or under the FTA because there has been no misrepresentation by BBT;
(g)if I am wrong in that conclusion, I would find that BBT has a defence of honest concurrent use to the passing off claim and I would exercise my discretion under the FTA to decline relief, based on that honest concurrent use;
(h)I make no firm findings the other affirmative defences pleaded by BBT; and
(i)BBT’s counterclaims are predicated on a finding of confusing similarity between the marks and so do not fall to be considered.
[357] It follows that none of BBB’s claims have succeeded and are dismissed. BBT’s counterclaim is also dismissed.
[358] I have not heard from counsel on costs. If they cannot be agreed brief (no longer than five pages) memoranda are to be submitted.
[359]Again, I regret the delay in issuing this judgment.
Rebecca Ellis J
Solicitors:
Malloy Goodwin Harford, Auckland for Plaintiffs Hudson Gavin Martin, Auckland for Defendants
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