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 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.
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.
"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.