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Red Bull gets its interim injunction

Red Bull gets its interim injunction

Thursday 20 October 2016 | Kate Duckworth

Precis: Earlier this year Red Bull was unsuccessful in obtaining an interim injunction from the New Zealand High Court preventing Drink Red from selling a ready-mixed drink containing vodka and an energy drink and an energy drink without alcohol. Red Bull appealed the decision of the High Court and made an application to adduce further evidence – the Court of Appeal has now issued its decision.

In a decision issued on March 24 2016 (Red Bull New Zealand Limited v Drink Red Limited [2016] NZHC 531), Red Bull was unsuccessful in obtaining an interim injunction from the New Zealand High Court preventing Drink Red from selling a ready-mixed drink containing vodka and an energy drink and an energy drink without alcohol. This was despite evidence suggesting that there was likely to be confusion and the judge finding that Drink Red had a serious case to answer, but requiring Red Bull to prove a strong prima facie case.

Red Bull appealed the decision of the High Court and in particular made an application to adduce further evidence. The Court of Appeal issued its decision on August 4 2016 (Red Bull New Zealand Limited, Red Bull GmbH v Drink Red Limited, Drink Red (Australasia) Limited, Drink Red Global Limited CA149/2016 [2016] NZCA 373).

Background

As is the case in many other countries, ‘Red Bull’ branded energy drinks are popular in New Zealand. Red Bull is sold in two key markets: the energy drink market and the alcoholic beverages market, where it is typically mixed with spirits.

In 2015 Drink Red launched a ready-mixed drink containing vodka and an energy drink and then an energy drink without alcohol, both under the name ‘Red’.

High Court decision

In refusing the interim injunction against Drink Red, the High Court ruled that Red Bull had met the ordinary threshold for what constitutes a serious question to be tried, but required Red Bull to prove a strong prima facie case.

In declining the interim injunction application, the High Court judge ruled that there was no evidence that the Drink Red products were serious rivals of Red Bull products in the marketplace, and no evidence among actual consumers that there was a serious degree of confusion or a serious likelihood of confusion. The judge also took account of evidence that if Red Bull won at trial, it would have knocked Drink Red out of the marketplace, being a $100 company, and even if damages could be quantified, Drink Red would not be able to pay them. The judge also noted that he did not believe the evidence before him showed that Drink Red had any intention to piggyback on Red Bull’s goodwill.

Court of Appeal decision

In a majority decision, the Court of Appeal allowed Red Bull’s appeal because Drink Red misled the High Court in relation to evidence that was critical to the judge’s decision to decline Red Bull’s application for an interim injunction.

After the High Court declined to issue an interim injunction, Red Bull obtained discovery from Drink Red. In addition to a May 2015 report that was included in the interim injunction evidence, the documents disclosed included June 2014 and February 2015 reports from a marketing company called Strategy, as well as an internal email from Strategy dated February 23 2015.

The June 2014 report revealed that Drink Red had deliberately tried to align itself with Red Bull’s branding. The February and May 2015 reports were sanitised reports, produced after receiving a cease and desist letter from Red Bull in February 2015 and then the interim injunction application in May 2015. The February 2015 Strategy email instructed staff to prepare the misleading report – designed to mislead “any reader of the May 2015 report into believing Drink Red had named its products without reference to Red Bull and its intellectual property”.

The new and allowable evidence was said to demonstrate Drink Red’s intention to use Red Bull’s intellectual property when Drink Red named and marketed its products and included statements like wanting to “tap into Red Bull’s equity”. The original June 2014 report referred repeatedly to Red Bull products, and the Court of Appeal ruled the subsequent actions of Drink Red demonstrated an intention to erase any evidence of a link between its products and Red Bull’s, despite it being clear that Drink Red was piggybacking on Red Bull’s intellectual property.

The majority of the Court of Appeal ruled that they were confident that had the High Court judge been made aware of the new evidence that shows Drink Red intended to trade off Red Bull’s intellectual property then he would have been satisfied Red Bull had a “strong prima facie case”. Drink Red was said to be the author of its own inconvenience and had proceeded with its eyes wide open. The application to allow further evidence was granted, as was the application for an interim injunction preventing Drink Red from selling its products in New Zealand until the result of the trial.

Published by World Trademark Review on 19 October 2016

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