In The Coca-Cola Company v Frucor Soft Drinks Limited [2013] NZHC 3282 (10 December 2013), Wylie J of New Zealand’s High Court has dismissed trade mark infringement claims levelled by Coca-Cola against Frucor, bottler and distributor of PepsiCo products in New Zealand (I generally refer to the Pepsi parties asPepsiCo below).

The decision amply demonstrates the “territoriality” principle, namely how enforcement can differ from territory to territory, including not only based on local issues but also due to the relevant armoury of registrations available to rely on.

The difficulties in transplanting concepts of UK and European trade mark law into the New Zealand regime are also highlighted.

The facts

Coca-Cola is the clear market leader for cola flavoured soft drinks in New Zealand. It has for many years used its well known contour shape bottle, and has obtained an extensive suite of 2D and 3D trade mark registrations in respect of that branding.

Frucor is the second largest non-alcoholic drinks company in New Zealand, and has acted as the bottler and distributor of PepsiCo products in New Zealand since 1999.

Over the course of a few years, PepsiCo set about redesigning its own relatively well known “swirl” bottle. The swirl bottle has been in use since around the 1980’s, and has been described as “being like a Corinthian pillar that had been twisted in the middle”.

The shape that PepsiCo landed on – for aesthetic and functional reasons – was the “Carolina” bottle the subject of these proceedings (shown below). The shape was in part inspired by the swirl bottle. PepsiCo released a range of 300ml Pepsi, Pepsi Max and 7UP soft drinks in the New Zealand market in 2009. This was a premium offer product, for sale in cafes, hotels and restaurants.

Click here to view the image.

Coca-Cola took exception to the shape of the Carolina bottle. It sought and obtained an ex parte injunction in respect of the use of the Carolina bottle in Germany (Regional Court of Cologne) but this was overturned shortly thereafter.

Coca-Cola sent letters of demand complaining in respect of the Carolina bottle in New Zealand and Australia on 27 September 2010. Frucor and Pepsico declined to give the requested undertakings (and a similar response was given in Australia), and Coca-Cola issued proceedings in each territory.

The Australian proceedings are due to be heard in March 2014.

The decision

Coca-Cola’s trade mark infringement claim in New Zealand was based on the following registrations:

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What sign/s was the defendant using?

Wylie J held that the signs used by PepsiCo were (a) the Carolina bottle itself and (b) the combination sign comprised of the Caroline bottle together with other word and device marks. In doing so he considered that there was considerable force in Coca-Cola’s submission that if the shape alone could not be a sign, then any trader could adopt any other trader’s shape mark and avoid infringement by adding a brand name. That could not be the correct approach as it would render the shape mark valueless.

Was the Carolina bottle used “as a trade mark”?

Wylie J here referred to the evidence of Mr Le Bras-Brown, one of the designers of the Carolina bottle. Mr Le Bras-Brown’s aim was to design an “ownable” and “proprietary” bottle, that would be seen as an “iconic Pepsico design”, and he believed that he had achieved this aim.

Wylie J also took note that consumers and the trade would be accustomed to seeing bottle shapes in the market, and referred to there being at least 90 trade mark registrations for bottles in New Zealand. He took into account that the parties had each sought trade mark registrations for bottle shapes.

He concluded that a substantial number of retailers and consumers seeing a cola or carbonated soft drink in a Carolina bottle would assume that the bottle is being used to distinguish the goods from those of other traders.

Are the respective signs similar?

Having met the initial thresholds, the issue then turned to assessing the similarity between the marks. This is where Coca-Cola’s case fell over. Considering the respective marks, Wylie J held that they were not materially similar.

He first noted that the primary similarity between the respective marks was that each had a waist (a feature that he had already indicated was common to the trade). Even so, the waists were not the same.

In respect of TM 47221, Wylie J considered that the distinctive and dominant features of Coca-Cola’s mark were the pronounced pinch towards the bottom of the bottle, the horizontal belt band, the vertical fluting below and above the belt band, the slight bulging above and below the belt band and the concave curved neck of the bottle leading from the top of the belt bund up to the mouth of the bottle.

Turning to the comparison, it was noted that the Carolina bottle had no vertical fluting, that there was no broad horizontal band around the middle of the Carolina bottle, that the Carolina bottle had a straight tapered neck and not a concave curved neck, and that there was no bulging on the sides of the Carolina bottle (the bulging above and below the waist can be seen more clearly in NZ TMs 244906 and 295168). Wylie J also pointed out that the Carolina bottle had an embossed horizontal wave pattern on the lower curved waist section. Wylie J noted that there were additional differences, but that these were features that an average consumer with an imperfect recollection would be unlikely to recollect.

The differences as regards NZ TMs 244906 and 295168 were largely the same.

In relation to the combination sign, incorporating PepsiCo’s word and device marks, it was held that these would clearly not infringe Coca-Cola’s registrations, including because PEPSI, PEPSI MAX and 7UP are well known in New Zealand.

Was there a likelihood of confusion?

Notwithstanding the finding that the marks were not similar, Wylie J considered the issue of deception and confusion for completeness.

Given the findings that the respective marks were not materially similar, the conclusion that there was no likelihood of confusion was an easy one to draw. However, Wylie J went on to make the following comments in support of this finding:

  • There was no evidence of confusion.
  • There was nothing to suggest that were any undetected instances of confusion.
  • Coca-Cola took no steps to complain about PepsiCo’s use until a year after it had first become aware of the Carolina bottle.
  • Coca-Cola has not taken steps against the Carolina bottle in most countries where PepsiCo’s product is sold.
  • Coca-Cola did not put on survey evidence or evidence of any other research undertaken.

Passing off/Fair Trading Act

While Wylie J accepted that Coca-Cola’s contour bottle has a strong reputation in New Zealand, he did not consider that there was a
likelihood of deception or confusion (taking the comparison between the actual products of Coca-Cola and PepsiCo, and the circumstances of actual use). Coca-Cola’s claim that damage would flow through diverted sales (based on “dilution”/“inundation”), Wylie J held that these were unsupported assertions.

On the Fair Trading Act claim, it was held that PepsiCo’s conduct was not misleading (or capable of being misleading), and that there were no false or misleading misrepresentations. This included consideration of the use of the Pepsi, Pepsi Max and 7UP marks on the Carolina bottle.

Comment

It is understood that the decision has been appealed.

There are a number of notable aspects of the decision. The following are just a few.

The relevance of UK and EU case law

It is quite common to see case law authorities from the UK cited in decisions from the trade mark registries and courts in New Zealand (and Australia for that matter). Wylie J acknowledged that “New Zealand legislation has consistently drawn in this area of the law from legislation in the United Kingdom”, and the decision freely and relevantly refers to various cases from the Australia, the UK and Europe.

However, in the context of the assessment of the signs that Pepsico was using, Wylie J was not convinced that the UK/EU authorities were directly on point. This was taking into account the differences between the New Zealand Act and the UK Act (and particularly the lack of a counterpart to s89(2) of the New Zealand Act in the UK Act).

On the other hand, Wylie J adopted a Euro-style “global assessment” when assessing the similarity between the marks and the likelihood of confusion. On the similarity point, he referred to the decision of the Court of Appeal of England and Wales in Specsavers International Healthcare Ltd & Ors v Asda Stores Ltd[2012] EWCA Civ 24 (31 January 2012), which cites the “standard” test adopted by the UKIPO for assessing the likelihood of confusion during the prosecution phase, at paragraph [52] (and particularly [52](c), which – reiterating Sabel – states that “the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details”).

What is particularly notable here is that Wylie J endorsed the global assessment based on Specsavers andSabel, but did not expressly consider enhanced distinctiveness in Coca-Cola’s marks. It is a bedrock of European trade mark law that a mark with greater distinctiveness (whether inherent or acquired) benefits from a greater scope of protection (Sabel). This is not expressly discussed in the decision, though that is not to say that enhanced distinctiveness was left out of the analysis. Wylie J referred to Coca-Cola’s evidence of advertising campaigns which have used the silhouette mark in one way or another. He noted Coca-Cola “has not registered the silhouette of its contour bottle simpliciter”, and that the silhouette “is less subtle than the registered shapes”, before concluding that “Coca-Cola cannot extend the scope of its registration by going on to use as a sign the silhouette derived from its registered marks when that sign is not itself registered”. A similar point was recently made in the decision of the Full Federal Court of Australia in Australian Postal Corporation v Digital Post Australia [2013] FCAFC 153 (6 December 2013), at [29].

Wylie J’s comment is perhaps ominous for PepsiCo in respect of the Australian proceedings, where Coca-Cola can rely on a mark registered in respect of (ostensibly) the silhouette, as we will see below.

Australia – better prospects for Coca-Cola?

While Wylie J footnotes it (in support of the proposition that a sign may fulfil more than one function), there is no discussion of the earlier decision of Australia’s Full Federal Court in Coca-Cola v All-Fect [1999] FCA 1721, in which a registration for Coca-Cola’s contour bottle mark (in 2D – shown below left) was infringed by a cola flavoured confectionary product “shaped somewhat like a contour bottle” (shown below right). In doing so the Full Federal Court overturned the decision of Merkel J at first instance, who had held that the shape of the confectionary was not used as a trade mark.

Click here to view the image.

Following on from the above point, and bearing in mind Wylie J’s finding that Coca-Cola could not rely on a mark that it had not registered, it is important to note that Coca-Cola has in its Statement of Claim relied on Australian trade mark registration nos. 1160893 and 1160894 (in addition to TM 63697 and 767355) as shown below. As can be seen, these registrations are in respect of a mark in which the silhouette is the entire mark, or predominates. These registrations do not include other features that are included in the New Zealand registrations (and in AU TMs 63697 and 767355), including the fluting and the label panel.

It is very much a case of waiting to see what view Australia’s Federal Court will take.

Click here to view the table.