Case note: credit unions and co-operatives in NZ

In Co-Operative Bank Limited v Anderson [2014] NZHC 2686 the High Court of New Zealand refused an application by The Co-operative Bank Ltd (TCB) for an interim injunction against the trustees of the New Zealand Association of Credit Unions (NZACU), from using or asserting a right to use certain names that include the words “co-op”.

For its advocacy role for its members in the financial services industry NZACU proposed to change its name from the NZACU to Co-op Money NZ. For its business to business trading with other operations it will change its name from FACTS Ltd to Co-op Services NZ. For its insurance service it will change its name from Credit Union Insurance Ltd to Co-op Insurance NZ.

NZACU is a co-operative owned by its members, and its members are also co- operatives. While the NZACU is essentially a representative body, its 17 members actively compete in the financial services sector with TCB.

TCB changed its name to The Co-operative Bank in October 2011 and registered the words THE CO-OPERATIVE BANK in logo form, but not word form, as a trade mark.

TCB claimed that the new names proposed by the NZACU will be deceptively similar to its name, “The Co-operative Bank”, and will cause confusion with customers and prospective customers.

It claimed that if those names are used this will constitute a breach of the Fair Trading Act 1986 NZ, amount to passing off, and be an infringement of the TCB’s trade mark.

The NZACU responded that TCB was wrongly seeking a monopoly over the word as part of a name in the financial services sector.

In examining the history Judge Asher concluded that TCB’s incorporation of the word “co-operative” in its name began well after the NZACU’s use of the word in its promotional statements and that of its members. TCB chose to use the word co-operative in its name against the background of competitors that were co-operatives promoting themselves using that word.

It is also relevant that the words “co-op” and “co-operative” are used in New Zealand trade names, without the suggestion of exclusivity. There is a New Zealand Association of Co-operatives called “Cooperative Business NZ” or “” to which both TCB and the NZACU belong.

Judge Asher observed that there is no common word in the TCB name and the proposed the NZACU names. NZACU does not use “co-operative”. He accepted that the words are used interchangeably in New Zealand with “co-op” being a convenient short form of “co-operative”. However, it is a different shorter word and this diminishes the similarities between the TCB and the NZACU names.

He concluded that TCB had not shown that it had developed a sufficient reputation in its name and the use of the word “Co-operative,” so that in the area of financial services that word is exclusively associated with TCB.

He decided that TCB’s case for misrepresentation was weak, as the lack of identical words, the differences in the words used, the descriptive nature of the word “co- operative”, the number of persons using it, and the recent adoption by TCB of its new name, make it unlikely that a substantial number of persons would be seriously confused by the names.

Judge Asher concluded:

[43] I do not consider that any substantial risk confusion would arise if the NZACU is allowed to use “co-op” in its branding. The NZACU and TCB will not be competing directly except perhaps in the insurance sector. I think it unlikely that consumers will be deceived into signing up with one believing it to be the other. The possibility of some initial confusion does not give TCB a winning hand. Importantly, the risk of some confusion does not prove a misrepresentation that will mislead customers. The decision to acquire a financial service, such as taking out a savings account or a loan, is not a decision taken lightly, and parties who do so can be expected to have spent some time reflecting on such a decision, and may well soon discover what entities they are in fact dealing with before they sign up. In my view, given the obviously descriptive nature of the word and the lack of similarity in the names, there is very little risk of a customer being misled.

[44] TCB can use “co-operative” in its name because that describes an important and accurate attribute of its business. But it also describes an important and accurate attribute of NZACU. It is perfectly understandable that the NZACU, given its history and nature, wishes to use the word “co-op” in its name. It should not be stopped just because it comes to put the word in its brand less than three years after TCB. While TCB eschews any intention to monopolise or prevent and use of the word “co-op” or “co-operative” by any party in the business of financial services, that is in effect what it seeks to do in this application.

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