NXP Holdings Limited v Winc Australia Proprietary Limited
[2019] NZHC 3463
•20 December 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-1254
[2019] NZHC 3463
BETWEEN NXP HOLDINGS LIMITED
First Applicant
NXP LIMITED
Second ApplicantTIRI GROUP LIMITED
Third ApplicantAND
WINC AUSTRALIA PROPRIETARY LIMITED
Respondent
Hearing: 17 December 2019 Appearances:
J G Miles QC and T D Mahood for the Applicants
M D O’Brien QC and J Q Wilson for the Respondent
Judgment:
20 December 2019
JUDGMENT OF GORDON J
[Application for leave to appeal and for stay]
This judgment was delivered by me
on 20 December 2019 at 12 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Solicitors: Bell Gully, Auckland
Hudson Gavin Martin, Auckland
Counsel:M O’Brien QC, Auckland J Miles QC, Auckland
NXP HOLDINGS LTD v WINC AUSTRALIA PROPRIETARY LTD [2019] NZHC 3463 [20 December 2019]
Introduction
[1] In my judgment of 21 October 2019 (the judgment),1 I granted an application for an interim injunction by the plaintiff, Winc Australia Pty Ltd (Winc), now the respondent, restraining the defendants (together NXP), now the applicants, from using the NETXPRESS name and trademarks (the NetXpress marks) or any other confusingly similar mark.
[2] NXP seeks leave to appeal to the Court of Appeal against the judgment and a stay of execution of my decision until NXP has exhausted all its appeal options.
[3]Both applications are opposed by Winc.
[4] The background facts of this dispute are set out at [2]–[16] of the judgment. I do not repeat them here.
Leave to appeal
Approach to leave to appeal
[5] For appeals to the Court of Appeal from any order or decision of the High Court made on an interlocutory application in civil proceedings, leave to appeal must be sought from the High Court under s 56(3) of the Senior Courts Act 2016.
[6] In Finewood Upholstery Ltd v Vaughan, Fitzgerald J characterised the leave requirement as a “filtering mechanism” to ensure that unmeritorious appeals of interlocutory orders, or appeals of interlocutory orders of no great significance to either the parties or more generally, do not unnecessarily delay the proceedings. The Judge recognised the following considerations as relevant:2
(a)A high threshold exists. An applicant should raise an arguable error of law or fact.
1 Winc Australia Pty Ltd v NXP Holdings Ltd [2019] NZHC 2682.
2 Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [9]–[14] citing A v Minister of Internal Affairs [2017] NZHC 887. See also Ngai Te Hapu Inc v Bay of Plenty Regional Council [2018] NZCA 291 at [12], [16] and [17]; and Croser v Focus Genetics Ltd Partnership (2548500) [2019] NZHC 3087 at [29]–[33].
(b)The alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential importance.
(c)Leave should only be granted where the circumstances warrant incurring further delay.
(d)Ultimately, the Court on an application for leave should stand back and assess, in a pragmatic and realistic way, whether the interests of justice are served by granting leave.
Alleged errors of law
[7] NXP has filed a draft notice of appeal with the application for leave. The draft notice sets out 11 grounds of appeal. Mr Miles QC, in his submissions for NXP, addressed the main grounds on which it relies under five headings.
The alleged threshold error
[8] Mr Miles submits that the Court erred in finding that the applicable threshold was that of a “serious question to be tried” and not some higher standard. He says that, in reality, the interim decision is likely to be the final decision because of the commercial realities of NXP having to undertake a significant rebranding exercise. Mr Miles refers to the length of time before a substantive hearing in this Court (likely in 2021) and submits that the reality is that in the event that NXP were successful at trial, it would not reverse the rebranding exercise it has to undertake now. Mr Miles submits that, for trade mark and/or passing off claims, where the grant of an injunction would cause real hardship, it may, and in this case would, be appropriate for the Court to require the plaintiff to prove a stronger case.
[9] In Red Bull New Zealand Ltd v Drink Red Ltd, this Court applied a higher threshold to an application between trade competitors relating to trade mark
infringement where the plaintiff had significant reputation.3 On appeal, the Court of Appeal expressly left open that question.4
[10] In reply, Mr O’Brien QC, for Winc, submits that the “serious question to be tried” threshold is the orthodox standard, affirmed by the House of Lords in American Cyanamid Co v Ethicon Ltd5 and the Court of Appeal in Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd.6 Furthermore, Mr O’Brien submits that Red Bull is distinguishable as, in that case, the High Court was persuaded that the defendants would “collapse” and cease trading altogether if an interim injunction was granted.7
[11]I first have regard to the Court of Appeal’s comments in Red Bull:8
[75] Brewer J was fully aware the conventional test for an interim injunction requires an applicant to establish there is a “serious question to be tried”.9 He was, however, persuaded that Drink Red would cease trading if he issued an interim injunction, and therefore decided it appropriate for Red Bull to face a higher threshold than normally applies when interim injunctions are considered. We acknowledge there is High Court authority for the approach Brewer J took.10
[76] This is not the case, however, for us to decide if the conventional “serious question to be tried” standard can be departed from when considering the first step of an interim injunction application. We need not consider that issue because we are satisfied Brewer J would have granted an interim injunction applying the strong prima facie test had he been aware of the new evidence that we have had the opportunity to consider.
[12] I also refer to the judgment of the Court of Appeal in Wilfred v Gan, where the Court said:11
[21] As the appellants note, this Court has said that where the grant or refusal of an interlocutory injunction may well “determine the fate of the litigation”, in these circumstances, “the Court should take a more robust
3 Red Bull New Zealand Ltd v Drink Red Ltd [2016] NZHC 531 at [8]–[9].
4 Red Bull New Zealand Ltd v Drink Red Ltd [2016] NZCA 373 at [76].
5 American Cyanamid Co v Ethicon Ltd [2975] AC 396 (HL) at 407.
6 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (CA).
7 Red Bull New Zealand Ltd v Drink Red Ltd (HC), above n 3, at [7].
8 Red Bull New Zealand Ltd v Drink Red Ltd (CA), above n 4.
9 Red Bull New Zealand Ltd v Drink Red Ltd (HC), above n 3, at [8]; and Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd, above n 6, at 133.
10 Finnigan v New Zealand Rugby Football Union Inc (No 2) [1985] 2 NZLR 181 (HC) at 183; DB Breweries Ltd v Lion Nathan Ltd (2007) 12 TCLR (HC) at [16]–[17]; Meat Services Ltd v Moses (1983) 1 TCLR 94 (HC) at 97; Watson & Son Ltd v Active Manuka Honey Association Inc HC Hamilton CIV-2008-419-1495, 30 July 2009 at [44]–[47] and [55].
11 Wilfred v Gan [2013] NZCA 457.
attitude than may be suggested by a reading of the decision of the House of Lords in American Cyanamid Co v Ethicon Ltd”.12
[13] I am satisfied, having regard to the above two Court of Appeal decisions, that NXP has identified an arguable error of law as to the threshold standard to be applied.
Alleged contractual interpretation errors
[14] NXP says that the Court erred in finding that “NetXpress” is a “trade mark … associated with ‘Winc’ brand” and therefore incorporated in the definition of “Winc retained names and marks”.13 Mr Miles submits that the whole thrust of cl 13.2 of the sale and purchase agreement (SPA), which sets out the definition of “Winc retained names and marks”, is directed at those associated with the name Winc and variations of that name. That does not include “NetXpress”. He submits that the interpretation NXP contends for is also supported by the inclusion, in the definition of retained names, of the intellectual property listed in sch 8. That intellectual property is the registered trade marks using the word Winc or Work Incorporated.
[15] Mr Miles submits there is a further interpretation error in the Court’s conclusion,14 that cl 13.3 of the SPA was intended to exclude NetXpress and thus Winc did not licence the NetXpress brand to NXP. Mr Miles refers to cl 13.3(a) of the SPA:
13.3 NetXpress
(a) With effect from Completion, [Winc] grants to [NXP] a royalty free, non-exclusive, non-transferable licence to use the Intellectual Property Rights owned by [Winc] in the NetXpress e-commerce platform (NetXpress IPR) in the manner it is used by the Business [NXP] as at the Completion Date including adapting modifying, copying and supporting the NetXpress IPR for the purposes of the Business in New Zealand.
…
(c) All NetXpress IPR licensed to [NXP] is licensed on an “as is” and “as available” basis, and [Winc] expressly excludes any warranties, representations, guarantees or assurances of any nature whatsoever with respect to the NetXpress IPR.
12 McKay Electrical (Whangarei) Ltd v Hinton [1996] 1 ERNZ 501 (CA) at 507 citing American Cyanamid Co v Ethicon Ltd, above n 5. See also NWL Ltd v Woods [1979] 1 WLR 1294 (HL) at 1306–1307; and New Zealand Olympic and Commonwealth Games Assoc Inc v Telecom New Zealand Inc (1996) 7 TCLR 167 (HC).
13 Winc Australia Pty Ltd v NXP Holdings Ltd, above n 1, at [32].
14 At [38] and [41].
[16] Mr Miles submits that a proper interpretation of the above clauses is that the word NetXpress used to brand the e-commerce platform falls within the scope of “intellectual property rights owned by [Winc] in the NetXpress e-commerce platform”.
[17] Mr O’Brien submits that these grounds are not arguable. He submits the contractual interpretation contended for by NXP is: contrary to the more natural reading of the relevant provisions and the SPA for the shares; difficult to reconcile with the language in the scheme of the SPA; inconsistent with the due diligence evidence which confirmed that NXP did not own any trademarks; inconsistent with contemporaneous evidence that showed that NXP itself did not consider it had acquired such rights; and inconsistent with NXP’s subsequent conduct including applications for revocation of the NetXpress marks.
[18] The submissions advanced by Mr Miles were made in the hearing of the application for the interim injunction and are referred to in the judgment. I preferred the narrower interpretation advanced by Winc. Given that NXP’s business is conducted primarily through the use of the e-commerce platform, it made sense that Winc would give a perpetual licence for the platform. There was no reason to broaden that clause to include the NetXpress marks and brands.15
[19] Further in determining that “NetXpress” is a “trade mark … associated with the ‘Winc’ brand” I relied on the evidence of Troy Swan, general counsel and company secretary of Winc, that the NetXpress marks have always been associated with Corporate Express (now Winc) and has been part of the Corporate Express (now Winc) IP ecosystem; and further that Winc is the registered proprietor of those marks.
[20] I am not persuaded that there is an arguable error in the interpretation of the SPA.
15 At [33]–[43].
Alleged goodwill error
[21] There are several parts to the alleged goodwill error. Mr Miles submits that the Court erred in finding that:
(a)NXP’s use of “NetXpress” is likely to deceive or confuse.16 Mr Miles submits that, in the absence of evidence, the Court could not put itself in the shoes of the relevant consumer (in this case businesses as opposed to members of the public).
(b)Reputation in the trademarks belongs to Winc, not NXP, and that goodwill will be diluted by association with NXP. Mr Miles submits that NXP generated all of the New Zealand goodwill and it owns all of that goodwill. As Winc has little reputational goodwill in the NetXpress brand in New Zealand, no material dilution of goodwill will occur.
[22] Mr Miles submits that each of the above findings is predicated on the view that the reputation and goodwill in “NetXpress” used by NXP accrued to Winc. Mr Miles submits that is an arguable error. He refers to Scandecor Development AB v Scandecor Marketing AB,17 which was followed in New Zealand in ABB Ltd v New Zealand Insulators Ltd,18 for the proposition that there is no “presumption of fact” that goodwill generated by the trading activities of a wholly-owned subsidiary belongs to the parent. What matters most is local perception. There was no evidence led by Winc as to what the perception was in New Zealand. Mr Miles also refers to the evidence in relation to control of the use of the marks and submits that it was arguable that there was not sufficient control. But in any event, the issue of perception is also crucial and the Court did not address that latter issue.
16 At [57]–[58].
17 Scandecor Development AB v Scandecor Marketing AB [1999] FSR 26 (CA).
18 ABB Ltd v New Zealand Insulators Ltd [2006] 3 NZCCLR 645 (HC) at [67]–[68].
[23] Mr O’Brien submits, first, in relation to (the lack of) survey evidence regarding confusion, that there is previous authority where the Court has granted an interim injunction in the absence of survey evidence.19
[24] Second, as to the findings regarding “control” of the trademark Mr O’Brien submits that the Court weighed the evidence,20 and applied the relevant legal principles.21 He therefore submits that it does not meet the threshold for leave to appeal for NXP to simply assert that “it is clear that Winc did not control actual use” of the marks by reference to the very affidavit evidence that the Court considered.
[25] I first address the lack of any survey evidence regarding possible confusion. The judgment refers to YGP IP Ltd v Yellowbook.com.au Pty Ltd.22 However, as the judgment records, that case was in relation to goods provided to members of the public.23 In this case, the evidence is that the customers are not members of the general public but rather businesses. While there is authority for the proposition that on an interim injunction, where the consumers are members of the public, it is open to the Court to place itself in the shoes of such a consumer, I accept there is an arguable error for the Court in an interim injunction hearing, to place itself in the shoes of the reasonable business consumer (here, corporate and governmental accounts) in the absence of survey evidence.
[26] Secondly, as regards evidence of control, I do not consider that there is an arguable error. In the judgment, the Court noted the evidence of Mr Swan (of Winc) regarding control and concluded that “this was not a mere right to revoke the licence; there was control in substance”.24 To the extent there was conflicting evidence, the Court commented that, “It is not for me, at this interim stage, to determine conflicts in the affidavit evidence.”25 And, so, “For the above reasons, I [was] satisfied there was genuine use of the registered trade marks by Winc through NXP”.26
19 YGP IP Ltd v Yellowbook.com.au Pty Ltd HC Auckland CIV-2007-404-2839, 13 July 2007.
20 Winc Australia Pty Ltd v NXP Holdings Ltd, above n 1, at [65]–[67].
21 At [62]–[64].
22 YGIP IP Ltd v Yellowbook.com.au Pty Ltd, above n 19, as cited in Winc Australia Pty Ltd v NXP Holdings Ltd, above n 1, at [56], n 29.
23 Winc Australia Pty Ltd v NXP Holdings Ltd, above n 1, at [56].
24 At [67].
25 At [67].
26 At [67].
[27] Thirdly, I address Mr Miles’ submission that it was an error to find that the reputation in the NetXpress marks belongs to Winc and not its (former) subsidiary, NXP. The judgment,27 refers to the NZIPOTM case of Minshull v Sepa NZ Ltd, where it was held that the goodwill arising from the local subsidiary’s use was attached to the foreign parent company as the local subsidiary was, at all material times, effectively under the control of the foreign parent company.28 On that basis, Winc’s position was arguable.
[28] As to Mr Miles reliance on Scandecor for the proposition that there is “no presumption of fact” that goodwill generated by the trading activities of a wholly- owned subsidiary company belongs to the parent,29 the Court did not rely on such a presumption. The reasons in the judgment were that, as in Minshull v Sepa NZ Ltd, the subsidiary was, at all material times, effectively under the control of the parent company.30 However, I do accept that there was no evidence from Winc as to how the NetXpress mark is perceived by the consumer in the market in which the mark is traded.31 In ABB Ltd v New Zealand Insulators, Courtney J referred to the decision in Scandecor and continued:32
[67] … Although factually complicated, the Court made a number of statements which can be generally applied to this type of case. First, it observed the “local” nature of goodwill, with the result that a business carried on locally (in that case in the UK) would normally attach to that business. However, the Court accepted that in some cases it would be both legally and factually possible for an overseas business to acquire goodwill locally by the supply of products or services through a subsidiary, agent or licensee. Whether this has happened is a question of fact. In deciding that question, what matters is with whom those trading in the local territory associate with the name or get-up.
[68] The Court particularly observed that in the commercial reality of the marketplace (which is what really counted on the issue of entitlement to goodwill), the overseas company had neither business in the UK nor had ever exercised control over any relevant business activities there to which its goodwill could attach. Evidence of the retailers called by the local distributor showed that they all associated the brand name with the local company with which they dealt and with whose services they were satisfied. …
27 At [79].
28 Minshull v Sepa NZ Ltd [2012] NZIPOTM 1 at [27.2.1].
29 Scandecor Development AB v Scandecor Marketing AB, above n 17.
30 Winc Australia Pty Ltd v NXP Holdings Ltd, above n 1, at [80].
31 See Scandecor Development AB v Scandecor Marketing AB, above n 17, at 40–45.
32 ABB Ltd v New Zealand Insulators Ltd, above n 18 at [67]–[68].
[29] While I was satisfied that Winc had demonstrated an arguable case in relation to control, there was no evidence from the relevant marketplace as to who they associate with the trade mark. To that extent, and having regard to, both Scandecor and ABB Ltd, I accept there was an arguable error.
[30] Finally, there is a ‘knock on’ effect. Any arguable error in relation to goodwill would have an impact on the assessment of the strength of Winc’s case under the various causes of action.
Alleged domain name error
[31] NXP says that it was an error to make an order preventing its use of the domain netxpress.co.nz. Mr Miles submits that NXP has a contractual right to use that domain, at least until January 2020, under the SPA.
[32] This is a misinterpretation of the terms of the order. The judgment clearly noted NXP’s continued interest in the domain netxpress.co.nz until 2 January 2020:33
[13] Next, as to the domain name, cl 13.2(g) permits NXP to use the netxpress.co.nz domain until 2 July 2019 (12 months from the completion date). The SPA then provides for a “Stand Down Period” of a further six months, during which no one is to use the netxpress.co.nz domain, until 2 January 2020. During this period, any inquiries, traffic or communications to netxpress.co.nz will automatically be redirected to a website and domain name nominated in writing by the first respondent, NXP Holdings Ltd, to Winc. …
[33]Mr O’Brien does not argue otherwise.
[34] Furthermore, by the time of the application for the interim injunction hearing, counsel were agreed that the sole issue was in relation to the use of the NetXpress marks to brand the e-commerce platform.34 Therefore, use of the domain name was not in issue in the hearing.
[35]There is no arguable error on this issue.
33 Winc Australia Pty Ltd v NXP Holdings Ltd, above n 1.
34 At [16].
[36] For completeness, I mention an affidavit of Robert Astley, director of NXP, filed in response to the affidavit of Mr Swan (in opposition to the applications for leave and stay). Mr Astley’s affidavit was sworn on 16 December 2019 and was filed on 17 December 2019. No leave had been given. Mr O’Brien objects to the admission of the affidavit. To the extent that the affidavit addresses the issue of rights over the domain name, it is not necessary for the Court to consider it. As noted above, the order does not prevent the use of the domain name netxpress.co.nz. Its use is governed by the terms of the SPA.
Alleged balance of convenience error
[37] For the applicants to succeed on an appeal in respect of the balance of convenience, they must show the Court was plainly wrong, failed to take into account a relevant factor or took into account an irrelevant factor, as on an appeal from the exercise of a discretion.35
[38] Mr Miles refers to a number of grounds which he submits establish that the decision was plainly wrong. Those are matters which were raised by then counsel, for the applicants in the interim injunction hearing, and which the Court addressed in assessing the balance of convenience.36
[39] But one of the submissions Mr Miles makes is that NXP has a clearly arguable case on appeal and is likely to succeed at the substantive hearing. Viewing the balance of convenience in the light of my decision that there are arguable errors in relation to the threshold test and in relation to the goodwill issues, I consider that shifts the balance of convenience. Weighing in those issues, together with the evidence of Mr Astley (referred to in [56] and [57] below in relation to the stay application), I accept there is an arguable error on the balance of convenience.
Are there arguable errors of general and/or particular importance?
[40] The arguable error regarding the threshold test is one that warrants appellate attention, having been left open in Red Bull. It is one that could properly be said to be
35 NZ Fintech Ltd v Credit Corp Financial Solutions Pty Ltd [2019] NZHC 1210 at [29].
36 Winc Australia Pty Ltd v NXP Holdings Ltd, above n 1, at [88]–[92].
of general importance. There are also the arguable errors in relation to the alleged need for evidence on an interim injunction in the circumstances of this case. Those too are of general importance.
[41] I accept also that the arguable errors are of importance to NXP, having regard to its position that even if it were to ultimately succeed at trial, reverting to the NetXpress brand is likely to be commercially unrealistic because of the length of time until a trial is heard and determined.
Do the circumstances warrant further delay?
[42] NXP has prepared its draft notice of appeal and has undertaken to pursue the appeal expeditiously (including seeking an urgent and/or priority fixture). There is no reason why an appeal and the substantive proceeding cannot be progressed in tandem. As already noted, the substantive proceeding is unlikely to be heard before 2021. In those circumstances, I do not consider that granting of leave to appeal would occasion much, if any, delay. Delay is therefore not an issue.
Are the interests of justice served by granting leave?
[43] Having determined that there are arguable errors both of general or public importance or otherwise of sufficient importance to NXP to outweigh the lack of any general or precedential importance, I consider it follows, as a matter of course in this case, that it is in the interests of justice to grant leave to appeal.
Stay of execution
Approach to stay of execution
[44] The starting point is that a successful party is entitled to the fruits of its judgment and an appeal does not operate as a stay of enforcement of the judgment appealed against.37 Notwithstanding this, the court that delivered the judgment appealed against may order a stay pending appeal under either r 20.10(2) of the High
37 High Court Rules 2016, r 20.10(1); Court of Appeal (Civil) Rules 2005, r 12(1); and Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust [2017] NZCA 377 at [10].
Court Rules 2016 or r 12(3) of the Court of Appeal (Civil) Rules 2005.38 Mr O’Brien submits the applicable principles are the same under either rule.
[45] Given the starting point, the applicant for stay of execution must show why the usual consequence of enforcement should not follow.39 As Hammond J observed in Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd, “at the end of the day, the test for a stay of execution is one of the justice of the given case”.40 The Court must weigh the relevant factors in balancing, on the one hand, the right of a successful litigant to have the fruits of judgment and, on the other hand, the need to preserve the position in case the appeal is successful.41
[46]Relevant factors in the balancing assessment include:42
(a)Whether the appeal may be rendered nugatory by the lack of a stay;
(b)The bona fides of the appellant as to the prosecution of the appeal;
(c)Whether the successful party will be injuriously affected by the stay;
(d)The effect on third parties;
(e)The novelty and importance of questions involved;
(f)The public interest in the proceeding; and
(g)The overall balance of convenience.
[47]The apparent strength of the appeal has also been treated as a relevant factor.43
[48] As this Court noted in SKIDS Program Management Ltd v McNeill, “Each case must be determined on its own circumstances. The list is not determinative. There may be other factors which, in the particular circumstances, warrant more weight”.44
38 Mr O’Brien points out that the applicants’ stay application relies on the High Court Rules, but their submissions rely on the Court of Appeal (Civil) Rules.
39 Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust, above n 37, at [10].
40 Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd (1999) 13 PRNZ 48 (HC) at [8].
41 Duncan v Osborne Buildings Ltd (1992) 6 PRNZ 85 (HC) at 87 as cited in Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd, above n 40, at [8].
42 Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd, above n 40, at [9].
43 Keung v GBR Investment Ltd [2010] NZCA 396 at [11].
44 SKIDS Program Management Ltd v McNeill HC Auckland CIV-2010-404-1696, 20 December 2011 at [9].
Grounds for stay of execution
[49]In summary, NXP applies for a stay of execution on the following grounds:
(a)If a stay is not granted, NXP’s intended appeal against the decision granting an interim injunction will effectively be rendered nugatory;
(b)NXP, as a condition of the granting of the stay, will undertake to diligently prosecute the application for leave;
(c)The appeal raises important questions of law whose determination is in the public interest;
(d)The balance of convenience favours the granting of a stay of execution; and
(e)If a stay is not granted the public, particularly actual and potential customers of NXP, will be negatively impacted by changes to the long- standing name and location of a service.
[50] Mr Miles submits that the intended appeal would be rendered nugatory if a stay is not granted. NXP says that the granting of an injunction is likely to be determinative of the proceeding as a whole as rebranding the e-commerce platform will become commercially unrealistic by the time a trial is heard and determined. Mr Miles submits that the use of the NetXpress brand in connection with the platform is of central importance and that the value of referring to the platform in the way it has done for over 20 years will be irretrievable and incalculable. Accordingly, he submits that the balance of convenience should favour a stay of execution until NXP has exhausted its appeal options.
[51] In reply, Mr O’Brien submits that NXP’s appeal would not be rendered nugatory if a stay is declined. He says NXP has already complied with the judgment
for some seven weeks. And, in any event, even if the appeal would be rendered nugatory, that is not a determinative factor.45
[52] As to compliance with the order over the preceding seven weeks, I am prepared to admit the part of the reply affidavit of Mr Astley of 16 December 2019 (at [6] to [10]) in which he addresses the impact of NXP of stopping use of the NetXpress brand. He says that while NXP has temporarily stopped using the NetXpress brand, that is significantly hampering its promotional activities and ability to interact with its customers.
[53] I also take into account my decision on the application for leave to appeal. In my view, it is important to assess the application for stay in light of the arguable errors that I have accepted. There is the issue of the applicable threshold. There is also the issue of the lack of evidence of likely confusion or deception,46 and whether the Court may infer likely deception or confusion where the customers are business customers (rather than members of the public) in the absence of such evidence. There is the further issue as to whether (notwithstanding that Winc had established an arguable case that it had control of the marks) it was necessary for Winc to also call evidence to establish that the NetXpress mark, under which the products are sold in New Zealand, are associated, in the minds of the purchasers of the products, with Winc.
[54] If any of those errors are upheld, they weaken Winc’s case and conversely strengthen NXP’s case.
[55] It is also necessary to take into account any injurious effect on Winc as the successful party. There is no evidence that Winc is intending to use the NetXpress marks in the near future in New Zealand. On the other hand, the Court stated in the judgment that permitting NXP to continue to use the NetXpress marks pending trial would dilute the mark and Winc’s control over the use of the mark, the avoidance of which is the whole point of registering a trade mark.47 That point still remains.
45 Citing Keung v GBR Investments Ltd, above n 43, at [10]–[11]; Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd, above n 40, at [13]; and Philip Morris (New Zealand) Ltd v Liggett & Myers Tobacco Co (New Zealand) Ltd [1977] 2 NZLR 41 (CA).
46 Winc Australia Pty Ltd v NXP Holdings Ltd, above n 1, at [56].
47 At [90].
[56] As against that, there is the evidence of Mr Astley of NXP that if a stay is not granted and NXP had to commit to a rebrand, it would be very unlikely that it could, or would, revert to using the NetXpress brand if NXP were successful on appeal and/or the substantive hearing. He says the fact that NXP refers once on its website to the portal as the NXP.nz portal, does not mean that NXP has rebranded the portal. He says NXP is struggling with not being able to refer to the platform in a meaningful way.
[57] He says that NXP does not want to invest significant amounts into a rebrand unless they are forced to because a stay is not granted. He says that a rebrand goes well beyond change of brand name on the website. He says, “We cannot continue to pause on branding the NetXpress platform”. If a stay is not granted, he says that NXP will need to undertake a full rebrand to minimise the impact and losses they are suffering. If NXP is forced to rebrand, it is quite unlikely that it would be able to revert to the NetXpress brand.
[58] Having regard to my decision on the application for leave to appeal and the arguable errors that I have accepted and to the evidence of Mr Astley as to the effect on NXP if a stay were not granted, I grant the application for a stay but in an amended form. The application seeks a stay until NXP has exhausted all its appeal options. The order will instead be until any further order of the Court of Appeal.
Orders
[59]I grant NXP’s application for leave to appeal to the Court of Appeal.
[60] I make an order staying the execution of my judgment of 21 October 2019 until any further order of the Court of Appeal.
Costs
[61] Costs are reserved. If the parties can agree costs, a joint memorandum should be filed within 25 working days of the date of this judgment. If costs cannot be agreed, NXP is to file and serve its memorandum within five working days of the date for the
joint memorandum. Winc is to file and serve its memorandum within a further five working days. Memoranda should not exceed four pages.
Gordon J
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