Facts

The plaintiff (TCCC) was the well-known beverage company. The second defendant, PepsiCo, was also a well-known international beverage company. The first defendant (Frucor), was, inter alia, the bottler and distributor in New Zealand of the PepsiCo soft drinks PEPSI, PEPSI MAX and 7UP.

In October 2009, the defendants began selling cola and lemonade in New Zealand in a new glass bottle (the Carolina bottle) which incorporated a horizontal embossed wave pattern. A year later in October 2010, TCCC commenced proceedings against the defendants alleging that they had used and were intending to continue to use the new bottle shape of the Carolina bottle and the silhouette of its shape as a sign and that this infringed three of TCCC’s registered trade marks in New Zealand protecting the well-known Coca Cola glass bottle (the Contour bottle).

One of the registered trade marks was a two-dimensional device mark; two were shape trade marks.

In addition, TCCC alleged that the defendants’ PEPSI, PEPSI MAX and 7UP products being sold in the Carolina bottle amounted to passing off as Coca Cola products or products associated with TCCC and further that these were in breach of ss 9, 10, 13(e) and (f) of the Fair Trading Act 1986.

The defendants denied trade mark infringement. They further denied both passing off and breaches of the Fair Trading Act, alleging that there were significant differences between the Contour bottle and the Carolina bottle and that, in every case, the Carolina bottle featured one or more of their word and device marks, PEPSI, PEPSI MAX or 7UP. 

Coca Cola soft drinks had been sold in New Zealand since 1939 in the Contour bottle and subsequently in PET bottles of a Contour shape and cans. PEPSI was first registered as a trade mark in New Zealand in 1944 followed by subsequent iterations of the mark. Prior to the 1960’s, PepsiCo had bottling contracts in New Zealand and PEPSI soft drinks were sold either in glass bottles or cans. From September 1992, the Australasian brewer and beverage company Lion Nathan, became bottler and distributor of PEPSI and 7UP in New Zealand. From 1999, Frucor acted as a bottler and distributor of PepsiCo products in New Zealand. 

Frucor distributed the PepsiCo brands PEPSI, PEPSI MAX and 7UP through all supermarket chains and through the route trade. As at 2009, PEPSI, PEPSI MAX and 7UP sales accounted, however, for only a small percentage of the carbonated soft drink market in New Zealand. 

Competition between TCCC and PepsiCo was well-known and well documented internationally and the Court found that this position extended to New Zealand. 

PepsiCo’s Carolina bottle was first commercialised as a non-returnable glass bottle commencing in Poland in 2005 and then in markets in the Middle East, Asia and Europe. At the time of trial it was in 35 countries, having been released in the UK and Australia in 2007 and Germany in 2009. The Carolina bottle was the subject of a design patent in the US in 2005 and registered designs in a number of other jurisdictions. 

In New Zealand, sales of the Carolina bottle were relatively modest but as at the end of October 2013, it had been on the market for four years and some 618,000 Carolina bottles containing PEPSI, PEPSI MAX or 7UP had been sold.

Trade mark infringement

At trial, TCCC abandoned its claim that the defendants’ sign was identical to each of its three registered trade marks (i.e. under (s89(1)(a)) and relied solely on infringement under s89(1)(c) i.e. that the defendants’ sign was similar to each of the three registered trade marks and that use of the defendants’ sign was likely to deceive or confuse. 

As to what comprised the defendant’s sign, TCCC asserted that the defendants’ use of the Carolina bottle and the silhouette of the bottle shape was use of a sign in the course of trade.

The defendants pleaded that their sign comprised a combination of one or more of the PEPSI, PEPSI MAX and 7UP marks together with their very different Carolina bottle and that these combination signs were used as trade marks to denote and distinguish their products. They denied that the silhouette of the Carolina bottle on its own had been used and was likely to be taken as use as a trade mark or that there was any likelihood of deception or confusion. 

In response, TCCC denied that the Carolina bottle was very different or that the horizontal wave pattern on its own was distinctive. TCCC also denied that PEPSI, PEPSI MAX and 7UP were well-known in New Zealand and that they formed part of the defendants’ sign. TCCC denied that, either alone or in combination with PEPSI, PEPSI MAX and 7UP, the Carolina bottle denoted and distinguished the defendants’ products.

The plaintiff relied on English and New Zealand authorities, including Saville Perfumery Limited  v June Perfect Limited (1941) 58 RPC 147, 161, upheld by House of Lords at 171, that, once use of a sign is shown, the user cannot escape infringement by showing that by something outside the sign itself, it had distinguished its goods from those of the plaintiff.

The defendants relied on more recent English High Court and Court of Appeal decisions since 2006 which held that Saville Perfumery (and the principles contained in it) were no longer good law, and that it was artificial to try and isolate the defendants’ sign from the context of its use and to narrow it by ignoring other signs or indicia that are used with it. [117] – [118]

Passing off

The defendants asserted that both as a matter of pleadings and law, TCCC could not rely on just three features of its Contour bottle namely the pinch, the relatively wide portion above the pinch and the tapering of the bottle from the wider portion up to the neck. [211] The defendants further contended that their bottle had a different shape with a horizontal wave pattern and that it exhibited PepsiCo’s well-known trade and device marks PEPSI, PEPSI MAX and 7UP. [211]

Wylie J held, dismissing the plaintiff’s claims:

A Trade mark infringement

The relevant comparison

(1)  S89(1)(c) calls for a comparison between each of TCCC’s registered trade marks and the sign being used by the defendants in the course of trade. [97]

What sign or signs were the defendants using?

(2)  For a sign to be a combination of signs, there first had to be individual signs.  There was nothing in the definition of “sign”  to prevent one article from being a sign because it incorporated one of the specific features referred to in subparagraph (a) of the definition and also a sign under subparagraph (b) because it added to that specific feature other features which were themselves signs. [104]

(3)  The Court was not convinced that decisions of the English High Court and Court of Appeal (which held that when determining whether there had been infringement, it was artificial to try and isolate the defendants’ sign from the context of use), were directly on point or were of any great assistance when interpreting the New Zealand legislation. [119]

(a)  There was no New Zealand equivalent to the EU Directives on which the UK Trade Marks Act was based or to the articles contained in it. As a result, while it was desirable to adopt a common approach in trade mark cases where an international perspective is important, the English authorities were of limited assistance, given the statutory framework. [120]

(b)  In New Zealand there is a statutory definition of the word “sign” and s89(2) requires that, for there to be infringement, a defendant’s use of a sign must be taken as being use as a trade mark. Neither of these statutory provisions exists in the UK. [121]

(c)  In many of the English cases, the courts were assessing what the defendants’ sign was from a use perspective, rather than determining first whether the impugned article was a sign, and then asking whether the sign was used as a trade mark. If a similar approach were to be in New Zealand, it would conflate the 2-step analysis required by the New Zealand Trade Marks Act. [122]

(4)  The defendants were using the Carolina bottle in New Zealand and it had a shape. The shape was a “sign” pursuant to the definition. The defendants had added to the shape sign PepsiCo’s word and logo marks, so they also used in the course of trade a combination sign. The Court had to consider whether either the shape on its own or the combination sign infringed the plaintiff’s registered trade marks. [123] and [125]

Use as a trade mark

(5)  The defendants had admitted that the combination sign was being used as a trade mark. [129] As to the Carolina bottle itself, retailers and customers were accustomed to seeing bottle shapes in the market and such shapes were capable of differentiating product. [140] A substantial number of retailers and consumers seeing a cola or a carbonated soft drink in a Carolina bottle were likely to assume that the bottle was being used as a trade mark – that is that the bottle distinguished the goods of one person from those of another. It was therefore being used as a trade mark. [141]

Were the defendants’ signs similar to any of the plaintiff’s three registered trade marks?

(6)  Although there were different tests articulated by the Court of Appeal as to the application of s89(1)(c), and similar provisions in ss 17(1)(a) and 25(1), each of them tended to run together and any attempt to differentiate between them was largely a matter of semantics. Much would depend on the facts of any given case. If the defendants’ sign was obviously not similar to the registered trade mark, then it would not generally be necessary to go on to consider whether or not use of the defendants’ sign was likely to deceive or confuse. On the other hand, where the mark and the sign were similar, it would generally be appropriate to consider the issues of similarity and deception and confusion together, because the extent of the similarity was likely to inform the decision whether there was a likelihood of deception or confusion. The Court in such cases could make a global assessment, taking into account, the similarity of the mark and the sign, when determining whether the use of the sign would be liable to deceive or confuse. Where a global assessment was called for, the Court would apply the various tests relevant to deception or confusion discussed in the authorities and would do so from the perspective of the average consumer in the relevant market. [154]

(7)  The comparison called for was between normal and fair use that the plaintiff made of its registered trade marks, given the rights granted by the registrations, and the actual uses made by the defendants of the signs. [156]

(8)  Material extraneous to the registered trade marks formed no part of their registration and the plaintiff could not extend the scope of what was protected by itself using signs which were similar to the registered trade marks. [159] The plaintiff’s use of the silhouette of its bottle was not normal and fair use of its registered trade marks. The plaintiff had not registered the silhouette of its Contour bottle simpliciter. Further, the silhouette was less subtle than the registered shape marks and it did not depict, for example, the vertical fluting. The silhouette was not a full expression of or surrogate for those registered trade marks. The plaintiff could not extend the scope of its registration by going on to use as a sign the silhouette derived from its registered marks, when that sign was not itself registered. [160]

(9)  In comparing the plaintiff’s registered trade marks to the defendants’ sign, the registered trade marks had to be considered as a whole. It was the totality and impression of both the registered trade marks and the defendants’ signs which was important. [161] The issue of similarity was to be determined from the perspective of the average consumer of the goods in question [162] and involved the application of the imperfect recollection test [163]. The Court must also bear in mind the circumstances in which the relevant goods were sold and the usages of the trade concerned [163].

(10)  There was no material or sufficient similarity between any of the three registered trade marks and the defendants’ Carolina bottle such as to lead to the likelihood of confusion or deception. [175], [183], [187], and [188]

(11)  As to the combination sign, if the Carolina bottle per se did not infringe the registered trade marks, then clearly use by the defendants of the combination sign incorporating not only the bottle but also PepsiCo’s word and device marks, could not infringe the registered trade marks. The PEPSI, PEPSI MAX and 7UP signs were a very prominent feature on the bottle and clearly distinguished the defendants’ offering in the marketplace from the registered trade marks – as did the caps on the bottles. [189] The PepsiCo marks were very well-known not only overseas but also in New Zealand. Nobody purchasing the defendants’ Carolina bottle with the defendants’ word and device marks on it would be under any misapprehension as to the product’s true origin or nature. [190]

Were the defendants’ signs likely to deceive or confuse

(12)  In view of the finding that there was no material similarity between the plaintiff’s three registered trade marks and the defendants’ Carolina bottle and that the defendants’ combination sign clearly distinguished the defendants’ offering in the marketplace, it followed that no issue of deception or confusion could arise. [198] Further observations reinforced the Court’s conclusion:

(a)  There was no evidence of any confusion at all notwithstanding that the Carolina bottle had been available in the marketplace since October 2009 and the sale of some 618,000 bottles over four years. The fact that there had been no confusion was a strong indication that confusion had not occurred and was not in future likely to occur. [169]

(b)  There was nothing to suggest any undetected confusion. [200]

(c)  It was surprising that the plaintiff took no steps to complain about the Carolina bottle until almost a year after it first became aware of it. This dilatoriness in pursuing the defendants, suggested that even the plaintiff did not consider there was a real likelihood of confusion at least initially.

(d)  It was surprising that the plaintiff had taken no steps in relation to the Carolina bottle in most countries where it was sold. Proceedings had only been commenced in Germany, Australia and New Zealand. [202]

(e)  Although survey evidence had fallen out of favour in recent years, it was nonetheless curious, when there was no evidence of any confusion at all after four years side-by-side trading, that no survey evidence of customers’ perceptions was produced by the plaintiff. [203]

B Passing off

Reputation of Contour bottle

(13)  The plaintiff’s Contour bottle had a strong reputation in New Zealand. [213]

Were persons likely to be confused or deceived?

(14)  The test most often applied was whether there is a reasonable likelihood of confusion or deception amongst a substantial number of persons. It was necessary to consider persons who were ordinary sensible members of the public and who represented the consumers in question. The perspective was that of the average prudent person with reasonable eyesight. [214] What was required was a comparison between actual products in the circumstances of actual use. [215]

(15)  A plaintiff could not pick and choose between those elements of its getup which found counterparts in the defendant’s getup and rely on those alone. Rather the getup of a claimant’s goods as a whole had to be compared with that of the defendants’ goods as a whole, including features which were not to be found in the plaintiff’s getup. Weight had to be given to differences in brand names or other marks. [215]

(16)  There was no reasonable likelihood of confusion or deception as the Carolina bottle was not materially similar to the Contour bottle. The defendants had differentiated their bottle from the plaintiff’s Contour bottle by the PEPSI, PEPSI MAX, 7UP marks and device marks. The distinctive embossed horizontal wave pattern had no equivalent on the Contour bottle. Even allowing for imperfect recollection, there was no reasonable possibility of deception or confusion amongst a substantial number of persons. [217] There was no evidence of confusion or deception at all notwithstanding that the two bottles had been sold side-by-side for some four years. [218].

(17)  There was nothing to support the assertion that sales had been or were likely to be diverted. Trade marks could not be diluted if there was no similarity likely to mislead consumers. The plaintiff had not suffered nor was likely to suffer damage. [220]

Fair Trading Act

(18)  The defendants’ conduct in trade had not been capable of being misleading. Nor had the defendants made a false or misleading representation. When the Carolina bottle was compared with the Contour bottle as a whole, there was no misrepresentation. [226] Further, there was no evidence of any person being misled or deceived in the four years that the products had been available side-by-side in the marketplace. [226]