NZ retailer Benchmark put competitor Mitre’s brochures outside Benchmark stores. Benchmark stickers on the brochure pages compared Benchmark’s prices with Mitre’s. Mitre sued. We report at
Topic: Comparative advertising
Who: Benchmark Building Supplies Limited and Mitre 10 (New Zealand) Limited
Where: The New Zealand Court of Appeal
When: October 2004
Applying laws very similar to those here in the UK, the Kiwi Court of Appeal threw out an application for an interim injunction in a spat between retailers over promotional brochures.
Retailer Mitre 10 delivered door-to-door brochures with details of its products and prices. Some of the recipients of the brochure were employees of Mitre's competitor Benchmark. Benchmark then displayed Mitre's brochures outside Benchmark stores. But before they did this, they doctored them a little. On some of the pages bright orange stickers were put against advertisements for some of the products available at Mitre stating the "Bunnings" price. Bunnings was the in-store brand of Benchmark and in every case where the sticker was applied, the Bunnings price was lower than Mitre's.
Mitre was a registered trade mark and Mitre applied to the Court for an interim injunction to stop Benchmark displaying Mitre's brochures in this way. Benchmark's causes of action were trademark infringement, copyright infringement and breach of moral rights.
First instance verdict
At first instance the Court held there was a serious issue to be tried on copyright and trademark infringement and that the balance of convenience favoured the grant of an immediate injunction prohibiting Benchmark's further use of the Mitre brochures. Benchmark appealed and the Court of Appeal took a different view.
On copyright infringement the appeal judges did not think Mitre had much of a case at all. There had been no copying or "reproduction" of the Mitre brochures: originals had simply been displayed outside Benchmark's stores.
Trade mark infringed?
On trademark infringement, the Court applied pretty much the same rule as we have here in the UK for use of competitors' brands in comparative advertising. It asked whether the use complained of was "contrary to honest commercial practices" or whether it took unfair advantage of Mitre's trade mark. The answer here was that it did neither. There appeared to be no argument by Mitre that the price comparisons were misleading and the function that Mitre's brands were performing in this context was exactly the same as when the brochures had first been published, namely indicating that the depicted products were available from Mitre at a particular specified price.
Moral rights infringed?
On moral rights infringement, again applying laws very similar to our own in this area, the Court held that moral rights can only be enforced by the individuals who created the works in question, not the companies who might have employed them when they produced the material. As the employer, not the employee, was the claimant in this action it could therefore not obtain relief, even though it might have been the first owner of copyright.
And, even if the individual creators had been joined to the action as claimants, the Court was not persuaded that simply displaying brochures in which copyright works appeared, without these works being damaged in any way apart from the application of stickers, amounted to derogatory treatment and thus dissatisfied on moral rights infringement.
Accordingly the injunction application was thrown out.
Why this matters:
The volte face on the part of the Court of Appeal here is explained by the fact that between the first instance judgment and the appeal hearing, new trademark laws were introduced in New Zealand which introduced the "honest commercial practices" defence for comparative advertising use of brands which we have had here in the UK since 1994.
But this does not wholly explain the difference, because New Zealand's laws of copyright and moral rights had not changed in the interim and the appeal judges' views on these aspects of the case seemed to be spot on.
Yet another case in which advertisers seeking relief from the courts in comparative advertising cases have come away with a bloody nose!