RED BULL NEW ZEALAND LTD v DRINK RED LTD [2016] NZCA 373

RED BULL NEW ZEALAND LTD v DRINK RED LTD [2016] NZCA 373 [4 August 2016]IN THE COURT OF APPEAL OF NEW ZEALANDCA149/2016[2016] NZCA 373BETWEEN RED BULL NEW ZEALAND LIMITEDFirst AppellantRED BULL GmbHSecond AppellantAND DRINK RED LIMITEDFirst RespondentDRINK RED (AUSTRALASIA)LIMITEDSecond RespondentDRINK RED GLOBAL LIMITEDThird RespondentHearing: 13 July 2016Court: French, Fogarty and Collins JJCounsel: A H Brown QC and S Wheeldon for AppellantsP D M Johns and M E Hutchison for RespondentsJudgment: 4 August 2016 at 12.00 pmJUDGMENT OF THE COURTA The application to adduce further evidence is granted.B The appeal is allowed.C An interim injunction is issued until further order of the High Court:(i) The respondents are restrained whether by their directors, servants, agents or otherwise howsoever from manufacturing, importing into New Zealand, offering for sale, selling, advertising or otherwise dealing in any energy drink products, alcoholic beverages or RTDs sold by reference to the trade mark "ЯED" or to use the trade mark "ЯED", or any other trade mark similar to the appellants' Red Trade Marks identified at [6] of this judgment.(ii) The respondents are also restrained whether by their directors, servants, agents or otherwise howsoever from making representations, whether express or implied, that their products are the same as a combination of the appellants' energy drink products and vodka or contain the appellants' energy drink products or in any other way associating its products with theappellants' energy drink products.D The respondents are ordered to pay costs for a standard appeal on a band A basis together with usual disbursements. We certify for second counsel.____________________________________________________________________REASONSPara NoFrench and Collins JJ [1]Fogarty J (dissenting) [93]FRENCH AND COLLINS JJ(Given by Collins J)Table of ContentsPara NoIntroduction [1]Background [3]Red Bull [3]Drink Red [8]The pleadings [25]The evidence [29]The High Court decision [37]Grounds of appeal [45]New evidence [50]Email [53]The strategy reports [56]Privilege [66]Reasons for allowing Red Bull's new evidence Application [68]The threshold for injunctive relief [74]Balance of convenience [80]Interests of justice [87]Separate judgment [88]Conclusion [89]Introduction[1] The appellants, whom we will refer to collectively as "Red Bull", have appealed a decision of Brewer J delivered on 24 March 2016 in which he declinedRed Bull's application for an interim injunction against the respondents.1 We will refer to the respondents collectively as "Drink Red".[2] The majority of the Court is allowing Red Bull's appeal because Drink Red misled Brewer J in relation to evidence that was critical to his decision to declineRed Bull's application for an interim injunction. In particular, Drink Red presentedBrewer J with a misleading report from its marketing company, Strategy Design and Advertising (Strategy). That report was instrumental in Brewer J deciding Drink Red had not deliberately used Red Bull's intellectual property whenDrink Red named and marketed its products. We are satisfied Brewer J would havereached a different conclusion about the strength of Red Bull's case and the balanceof convenience had he the benefit of the evidence we have now considered. Having considered that evidence ourselves, the majority have reached the firm view that an1 Red Bull New Zealand Ltd v Drink Red Ltd [2016] NZHC 531.interim injunction should be issued. The terms of the interim injunction are set out in [90] of this judgment.BackgroundRed Bull[3] Red Bull commenced producing and supplying energy drink products in Europe in 1987. It commenced trading in New Zealand in 1996.[4] Red Bull produces an energy drink called Red Bull, which is marketed in various ways in two key markets:(a) the energy drink market; and(b) the alcoholic beverages market, in which Red Bull is mixed with spirits, principally vodka. Red Bull itself does not produce any alcohol-based drinks.[5] Red Bull has sold approximately $40 million worth of its energy drink products in New Zealand every year since 2010.[6] Red Bull has asserted proprietary interests in six trade marks (Red Trade Marks) relevant to these proceedings:(a) RED BULL(b)(c)(d)(e) RED EDITION(f) RED[7] The trade marks (c) and (d) are primarily relied on by Red Bull and we willrefer to these as Red Bull's "Red Series Marks".Drink Red[8] Mr McCormick is now the managing director of the Drink Red companies. In 2013 he was living in Australia, where he owned and managed a company that distributed Crown's Premium Energy Drink (Crown's). He sought advice from a Mr Samson, a friend in New Zealand, about how he could get Crown's energy drinks into New Zealand bars and liquor stores. After discussing ideas with Mr Samson, Mr McCormick began investigating ways to produce his own energy drink as well as a ready-to-drink (RTD) similar to vodka and Red Bull. Mr McCormick has explained that his real focus was in creating a pre-mixed alcoholic drink.[9] One of the first steps taken by Mr McCormick involved the incorporation of a company called Vodka Red Ball Ltd on 8 January 2014. The directors of that company were Mr Samson and a Mr Rollo, a Christchurch-based lawyer. At the same time Mr Rollo applied for the trade mark "red ball vodka; vodka red ball".That application lapsed on 9 January 2015. There is no evidence Drink Red has evertraded under the name "Red Ball".[10] In or around February 2014 Mr Samson approached Strategy. In the ensuing months Mr McCormick also became directly engaged with Strategy.[11] In June 2014 Strategy provided Mr McCormick and Mr Samson with advice on the process they should follow to create a name for their proposed vodka RTD products. That advice was in the form of a report, which we shall refer to as the"June 2014 report".[12] In the High Court Mr McCormick produced a document called Naming and Identity Process, Red – Vodka & Energy. That document was prepared by Strategy in May 2015. We shall refer to that document as the "May 2015 report".Mr Cranko, the managing partner of Strategy, swore an affidavit in the High Court inwhich he explained the May 2015 report was compiled by "identifying tenrepresentative pre-existing presentations and collating them into a single, summarypresentation".[13] We will return to the June 2014 and May 2015 reports when considering Red Bull's applications to adduce further evidence in this Court. Suffice for present purposes to record that in his High Court affidavit Mr McCormick explained that after receiving the June 2014 report from Strategy, he decided to name his new vodka pre-mixed product Red. Mr McCormick explained he chose the name Red because it "has strong ties to Russia, the birth place of vodka" and "because Red is asimple, short and clear name which has the ability to stand out as something unique". Mr McCormick said the respondents were not "trying to 'piggy back' on thebranding or trade marks of Red Bull".[14] The Drink Red companies were incorporated on 7 August 2014, 2 September 2014 and 19 June 2015. The first and second Drink Red companies have 1,000 one dollar shares while the third has 100 one dollar shares. The initial shareholders and directors of the first two Drink Red companies were Mr Samson and Mr Rollo. They ceased to be shareholders and directors of those companies on 13 April 2015. Mr McCormick is now the principal shareholder and sole director of the Drink Red companies.[15] Mr McCormick explained in his affidavit that the Drink Red companies began selling their Red vodka and energy drink products (ЯED RTD) in February 2015 under the trade mark ЯED. The trade mark is written "ЯED" but ispronounced "Red".[16] The relevant marks being used by Drink Red are:2(a)(b)2 Only the second and third marks are registered trade marks.(c)(d) RED(e)[17] Red Bull alleges similarities between its Red Series Marks and the marks being used by Drink Red in relation to its two claims under the Trade Marks Act 2002, which we explain in [25].[18] In February 2015 Red Bull obtained a copy of a trade brochure that had been compiled by Drink Red and was being distributed to bars and liquor outlets. That document said, amongst other things: "One of the world's most popular drinks nowavailable pre-mixed and ready to drink". Red Bull says this is a clear reference to Red Bull mixed with vodka.[19] On 20 February 2015 Red Bull's lawyers sent a letter of demand to Drink Red. They asserted Red Bull's unregistered and registered trade mark rights in RED, and its objection to Drink Red's pre-mixed products being branded as ЯED. The letter required Drink Red to withdraw its products. Correspondence then ensued between the parties but no resolution was reached. Red Bull commenced its proceeding in the High Court at Auckland on 11 May 2015.[20] In November 2015 Drink Red launched a non-alcoholic drink called ЯEDEnergy. According to Mr Pook, the general manager of Red Bull New Zealand Ltd, Drink Red's non-alcoholic drink is the same colour as Red Bull and the two products taste and smell the same.[21] Drink Red has, however, endeavoured to distinguish its products from Red Bull by printing on the side of the cans and packaging of some of its products the following statement:3This product does not contain Red Bull and it is not endorsed by or affiliated in any way with Red Bull. We know you would not think that but their lawyers thought you might.[22] According to Mr McCormick, in 2015 Drink Red spent approximately $422,000 in marketing its products.[23] On 27 November 2015 one of Red Bull's lawyers wrote to Drink Red's thenlegal advisors seeking an undertaking by 4 December 2015 that Drink Red withdrawboth its ЯED RTD and ЯED Energy products. Red Bull's lawyers advised that theywould apply for an interim injunction if Drink Red refused to comply with its requests.[24] On 2 December 2015 Drink Red's lawyers advised Red Bull's lawyer that it would not be withdrawing its products. On 11 December 2015 Red Bull applied for an interim injunction preventing Drink Red from advertising, selling or otherwise dealing in its ЯED RTD or ЯED Energy products.The pleadings[25] Red Bull has pleaded that Drink Red has:(a) committed the tort of passing off by misrepresenting to the public that Drink Red products are associated with Red Bull products;(b) breached s 9 of the Fair Trading Act 1986, which prohibits conduct that is misleading or deceptive or is likely to mislead or deceive; and3 We agree with Brewer J's analysis that the disclaimer is ineffective in resolving any confusion inthese circumstances.(c) infringed s 89 of the Trade Marks Act either by:(i) using the mark ЯED in respect of a product that is similar to Red Bull, which is likely to deceive or confuse;4 or(ii) using the mark ЯED in relation to goods that are not similar to Red Bull in a way that takes unfair advantage of or is detrimental to the distinctive character or reputation of the Red Bull trade marks.5[26] In summary, Red Bull's case is that its products are sufficiently similar to the Drink Red products to cause confusion in the market and that Drink Red is makingunlawful use of Red Bull's intellectual property. The trial for the substantiveproceeding is set to begin on 31 October 2016 in the High Court at Auckland. Two weeks have been allocated.[27] At the hearing before us, much attention was focused on the relevance orotherwise of evidence of Drink Red's intention to take advantage of Red Bull's intellectual property. Drink Red's intention is relevant in three respects:(a) First, in cases alleging passing off and breaches of s 9 of the Fair Trading Act, a defendant's intentional use of a plaintiff's intellectual property is a factor that strengthens a plaintiff's case.64 Trade Marks Act 2002, s 89(1)(c):(1) A person infringes a registered trade mark if the person does not have the right to use theregistered trade mark and uses in the course of trade a sign—(c) similar to the registered trade mark in relation to any goods or services that areidentical with or similar to any goods or services in respect of which the trade markis registered, if that use would be likely to deceive or confuse; 5 Section 89(1)(d):(d) identical with or similar to the registered trade mark in relation to any goods orservices that are not similar to the goods or services in respect of which the trademark is registered where the trade mark is well known in New Zealand and the useof the sign takes unfair advantage of, or is detrimental to, the distinctive character orthe repute of the mark.6 Shotover Gorge Jet Boats Ltd v Marine Enterprises Ltd [1984] 2 NZLR 154 (HC) at 157; Tot Toys Ltd v Mitchell [1993] 1 NZLR 325 (HC) at 354; NZ Tax Refunds Ltd v Brooks Homes Ltd[2013] NZCA 90, (2013) 13 TCLR 531 at [17] and [32].(b) Second, in respect of the cause of action under s 89(1)(d) of the Trade Marks Act, it is necessary to show that Drink Red's sign takesunfair advantage of or is detrimental to the distinctive character or therepute of Red Bull's registered trade marks. A New Zealandcommentator, Paul Sumpter, suggests unfair advantage "requires adeliberate exploitation of the coat-tails of the well-known mark and an assessment of evidence of the benefit obtained by the defendant fromits use of the sign".7(c) Third, the extent to which Drink Red acted intentionally was an important consideration in the balance of convenience and interests of justice assessment, which we consider at [80]–[87].[28] The gravamen of Drink Red's case is that none of Red Bull's claims cansucceed. Drink Red says that in respect of the passing off and Fair Trading Actclaims, there was no clear intention by Drink Red to use Red Bull's intellectualproperty in a manner that was likely to mislead or deceive the public. Drink Red also maintains it has not taken unfair advantage of Red Bull's trade marks pursuantto the Trade Marks Act.The evidence[29] The evidence relied upon by Red Bull in support of its application for aninterim injunction included Drink Red's trade presentation brochure, which we havereferred to in [18]. Red Bull also relied on the same statement found on Drink Red'sFacebook page.[30] Red Bull also produced evidence that in September 2012 it released a new version of its Energy drink called RED Edition. Red Bull ceased to produce thisproduct in 2015. Red Bull says Drink Red also traded on Red Bull's equity in itsRED Edition brand when it released its ЯED brand of products.7 Paul Sumpter Trade Marks in Practice (3rd ed, Lexis Nexis, Wellington, 2015) at 183.[31] The evidence relied upon by Red Bull also included affidavits from Ms Taefi and Ms Franks, both of whom are barristers in Auckland. They were retained by Red Bull to conduct investigations on its behalf.[32] No objection was taken to the admissibility of this evidence in the High Court and we do not share the concerns about it held by Fogarty J.8 It was not hearsay and it was not purporting to be a survey of consumers. We therefore do not consider the authorities on survey evidence to be directly relevant. We also consider it is reasonable to assume retailers have better product knowledge than consumers so that confusion on their part is telling.[33] In her affidavit Ms Taefi explained that in mid-November 2015 she visited 52 businesses in Auckland that were known to stock Drink Red products.9 Sheinterviewed employees of those businesses about the contents of Drink Red'sproducts. Ms Franks carried out similar investigations to Ms Taefi. Ms Franks interviewed employees of 22 Wellington businesses on 27 November 2015 and employees of 23 Christchurch businesses on 30 November 2015.[34] Ms Franks swore a second affidavit concerning investigations she carried out between 19 and 21 January 2016 in Auckland, Wellington and Christchurch in relation to ЯED Energy products. Ms Franks telephoned employees of 55 businesses in Auckland that stocked Drink Red products. Ms Franks carried out a similar exercise when she spoke by telephone to employees of 21 businesses in Wellington and 27 businesses in Christchurch. In her second affidavit Ms Franks also gaveevidence about comments she extracted from Drink Red's Facebook page.[35] The evidence obtained by Ms Taefi and Ms Franks was relied upon by Red Bull to support its contention that there was a high level of confusion in the market place between Drink Red products and Red Bull products. In his submissions to us Mr Brown QC, senior counsel for Red Bull, pointed to many instances set out in the affidavits of Ms Taefi and Ms Franks that he said8 See below at [105]–[110].9 Most of the Drink Red products stocked were the ЯED RTD. Only three of the businesses visited by Ms Taefi stocked ЯED Energy. Ms Franks only saw ЯED Energy in two of the businesses.demonstrated confusion in the market place between Drink Red products and Red Bull.[36] This aspect of Red Bull's case can be summarised in the following way:(a) In 17 out of the 92 licensed premises staff explicitly said Drink Red's ЯED RTD product was either Red Bull or contained Red Bull, or staff understood the barristers to be asking for Red Bull when they askedfor Drink Red's products.10(b) Staff in 24 of the premises surveyed said that Drink Red's products are "like" Red Bull, "the same as" or "similar" to Red Bull or "maybe" or "probably" Red Bull.(c) There was evidence showing Drink Red's products alongside a sign saying: "ANY RED BULL AND VODKA Buy 2 for $20.00".(d) Two stores stocked Drink Red's products inside Red Bull brandedfridges.(e) Four out of 97 stores that answered by telephone understood a requestfor ЯED Energy to be a request for Red Bull.(f) There was evidence of members of the public being confused onDrink Red's Facebook page. Three examples were cited that involvedmembers of the public making comments that indicated they believedDrink Red's product was Red Bull or associated with Red Bull.The High Court decision[37] On 24 March 2016 Brewer J declined Red Bull's application for an interiminjunction.1110 That is 18.5 per cent of the licensed premises canvassed.11 Red Bull New Zealand Ltd v Drink Red Ltd, above n 1.[38] The evidence produced by Red Bull was analysed by Brewer J in three stages.[39] First, Brewer J considered the claims of passing off and the breach of the Fair Trading Act. He accepted the evidence from Red Bull that a significant percentage of employees in licensed premises believed Drink Red products contained, or were associated with, Red Bull. In this respect, Brewer J concluded that Drink Red "had a serious question to answer".12[40] Brewer J was also satisfied evidence produced by Red Bull showing ЯEDRTD alongside the sign referring to it as "Red Bull and vodka",13 and, to a lesser extent, evidence from Facebook comments regarding the ЯED RTD products werefurther evidence of conduct that was likely to mislead or deceive consumers intothinking Drink Red's products were associated with Red Bull's products.14 Brewer J said the discontinued RED Edition Red Bull product also helped, to some extent,Red Bull's case.15 He was not, however, satisfied the evidence established an intention by Drink Red to breach the Fair Trading Act or commit the tort of passing off.16[41] The second part of Brewer J's evidential analysis focused upon s 89(1)(c) of the Trade Marks Act. He accepted there were similarities between the Drink Red marks and Red Bull trade marks,17 as well as similarities between their goods.18Brewer J concluded, however, the evidence fell short of establishing a strong prima facie case of a breach of s 89(1)(c) of the Trade Marks Act.19[42] The third part of Brewer J's factual analysis focused upon s 89(1)(d) of the Trade Marks Act. He concluded the Red Bull trade marks were well known in12 At [33].13 See above at [36](c).14 Red Bull New Zealand Ltd v Drink Red Ltd, above n 1, at [31] and [38].15 At [44].16 At [53].17 At [62].18 At [55].19 At [62].New Zealand but the evidence advanced by Red Bull to support its claim of confusion fell short of establishing a strong prima facie case.20[43] When assessing where the balance of convenience lay, Brewer J reached the conclusion that the arguments in favour of Drink Red should prevail. Amongst other reasons, Brewer J was concerned that if an interim injunction were granted, Drink Red would go out of business.21[44] In considering the overall justice of the case, Brewer J reasoned that the nature of the evidence presented to him, and the need to test the evidence at trial, weighed against the granting of an interim injunction.22Grounds of appeal[45] Four grounds of appeal have been advanced by Red Bull.[46] First, Red Bull alleges Drink Red deliberately misled Brewer J in relation to crucial evidence placed before him. Red Bull argues we should exercise our discretion and issue an interim injunction based upon the new evidence.[47] Second, Brewer J was wrong to require Red Bull to demonstrate a "strong prima facie case" before considering whether the balance of convenience andinterests of justice favoured the granting of an interim injunction.[48] Third, even if this was a case that required Red Bull to demonstrate a strong prima facie case in the first stage of the inquiry into whether or not an interim injunction should be issued, Red Bull has in fact established a strong prima facie case.[49] Fourth, Brewer J erred in his assessment of the balance of convenience in four ways:20 At [75].21 At [81](b).22 At [84].(a) He failed to take into account the fact Drink Red had created their own inconvenience.(b) He failed to take into account Drink Red's own evidence that their ЯED Energy drink product was a minor part of their business.(c) He was plainly wrong to conclude the balance of convenience favoured Drink Red after having found damages would be an inadequate remedy for Red Bull.(d) He was plainly wrong in requiring Red Bull to satisfy the existence ofa "serious prima facie case" as part of the balance of convenienceanalysis and failing to consider the relative strengths of the parties'cases.It is not necessary for us to refer to the second and third of the grounds of appeal.New evidence[50] Red Bull has filed two applications to adduce new evidence in this Court. The first application asks us to consider the June 2014 report, and changes made from that report that were not incorporated into a report produced by Strategy in February 2015 or the May 2015 report presented to Brewer J. We are also asked to focus upon additions to the May 2015 report that were not in early iterations of that report. The second application relates primarily to an email chain Red Bull received on 24 June 2016 after obtaining third party discovery against Strategy.[51] The applications to produce new evidence are brought pursuant to r 45(1) of the Court of Appeal (Civil) Rules 2005, which allows this Court to consider evidence not adduced at first instance where that evidence is fresh, credible and cogent.23 It is well established that the jurisdiction to adduce further evidence is to be exercised sparingly. Factors that will influence the decision to allow new evidence to be adduced include whether the evidence could have been produced to the first instance23 Rae v International Insurance Brokers (Nelson Marlborough) Ltd [1998] 3 NZLR 190 (CA) at 192; Erceg v Balenia Ltd [2008] NZCA 535 at [15].court with reasonable diligence,24 as well as the cogency and the materiality of the evidence in question.25 The paramount consideration is the overall interests of justice.[52] In order to fully appreciate the material facts it is helpful to first examine one of the emails that is part of the evidence Red Bull wishes to adduce through its second application under r 45(1).Email[53] Red Bull's third party discovery against Strategy revealed an email fromMr Cranko to two Strategy employees, Mr Ridley and Mr Kitto, dated 23 February 2015. That email was sent three days after Red Bull's lawyer sent its letter ofdemand to Drink Red requiring it to stop producing its ЯED RTD. The email refers to Mr Cranko having had a discussion with Mr Samson and Mr Rollo on 22 February 2015 and instructs Strategy staff to:Prepare a separate document that, in detail, analyses Red Bull logo, name, colour, fonts, etc to RED highlighting all the differences including thesubtilise the Russian influence etc It can be dated Feb 23rdInclude in the previous competitor analysis other can designs particularly with reference of Ali cans etc as many as look like Red Bull designs clearly showing its nots unique and anti competitive to suggest our can design is a copy of Red Bulls (which its not either). Remove any comments on thedocument that relate to "passing of" or creating confusion with Red Bull.Do another search of all names that include the Red in them relating to energy drinks, alcoholic drinks or basically any drink we need to show that this is a generic name. Also has anyone ever seen Red Bull use their Red trademark in a product (it was registered in NZ in 2006. Also anyone ever seen a RedBull promo boy?Can you please get on to this on Tuesday, for sending to me first and then Steve on Wed. Dave please open a separate job for this work.PS all this means is that we are all doing something very right if RedBull are trying to bully us.PPS use RED in caps need to make as many differences as possible24 Erceg v Balenia Ltd, above n 23, at [15].25 Rae v International Insurance Brokers (Nelson Marlborough) Ltd, above n 23, at 192.Good work guys what fun![54] That email was headed "privileged". We explain in [66]–[67] why we are disallowing any privilege that might attach to that email.[55] On 25 February 2015 Mr Ridley emailed Mr Cranko. Attached to that emailwas a report Mr Ridley referred to as being "the updated Competitor Analysis". We refer to that report as the "February 2015 report". Apart from in one respect that weexplain in [63], the February 2015 and May 2015 reports are similar.The strategy reports[56] As explained, Mr Cranko said in his affidavit that he created the May 2015report by "collat[ing] an internal summary of the [earlier] presentations for the creation and development of the ЯED identity". He also said the May 2015 report was created "by identifying ten representative pre-existing presentations andcollating them into a single, summary presentation" (emphasis added).[57] We consider it significant that Drink Red did not seek to file any further evidence from Mr Cranko to explain his conduct in light of the new evidence. This was a case that cried out for an explanation for the decision to sanitise and reconstruct the evidence that was placed before Brewer J.26[58] The only evidence that was filed by Drink Red in response was an affidavit by Mr McCormick. In the affidavit he states that the respondents were incorporated after the June 2014 report, that he was not personally involved in the creation of either the June 2014 or May 2015 reports, that the option of deliberately passing off products as Red Bull had been discarded by the time the May 2015 report was created and that it was not an option he ever considered on behalf of the respondents.[59] We do not accept these attempts to distance Drink Red from Mr Cranko'sreport and affidavit, which the respondents chose to put in evidence to support their26 We may therefore draw the inference that Mr Cranko's evidence would not have assisted DrinkRed: Ithaca (Custodians) Ltd v Perry Corporation [2004] 1 NZLR 731 (CA) at [153]–[154];Forivermor Ltd v ANZ Bank New Zealand Ltd [2014] NZCA 129 at [15]; and Morgenstern v Jeffreys [2014] NZCA 449, (2014) 11 NZCLC 98-024 at [78].case. In the affidavit he swore for the purposes of the High Court proceeding Mr McCormick himself exhibited Mr Cranko's May 2015 report and endorsed its truthfulness. We note too that, according to Mr McCormick's earlier affidavit, the respondent's product name had been chosen as early as July 2014.[60] After Brewer J declined to issue an interim injunction, Red Bull obtained discovery from Drink Red. The documents disclosed by Drink Red during the discovery process included the June 2014 report and the February 2015 report.[61] There are a number of points of difference between the three Strategy reports (June 2014, February 2015 and May 2015). We shall focus only on the most striking points of difference between the three reports.[62] The following pages and statements in the June 2014 report were not carried through to the February 2015 or the May 2015 reports:(a) A page depicting cans of Red Bull products.(b) A statement that:A similar colour palette and a modernist styling will be the mosteffective way to tap into Red Bull's equity. We may be able to createa design that evokes a similar feeling to Red Bull without directly copying any of its features.(Emphasis added.)(c) A passage referring to the "names of Red Bull alcoholic drinks" andthe headings "Direct Pass Off", which listed "Vodka Red Ball", "VRB" and "RBV", and "Red Bull referenced", which listed numerous names incorporating "Bull".(d) A statement that:We know that we have two distinct options when approaching the naming for the vodka Red Bull beverage:1 Pass off the Red Bull name (Vodka Red Ball, VRB etc).2 Develop a new and unique name for the product.(e) A statement that:— ["Red"] gives us a good theme to brand the can around (Russia/Communism).— The Russian flag happens to be the same colour as the red bull can, allows us to tap into some of Red Bull's equity in an original way.(Emphasis added.)[63] In the May 2015 report there is a page headed "Naming Development". Thepage refers to documents created by Strategy on 16 June 2014 and 27 June 2014. The page states:The following pages show the process we went through in developing a name for the vodka and energy drink:— Using insights from market research we wanted to establish a unique name for the vodka and energy product. The name needed to have a strong theme or idea attached to it which would then be used as a platform for the branding and packaging design.— Keeping the name simple and attractive to our target audience was a key factor in deciding our favoured name.— Many names were presented, the final three names included Red, Rebel and Alt. Red was chosen by process of elimination. Rebel had too many negative connotations associated with it. Alt was liked by all, but has links to liver disease (Alanine Aminotransferase). Alt also has negative links to an altered state of mind.— Being that the main ingredient is vodka, the chosen name Red gives us a great platform on which to brand the drink. The colour red is strongly associated to Russia and Russian imagery.— Upon selecting the name RED, we undertook further (existing red can design) research to ensure our identity.This page was not in either the June 2014 or February 2015 reports.[64] The February 2015 report was created five days after Red Bull sent its letter of demand to Drink Red and three days after Mr Cranko instructed Strategy staff to prepare a new report that was to exclude comments in the June 2014 report that would be likely to cause difficulty for Drink Red in the event of any litigation arising. The May 2015 report was created soon after Red Bull commenced itsproceeding and contains many of the material changes in the February 2015 report. The May 2015 report was undoubtedly created by Strategy knowing the conduct of Drink Red and Strategy would be subject to judicial scrutiny. The changed reports were designed to cast Drink Red in the best possible light and would have had the effect of misleading any reader of the May 2015 report into believing Drink Red had named its products without reference to Red Bull and its intellectual property.[65] Unlike Fogarty J, we would not characterise the behaviour revealed by thenew evidence as "a start up firm examining the weakness of a rival's trade name".27Intentionally tapping into someone else's equity goes beyond that.Privilege[66] No explanation has been provided as to why the email we have set out in [53] was subject to genuine privilege. Mr Johns, senior counsel for Drink Red, could not explain who was asserting privilege or on what basis they were asserting it.[67] Even if the email was one that would attract genuine privilege, this is a case in which we are justified in exercising the jurisdiction conferred by s 67 of the Evidence Act 2006 to disallow any claim for privilege. We do so because the email displays an intent to dishonestly create a misleading report designed to convince anyone who read the February and May 2015 reports that Drink Red's products' names and designs were created without reference to Red Bull's products anddesigns.Reasons for allowing Red Bull's new evidence application[68] We reject Mr Johns' submission that the June 2014 and February 2015 reports could, with reasonable diligence, have been obtained before the hearing of the application for an interim injunction. Drink Red failed to comply with timetable directions issued by the High Court in December 2015 requiring it to provide discovery by 1 February 2016. Drink Red belatedly provided discovery on 29 April 2016, well after Brewer J had declined Red Bull's application for an interiminjunction. In addition, Drink Red provided its evidence in opposition to the interim27 See below at [115].injunction only two days before Brewer J heard Red Bull's application. This was notthe fault of Mr Johns or his firm. Drink Red had changed its lawyers and instructed Baldwins Law Ltd a matter of days before the interim injunction was heard.[69] We also reject the suggestion that the new evidence is neither material nor cogent. In reaching this conclusion we acknowledge the three Drink Red companies were incorporated after the name ЯED was settled upon. The evidence shows, however, Mr McCormick was intimately involved in the decisions that led to the creation of the ЯED name and designs, and that the three Drink Red companies have traded on the decisions Mr McCormick and others made prior to incorporation.[70] In our assessment, the new evidence is fresh, highly material and cogent. It shows the May 2015 report presented to Brewer J was misleading. The clearimpression created by Mr Cranko, and to a lesser extent Mr McCormick's evidence,was that Strategy had faithfully collated earlier reports and accurately summarised them in the May 2015 report to demonstrate how Drink Red settled upon its brandname and presentations and that Drink Red was not "piggy backing" in any way on Red Bull's name and product design.[71] Their evidence led Brewer J to make the following findings:28 I do not think that the evidence before me supports the submission that [Drink Red] had an intention to piggy back on Red Bull's goodwill:(a) [Drink Red] have spent $442,000 on marketing their products;(b) [Drink Red] openly invite consumers to notice the differences between their products and Red Bull;(c) The idea of creating a pre-mixed vodka and energy drink came before the choice to call the product "Red". [Drink Red] contractedwith a firm called "Strategy" which considered multiple trade names before settling on Red.In my view, the evidence is not sufficient for me to infer that the defendants intended to pass off their goods as the goods of the plaintiffs.[72] In our assessment, this is an example of a rare instance in which this Court should consider the new evidence that should have been placed before Brewer J.28 Red Bull New Zealand Ltd v Drink Red Ltd, above n 1, at [52]–[53].[73] The new evidence demonstrates Drink Red's intention to use Red Bull'sintellectual property when Drink Red named and marketed its products. The original June 2014 report refers repeatedly to Red Bull products, and the subsequent actions of Drink Red demonstrate an intention to erase any evidence of a link between itsproducts and Red Bull's, despite it being clear Drink Red was "piggy backing" on Red Bull's intellectual property.The threshold for injunctive relief[74] Brewer J explained he was "entirely satisfied that [Red Bull] [met] theordinary threshold for what constitutes a serious question to be tried on a number ofgrounds".29 He proceeded to say, however, that in this case Red Bull was required to"demonstrate a strong prima facie case" to pass the first step required for an interiminjunction.30[75] Brewer J was fully aware the conventional test for an interim injunctionrequires an applicant to establish there is a "serious question to be tried".31 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.32[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 ofan 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.29 Red Bull New Zealand Ltd v Drink Red Ltd, above n 1, at [78].30 At [8]–[9], [62], [74]-[75] and [78].31 At [8]; Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (HC) at 133.32 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 25 (HC) at [16]–[17]; Meat Services Ltd v Moses (1983) 1 TCLR 94 (HC) at 97; Watson & Son Ltd v Active Manuka Honey Association IncHC Hamilton CIV-2008-419-1495, 30 July 2009 at [44]–[47] and [55].[77] We have reached this conclusion because in his analysis of the evidence Brewer J made a number of findings in support of Red Bull's application for an interim injunction. The key findings made by Brewer J in support of Red Bull'sapplication were:(a) His findings that a significant number of persons interviewed by Ms Franks and Ms Taefi illustrated a level of confusion about Red Bull and Drink Red's products.33(b) His finding that:34 I still consider the evidence as tending to prove that [Drink Red's]products are likely to mislead or deceive consumers into thinking that they contain or are associated with Red Bull. I say this for two reasons:(a) First, if staff engaged in the actual business ofselling alcohol consider [Drink Red's] products tocontain or be associated with Red Bull, then it is likely that members of the general public would make the same mistake. Staff members working in liquor stores are more likely than ordinary consumers to know which products are associated with which companies.(b) Second, the first port of call for a prospective purchaser who is confused as to whether [DrinkRed's] Red products are associated with Red Bull islikely to be a staff member working at the store being visited.(c) His finding that: "The evidence of Ms Franks and Ms Taefi does suggest that [Drink Red] have a serious case to answer".35(d) His finding that Drink Red's Facebook showed confusion in the minds of some members of the public about Red Bull and Drink Red'sproducts.3633 Red Bull New Zealand Ltd v Drink Red Ltd, above n 1, at [25], [28]–[29] and [33].34 At [30].35 At [33].36 At [35]–[36] and [38].(e) His finding that the discontinued RED Edition Red Bull "does help, to some extent, the plaintiff's case" in lending to the assumption thatDrink Red's products are a Red Bull line extension.37[78] We also reach this conclusion on the basis of the relevance of Drink Red's intention to take advantage of Red Bull's intellectual property, which we haveexplained at [27].[79] We are confident that had Brewer J been made aware of the new evidencethat shows Drink Red intended to trade off Red Bull's intellectual property then he would have been satisfied Red Bull had demonstrated it had a "strong prima facie case".Balance of convenience[80] In deciding the balance of convenience weighed against the issuing of an interim injunction, Brewer J recognised Red Bull had demonstrated it had a seriousquestion to be tried that "the competition by [Drink Red] is unlawful".38 Against that finding, Brewer J said:39 the case against [Drink Red] does not reach the level of being a strongprima facie case. [Drink Red] has two products, and only Red Energy competes directly with Red Bull. If the interim injunction is granted, the defendants die. They cannot survive without selling their products.[81] We have already explained why Brewer J's finding that Red Bull had notdemonstrated a strong prima facie case has been superseded by the new evidence and can no longer stand.[82] Mr Brown is correct when he submits Brewer J erred in law by failing to have regard to the fact Drink Red was the author of its own inconvenience.37 Red Bull New Zealand Ltd v Drink Red Ltd, above n 1, at [43]–[44].38 At [81].39 At [81](b).[83] In addition, the authorities make it clear that a relevant factor to be considered when assessing the balance of convenience is whether the party againstwhom the injunction is sought has proceeded "with their eyes open".40[84] Further, Brewer J apparently believed it was an accepted fact that Drink Red would go out of business if an interim injunction was issued.41 In this Court, Mr Brown explained his client was not convinced Drink Red would go out of business if an injunction were issued. Mr Brown explained Brewer J was perhapsled to believe Red Bull agreed with Drink Red's proposition on this point because it did not challenge Drink Red's assertion in the High Court. There is evidence thatsupports Mr Brown's view that Drink Red may survive an interim injunction. In hisevidence Mr McCormick says that if an injunction is granted, Drink Red will have toundertake a "huge-scale rebrand at a prohibitive cost". This does not necessarilymean Drink Red will go out of business if an interim injunction is issued.[85] We are very mindful of the fact Red Bull's substantive proceeding isscheduled to commence on 31 October 2016. That consideration does not, however, outweigh our deep concern that Brewer J was misled on material facts and our conviction he would have issued an interim injunction if the facts we have considered had been placed before him.[86] In summary, there are three factors that now weigh strongly in favour of granting an interim injunction. These factors are:(a) Red Bull has demonstrated a strong prima facie case.(b) Drink Red is the author of any inconvenience it suffers and createdthis inconvenience with its "eyes open".40 Wholesale Distributors Ltd v Songle Supermarket Ltd [2014] NZCA 565, (2014) 16 NZCPR 14 at [30]; Bleiman v News Media (Auckland) Ltd [1994] 2 NZLR 673 (CA) at 680; Black White & Grey Cabs Ltd v Hill HC Wellington CP1013/91, 7 February 1992 at 9; Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd, above n 31, at 139.41 Red Bull New Zealand Ltd v Drink Red Ltd, above n 1, at [7].(c) Drink Red should not now avoid the consequences of an interim injunction that would have been issued on 24 March had Brewer J not been misled about material evidence.Interests of justice[87] Red Bull has lost the benefit of an injunction it would otherwise have obtained on 24 March 2016. Red Bull should now be placed in the position it would have been in had Brewer J not been misled. Allowing Drink Red to avoid the consequences of an interim injunction would not only encourage misleading behaviour in the future, but would bring into question the integrity of theadministration of justice. To allow a party to "keep the spoils so unworthily obtained" of having misled the court in a "material matter" is not a state of affairsthis Court can countenance.42Separate judgment[88] We have had the benefit of considering the separate judgment of Fogarty J. We respectfully disagree with him for the following key reasons:(a) In our assessment Brewer J would have reached different conclusionsabout the strengths of Red Bull's case and the balance of convenience had he been presented with the evidence that should have been placed before him.(b) The issues relating to the strength of Red Bull's claims to intellectualproperty in its Red Series Marks were not argued before us and were not relied upon by Drink Red in opposing the application for an interim injunction.(c) The authorities cited by Fogarty J do not appear to us to be directly relevant to the issues we have had to consider.42 Meek v Fleming [1961] 2 QB 366 (CA) at 379.Conclusion[89] The application to adduce further evidence is granted. The appeal is allowed.[90] We issue an injunction in the following terms:(a) Drink Red is restrained whether by their directors, servants, agents or otherwise howsoever from manufacturing, importing into New Zealand, offering for sale, selling, advertising or otherwise dealing in any energy drink products, alcoholic beverages or RTDssold by reference to the trade mark "ЯED" or to use the trade mark "ЯED", or any other trade mark similar to the appellants' Red TradeMarks identified at [6] of this judgment.(b) Drink Red is also restrained whether by their directors, servants, agents or otherwise howsoever from making representations, whether express or implied, that their products are the same as a combinationof the appellants' energy drink products and vodka or containRed Bull's energy drink products or in any other way associating its products with the appellants' energy drink products.[91] This interim injunction remains in force until further order of the High Court.[92] Red Bull is entitled to costs for a standard appeal on a band A basis together with usual disbursements. We certify costs for a second counsel.FOGARTY JIntroduction[93] I agree with the substantive reasoning of Brewer J on the evidence before him. I do not consider Brewer J founded his decision on his favourable findings in [52] and [53], particularly when one reads [49] of his judgment. The following reasoning responds to the evidence and argument placed before us on appeal.[94] I do not agree with the reasoning of the majority. It is most unusual to dissent on an interlocutory dispute. However, in this case I think it more probable than not that the grant of an interim injunction will bring the litigation to an end, without Red Bull's case being tested by a trial. Brewer J recorded that counsel agreed thatwould be the outcome.43 However, before us, Mr Brown doubted he had so agreed.[95] The discovery that documents had been doctored reinforces the argument that Drink Red intends to misrepresent Drink Red products as Red Bull products. However, at trial there will be two main issues, in this order:(a) Can Red Bull rely on its trade marks, or otherwise, to monopolise the word RED?(b) If not, is Drink Red nonetheless to be prohibited from using RED as a brand, as it has become identified by consumers with Red Bull?[96] If these issues are resolved in Drink Red's favour, the causes of action of trade mark infringement and passing off will be difficult to prove, no matter what is proved as to the intent of Drink Red.Challenging a trademark's validity at the interim injunction stage[97] In its first cause of action, relying on s 89 of the Trade Marks Act 2002, thepleading is that Drink Red's mark, ЯED, infringes the "Red Series Marks". Red Bullhas not pleaded any consumer confusion or any affidavit evidence in support of this cause of action.[98] Red Bull is attempting to monopolise the word RED, relying on its trade marks. Red Bull will have difficulty at trial relying on the registration of these marks by the Intellectual Property Office of New Zealand (IPONZ). Of relevance is the response of Glazebrook J to a submission made by counsel in the case ofCadbury Ltd v Effem Foods Ltd:4443 Red Bull New Zealand Ltd v Drink Red Ltd, above n 1, at [7].44 Cadbury Ltd v Effem Foods Ltd [2007] NZCA 303, (2007) 78 IPR 672.[24] Finally, Cadbury submits that the Judge should have taken into account the practice of the Intellectual Property Office of New Zealand (IPONZ) of allowing the registration of colour marks and the names of colours as word marks.[34] we do not find the practice of IPONZ in accepting colour and name of colour registrations helpful.[99] Section 162 of the Trade Marks Act (the Act) provides that in all legal proceedings that relate to a registered trade mark the fact that a person is the registered owner of a trade mark is prima facie evidence of the validity of the trade mark. Registration presents no obstacle to a respondent challenging the validity of the trade mark when opposing an application for an interim injunction. This is because whether or not Red Bull has a serious question to be tried is a forward looking assessment of its likely position at trial. Although Drink Red has not so farraised the issue of the validity of the registered "Red Series Marks" in its pleadings,this is a matter that it would be able to raise at trial.[100] In Gold Real Estate Group Ltd v Goldleaf Real Estate Ltd I found it was likely, if not inevitable, that the defendants would apply for a declaration from the Court pursuant to s 73(1) of the Act that the plaintiff's trade mark was invalid at the trial (the particular provisions against which validity is tested are found in s 18).45 I concluded that it would be wrong to assume that the mark would be found to be validly registered at trial.46 Therefore, for the purposes of examining whether there was a serious question to be tried, I considered whether the defendants would be able to show at trial that the plaintiff's registered mark was invalid.47 I have taken the same approach in the present case.More upon monopolising colours[101] In Cadbury Ltd v Effem Foods Ltd the Court of Appeal held Cadbury could not have a monopoly over the word PURPLE in relation to confectionary products,45 Gold Real Estate Group Ltd v Goldleaf Real Estate Ltd (2006) 11 TCLR 530 (HC) at [16]. This case concerned a trademark registered by IPONZ for the word "GOLD". In this case I followed MacKenzie J in Effem Foods Ltd v Cadbury Ltd HC Wellington CIV-2004-485-2127, 12 December 2005, so that my reasoning is essentially similar to the Court of Appeal in Cadbury, above n 44, who upheld MacKenzie J.46 At [21]–[30].47 At [15]–[25].as the word could be descriptive of some of the goods coming within the registration (in that the products and/or packaging might be described as purple or contain purple elements).48 The policy reason for this rule is that descriptions are in the public domain and part of our discourse.49[102] Internationally it is very difficult to monopolise a colour. The United StatesSupreme Court's decision in Qualitex Co v Jacobson Products Co Inc considered the question of monopolising colours.50 By contrast to the present case, the decision involved the trade-marking of the use of a colour itself (and not the name of the colour). The plaintiff had used green-gold colours for the pads that it sold to dry cleaning firms to use in their dry cleaning presses. The defendant began to sell its own pads to dry cleaners, which were of a similar colour. The Supreme Courtoverturned a decision of the Court of Appeals for the Ninth Circuit that the equivalent United States legislation (the Lanham Act) did not permit the registrationof a "color alone" as a trademark.51 However, in doing so, the Supreme Courtrestricted the registration of such "color alone" trademarks to limitedcircumstances:52We cannot find in the basic objectives of trademark law any obvioustheoretical objection to the use of color alone as a trademark, where thatcolor has attained "secondary meaning" and therefore identifies and distinguishes a particular brand (and thus indicates its "source").(Emphasis added.)[103] The Court of Appeal's reasoning in Cadbury is consistent with this approach:53We also agree with MacKenzie J that there is an issue of Cadbury gaining a de facto monopoly on the use of the word PURPLE, thus providing a disincentive to other traders to use that word even in a descriptive sense on purple goods. Because of the close link between the word purple and the colour, we also consider that it would provide a disincentive to use the colour purple or similar colours on goods in Class 30 for fear consumers may associate those goods with the word mark PURPLE and thus with48 Cadbury Ltd v Effem Foods Ltd, above n 44, at [27] and [34].49 Registrar of Trade Marks v W & G Du Cros Ltd [1913] AC 624 (HL) at 635.50 Qualitex Co v Jacobson Products Co Inc 514 US 159 (1995).51 Qualitex Co v Jacobson Products Co Inc 13 F 3d 1297 (9th Cir 1994) at 1302; Trademark Act of 1946 (Lanham Act) 15 USC §§ 1051–1127.52 Qualitex Co v Jacobson Products Co Inc, above n 50, at 163.53 Cadbury Ltd v Effem Foods Ltd, above n 44, at [34].Cadbury. The granting of a monopoly over what is essentially a feature of the goods in the relevant class is not, in our view, within the scheme of the trade mark regime.[104] What is obvious is that pure colours, the colours of the rainbow, are in the public domain, as are their names. No one can own them. Trademarks tend to protect designs, patterns and a mix of colours that are unique. Because they are unique, they are distinctive. Because they are distinctive, they can be used toassociate in the consumer's mind the merit of the quality of the product being soldand thus the mark carries the goodwill of the product with it. At trial that confusion has to be proven.Survey evidence[105] There is no consumer evidence in this case that the word RED is associated by consumers with Red Bull. This type of evidence, which is commonly relied on in passing off cases, is known as survey evidence.[106] Rather, the evidence relied upon by Red Bull in support of the injunction consists of interviews of employees of businesses in Auckland, Wellington andChristchurch known to stock Drink Red's products. The majority relies heavily onRed Bull's survey of retailer evidence in support of its decision to grant the interim injunction. But I have significant doubts as to the admissibility and reliability of this evidence.[107] The Court of Appeal in Tasman Insulation New Zealand Ltd v Knauf Insulation Ltd recently had the opportunity to consider the admissibility of evidence relating to two surveys of consumers in relation to a Fair Trading Act claim.54 The case identified that the principles relating to the admissibility of survey evidence are those set out in Imperial Group plc v Philip Morris Ltd,55 applied in New Zealand inAuckland Regional Authority v Mutual Rental Cars (Auckland Airport) Ltd.56 One of the admissibility requirements identified in those decisions, and subsequent54 Tasman Insulation New Zealand Ltd v Knauf Insulation Ltd [2015] NZCA 602, (2015) 116 IPR 352 at [232] and [253]–[254].55 Imperial Group plc v Philip Morris Ltd [1984] RPC 293 (Ch).56 Auckland Regional Authority v Mutual Rental Cars (Auckland Airport) Ltd [1987] 2 NZLR 647 (HC) at 658–659.decisions of the High Court,57 is that "[t]he interviewees must be selected so as to represent a relevant cross-section of the public".58[108] A relevant cross-section of the public must include actual consumers.59Red Bull's survey evidence fails this admissibility hurdle. The notion that survey evidence can be admissible where the inquiry is made of suppliers or retailers, not consumers, is novel. I have been unable to find any case where such evidence has been allowed.[109] I reject Mr Brown's argument that because the law of hearsay has beenliberalised by the Evidence Act, the old authorities relating to survey evidence no longer apply. No authority was provided in support of this submission. In fact, the courts have continued to apply survey evidence admissibility rules since the passage of the 2006 Act.60[110] Survey evidence is usually obtained as a result of investigations carried out by an independent research centre with an expertise in market research. This has the function of ensuring the honesty and accuracy of the survey, as well as the reliability of the conclusions to be drawn from the results of the survey. I am not persuaded the junior barristers retained were suitably qualified to carry out market research nor to interpret the survey data obtained from such investigations.Discussion[111] Red Bull is a very successful trade name. It is a brand. It is internationally recognisable. And as a successful brand it has a weakness. It depends in part on trying to monopolise the word RED, a name of a colour.[112] Red Bull has attempted to monopolise the word RED by successfully registering the "Red Series Marks", which use the word "Red" as a stylised andcoloured device. It would be an error of law to rely upon the IPONZ registrations to57 Levi Strauss & Co v Kimbyr Investments Ltd [1994] 1 NZLR 332 (HC) at 364; Patience & Nicholson (NZ) Ltd v Cyclone Hardware Pty Ltd [2001] 3 NZLR 490 (HC) at [84].58 Auckland Regional Authority v Mutual Rental Cars (Auckland Airport) Ltd, above n 56, at 658;Imperial Group plc v Philip Morris Ltd, above n 55, at 302–303.59 Tasman Insulation New Zealand Ltd v Knauf Insulation Ltd, above n 54, at [253]–[254].60 Tasman Insulation New Zealand Ltd v Knauf Insulation Ltd, above n 54.conclude Red Bull has achieved a monopoly over the word RED separate from RED BULL as a trade mark or a trade name descriptive.[113] Vodka Red Bull (or "Red Bull and Vodka") is a popular drink for youngpeople at bars. But you cannot buy ready-mixed Red Bull and vodka in ready-to- drink (RTD) form. This is a gap in the market that the new entrant respondent sought to exploit. In my view, there is a serious argument that Drink Red is entitled to take advantage of the popularity of Red Bull and vodka with a rival RTD using the name RED, with "R" reversed.[114] I think it is important to keep in mind that the common law favours competition. That is the reason why there is common law against restrictive trade practices. The common law has always understood that competition favours the consumer.[115] There is nothing wrong with a start up firm examining the weakness of arival's trade name before deciding on the start up's name. To the contrary, suchconduct is the essence of a rival's behaviour, which the common law recognises is tothe betterment of the consumer. That is not only recognised by the common law, it isalso Parliament's policy, hence the Commerce Act 1986, the Fair Trading Act and so on. As famously held by the Trade Practices Tribunal of Australia in Re Queensland Co-operative Milling Association Ltd:61Competition expresses itself as rivalrous market behaviour. In the course of these proceedings, two rather different emphases were placed upon the most useful form such rivalry can take. On the one hand it was put to us that price competition is the most valuable and desirable form of competition. On the other hand it was said that if there is rivalry in other dimensions of business conduct — in service, in technology, in quality and consistency of product— an absence of price competition need not be of great concern.In our view effective competition requires both that prices should be flexible, reflecting the forces of demand and supply, and that there should be independent rivalry in all dimensions of the price-product-service packages offered to consumers and customers.[116] In these proceedings the respondent has been exposed, by third party discovery, of having amateurishly, foolishly, and unnecessarily doctored documents61 Re Queensland Co-operative Milling Association Ltd (1976) 8 ALR 481 at 515.before they were filed in the Court in order to disguise that it has been ruthlesslyexploring capitalising on the colour weakness in Red Bull's brand, and on the failureof Red Bull to sell a RTD product, being a mixture of its high energy drink and vodka.[117] The respondent should have been candid about this in front of Brewer J in the High Court and to ourselves in the Court of Appeal. However, the price of the absence of candour, indeed direct deceit, should not be loss of the opportunity to defend the claims in a trial.[118] The effect of granting the interim injunction will be to end the respondent'sbusiness. There are various ways of eliminating rivals. One is by litigation. It is perfectly legitimate and not to be criticised, but it should be recognised that this isRed Bull's goal.[119] Based on the evidence before the High Court and this Court, Red Bull has no admissible evidence of confusion. In the absence of this evidence, there is, on any view of the facts, a serious issue of liability to be heard at the trial. Red Bull should not be able to end this litigation because Drink Red attempted to mislead the High Court and Court of Appeal in the interim injunction hearings.[120] As to the consequences of Drink Red misleading the Courts, I am of the view that they can be adequately redressed to the extent the conduct unnecessarily imposed costs on Red Bull.Solicitors:Kensington Swan, Auckland for AppellantsBaldwins Law Ltd, Auckland for Respondents