Drinks
company Red Bull took rival Drink Red off the market after discovering a
marketing company doctored court evidence to hide Drink Red’s branding motives.
When Red Bull failed last March to get a
High Court injunction stopping Drink Red from selling its rival product under
the name Red (with the letter R reversed), it immediately got a court order for
access to business records of Strategy Design and Advertising, the marketing
company advising Drink Red. It found
Strategy Design had produced two separate marketing reports for its client. The first, dated June 2014, recommended
branding with colour and styling designed “to tap into Red Bull’s equity” and
emphasised that adoption of a name similar to Red Bull’s products had commercial
advantages. A revised report, dated May
2015, was used in court to support Drink Red’s claim that its choice of name
and branding was not driven by any intent to rip off the existing Red Bull
brand. The May 2015 report stated Drink
Red’s branding was chosen after exhaustive research to find a name simple and
attractive for its target audience.
Drink Red, controlled by Scott McCormick,
launched its non-alcoholic Red Energy in November 2015, reportedly spending
$422,000 to launch its brand. It was up
against Red Bull with approximately $40 million annual sales since 2010. Mr McCormick had plans to break into the market
for RTD alcoholic beverages.
Red Bull alleges the branding chosen is a
blatant attempt to cause confusion in the market and rip off its product. Lawyers for Red Bull canvassed bars in
Auckland, Wellington and Christchurch finding that staff at nearly twenty per
cent of some 100 bars thought Drink Red’s drinks were Red Bull products. In two bars, Drink Red’s product was stored
inside Red Bull branded fridges.
With a full trial timetabled for later in
the year, Red Bull asked the High Court to block Drink Red’s product from the
market in the interim as it had potential to harm sales. The High Court refused. Justice Brewer said an interim injunction
would put Drink Red out of business. He
said Drink Red had a serious question to answer but there was no evidence it
deliberately intended to cause confusion.
After learning that deliberately misleading marketing evidence was put
before the High Court, the Court of Appeal granted an injunction, pulling Drink
Red’s product from the market.
Red
Bull v. Drink Red – Court of Appeal (4.08.16)
16.118