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Blurring the Boundaries Between Alcoholic and Non-alcoholic Beverage Classes of Trade Marks

Blurring the Boundaries Between Alcoholic and Non-alcoholic Beverage Classes of Trade Marks

The International Trade Mark Association (INTA) has reportedly filed an amicus brief, as third-party observers, in a case before the Grand Board of Appeal of the European Union Intellectual Property Office. The case concerns the issue of similarity or dissimilarity of alcoholic and non-alcoholic beverages.

While the provisions on trade mark infringement in the EU differ from the South African Act, decisions made in the EU may be taken into account by the South African courts.

Interestingly, a recent report reveals that there may be good reason to reconsider a decision on the similarity or dissimilarity of alcoholic and non-alcoholic beverages given changing market realities.

Where two parties, one selling alcoholic beverages and the other non-alcoholic beverages under similar marks may not have been held to be confusing in the past, there may be good reason for this to change.

In its brief, the INTA asserted the importance of considering current market practices and habits insofar as the goods in question are concerned. All relevant factors need to be considered in assessing the similarity between goods, including the nature of the goods, their intended purpose, method of use and whether they compete with each other or are in some way complementary. It is also important to consider the channels used to distribute the goods, their usual origin, and the relevant public. It is not necessary for all criteria to be fulfilled.

The INTA asserted that it should not be relevant that the public is generally capable of distinguishing the goods – being alcoholic from non-alcoholic beverages.

Current market realities reveal that, unlike in the past, where producers of the two types of drinks remained relatively separate, there is now more of a convergence of the two. The alcoholic beverages industry is becoming more likely to sell non- or low alcoholic beverages. Furthermore, soft drink manufacturers are moving towards the manufacture and sale of alcoholic variations of their soft drinks. The boundaries between the two classes of trade marked goods are becoming more blurred.

It might therefore be argued that the likelihood that the public would be able to distinguish the goods is inextricably woven into the current practices of the market.

The authors of the South African Law of Trade Marks, Webster and Page, provide that the English courts have adopted the view that the determining factor in deciding the likelihood of deception or confusion, in cases of potential infringement, is: how the potential marks can be used, provided that the manner of use is fair and normal. This is called the notional user approach and has been applied by our courts in subsequent decisions.

One of the cases that applied the notional use approach is Danco Clothing (Pty) Ltd v Nu-Care Marketing Sales and Promotions (Pty) Ltd. Here, the Court had to decide whether there was a likelihood of deception or confusion among a substantial number of persons, taking into account: the nature of the goods, their respective use, and the trade channels through which the goods could notionally be retailed. In this case, while the marks of the parties in question were identical, being FRENCH CONNECTION, the goods were arguably quite different, being cosmetics and clothing. The Court decided that, while there was no evidence of actual confusion or deception, and while there were no side-by-side sales of the respective commodities, making confusion arguably more likely, the established trend of manufacturers of popular brands of clothing to also market cosmetics and perfumery under the same brand meant that they had become associated in the minds of the public. This was enough for the Court to decide that there was a likelihood of deception or confusion between the marks in question, despite the apparent differences of the goods.

On the other hand, in the case of Mettenheimer v Zonquasdrif Vineyards CC, a South African case concerning the registered trade mark ZONQUASDRIFT in respect of alcoholic beverages, except beer (the appellant’s mark) and use of the mark ZONQUASDRIF VINEYARDS in respect of wine grapes (the respondent’s mark), the Supreme Court of Appeal (“SCA”) agreed, in comparing the two marks, that the marks were virtually identical. It was argued by the appellants that the public may be confused into thinking that the appellant’s wine and the respondent’s grapes originate from the same farm. The Court, however, distinguished between the notional purchasers of grapes and the notional purchasers of wine, highlighting that wine grapes are suitable only for winemaking and sold exclusively to wine makers and co-operatives, or using specialists. The chances of the buyers confusing the respondent’s wine grapes as the source of the appellant’s wine was therefore excluded. It also held that any likelihood of notional purchasers of Zonquasdrift wine believing that they originate from the same farm as the respondent’s was overcome by the fact that the respondent did not market its wares in outlets or retail outlets or advertise them in the public domain.

The considerations proposed to determine the likelihood of confusion include: the uses of the respective goods; the users of the goods; the physical nature of the goods; and the respective trade channels through which the goods reach the market. This is by no means an exhaustive list.

It is this author’s view that, while the public’s ability (or inability) to distinguish the goods in question may remain an important consideration, the changes in current market realities (where industries extend the range of products sold and previously clear divisions between products become more blurred, like that between alcoholic and non-alcoholic beverages, or the shift online) are likely to become more relevant in decisions on the likelihood of confusion. Further, while there are common factors to be taken into account in each case, the deciding factors will likely differ from case to case.

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