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[2016] ZASCA 18
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Distell Limited v KZN Wines and Spirits CC (20291/2014) [2016] ZASCA 18; 2016 BIP 134 (SCA) (15 March 2016)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 20291/2014
In
the matter between:
DISTELL
LIMITED
APPELLANT
and
KZN
WINES AND SPIRITS
CC
RESPONDENT
Neutral
Citation:
Distell
Ltd v KZN Wines and Spirits CC
(20291/2014)
[2016] ZASCA 18
(15 March 2016)
Coram:
Lewis,
Cachalia, Wallis, Saldulker and Zondi JJA
Heard:
1
March 2016
Delivered:
15
March 2016
Summary:
Trade
mark infringement: the marks KNIGHT’S GOLD and KNIGHTS in
respect of whisky are not likely to be confused with the mark
BLACK
KNIGHT: no infringement of
s 34(1)
(a)
of the
Trade Marks Act 94 of 1993
by selling BLACK KNIGHT in
competition with KNIGHTS.
ORDER
On
appeal from:
Kwazulu-Natal
Division of the High Court, Durban (Mnguni J sitting as court of
first instance).
(a)
The appeal is dismissed with the costs of two counsel where so
employed.
(b)
The respondent shall pay the costs occasioned by the postponement of
the hearing of the appeal on 10 September 2015.
JUDGMENT
Lewis
JA (Cachalia, Wallis, Saldulker and Zondi JJA
concurring)
[1]
The appellant, Distell Limited (Distell), is a leading producer and
marketer of wines and spirits in South Africa. At issue
in this
appeal is an alleged infringement by the respondent, KZN Wines and
Spirits CC (KZN Wines), of two of Distell’s word
trademarks in
respect of whisky. The one registered mark is KNIGHT’S GOLD
(88/5853) and the other is KNIGHTS (91/3863) both
in class 33. The
KNIGHT’S GOLD mark was registered on 30 October 1990, and the
mark KNIGHTS on 24 January 1994.
[2]
In 2002 KZN Wines started importing into South Africa from Scotland a
whisky with the mark ‘BLACK KNIGHT’, and has
sold it
exclusively to Midmar Liquors Limited (Midmar), which has some 40
outlets across the country. Midmar has sold both BLACK
KNIGHT and
KNIGHTS whisky since at least 2009.
[3]
The KNIGHT’S GOLD mark consists of only the two words. The mark
KNIGHTS also depicts a device of a label with the word
KNIGHTS in
white print on a black background, with decorative features above and
below it. The KNIGHTS mark appears thus:
[PLEASE
CONSULT THE PDF VERSION AND RTF FOR IMAGES]
And
the bottle thus:
[PLEASE
CONSULT THE PDF VERSION AND RTF FOR IMAGES]
Each
trademark is subject to a disclaimer.
[PLEASE
CONSULT THE PDF VERSION AND RTF FOR IMAGES]
The
whisky imported by KZN Wines is sold in the bottle depicted below:
[4]
In May 2011 Distell discovered the use of the mark BLACK KNIGHT and
brought an application in the KwaZulu-Natal High Court,
Durban, for
an interdict against KZN Wines restraining it from infringing its two
word marks, on the basis that the use of the
mark BLACK KNIGHT in the
course of trade in relation to alcoholic beverages, is likely to
deceive or cause confusion in terms of
s 34(1)
(a)
of the
Trade Marks Act 194 of 1993
. Distell also sought relief on the
basis that KZN Wines was passing off its whisky as that of Distell’s
two products.
[5]
The high court (Mnguni J) dismissed the application, finding that the
use of the BLACK KNIGHT mark did not infringe Distell’s
registered marks because there was no probability that a notional
customer might be confused or deceived as contemplated by
s 34(1)
(a)
of the Act. It found also that, although Distell has acquired a
reputation associated with the use of the KNIGHTS mark, KZN Wines
was
not passing off its product as that of Distell. The high court
refused leave to appeal against its order. The appeal lies with
the
leave of this court.
[6]
The facts are largely common cause although KZN Wines does not
concede that Distell’s reputation existed at the time when
it
started to import BLACK KNIGHT whisky. Distell argues that the
dominant word in each of its marks is knight. That is obviously
so in
respect of the one mark. It is not obviously so in respect of
KNIGHT’S GOLD. Nor is it obvious in respect of BLACK
KNIGHT.
Before turning to a comparison it is useful to set out the legal
principles applicable to trademark infringement. They
are well
settled, and have been oft-repeated. I shall not deal with the many
cases in which this and other courts have rehearsed
them, but shall
refer to the famous dictum of Corbett JA in
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A), which has been repeatedly reaffirmed by this
court, and then the most recent judgments of this court.
[7]
The starting point must of course be
s 34(1)
of the Act. It provides:
‘
The
rights acquired by registration of a trade mark shall be infringed
by—
(a)
the
unauthorized use in the course of trade in relation to goods or
services in respect of which the trade mark is registered, of
an
identical mark or of a mark so nearly resembling it as to be likely
to deceive or cause confusion.’
In
Plascon-Evans
Corbett JA said (at 640G-641D):
‘
In
an infringement action the
onus
is
on the plaintiff to show the probability or likelihood of deception
or confusion. It is not incumbent upon the plaintiff to show
that
every person interested or concerned (usually as customer) in the
class of goods for which his trade mark has been registered
would
probably be deceived or confused. It is sufficient if the
probabilities establish that a substantial number of such persons
will be deceived or confused. The concept of deception or confusion
is not limited to inducing in the minds of interested persons
the
erroneous belief or impression that the goods in relation to which
the defendant’s mark is used are the goods of the
proprietor of
the registered mark, ie the plaintiff, or that there is a material
connection between the defendant’s goods
and the proprietor of
the registered mark; it is enough for the plaintiff to show that a
substantial number of persons will probably
be confused as to the
origin of the goods or the existence or non-existence of such a
connection.
The
determination of these questions involves essentially a comparison
between the mark used by the defendant and the registered
mark and,
having regard to the similarities and differences in the two marks,
an assessment of the impact which the defendant’s
mark would
make upon the average type of customer who would be likely to
purchase the kind of goods to which the marks are applied.
This
notional customer must be conceived of as a person of average
intelligence, having proper eyesight and buying with ordinary
caution. The comparison must be made with reference to the sense,
sound and appearance of the marks. The marks must be viewed as
they
would be encountered in the market place and against the background
of relevant surrounding circumstances. The marks must
not only be
considered side by side, but also separately. It must be borne in
mind that the ordinary purchaser may encounter goods,
bearing the
defendant’s mark, with an imperfect recollection of the
registered mark and due allowance must be made for this.
If each of
the marks contains a main or dominant feature or idea the likely
impact made by this on the mind of the customer must
be taken into
account. As it has been put, marks are remembered rather by general
impressions or by some significant or striking
feature than by a
photographic recollection of the whole. And finally consideration
must be given to the manner in which the marks
are likely to be
employed as for example, the use of name marks in conjunction with a
generic description of the goods.’
[8]
This passage was relied on by the high court in stating that the
likelihood of confusion must be considered globally. That principle,
originating in the European Court of Justice in
Sabel
BV v Puma AG Rudolf Dassler Sport
[1998] RPC 199
(ECJ) 221 at 224 was adopted by this court in
Bata
Ltd v Face Fashions CC & another
2001 (1) SA 844
(SCA) para 9.
Sabel
said that a court must consider the allegedly infringing mark
‘globally’: ‘a global appreciation of the visual,
aural or conceptual similarity of the marks in question, must be
based on the overall impression given by the marks, bearing in
mind,
in particular, their distinctive and dominant components’.
[9]
This principle was again approved by this court in
Cowbell
AG v ICS Holdings Ltd
2001 (3) SA 941
(SCA) para 10, where Harms JA emphasized that the
essential function of a trade mark is to indicate the origin of the
goods in
connection with which it is used. And, as he pointed out,
the decision whether there is a reasonable likelihood of deception or
confusion amounts to a value judgment. (See also
Online
Lottery Services (Pty) Ltd & others v National Lotteries Board &
others
2010 (5) SA 349
(SCA) para 13.)
[10]
In
Century City Apartments Property Services CC & another v
Century City Property Owners’ Association
2010 (3) SA 1
(SCA) para 13 Harms DP approved a more recent dictum of Laddie J in
the Chancery Division (England and Wales),
Compass Publishing BV v
Compass Logistics Ltd
[2004] EWHC 520
(Ch). Laddie J said (para
24):
‘
The
likelihood of confusion must be appreciated globally, taking account
of all relevant factors. It must be judged through the
eyes of the
average consumer of the goods or services in question. That customer
is to be taken to be reasonably well informed
and reasonably
circumspect and observant, but he may have to rely upon an imperfect
picture or recollection of the marks.
The
court should factor in the recognition that the average consumer
normally perceives a mark as a whole and does not analyse its
various
details. The visual, aural and conceptual similarities of the marks
must be assessed by reference to the overall impressions
created by
the marks bearing in mind their distinctive and dominant components.
Furthermore, if the association between the marks causes the public
to wrongly believe that the respective goods come from the
same or
economically linked undertakings, there is a likelihood of
confusion.’ (My emphasis.)
[11]
These dicta were all repeated in
Yair Shimansky v Browns the
Diamond Store
[2014] ZASCA 214
which referred to and relied in
turn on
Roodezandt Ko-operatiewe Wynmakery Ltd v Robertson Winery
(Pty) Ltd & another
(503/13)
[2014] ZASCA 173.
There, Brand
JA elaborated on the meaning of the value judgment to be made (in the
context of an application to remove a trade
mark from the register).
He said (para 5):
‘
Considerations
that could assist in the exercise of this value judgment have been
proposed in numerous decided cases. One of these
cases is
Laboratoire
Lachartre SA v Armour-Dial Incorporated
1976
(2) SA 744
(T) in which Colman J sounded the following note of
caution (at 746B-E):
“
We
have had ample time for full consideration and close comparison of
the two trademarks with which we are concerned. These advantages,
however, carry their own dangers. They have caused us to look at the
trademarks with far greater care than they would be looked
at by the
members of the public whose probable reactions we are required to
assess, and with a far keener awareness of similarities
and
dissimilarities than such people would probably have as they go about
their daily lives.
What
we have now to do is, therefore, to transport ourselves, notionally,
from the court-room or the study, to the market place.
We must try to
look at the marks as they will be seen, if they are both in fair and
normal commercial use, by the hypothetical
consumers of [wine]. Those
will be people of many races and degrees of education, having varied
gifts, interests and talents. We
are not to postulate the consumer of
“phenomenal ignorance or extraordinarily defective
intelligence”. . . We
are to consider a person of average
intelligence and proper eyesight, buying with ordinary caution.”’
[12]
Brand JA then listed the principles of comparison that have developed
in order to reach the value judgment. He said (para 6):
‘
Most, if not
all, of these considerations seem to find application in the present
context. Other principles of comparison which
have become
crystallised in earlier decisions of this court which I find to be
pertinent, include the following:
(a)
A likelihood of confusion does not only arise when every person
interested or concerned
in the class of goods for which the trademark
has been registered could probably be deceived or confused. It also
arises if the
probabilities establish that a substantial number of
such persons will be deceived or confused.
(b)
The concept of deception or confusion is not limited to inducing in
the minds of these
interested persons the erroneous belief or
impression that the two competing products are those of the objector
or that there is
a connection between these two products. A
likelihood of confusion is also established when it is shown that a
substantial number
of persons will probably be confused as to the
origin of the products or the existence or non-existence of such a
connection.
(c)
The determination of the likelihood of confusion involves a
comparison between the
two competing marks, having regard to the
similarities and differences in the two and an assessment of the
impact it would have
on the average type of customer who is likely to
purchase the kind of goods to which the marks are applied.
(d)
The marks must not only be considered side by side, but also
separately.
(e)
It must be borne in mind that the ordinary purchaser may encounter
goods bearing one
mark with an imperfect recollection of the other.
(f)
If each of the competing marks contains a main or dominant feature or
idea, the likely
impact made by this dominating feature on the mind
of the customer must be taken into account. This is so because marks
are remembered
by some significant or striking feature rather than by
the photographic recollection of the whole. (See eg
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 640G-641E;
Puma
AG Rudolf Dassler Sport v Global Warming (Pty) Ltd
2010
(2) SA 600
(SCA) para 8; and
Adidas
AG & another v Pepkor Retail Ltd
2013
BIP 203 (SCA) paras 20-23.)’
[13]
Distell argues that it is sufficient that a person looking casually
at the marks used by the parties is likely to be deceived.
And that
the deception need last for only a fraction of time, a principle
recently affirmed in
Orange
Brand Services v Orange Works Software
[2013]
ZASCA 158
(22 November 2013) para 13. It relied also on a passage of
the judgment of Colman J in
Oude
Meester Groep Bpk & another v SA Breweries Ltd; SA Breweries Ltd
& another v Distillers Corporation (SA) Ltd &
another
1973 (4) SA 145
(W) which dealt also with an alcoholic beverage
(beer) and the circumstances in which a customer would probably be
deceived as
to the origin of the drink ordered in a bar or bought at
a liquor shop.
[14]
Colman J said (at 161A-H) that the proper approach to be taken is not
to compare the marks side by side in a study or a court
room, where
the respective marks are examined in a calm and intellectual
atmosphere. A court dealing with an alleged infringement
must
transport itself, notionally, ‘from the court room to the
market place’ and stand in the shoes of the customer
who drank
beer. The court must remember that not all beer drinkers are careful
or logical people, and that ‘on a convivial
occasion, enlivened
by the use of beer or spirits, recollection may fade and articulation
may deteriorate with the passage of time’.
Colman J found that
the probability of deception and confusion as to the marks ‘Master
Brew’ and ‘Old Master’
had been established.
[15]
Distell argues that in a crowded bar or tavern there is a likelihood
of confusion: the customer may order a KNIGHTS whisky
and be served
some BLACK KNIGHT. The high court considered that the circumstances
were irrelevant to the issue of confusion and
deception: even though
whisky is a popular drink it is not a cheap drink, said Mnguni J.
Thus a consumer was ‘likely to exercise
circumspection and a
greater degree of care in making a purchase’. Distell argues
that the high court failed to take into
account that both BLACK
KNIGHT and KNIGHTS are inexpensive whiskies, and that consumers of
either product would not be whisky connoisseurs.
And even if
confusion was dispelled as soon as the consumer tasted what had been
poured, it was enough that confusion had occurred
for an instant.
[16]
In my view, one cannot ignore the use of the word black to describe
KZN Wines’ whisky. Knight is used as a noun, and
the adjective
describing the knight is black. Whether the colour black is used to
describe a mythical figure (as in the Black Knight
of King Arthur’s
round table) or to express some quality which many whisky brands use
(the example given being Black Label,
describing a whisky in the
Johnny Walker range, but others abound) does not matter. It
simply cannot be ignored. Although
Distell tried to argue that knight
is the dominant word even in Knight’s Gold, it is hard to see
why. Just as black cannot
be ignored, nor can gold. As the high court
said, the word black was as significant as knight in KZN Wines’
mark.
[17]
The sound, sense and appearance of the respective marks are
different. Even the consumer with an imperfect recollection, and
in a
noisy pub or crowded bottle store, is not likely to be confused as to
the origin of BLACK KNIGHT whisky. Indeed, it is significant
that in
the years that Midmar has been trading in both KNIGHTS and BLACK
KNIGHT whiskies, there has been no evidence of confusion.
We have not
even been advised how Distell discovered, in May 2011, that the mark
BLACK KNIGHT, was being sold at the same outlets
as KNIGHTS has been.
And in
Pioneer
Foods (Pty) Ltd v Bothaville Milling (Pty) Ltd
[2014] ZASCA 6
;
[2014] 2 All SA 282
(SCA) this court held that where,
after ten years of competitive trading of two brands of maize meal,
no evidence of actual confusion
was led, the absence of such evidence
tipped the balance in favour of finding that there was no likelihood
of confusion between
the two. Although that was said in a matter
concerning passing-off, the principle must be the same. If there is
no evidence of
confusion, then the likelihood of confusion between,
or deception as to, the different marks is significantly reduced.
[18]
The high court thus correctly found that there was no infringement of
Distell’s marks. And since there is little likelihood
of
confusion as to the origin of the parties’ respective marks,
and no evidence at all of a representation that BLACK KNIGHT
is the
product of Distell, the question of passing-off falls away. There is
thus no need to discuss the very different shapes and
colours of the
bottles in which KNIGHTS and BLACK KNIGHT are sold. The high court’s
order was correctly made in the circumstances.
[19]
(a) The appeal is dismissed with the costs of two counsel where so
employed.
(b)
The respondent shall pay the costs occasioned by the postponement of
the hearing of the appeal on 10 September 2015.
_______________________
C
H Lewis
Judge
of Appeal
APPEARANCES
For
Appellant:
I Joubert
Instructed
by:
Spoor & Fisher, Centurion
Phatshoane Henney
Attorneys, Bloemfontein
For
Respondent:
A R Sholto-Douglas SC, A R Newton
Instructed
by:
Kellerman Hendriks Inc, Bellville
Symington & De Kok,
Bloemfontein