Storm in a Contour Bottle? – The Coca-Cola Company v Pepsico Inc & Ors VID 876/2010

November 1, 2010

By Amanda Scardamaglia

The Coca Cola Company (‘Coca Cola’) has recently brought proceedings against Pepsico Inc, its Australian holding company Pepscio Australia Holdings Pty Ltd and Schweppes Australia Pty Ltd as the manufacturer and distributor of Pepsi and Pepsi Max (‘the Respondents’). In the Statement of Claim dated 14 October 2010, Coca Cola alleges the Respondents have been selling Pepsi and Pepsi Max products in glass bottles that have the same characteristic shape and silhouette as the Coca Cola ‘Contour Bottle’, infringing their intellectual property rights. The case raises a number of interesting issues concerning the often fraught area of shape marks, some of which will be raised here.

Facts

Coca-Cola is the registered owner of a number of Australian trade marks that depict its famous Contour Bottle, which were included in the Statement of Claim and shown in Figure 1.  The Contour Bottle is a hallmark of Coca Cola’s branding – with its pinched in waist shape and silhouette distinguishing Coca Cola’s products from other sodas on the market.  Coca Cola has built a strong reputation in the Contour Bottle through significant promotion and marketing and claims that it has sold its Coke and Coca Cola products in the Contour Bottle since 1916 in the United States and since at least 1938 in Australia.

Figure 1: Coca Cola Contour Bottle Trade Marks

In May 2010, Coca Cola became aware that the Respondents were selling Pepsi and Pepsi Max in glass bottles similar to their Contour Bottle.  Images of those glass bottles, as featured in the Statement of Claim are depicted in Figure 2.  Coca Cola demanded that the Respondents refrain from what it said was unlawful conduct.  The Respondents refused.  In response, Coca Cola initiated these Federal Court proceedings.

Figure 2: Alleged Infringing Pepsi and Pepsi Max Glass Bottles

It’s not the first time Coca Cola have sought to enforce their rights with respect to the shape of its Contour Bottle.  Many will recall the 1999 case Coca-Cola Co v All-Fect Distributors Ltd, where Coca Cola successfully brought trade mark infringement proceedings against the manufacturer of a cola flavoured confectionary product which took the form of the shape of its Contour Bottle.  Although ‘… a total impression of similarity [did] not emerge from a comparison of the two marks …’ Black CJ, Sundberg and Finkelstein JJ found that the ‘… idea suggested by the mark is more likely to be recalled than its precise details …’ such that consumers might be caused to wonder about the source of the confectionary products as a result.  Coca Cola will no doubt seek to rely on this decision, although, as the following summary of the present claim demonstrates, there are some critical points of difference between the two disputes.

The Claim

Typical of most trade mark disputes, Coca Cola has brought a three pronged claim against the Respondents, namely:

1.       Trade mark infringement under section 120(1) of the Trade Marks Act 1995 (Cth) (‘TMA’).

2.       Breach of sections 52 and 53 of the Trade Practices Act 1974 (Cth) (‘TPA’).

3.       Passing off.

As to the trade mark infringement claim, Coca Cola allege the Respondents have been using the particular bottle shape for its Pepsi and Pepsi Max products within the meaning of use in section 17 of the TMA and that the bottle shape is substantially identical with or deceptively similar to Coca Cola’s trade marks so as to constitute trade mark infringement under section 120(1) of the TMA.

Coca Cola also claims the Respondents have engaged in conduct which is misleading or deceptive or is likely to mislead or deceive in breach of section 52 of the TPA.  It further claims the Respondents have falsely represented that they are authorised or have approval or are associated with Coca Cola in breach of section 53 of the TPA.

Finally Coca Cola claims the Respondents have passed off its products as Coca Cola products, or licensed Coca Cola products.

As a result of this conduct, Coca Cola claims it has suffered unspecified loss and damage and seeks to have the Court restrain the Respondents from continuing to sell its products in the said glass bottles.

With respect to the trade mark infringement claim, there are two issues that will likely dominate proceedings.

1.       The first is the issue of use as a trade mark, which is likely to be raised in the Respondents’ defence, which is yet to be filed.

2.       The other issue which will obviously present itself is the question of deceptive similarity.

Issue 1: Use as a Trade Mark

It is a requirement of registration that the sign, defined under section 6 of the TMA, must be used or intended to be used to distinguish goods or services, consistent with the definition of a trade mark under section 17 TMA.  This implies that, with respect to shape marks, merely adopting a particular shape will not amount to trade mark use.  And, in the same way that descriptive terms will not normally be registrable as a trade mark because they will fall foul of the use requirement, functional or utilitarian shapes will not be registrable as trade marks if they do not also serve the secondary purpose of distinguishing those goods from the goods provided by others.  Of course, the corollary of the requirement of use for registration is that in context of trade mark infringement; there is a requirement that the alleged infringer has used a sign that is substantially identical or deceptively similar sign to distinguish its goods from other goods.

The use requirement can be particularly problematic in relation to shape marks in both the registration and infringement contexts, since all physical things take the form of some shape.  Would a consumer, on seeing a product for the first time, think that the shape of the product is a trade mark, that is, an indicator of origin?

In the Statement of Claim, Coca Cola allege that the bottle shape used by the Respondents ‘… would be perceived by consumers in Australia as possessing the character of a brand for distinguishing the Infringing Products from other beverage products.  …’ and  ‘… have used the bottle shape of the Infringing Products and the silhouette of that bottle shape as a trade mark within the meaning of ss 17 and 120(1) TMA.’

The Respondents will have to address this point in their defence.  They will likely argue that their Pepsi and Pepsi Max glass bottles are not being used as a trade mark within the meaning of the TMA and thus their conduct does not constitute trade mark infringement.

Potential Defence

In doing so, the Respondents may argue that the glass bottle it has used does not function as a trade mark because the shape it has adopted is functional.

Furthermore, the shape adopted is but one of a number of features on its Pepsi and Pepsi Max products preventing it from functioning as a trade mark.  That is, the Respondents would argue that the addition of the ingrained wave pattern on the glass bottle and the use of its other distinctive Pepsi and Pepsi Max marks all have the combined effect of diluting the significance that might have otherwise attached to the shape of its glass bottle and that any distinctiveness that the shape has acquired was likely attributable to its use alongside the other distinguishing trade marks and indicia.  As a consequence, it is possible that consumers, on seeing Pepsi and Pepsi Max products for the first time, would not think that the shape of its glass bottle was a trade mark, distinguishing its products from other manufactures, as Coca Coca alleges.

There are a couple of important shape mark cases that are on point and may be relevant here for the purposes of determining whether the shape of the Respondents’ glass bottle constitutes use as a trade mark.  The first is the well known Philips v Remington case, where Philips failed to establish trade mark infringement of its triple head shaver shape mark because there had been no use of the trade mark by Remington.  The issue of use was also raised more recently in the 2009 case Guylian v Registrar of Trade Marks although in the context of an application to register the shape of a seahorse for use with respect to chocolates.  Although it is not possible to go into the details of these cases here, suffice to say the Respondents may be able to draw on these cases and in particular the Guylian case favourably.

Issue 2: Substantially Identical With or Deceptively Similar

The question of whether the Pepsi and Pepsi Max glass bottle is substantially identical with or deceptively similar to Coca Cola’s trade marks will also be hotly disputed.  It is unlikely that a Court would determine that the marks were substantially identical comparing the two marks side by side and noting their similarity.  The question of deceptive similarity is more contentious.

It is at this point that the present dispute differs from Coca-Cola Co v All-Fect Distributors Ltd.  Here the alleged infringer is Coca Cola’s main rival, which has established its own distinct reputation in the cola market, the same market in which Coca Cola operates.  The question as to whether consumers would be caused to wonder about the source of the Respondents’ products is therefore  more tenuous here than it was in Coca-Cola Co v All-Fect Distributors Ltd, given the level of consumer savviness and the strongly held preference most consumers hold for either Coca Cola or Pepsi products.

Conclusion

However the Respondents decide to frame their defence, the use issue is likely to comprise a key aspect of this dispute and it will be interesting to see what the Court will make of this, if the matter goes to hearing.  Similarly, the question as to substantial identity and consumer confusion will also be an interesting point of argument in this battle of the cola giants.

So where to from here? Well, the Respondents will have to file their defence shortly, with the matter due for a directions hearing next week.  This is definitely one to watch with interest.

Amanda Scardamaglia is a Teaching Fellow and PhD Candidate at the University of Melbourne Law School.

(return to the top of this edition)


World Famous in New Zealand – a ‘battle between a Paeroa businessman and international drinks giant Coca-Cola’

June 3, 2010

By Dr Owen Morgan

The New Zealand media recently reported that the Assistant Commissioner of Trade Marks had directed Coca-Cola’s application for the phrase ‘WORLD FAMOUS IN NEW ZEALAND’ (in respect of aerated waters etc) to proceed to registration.  For the decision click here.

The phrase was coined by an advertising agency for use with ‘Lemon and Paeroa’, a popular aerated drink and one that has lifted awareness of Paeroa, a small rural town (population around 4,000) in the North Island of New Zealand which is known for its mineral springs. The drink was originally made from Paeroa mineral water and lemon. The phrase was used for sometime by Coca-Cola Amatil (NZ) Limited before it filed the application and Coca-Cola already held a number of registrations for labels incorporating the name of the drink and the phrase.

The application was filed on 30 September 2004 and it was accepted on 29 January 2007. It would probably have proceeded to registration without much interest from anybody if Coca-Cola hadn’t upset a small businessman. But it wasn’t until 12 April 2010 that the Assistant Commissioner handed down his decision in respect of the opposition by a Paeroa businessman, Mr Tony Coombe.

Why bother opposing Coca-Cola’s application?

Coombe is a small businessman apparently prepared to spend his own money to protect a ‘Kiwi-ism’ that belongs to all New Zealanders. There is some truth in this assertion as can be seen by the wide range of material that is returned when the phrase is searched on Google.

What hasn’t been reported is that the dispute arose because Coombe had incorporated a company in September 2000 named World Famous in New Zealand Limited. It is currently an inactive land-holding company. Coombe was later contacted by Coca-Cola’s lawyers who asked him to change the name of the company. He refused and his attempts to reach an agreement with Coca-Cola’s lawyers were unsuccessful and led to what he described as ‘nasty phone calls’ and ‘nasty letters’. Coombe hit back by opposing Coca-Cola’s application and the dispute dragged on.

Why would Coca-Cola try and get Coombe to change the name of his company?

The answer, presumably, is that Coca-Cola wants a monopoly on the use of the phrase over and above the monopoly it will obtain by way of its trade mark registration and the related goodwill that it has built up in the phrase.

Who won?

Coombe has spent a reasonable sum of money (approximately NZ$30,000 in legal fees over a period of about two and one half years) and he has nothing to show for it, other than the right to battle on. He hasn’t changed the name of his company but he admits that if he had known how much the dispute was going to cost him, he might well have done so.

However, he has also said that he felt that he might as well go ahead with the next stage which was to file an appeal in the High Court against the decision of the Assistant Commissioner. There is lesson here: put a price on how far you are prepared to go to fight for a principle when you’re confronted by a multi-national with very deep pockets. A second lesson, and one for the Coca-Cola’s of this world, is: some people value their principles and are prepared to fight for them.

Coca-Cola’s mark has been registered, but does this mean that Coca-Cola won? The Assistant Commissioner noted that Coca-Cola faced a difficulty:

‘While the applicant may be able to produce evidence of a connection in the minds of the public between its L&P trade mark (and goods) and the use of the phrase “World Famous in New Zealand”, that does not mean that others should not be free to use the same phrase in relation to their goods and nor does it mean that the public will not expect that to be a phrase that others ought to be free to use. On the evidence it appears that the public do in fact have such an expectation.’  (para 32(g))

Coca-Cola may have won the battle, have they won the war? The media reports were not complimentary of ‘the international drinks giant’ and all Coca-Cola has secured is confirmation of its existing monopoly. The exclusive right to use the phrase in question had surely been established by the years of use on the label and the many bottles and cans of drink that have been sold.  And Coca-Cola may yet face another day in court.

Isn’t this just another example of a multi-national bullying a small businessman.

Postscript – the future of carbonated milk!!

More recently, Coca-Cola has again been in the news for its aggressive behaviour in protecting its marketing position. It appears that Coca-Cola has a supplier contract with the organisers of the National Agricultural Fielday.  The NZ “Fielday” is the largest agribusiness exhibition in the Southern Hemisphere.

It is reported that Coca-Cola have used this agreement to prevent an innovator (Mr Revell) from selling his newly developed product – a carbonated milk drink (cola and lemonade flavours) – from a stand at the Fielday. The organisers declined his application for a stand, although, he was later told he could exhibit but not sell his product. As Revell couldn’t afford the cost of the stand, he declined.

Post – postscript – anything but the football!!

There is another lesson in the Revell example for small businessmen. New Zealand hosts the Rugby World Cup in 2011. Under New Zealand’s draconian ambush marketing laws, the right to sell products in the vicinity of World Cup venues will be strictly controlled and will require a licence from the organiser.

If Coca-Cola is the soft drinks supplier to the Rugby World Cup, it is reasonable to assume that it will use its commercial ‘clout’ to ensure that no other licences are issued to sell soft drinks. This would mean that no other traders (including children selling home-made lemonade from their front gardens) in certain designated streets around the venues will be able to sell drinks to passers-by.


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