The not-so-sweet dispute over Brown Sugar

Wednesday 1st February 2012

The recent dispute between the Taihape-based Brown Sugar Café and the Nelson-based House of Brown Sugar Café highlights how important trade marks are to small businesses.

The matter gained media coverage in September last year when Brown Sugar Café (along with its sister business of the same name in Otaki) threatened to take legal action against House of Brown Sugar for infringing its registered trade mark “Brown Sugar Cafe”. Legal proceedings were filed late last year and, ultimately, Brown Sugar Café prevailed when House of Brown Sugar agreed to rename itself as Strawberry Bakehouse.

The owners of Brown Sugar Café were, somewhat surprisingly, seen as bullies, while House of Brown Sugar incurred significant legal costs in defending the legal proceedings and the additional expense of rebranding when its owners finally agreed to change the café’s name.

What can we learn from this bitter tale? 

First, as a small business (or indeed any business) it is imperative to ascertain whether your intended (or existing) branding may infringe a registered trade mark. [1] In essence, this means that your branding or signage cannot be:

  • identical to a registered trade mark in respect of the same goods or services;
  • similar to a registered trade mark in respect of the same or similar goods or services, such that use of the branding/signage “would be likely to deceive or cause confusion[2] amongst members of the public. 

Second, a registered trade mark can be a powerful tool, even for a small business.  With its trade mark registered for 18 years, Brown Sugar Café has successfully protected the words “Brown Sugar” on previous occasions by requiring eateries using the words “Brown Sugar” in their trading names to remove them.  However, as the Brown Sugar Café case demonstrates, care must be taken in the approach to enforcing trade mark rights, as bad press may permanently damage the very mark the business seeks to protect. 

The lessons from the Brown Sugar Café also ring true in the case of Giltrap Prestige and the New Zealand Rugby Union (NZRU).  During the Rugby World Cup 2011, the NZRU was labelled as a bully by the public and press after requiring Giltrap Prestige (a car dealership in Auckland) to remove its sign “Go the All Blacks”, because the sign infringed the NZRU’s “All Blacks” trademark.  Regardless of the general public’s sentiment in this particular example, the long-term value to NZRU of owning the “All Blacks” trade mark is clearly immense.


[1] While outside the scope of this article, we note that there are other intellectual property rights that businesses should be aware of when branding, including the non-statutory protections for goodwill and the statutory protections provided against misleading and deceptive conduct under the Fair Trading Act 1986.
[2] Section 89 Trade Marks Act 2002.
 

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