NZ Fintech Limited t/a Moola v Credit Corp Financial Solutions Pty Limited t/a Wallet Wizard
[2019] NZHC 1210
•30 May 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-2640
[2019] NZHC 1210
UNDER the Trade Marks Act 2002 and Fair Trading Act 1986 BETWEEN
NZ FINTECH LIMITED T/A MOOLA
Plaintiff
AND
CREDIT CORP FINANCIAL SOLUTIONS PTY LIMITED T/A WALLET WIZARD
Defendant
Hearing: 21 May 2019 Appearances:
J N Simpson and J C Dickson for the Plaintiff
C Elliott QC, J Edwards and R Langdana for the Defendant
Judgment:
30 May 2019
JUDGMENT OF GAULT J
(Application for leave to appeal interlocutory order)
This judgment was delivered by me on 30 May 2019 at 4:30 p.m. pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………………
Solicitors / Counsel:
Mr E Gray, Barrister, Auckland
Mr R C Watts, Ms J N Simpson and Ms J C Dickson (plaintiff’s instructing solicitor), Simpson Grierson, Solicitors,
Auckland
Mr C Elliott QC, Barrister, Auckland
Mr J Edwards, Mr R Langdana and Ms R O’Brien (defendant’s instructing solicitor), Russell McVeagh, Solicitors, Auckland
NZ FINTECH LTD T/A MOOLA v CREDIT CORP FINANCIAL SOLUTIONS PTY LTD T/A WALLET WIZARD [2019] NZHC 1210 [30 May 2019]
[1] The plaintiff (Moola) commenced proceedings in November 2018 alleging that the purchase by the defendant (Wallet Wizard) of Google Adwords that include the word “Moola” infringes Moola’s registered trade mark, amounts to passing off and breaches the Fair Trading Act 1986. Moola also alleges that Wallet Wizard has used slogans that mirror those used by Moola in its Adword advertising, and that this also amounts to passing off and breaches the Fair Trading Act.
[2] Moola applied for an interim injunction restraining Wallet Wizard from using the word “Moola” or any close variation in its advertising or marketing material, including in Google Adwords or advertisements on Google.
[3] On 2 April 2019 I dismissed Moola’s application for an interim injunction.1 Moola seeks leave to appeal. Wallet Wizard opposes leave.
Background and judgment
[4] The factual background to the proceeding is set out in my judgment of 2 April 2019. I do not repeat it here.
[5]My reasons for refusing an interim injunction may be summarised as follows:
(a)Moola had not established a serious question to be tried that Wallet Wizard had used the word “Moola” “in such a manner as to render the use of the sign as likely to be taken as being used as a trade mark” as required for infringement by s 89(2) of the Trade Marks Act 2002 (the Act).
(b)Moola had not demonstrated a serious question on the passing off or Fair Trading Act causes of action as its own evidence that consumers understand the essential features of Google Adwords indicates that the purchase of a trade-marked Adword does not involve a representation which would lead or be likely to lead members of the public to believe that the services it offers are the services of Moola.
1 NZ Fintech Ltd t/a Moola v Credit Corp Financial Solutions Pty Ltd t/a Wallet Wizard [2019] NZHC 654.
(c)In any event, I considered the balance of convenience and overall justice weighed against interim relief. I considered the following factors in coming to this conclusion:
(i)As to whether damages would be an adequate remedy for Moola, damages based on trading may be reasonably easily calculated but damage to goodwill and brand dilution are often difficult to measure, which weighed in favour of interim relief. Even so, here the evidence indicated Wallet Wizard is writing only a modest number of loans.
(ii)Wallet Wizard’s damages ought to be relatively easy to calculate.
(iii)Harm to third parties did not alter the balance.
(iv)Even if I had considered Moola established a serious question, the relative strength of the parties’ cases weighed against interim relief.
(v)I did not consider Moola had delayed.
(vi)One of the three clean hands arguments weighed against interim relief – Moola’s actions bidding on the Wallet Wizard Adword amounted to engaging in the very conduct it is complaining about in a manner that went further than a legitimate reaction.
(vii)In relation to the respective status quo arguments, I said that allowing a competitive market place to continue may be a factor relevant to overall justice, at least in combination with the other factors weighing against interim relief (relative strength of the parties’ claims and Moola’s bidding on the Wallet Wizard Adword).
Approach to leave to appeal
[6] Leave is required in accordance with s 56(3) of the Senior Courts Act 2016. 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 that have no great significance to either of the parties do not unnecessarily delay the proceedings. Fitzgerald J recognised the following considerations as relevant:2
(a)A high threshold exists. An applicant should raise an arguable error of law or fact.
(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.
[7] In Li v Chief Executive, Ministry of Business, Innovation and Employment, Palmer J indicated an application to appeal an interlocutory decision is likely to be granted where: (a) there is good reason to consider it before, or separately to, the substantive appeal; and (b) it is sufficiently meritorious in substance and relates to a sufficiently important issue as to outweigh the cost and delay of appeal.3
[8] The Court of Appeal referred to Finewood in Ngai Te Hapu Inc v Bay of Plenty Regional Council.4 Like Fitzgerald J,5 the Court of Appeal referred to the similar leave
2 Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [9]-[14].
3 Li v Chief Executive, Ministry of Business, Innovation and Employment [2018] NZHC 1171 at [22].
4 Ngai Te Hapu Inc v Bay of Plenty Regional Council [2018] NZCA 291 at [12].
5 Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [12].
requirement under the former Commercial List.6 The Court of Appeal declined to provide definitive guidance on the applicable principles but agreed that leave should only be granted where the significance or implications of an arguable error of fact or law, either for the particular case or for the applicant or as a matter of precedent, warrants the further delay which the appeal process would involve.7
Moola’s submissions
[9] Ms Simpson for Moola submitted that the judgment contains three core errors of fact or law:
(a)The Court erred at paragraph [52] in its interpretation of s 89(2) of the Act regarding the interpretation of the phrase “taken as use as a trade mark”. Section 89(2) should be interpreted to allow for changing technologies, including how a trade mark can be used (invisibly). It does not require the trade mark to be seen or perceived. Consumer understanding is sufficient for use as a badge of origin. Section 89(2) is intended to prevent infringement when a sign that could be used as a trade mark is being used in a different way (generic / descriptive use). This ground also alleges that the Court erred by considering the question from the perspective of the defendant not the consumer. Moola also says that, contrary to the Court’s finding at [43], there was evidence that internet users perceive the purchased Adword on their browser and take this as a manifestation of the Adword purchaser’s use as a trade mark.
(b)The Court erred at paragraph [53] in its application of American Cyanamid Co v Ethicon Ltd8 by failing to find a serious question to be tried in circumstances where it elected to refrain from determining what it states was a difficult issue of law (the application of s 89(2) to Adword “advertising”) and had evidence before it that disclosed a real
6 At [16]-[17] citing Meates v Taylor [Leave] (1992) 5 PRNZ 524 (CA) at 526, confirmed in Clear Communications Ltd v Attorney-General (1998) 12 PRNZ 287 (CA). See also Waterhouse v Contractors Bonding Ltd [2013] NZCA 151, [2013] 3 NZLR 361 at [14]-[15].
7 At [17].
8 American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL).
prospect of success if the application of s 89(2) contended for by the plaintiff was correct.
(c)The balance of convenience was incorrectly weighed on the facts before the Court.
[10] Moola submitted the arguable errors relating to s 89(2) and American Cyanamid are of precedential importance. Moola also submitted that an appeal will not cause further delay in the proceeding before this Court.
Wallet Wizard’s submissions
[11] Mr Elliott QC for Wallet Wizard submitted that Moola must show an arguable error in the sense of a tenable case and a real prospect of success on appeal. He submitted the legal position is clear, that the purchase of Adwords per se, without some other disentitling conduct, is lawful, and Moola is seeking to change the law. Mr Elliott submitted the decision is based on a correct interpretation of the Act, longstanding and conventional trade mark principles, a correct application of the principles relating to interim injunctions and was supported by the evidence.
[12] Mr Elliott submitted the circumstances, and overall interests of justice, strongly weigh against granting leave, given the lack of general importance in terms of precedent value or significant prejudice, and the delay an appeal would cause. Wallet Wizard also points to the delay to date due to Moola’s alleged failure to act expeditiously.
Arguable error
[13] As I have said in another recent application for leave to appeal in an interim injunction case, I am conscious that I am being asked to review the correctness of my own decision.9 In such circumstances, the easier course might simply be to accept the alleged errors must be arguable but that would not be the correct approach. I must assess whether there is an arguable error. In doing so, I am conscious that, if I decline leave and it is sought from the Court of Appeal, that Court may wish to have my
9 Mad Butcher Holdings Ltd v Standard 730 Ltd [2019] NZHC 699 at [13].
reasons for considering whether they should address the alleged errors in the context of interim relief in this case.
Taken as use as a trade mark
[14] In essence, this argument is that, contrary to paragraph [52] of the judgment, “taken as” should be interpreted so as to apply to Wallet Wizard’s use of a Google Adword keyword if the use is understood by consumers even though it cannot be seen or accessed given the hidden nature of Google Adwords. This essentially raises the key issue that I considered in my judgment, having regard to the authorities canvassed.
[15] I consider my conclusion is consistent with the approach of Asher J in InterCity Group (NZ) Ltd v Nakedbus NZ Ltd and the Court of Appeal in Tasman Insulation New Zealand Ltd v Knauf Insulation Ltd,10 albeit those cases also involved a lack of evidence. That approach involves ascertaining what meaning prospective purchasers are likely to take from the word if they see or have access to it. On that basis, I do not consider there is an arguable error.
[16] As part of this argument, it was suggested that the judgment erred by considering the question from the perspective of the defendant rather than the consumer. This is a reference to paragraph [52] of the judgment where I said:
While visibility may not always be essential, the fact that the purchaser of a Google Adword is not using the trade mark as a badge of origin for its own goods or services, but rather using it in Google’s paid service to place its comparative or competitive offering in the search results as well as the trade mark owner’s offering, indicates that there is no use as a trade mark.
[17] As Mr Elliott submitted, my reasoning relies specifically on the consumer- focused perspective in the authorities.11 I do not consider the sentence complained of, outlining an alternative way of framing the interpretation issue, indicates a different approach from the consumer-focused test. Even if this alternative way of framing the issue is unhelpful, on the basis indicated above at [15], I do not consider there is an arguable error.
10 InterCity Group (NZ) Ltd v Nakedbus NZ Ltd [2014] NZHC 124, [2014] 3 NZLR 177 at [85]; and Tasman Insulation New Zealand Ltd v Knauf Insulation Ltd [2015] NZCA 602, [2016] 3 NZLR 145 at [184]-[187].
11 See, for example, at [29], [33]-[39], [43], [49] and [51].
[18] I do not accept Moola’s submission that, contrary to the Court’s finding at [43] of the judgment, there was evidence that internet users perceive the purchased Adword on their browser and take this as a manifestation of the Adword purchaser’s use as a trade mark. My only finding at [43] said that (as in InterCity) there was no evidence that internet users “see” the use of the keyword “Moola”, and they have no access to it inside the Google algorithm. The paragraph went on to record Moola’s submission that invisible use can still be use as a trade mark: it is sufficient if consumers understand a trade mark is being used, even if they cannot actually see it. This is consistent with Mr Shand’s evidence, on which Moola relies in relation to this argument. He states that “Even though the purchaser’s use of the keyword may not be visible to the consumer in the usual sense in the search results, when most modern consumers see an ad (prefaced by “Ad”), they will understand that this means the words have been purchased by the owner of the web page that is returned in the search results”.
[19] Mr Elliott submitted that I was “kind” to Moola in paragraph [51] and that I could have gone further and concluded Moola’s evidence did not even establish a serious question to be tried in relation to consumer understanding (based both on challenging witness qualifications to give consumer perception evidence and the lack of evidence on the use as a badge of origin). I do not consider that is relevant to whether there is an arguable error. It might be relevant to the overall assessment of whether the interests of justice are served by granting leave. I note Ms Simpson submitted in reply that such use must be as a badge of origin.
American Cyanamid
[20] As Moola put it, in a nutshell this argument is that at paragraph [53] the judgment acknowledges the application of s 89(2) to Adword advertising is a difficult question of law, and as there is evidence that supports a finding of infringement applying Moola’s interpretation of s 89(2), the Court should conclude based on American Cyanamid that there is a serious question to be tried.
[21] As a preliminary point, counsel relied on the following sentence in American Cyanamid, which appears later in a paragraph that I partially referred to in my judgment:12
So unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought.
[22] Counsel did not suggest that this reference to “real prospect” indicates any different approach from that of serious question to be tried, which is routinely applied in New Zealand following the Court of Appeal’s decision in Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd.13
[23] Given Moola’s argument, the Court of Appeal’s more general observations bear repeating:14
The argument presented by Mr Brown leads us to add some more general observations. In substance he said that an over-mechanical following in the High Court of New Zealand of the two-stage approach enunciated in American Cyanamid Co v Ethicon Ltd [1975] AC 396 has resulted in plaintiffs in passing off and other actions obtaining too easily injunctions which, although nominally interim, have had the effect of putting an end to the litigation. We accept that this is at least a danger against which it is necessary to guard. The American Cyanamid approach has been qualified in the House of Lords itself in NWL Ltd v Woods [1979] 3 All ER 614. In this Court we have drawn attention from time to time to the importance of not seeking the answer to an interlocutory injunction application in the rigid application of a formula…
Whether there is a serious question to be tried and the balance of convenience are two broad questions providing an accepted framework for approaching these applications. As the NWL speeches bring out, the balance of convenience can have a very wide ambit. In any event the two heads are not exhaustive. Marshalling considerations under them is an aid to determining, as regards the grant or refusal of an interim injunction, where overall justice lies. In every case the Judge has finally to stand back and ask himself that question. At this final stage, if he has found the balance of convenience overwhelmingly or very clearly one way - as the Chief Justice did here - it will usually be right to be guided accordingly. But if the other rival considerations are still fairly evenly poised, regard to the relative strengths of the cases of the parties will usually be appropriate. We use the word "usually" deliberately and do not attempt any more precise formula: an interlocutory decision of this kind is essentially
12 At [21]. American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL) at 408.
13 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (CA).
14 At 142.
discretionary and its solution cannot be governed and is not much simplified by generalities.
Very often a prompt hearing of the action itself is preferable to an interlocutory injunction hearing…
[24] Turning to paragraph [53] of my judgment, my observation was merely that it was not for me to decide difficult questions of law at this stage. I said that as a preface to my conclusion that, for the purposes of interim relief, Moola had not established a serious question to be tried that Wallet Wizard has used the word Moola “in such a manner as to render the use of the sign as likely to be taken as being use as a trade mark” as required by s 89(2) and therefore infringed Moola’s trade mark. In other words, I was not determining the issue of law at the interlocutory stage. Moola can of course argue for its preferred interpretation at trial.
[25] Nevertheless, my conclusion for the purposes of interim relief, having considered the legal authorities and the affidavit evidence, was that Moola had not established a serious question to be tried.
[26] As I did not purport to decide in any binding sense whether consumer understanding is sufficient in the case of Adword advertising, and as I did not rule out the possibility that the evidence at trial could show such understanding, I accept there may be a question to be tried. But the issue here is whether my conclusion that Moola had not, at the interim stage, established a serious question to be tried raises an arguable error.
[27] I do not accept the proposition that there must be a serious question to be tried in every case where a difficult question of law is not determined at the interim stage and the possibility of evidence at trial supporting the plaintiff’s legal interpretation cannot be ruled out. The assessment of whether there is a serious question to be tried is a mixed question of law and fact. As Mr Elliott submitted, it cannot be correct that every case where there is a complex question of law left for trial meets the threshold of a serious question to be tried. It may well be different where there is a difficult question of law left for trial and the evidence at the interim stage is sufficiently compelling to conclude there is a serious question to be tried. The fact that I did not
rule out the possibility of evidence at trial supporting the plaintiff’s legal interpretation does not mean Moola established a serious question to be tried at the interim stage.
[28] Moola’s submissions briefly suggested that there was a consequential erroneous focus at [56] on the form of injunction applied for in relation to the alternative causes of action. I do not consider there was an arguable error here.
Balance of convenience
[29] Ms Simpson accepted that my assessment of the balance of convenience and overall justice involved the exercise of discretion where the appeal threshold is higher.15 Applying the approach in May v May,16 the arguable error has to be put in terms that my balance of convenience and overall justice assessment was plainly wrong (as there was no suggestion of acting on a wrong principle, failing to take account some relevant matter or taking account of some irrelevant matter).
[30] Except for the consequential effect of the alleged error in relation to serious question, the argument essentially sought to re-weigh the same factors relevant to the balance of convenience. I do not consider there is an arguable error, especially given the plainly wrong threshold.
[31] As to the alleged error in relation to serious question, my judgment went on to consider balance of convenience and overall justice and recorded my view that, even if I had considered Moola established a serious question to be tried, the relative strength of the parties’ cases weighs against interim relief.17 I remain of that view. In order to succeed, Moola will need to persuade the Court legally and evidentially that use (purchasing a Google Adword) that cannot be seen by internet users can still be “taken as being used as a trade mark” by a significant number of normally informed and reasonably attentive internet users, notwithstanding the approach to s 89(2) of this Court in InterCity and the Court of Appeal in Tasman.18 Mr Elliot’s submission that
15 See NZ Tax Refunds Ltd v Brooks Homes Ltd [2013] NZCA 90, (2013) 13 TCLR 531 at [12]-[13].
16 May v May (1982) 1 NZFLR 165 (CA) at 169-170. See also Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 at [32].
17 At [70] of my judgment.
18 InterCity Group (NZ) Ltd v Nakedbus NZ Ltd [2014] NZHC 124, [2014] 3 NZLR 177 at [85], and Tasman Insulation New Zealand Ltd v Knauf Insulation Ltd [2015] NZCA 602, [2016] 3 NZLR 145 at [184]-[187].
I could have gone further on the evidence is relevant in the context of whether I was plainly wrong to exercise my discretion against interim relief.
[32] Moola also disputed taking into account its bidding on “Wallet Wizard” as an Adword as a factor weighing against an interim injunction on the basis that Mr Carpenter of Wallet Wizard stated that Wallet Wizard is not concerned with such historical use. I do not accept this submission. Mr Carpenter’s statement reflects Wallet Wizard’s position that there is no infringement whereas Moola asserts otherwise, but has engaged in the very same conduct it seeks to have the Court injunct. In the same paragraph Mr Carpenter expressed surprise that Moola is complaining when it has been doing the same thing. I also do not accept the argument that I was wrong not to take into account that Moola had outsourced its advertising for at least some of the relevant period and so implicitly should not be responsible for the conduct which, on its case, would infringe.
[33] Moola also argued that I incorrectly regarded the status quo as being the situation where Wallet Wizard was bidding on the Moola trade mark as an Adword. I do not consider that my observations on the parties’ respective status quo arguments add anything to the alleged errors already addressed.
[34] Finally, Moola submitted I did not give enough weight to my findings regarding the adequacy of damages (damage to Wallet Wizard ought to be relatively easy to calculate, Wallet Wizard was writing only a modest number of consumer loans and damage to goodwill and brand dilution are often difficult to measure). Somewhat inconsistently, in oral submissions Moola suggested I was wrong not to take into account the risk that Wallet Wizard’s sales may ramp up. The evidence does not support that submission. I do not see any arguable error in relation to weighing the adequacy of damages for either party.
[35] I conclude that there is no arguable error that the exercise of discretion was plainly wrong.
Importance
[36] I accept the s 89(2) issue is of some importance given the extent of Google Adwords but given the existing authorities on the issue referred to,19 both of which involved cases that had gone to trial, it seems unlikely the Court of Appeal will determine the issue in this interim injunction context. As the Court of Appeal said in Klissers, on an interim ruling “any expression of views on matters better decided at a trial should be avoided as far as reasonably possible”.20 This may be particularly so where the case will likely involve contested expert evidence on the issue of consumer understanding.
[37] I do not consider the application of American Cyanamid raises an issue of precedential importance. The approach to interim injunctions in New Zealand is clear following Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd.21 Nor does the weighing of the balance of convenience raise any issue of precedential importance.
[38] I accept the refusal of interim relief is of importance to Moola. However, this is not a case where it effectively determines the proceeding. Also, the modest number of consumer loans written by Wallet Wizard, the undertaking proffered and the history of the dispute since 2015 all weigh against the claimed importance and suggest that an early fixture would be a more efficient way of progressing this case. Mr Elliott indicated that Wallet Wizard would consent to a priority fixture, which I consider appropriate. By consent, case management to date has been deferred pending the outcome of this application, but counsel for Moola indicated that following this decision they wish to proceed expeditiously, as I would expect in a case such as this. I consider the refusal of interim relief is not of sufficient importance to Moola to outweigh the lack of general importance.
19 InterCity Group (NZ) Ltd v Nakedbus NZ Ltd [2014] NZHC 124, [2014] 3 NZLR 177 at [85], and Tasman Insulation New Zealand Ltd v Knauf Insulation Ltd [2015] NZCA 602, [2016] 3 NZLR 145 at [184]-[187].
20 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (CA) at 141.
21 At 142.
Delay
[39] Moola submits that an appeal will not cause further delay in the substantive proceeding. That may not be so if the parties proceed expeditiously and obtain a priority fixture. But as matters currently stand, I do not consider that delay is a material factor weighing against leave to appeal.
[40] Mr Elliott referred again to Moola’s delay since 2015 but, for the reasons given in my earlier judgment, I do not consider that delay itself should be a factor weighing against leave to appeal.
Interests of justice
[41] Overall, standing back and assessing the matter in a pragmatic and realistic way, I do not consider the interests of justice are served by granting leave. Even if there was an arguable error in relation to serious question, I consider it did not affect the outcome. Also, declining Moola interim relief is not of sufficient importance to outweigh the lack of general importance.
Costs
[42] The parties did not address costs in the event leave were declined. I consider that costs should follow the event. If costs cannot be agreed, counsel may address the issue in brief memoranda.
Result
[43]The application for leave to appeal is dismissed.
Gault J
4
9
1