In August this year, Red Bull successfully appealed its case against drinks company Drink Red, after it was found that the latter had misled the judge. The case arose last year, when it was alleged that Drink Red had tapped into Red Bull's equity when it named and marketed its product. AJ Park litigation expert Laura Carter looks at some of the missteps made by the marketing agency involved in the case.
The recent Court of Appeal decision has exposed some of the pitfalls for marketing agencies trying to do the best for their clients, but in the process misleading the court.
Drink Red hired a design agency to assist it with a competitor analysis and to look at options for the name of its new energy drink and vodka product. In its report back to Drink Red, the advertising agency made a number of statements about tying the client’s product to Red Bull. For example, the report included statements like the following:
"A similar colour palette and modernist styling would be the most effective way to tap into Red Bull’s equity. We may be able to create a design that evokes a similar feeling to Red Bull without directly copying any of its features."
Other parts of the report suggested that the product was deliberately targeting Red Bull’s market and seeking to trade off its image.
In due course, the brand name 'ЯED' was chosen for the new energy drink and vodka product.
This was followed by Red Bull challenging Drink Red's use of the name, and ultimately issuing proceedings for trade mark infringement and passing off against Drink Red.
It was at this point that the marketing agency, in trying to assist its client, took some misguided steps.
The design agency instructed its staff to prepare a separate report than that which it had initially prepared for its client taking out the references that might in any way suggest the product was designed to be a copy of Red Bull or to trade off Red Bull’s name. It also asked its staff to add into the previous competitor analysis it had prepared as many similar non Red Bull products as possible. The modified report also included alternative explanations for why 'ЯED' was chosen (without any reference to Red Bull).
It was this altered version of the design agency’s report that was ultimately put into evidence by Drink Red. Drink Red asserted in court that the name 'ЯED' was chosen because of the association between Red and Russia, 'the birthplace of vodka'. It denied that it was trying to piggy-back on the branding of Red Bull.
In the High Court, the judge only had a copy of this altered version of the report. He declined to grant an interim injunction and 'ЯED' was allowed to continue to be sold in the market while the proceedings continued.
However, the fact that the report had been altered came out in the required disclosure of documents between the parties to the litigation, as such documents invariably do. Accordingly, the Court of Appeal had the evidence around the alteration of the report, and found that Drink Red had deliberately misled the High Court judge.
Accordingly, the Court of Appeal overturned the High Court decision and an interim injunction is now in place preventing the sale of any 'ЯED' products in the marketplace until the trade mark infringement and passing off cases are heard.
This case is a clear warning to design agencies about being aware of the risks of helping their clients trade off other brands in the market place. It is also a clear statement on the risks in doing anything that might in any way help a client mislead the court or other parties in legal proceedings.
And as for whether 'ЯED' is too similar to Red Bull’s trade marks, we will have to wait until the substantive decision is issued later this year.
Laura Carter is a litigation expert at AJ Park.