Daniel Lynch

Daniel Lynch is a digital business reporter for nzherald.co.nz

InterCity wins trademark feud with Nakedbus

"We feel vindicated by the ruling," acting Intercity chief executive Nick Hurdle said. Intercity bus shelter on Dalton Street, Napier. Photo / Paul Taylor
"We feel vindicated by the ruling," acting Intercity chief executive Nick Hurdle said. Intercity bus shelter on Dalton Street, Napier. Photo / Paul Taylor

The legal stoush between bus company rivals InterCity and Nakedbus over the use of the term 'inter city' has ended in the High Court at Auckland.

The High Court has ruled that Nakedbus infringed InterCity's trade mark.

The court found Nakedbus attempted to pass its business off as InterCity's when it ran adverts on Google which would respond to searches for 'InterCity' and which promoted Nakedbus buses as "inter city" in both the advertisements and on the corresponding website.

It also found this was part of a strategy to "hook" travellers into clicking through to the Nakedbus website, using InterCity's trade mark to confuse them into thinking that Nakedbus was some sort of affiliate.

Google AdWords is a paid advertising service that uses keywords in internet searches to trigger adverts on the Google results page.

Acting InterCity chief executive, Nick Hurdle said healthy competition was good for the company and for consumers, but this wasn't a fair fight.

"This was a cynical, calculated and deliberate attempt by a competitor to leverage our trade mark and mislead customers," Hurdle said.

InterCity currently has about 60 per cent of the New Zealand long distance bus business, Nakedbus accounts for 35 per cent.

Nakedbus had argued that the words "inter" and "city" were just descriptors for domestic bus services.

A Nakedbus pulls into Quay Street in Auckland.
A Nakedbus pulls into Quay Street in Auckland.

Nakedbus founder and chief executive Hamish Nuttall in his evidence explained that in 2006 InterCity had a "near monopoly" position - around 95 percent of long haul passenger bus services - and that the "intercity" brand was tired and vulnerable to a vigorous competitor operating online.

"Naked Bus is disappointed with the outcome of a case that both sides recognised as raising novel legal issues that had not previously been tested in New Zealand. We are now reviewing our position. A decision on whether Naked Bus will appeal is yet to be made," Nuttall said in a statement

From its launch in September 2006, Nakedbus engaged in a price war with InterCity, introducing fares from as low as $1 plus booking fee, which in due course was matched by InterCity.

As part of the ruling, Justice Raynor Asher raised concerns over the reliability of evidence provided by Nakedbus and rejected their claims that this was just honest use of a descriptive word.

A screenshot of the Nakedbus website with the use of the trademarked term 'Inter city.'
A screenshot of the Nakedbus website with the use of the trademarked term 'Inter city.'

"I am satisfied that through Google Nakedbus is placing advertisements that are misleading and deceptive to a significant number of internet users," Justice Asher said in the ruling.

"There was also evidence of actual confusion by consumers as a result of consumers mistakenly booking with Nakedbus intending to book with (InterCity), causing lost sales."

The proceedings were adjourned for a further hearing on the account of profits claim - the amount of financial gain Nakedbus benefited by using the 'inter city' trademark.

- NZ Herald

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_a3 at 29 Aug 2014 04:19:05 Processing Time: 803ms