Battle Of The Buds

On 1 June 2001 Justice Doogue delivered an important judgment in the trade mark field. The dispute was between two old adversaries, Anhauser-Busch of the USA and Budweiser Budvar of the Czech Republic.

The case centred around the Czech defendant’s use in New Zealand of the trade mark Budejovicky Budvar and its alleged use of Budweiser and by implication of the American company’s “Bud” trade mark.

The parties have reached various forms of accommodation over a period of more than 90 years. Refer: Anhauser-Busch Incorporated v Budweiser Budvar National Corporation, Wellington High Court, CP 361/97, 1 June 2001, Doogue J (unreported).

As indicated above, the New Zealand case centred around the Czech defendant’s use in New Zealand of the trade mark Budejovicky Budvar and its alleged use of Budweiser and by implication of the American company’s “Bud” trade mark. The American company had registered in New Zealand both Budweiser and Bud and it was acknowledged that they had a huge international reputation which extended to New Zealand and that they had rights by way of registration. The issue however revolved principally around the defendant’s registration and use of a range of trade marks incorporating the words Budejovicky Budvar.

The American plaintiff argued that its registered trade marks had been infringed and that the defendant’s own trade mark registrations should be removed. In addition, the plaintiffs took action on the basis of passing off and breach of the Fair Trading Act.

The judgment is a long and comprehensive one and the arguments raised for and against were detailed. At the end of the day, however, the plaintiff’s main contention was that through the repetition of the word “Bud” in the defendant’s trade mark, this amounted to infringement of its “Bud” registration and further amounted to an actionable misrepresentation in trade.

Considerable expert evidence was led by both parties as to how members of the New Zealand public would be likely to respond to the defendant’s trade marks and product, how they were likely to pronounce and abbreviate the mark and what their overall impressions would be. The plaintiff filed market survey evidence to support its case.

Overall, the plaintiff’s contention was that from the results of the survey and by virtue of a linguistic or psychologist’s approach, a typical prospective New Zealand purchaser of packaged beer would be likely to be confused on seeing the Budejovicky Budvar product. That is, into believing that it was the American company’s Budweiser product, or was somehow associated with the American company’s product because of the common first syllable, the difficulties of the words in English and the familiarity with the American brand.

Notwithstanding this submission, there was no evidence of actual confusion between the two products.

These arguments were rejected, on the basis that there could be no visual confusion between the competing marks and any confusion could only result from imperfect recollection or aural confusion resulting from an incorrect assumption that because of the common feature “Bud” there was some connection.

The judgment deals at some length with the market survey and is critical of its design and the conclusions drawn from it. Apart from questions of design and choice of proper universe, the Judge felt that the market survey was not directed to the correct issue, i.e. the marks themselves. He was also less than convinced by the fact that it only showed that a small and certainly not substantial or significant number of New Zealanders might confuse the two products. In fact, the Judge concluded that the survey did more to assist the defendant than the plaintiff.

Essentially, the Judge found that the trade mark infringement claim was not made out and that the Czech company’s trade marks should not be removed.

There was however also argument about whether the defendant had improperly given greater prominence to the word “Budweiser” in its packaging. The Judge found that notwithstanding its prominence, there was no evidence that anyone took the name or part of the name of the company on the defendant’s new bottle as being the use of the word “Budweiser” as a trade mark. However, on the defendant’s old bottle, the prominence was greater and the Judge found that the old bottle did not have the protection of section 12 of the Trade Marks Act, i.e. saving for use of own name. Accordingly, the Judge warned that while it had not been established in the present proceedings that the defendant’s old bottle had infringed the plaintiff’s registered trade marks, any future use of the old bottle would be likely to lead to an opposite conclusion.

Having made these findings, his Honour dismissed the passing off and fair trading claims. It is noteworthy that in doing so he again referred to the market survey. Some 85% of those surveyed had knowledge of the Budweiser brand but only 10% of those surveyed associated the defendant’s beer with Budweiser. In a way, this figure confirmed the Judge’s view that there was no real likelihood of a misrepresentation necessary to establish relief.

Finally, it is worthy of mention that the Judge endorsed Gault J’s comments in Mainland Products Ltd v Bonlac Foods (NZ) Ltd [1998] 3 NZLR 341 at 343 that claims of passing off and under the Fair Trading Act add little in a case which is truly a trade mark case. This may lead to the need for a re-evaluation of how name cases are run in the future.

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