New Zealand's Bed Bath & Beyond is fighting on two fronts to protect its brand. Now, the High Court has knocked it back.
This country's most familiar green-and-white High St homeware retailer (and yes, that is a contested category) is paying the price for scoring shoppers off the back of a well-known international brand – at risk of what a High Court judge calls "an embarrassing own goal".
Bed Bath & Beyond NZ has been embroiled in a three-year legal stoush with an Australian competitor on one side, while simultaneously having to defend its reputation as the "Big Blue" US chain that it's modelled itself on goes bust.
Yesterday in the High Court, it lost the first fight: Justice Rebecca Ellis refused to stop Australia-based Bed Bath N' Table Pty Ltd trading in New Zealand with its similar green-and-white signage and trademark.
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That will cost Bed Bath & Beyond Ltd, though how much remains unclear. In some shopping centres, the two brands go head to head – in Onehunga, they're across the road from each other.
BBB NZ (as we'll refer to it) lists the legal disputes over trademarks in the contingent liabilities of last year's financial statements. "There is no financial settlement expected as the case is in relation to the right to use the trademark," it says. "It is impractical to estimate potential liabilities (if any) and as such, no amounts of these liabilities are disclosed."
Now, the New Zealand retailer must turn its attention to the bigger challenge: rather than fighting the green dwarf BBT in New Zealand, it must protect itself against any brand damage inflicted by the collapse of "Big Blue" in North America.
And it's not just BBB NZ, BBB US and BBT competing for market share and brand recognition – Newsroom has discovered there's a BBB Australia too. More on this alphabet soup of intertwined initialisms later, but first, some history.
"Bed Bath & Beyond should not, although may, be confused with the quite separate North American company Bed Bath and Beyond, which has been operating 'big-box' stores selling manchester and home products in the United States and elsewhere for over 50 years." – Justice Rebecca Ellis
When a small budget manchester store selling seconds and over-runs from a bedding manufacturer in Auckland decided to take on the big boys in 2009, it rebranded from Linen for Less, to Bed Bath & Beyond. As it's expanded to 55 stores nationwide, that looked like a smart move.
Until now. The rebrand was a bold and somewhat impudent move – Bed Bath & Beyond was the name of one of the world's biggest homeware chains, a US company founded in New Jersey in 1971 whose big blue discount mailers have become a cultural icon in retail. At its peak, the US retailer had 1512 stores worldwide, 65,000 staff and revenue well over US$12.1 billion (NZ$19b).
But BBB US had no plans to expand into New Zealand and so it had not trademarked its brand here – leaving the door wide open to Sydney rag-trade millionaire Fred Bart and his local business partners, Aucklanders Murray Carter and Trevor Brown.
Now, the US retail chain is to close its 360 stores at the end of this month, after declaring bankruptcy in April. An online outlet store has bought the BBB US brand and will sell home products under that name on its web store.
Online is the same heavily contested market where the New Zealand company is doing more and more of its business, as the costs of leasing property and hiring staff to run bricks-and-mortar stores rise.
Bed Bath & Beyond NZ relies increasingly on web sales
As Justice Ellis says this week: "Bed Bath & Beyond should not, although may, be confused with the quite separate North American company Bed Bath and Beyond, which has been operating 'big-box' stores selling manchester and home products in the US and elsewhere for over 50 years."
It’s worth noting that Bed Bath & Beyond in New Zealand doesn’t sell beds, or baths – just their accoutrements. Neither will the remnants of its US counterpart, when they go online only. Similarly, Bed Bath N’ Table doesn’t sell beds, baths or tables.
The judge notes that each company's trademark indirectly refers to the products sold by its owner – "products for the bedroom and products for the bathroom".
She comments approvingly on the two trademarks' rhetorical merit. "Just as the word 'beyond' reinforces the alliterative flavour of the BBB mark as a whole, the second syllable of 'table' reinforces the alliterative flavour of the BBT mark as a whole."
BBB NZ chief executive Trevor Brown wasn't returning calls from media this week. But already, he's told Newsroom he's written to the local company's 500 staff to assure them they're not impacted by the US company's troubles, and to "hundreds of thousands" of customers who are signed up to his company's loyalty scheme, to reassure them as well.
Canterbury University marketing professor Ekant Veer says consumers don't even realise the three brands are different. "Unless there's a fundamental shift in products, services and experiences then the brand will not matter much."
The judge has redacted Bed Bath & Beyond's "commercially sensitive" annual sales figures from her judgment, but says they give a snapshot of the retailer's growth.
In fact, the company is required to publish those figures in an annual report to the Companies Office. Newsroom has collated the past 10 years sales figures, in the chart above. These show $79m sales revenues in the 12 months to July 2020, increasing to $109m in 2021, and $114m in 2022.
Like other bricks-and-mortar retailers, the company was heavily reliant on online sales through the Covid lockdowns – 18 percent of sales were through its web store last year.
Its before-tax profits increased from $3.3 million in the year to July 2020 to $13.8m in 2021, before dipping slightly to $12m last year in response to rising supply chain and staff costs.
"Let them have it. Just give me some money for the company registration, then I'm out!" – Zac Pottamkulam, Bed Bath & Beyond Australia
There's a certain schadenfreude in a company that naughtily nabbed the brand of a prominent multinational now feeling the pain of that multinational's collapse. And there's an irony that BBB NZ would happily ride on the prominence of BBB US's name, yet object to an Australian challenger using a similar name.
"It's clear that a brand has power otherwise why would BBB NZ exploit a trademark loophole with the US company to develop their own name in Aotearoa," Ekant Veer says. "Protecting this, even from an organisation that has held the name in Australia since the 70s, is clearly in their interests – but does sound like they were trying to prevent someone else doing something they did themselves."
All in all, it's been a bad run for New Zealand businesses trying to contest trademarks. Mānuka honey producers lost a battle with Australian producers for exclusive use of the name; toymaker Zuru lost a trade mark dispute with Danish giant Lego last week and, in the same courthouse this week, BBB NZ lost its battle with Australia-based BBT.
BBB NZ, BBB US and BBT can't or won't response to media calls, now. But one smaller player is happy to talk to Newsroom.
Zac Pottamkulam is the founder of Bed Bath and Beyond Pty Ltd, in Australia. He has occasional business dealings with BBB NZ, supplying them rugs. He says Brown had told him about the protracted trademark battles with BBT, in which BBB NZ took a legal claim, then BBT counterclaimed.
Pottamkulam is very happy to sit out the disputes – he's an amused bystander.
When he first registered the company name Bed Bath & Beyond, his business had 12 stores across Victoria, Queensland and ACT. But as he retrenched to primarily online retail and wholesale, from just three warehouses in his home state of Victoria, he realised that the BBB brand was somewhat of a poisoned chalice.
Despite registering it as his company name, the 46-year-old has never traded under it. His main brand is Dotts Rugs.
So what if one of the other three companies should want to trade under the name Bed Bath & Beyond in Australia?
"Let them have it," he laughs. "Just give me some money for the company registration, then I'm out!"
