Benchmark Building Supplies Ltd v Mitre 10 (New Zealand) Ltd & Anor

Court of Appeal

Gault P, Anderson J and Glazebrook JJ

7 and 29 August 2003

Trade marks - comparative advertisements using respondents’ own promotional leaflets - appellant adding stickers to leaflets advertising its own prices for the same goods - whether trade mark infringement - importing a reference - exemption for comparative advertising in Trade Marks Act 2002 - transition to new Act - s8 Trade Marks Act 1953 - s94 Trade Marks Act 2002

Copyright - whether infringement by “copying” - requirements of “copying” and “reproduction” - whether infringement by “adaptation” - nature of adaptations - ss 16, 29, 34 Copyright Act 1994

Copyright - moral rights - derogatory treatment of works - whether corporate owner of works is author - definition of author - ss 5, 98, 99 Copyright Act 1994

Facts:

The first respondent, under licence from the second respondent, an Australian company, franchised in New Zealand the name and style “Mitre 10” for large supermarket outlets for hardware, tools and equipment for home maintenance and improvement.  The first respondent was licensed to use the second respondent’s trade marks which included a number of registrations for MITRE 10 in respect of a wide range of goods and certain services.  To promote these businesses in a price-sensitive competitive market, the first respondent produced at regular intervals promotional brochures that were delivered to household letterboxes throughout New Zealand.  These brochures were printed in colour and depicted photographic illustrations of various products accompanied by brief descriptions and, in prominent print, the prices at which they could be purchased.  Most of the products featured were described by reference to the brand name of third party manufacturers.  A small number were unbranded and others were identified by Mitre 10’s trade mark BUTLERS. 

From October 2002, the appellant, which operated large competing retail outlets under the name “Bunnings”, displayed outside its stores original copies of Mitre 10 brochures which had been received by its employees. These had superimposed on them bright orange stickers placed against the advertisements of some of the products stating “Bunnings’ Price” with handwritten dollar amounts lower than those offered by Mitre 10. 

The respondents commenced injunction proceedings against the appellant for (inter alia) breach of copyright by adaptation and for trade mark infringement.  At first instance, the judge found minor instances of arguable trade mark infringement however his decision to grant an interim injunction was based on a finding of breach of copyright by copying which had been neither pleaded nor argued.

On appeal the respondents sought to uphold the judgment on grounds of trade mark infringement, breach of copyright by both adaptation and copying, and on a further ground (not argued in the High Court) namely breach of moral rights.  The respondents alleged that the addition of the stickers to the brochures constituted derogatory treatment of the copyright works comprising the brochures.  The first respondent alleged that it was the author of the works and entitled to assert moral rights.

Held (allowing the appeal and discharging the interlocutory injunction):

Copyright - Coping

1. While reproduction of a copyright work may occur without multiplication of the original work in particular circumstances, the conventional approach to copyright requires the making of something that did not exist before in order to find infringement. By displaying the first respondent’s own brochures, the appellant had done nothing to reproduce the copyright works.  Nothing had been copied. Even if a new work was created incorporating the brochures (and it was very doubtful that applying the stickers had that effect), the representation of the copyright works remained unchanged and no new representations of them were made [paras 28, 32]. 
   
   Théberge v Galerie d’Art du Petit Champlain Inc (2002) 210 DLR (4th) 385; Frost and Reed v The Olive Series Publishing Co (1908) 22 TLR 649; The CM Paula Company v Logan 344 F Supp 189 (1973); Peker v Masters Collection 96 F Supp 2nd 216 (2000) referred to.
   
   Copyright - Adaptation
   
   
2. Making an adaptation of a work involves producing a different version of the work by taking the intellectual content of the original, or incorporating the same product of originality of the author, and expressing it in a manner which cannot be categorized as copying or reproduction but still presents substantially the same work.  An adaptation requires more than merely taking and using the original work without change [paras 36, 39].
   
   The use by the appellant of the first respondent’s brochure involved no conversion of, or change to, any literary work.  They remained the same throughout and no adaptation of the copyright works had been made [para 40].
   
   Copyright - Moral Rights
   
   
3. Moral rights are enforceable only by the authors of works, not the owner of copyright in the works.  The context of the Copyright Act requires that the word “person” in the definition of “author” in s5(1) does not extend to bodies corporate except where the contrary is stated in ss 5(2) and (3). The authors of the works were individuals that were not parties to the proceedings.  The first respondent was not the author [paras 41, 43].
   
   
4. (Obiter) The Court was not persuaded that displaying brochures in which copyright works are reproduced for comparative advertising amounts to derogatory treatment of those works.  The brochures were being used for the very purpose that they were created.  That the appellant was taking advantage from it could not be said to be prejudicial to the honour or reputation of the authors whose identity was not disclosed [para 46].
   
   Trade Marks
   
   
5. Section 94 of the Trade Marks Act 2002 (which excluded comparative advertising from infringement) applies to comparative advertising other than a simple comparative list. The appellant’s use of the respondents’ trade marks in this case constituted comparative advertising within s94 [paras 50, 51].
   
   
6. There was no evidence that the appellant’s activities were inconsistent with honest commercial matters and the Court saw real difficulty in characterizing these open and obvious comparisons as in some way lacking in honesty [para 55].

Cable Wireless plc v British Telecommunications plc [1998] FSR 383, 389 referred to.

Counsel
A H Brown QC and E C Gray for the appellant
R J Asher QC and SA Grant for the respondents