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[2019] ZAGPPHC 113
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Scotch Whisky Association and Others v Milestone Beverage CC and Others (2882/2017) [2019] ZAGPPHC 113; 2019 BIP 295 (GP) (4 March 2019)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
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IN THE HIGH COURT OF SOUTH
AFRICA
GAUTENG DIVISION, PRETORIA
(1)
REPORTABLE: YES
(2)
OF INTEREST TO OTHER
JUDGES
CASE NUMBER: 2882/2017
4/3/2019
In
the matter between:
THE
SCOTCH WHISKY ASSOCIATION
FIRST APPLICANT
CHIVAS
BROTHERS
LTD
SECOND APPLICANT
CHIVAS
HOLDING (IP)
LTD
THIRD APPLICANT
PERNOD
RICARD SOUTH AFRICA (PTY) LTD
FOURTH APPLICANT
and
MILESTONE
BEVERAGE CC
FIRST RESPONDENT
WAYNEL
DISTRIBUTORS CC
SECOND RESPONDENT
THE
TRUSTEES FOR THE TIME BEING OF THE
THISTLE
TRUST (004828/2002)
THIRD RESPONDENT
THE
TRUSTEES FOR THE TIME BEING OF THE
T
AND S HAUPT FAMILY TRUST (021433/2014)
FOURTH RESPONDENT
SEAN PETER HAUPT (ID:
[….])
FIFTH RESPONDENT
CELESTE
O HAUPT (ID: [….])
SIXTH RESPONDENT
THE
MINISTER OF AGRICULTURE , FORESTRY AND
FISHERIES
SEVENTH RESPONDENT
JUDGMENT
KUBUSHl,
J
INTRODUCTION
[1]
This is an application based on unlawful competition in the Whisky
industry. The premise
for the unlawful competition is alleged to be
by way of misrepresentation and breach of various statutory
provisions. namely,
section 41
of the
Consumer Protection Act 68 of
2008
and sections 11 and 12 of the Liquor Products Act 60 of 1989
("the
Liquor Products Act"
;).
[2]
The application concerns the first
respondent's ROYAL DOUGLAS and KING ARTHUR alcoholic beverage
products ("the relevant products")
which firstly, are said
to have get-ups misrepresenting to the public that they are whisky
and/or Scotch Whisky products. whilst
the relevant products are, in
fact, cane spirit or vodka that is coloured to have the appearance of
whisky. Secondly, the get-ups
contain misleading statements and/or
information about the nature and quality of the liquor being sold, in
particular, that the
products are whisky flavoured, whisky and/or
Scotch Whisky and contain alcohol strength of 43,5%, when it is not
so.
THE
PARTIES
[3]
The parties involved in this litigation
are:
3.1
(a) The
first applicant, The Scotch Whisky Association, is the trade
association of the Scotch Whisky
industry. It traces its origin back
to 1912 when the first association to represent and protect Scotch
Whisky was formed. It presently
operates as a company incorporated in
terms of the Companies Act of the United Kingdom;
(b)
The second applicant is a member of the
first applicant and a producer and supplier of a large number of
Scotch Whisky brands sold
in South Africa;
(c)
The third applicant is the owner of the
intellectual property and goodwill attaching to the second
applicant's Scotch Whisky brands;
and
(d)
The fourth applicant is an appointed
exclusive distributor of the second applicant's products in South
Africa.
3.2
There are seven respondents cited in the
application, namely
(a)
The first respondent, a close
corporation incorporated in accordance with the laws of South Africa,
is involved in the liquor product
industry and is managed and
administered by the fifth respondent, who is its sole director and
managing member;
(b)
The second respondent is a close
corporation in respect of which the fifth respondent's father owned
the membership interest. Historically,
the second respondent was
responsible for the manufacture of, amongst others, the ROYAL DOUGLAS
and KING ARTHUR products and the
first respondent was responsible for
the marketing, distribution and sales of the products. After the
demise of the fifth respondent's
father, the first respondent took
over the duties of the second respondent as well. The first
respondent has since obtained its
own A-code, being A1637 and as such
the labels of all the products (including the products forming the
subject matter of this application)
manufactured and distributed by
the first respondent have since 2016 reflected the said A-code;
(c)
The third respondent was set up and
managed by the fifth respondent's father and the fifth respondent,
according to him, has no
involvement with the third respondent;
similarly, the third respondent has no involvement with the
manufacture, sale and distribution
or marketing of the first
respondent's products, including the relevant products;
(d)
The fourth respondent is the trustee for
the time being of the T and S Haupt Family Trust, a trust
incorporated in South Africa.
It is the proprietor of the trade mark
application no. 2015/14691 ROYAL DOUGLAS in class 33 in respect of
"
Alcoholic beverages (except beers)".
The
first respondent is said to have previously used the ROYAL DOUGLAS
trade mark under licence from the fourth respondent;
(e)
The fifth respondent is the party
controlling, managing and directing the first and the fourth
respondents.
(f)
The sixth respondent is a trustee of the
third respondent and the executrix of the deceased estate of the
fifth respondent's father,
which estate includes the second
respondent.
(g)
The seventh respondent is cited herein
for purposes of notice and no relief is sought against him except if
he were to oppose the
relief sought in the application.
Only the first, fourth and fifth
respondents are opposing and for purposes of this judgment I shall
refer to them jointly as the
respondents.
[4]
The first applicant is said to have a
significant interest in the South African whisky market in that
virtually all of the well-known
Scotch Whisky brands sold in South
Africa are owned by its members. Members of the first applicant, like
the second applicant,
accordingly hold a significant share of the
whisky market in South Africa. These members own some of the world
renowned Scotch
Whisky brands sold in South Africa. As such, for the
various reasons advanced in the applicants' founding papers, amongst
others,
the fact that Scotch Whisky is one of the world's leading
spirit drinks, it is not in dispute that the reputation and integrity
of Scotch Whisky is worth protecting. Its objects are contained in
paragraph Ill of its Memorandum of Association as, amongst others:
(a)
To
protect and promote the interests of the Scotch Whisky trade
generally both at home and abroad; and
(b)
To
prosecute, defend and enter into legal proceedings in any territory
of the world in defence of the interests of the Scotch Whisky
trade.
[5]
The first respondent is said to be
listed as one of the parties responsible for the production and/or
distribution and/or sale of
certain alcoholic beverages known as the
ROYAL DOUGLAS and KING ARTHUR products ("the relevant
products"). The said relevant
products are sold in South Africa
under the auspices of whisky flavoured spirit aperitif products and
are the basis of the complaint
in this application.
THE
RELIEF SOUGHT
[6]
The first relief sought by the
applicants, in the main, is for an order interdicting and restraining
the first, second, third, fourth,
fifth and sixth respondents from:
6.1
selling
or offering for sale products with the get-ups or labels, or using in
the course of trade or otherwise, the get-ups or labels
illustrated
in annexure "A" and "B" [of the notice of motion]
or similar get-ups or labels; and
6.2
using
in any manner in the course of trade or otherwise the name or
description "whisky", "whiskey" or other
derivation thereof in relation to any liquor product that does not
satisfy the statutory requirements for whisky;
6.3
using
in any manner in the course of trade, or otherwise, the words
"Scotch"; "Scotland"; "Scottish";
or
any word or phrase of which "Scotch"; "Scotland";
"Scottish" form part, or labels and representations
which
include the insignia evocative of Scottish or UK origin in relation
to any liquor product which has not been wholly manufactured
or
produced in Scotland.
THE
FACTUAL MATRIX
[7]
It is common cause that, initially when
the applicants approached this court for the relief they seek, their
complaint was in respect
of the depiction of the get-ups of the said
alcoholic beverages, as appears in annexure "A" and "B"
of the
notice of motion, which were alleged to be strongly evocative
of Scotland and the United Kingdom, respectively, when used in
relation
to a golden brown liquor which suggested that the products
are Scotch Whisky and also containing false information about the
alcoholic
strength of such beverages.
[8]
In essence, the applicants' complaint
was that the products were being falsely represented as whisky,
whisky flavoured and also
as Scotch Whisky, when in fact they bear no
relation whatsoever either to whisky, Scotland or the United Kingdom.
Thus, the sale
of the products, according to the applicants, amounted
to unlawful competition by way of misrepresentation and in breach of
the
aforesaid statutory provisions.
[9]
In their answering affidavit and in
reply to the complaint raised by the applicants in their founding
papers, the respondents alleged
that they had attended to the
applicants' complaint in that they had replaced the first sets of
get-up they were using to market
and sell the relevant products with
the second sets of get-up. The applicants in turn, when replying to
the respondents' allegations
as contained in the applicants'
answering affidavit, raised a number of issues which according to
them showed that the respondents
has still not addressed the
complaints raised in their founding papers in full. In particular,
the content of the first respondent's
website which still reflected
that the products were being marketed and sold in the first sets of
get-up.
[10]
But. at the time the matter was heard, it became common cause that
the respondents had indeed
replaced the first sets of get-up as
depicted in the applicants' papers and was at the time already
marketing, distributing and
selling the products dressed in the
second sets of get-up. Specifically, the first respondent had
addressed the website complaint
and amended it to reflect the
products in their second sets of get-up and that the products were no
longer being marketed and sold
as whisky products but as whisky
flavoured spirit aperitifs.
[11]
Be as it may, the applicants are not satisfied about what they refer
to as cosmetic changes which,
according to them, have done nothing to
alleviate their concerns. They, consequently, object to the second
sets of get-up and maintain
that the second sets of get-up still
contain misleading statements about the nature and quality of the
spirit being sold: the representation
about the alcohol strength of
these products as well as that they are not whisky flavoured. The
applicants were able to continue
with their claim mainly because in
the notice of motion they contended for an order interdicting and
restraining the selling or
offering for sale of products with
the
first sets of get-up or labels or similar sets of get-up or labels.
(my emphasis) Thus they contend that the second sets of
get-up are
similar to the first sets of get-up and the respondents should be
interdicted and restrained from selling or offering
the relevant
products for sale in those get-ups.
[12]
As a result, the applicants' submission
is that the respondents continue to trade unlawfully in competition
with members of the
first applicant and in contravention of the
Liquor Products Act; an
allegation which is obviously denied by the
respondents. What requires determination at this stage is whether the
first respondent
is trading in unlawful competition with the members
of the first applicant and/or in contravention of the legislative
provisions
of the
Liquor Products Act. shall
, hereunder, deal with
the two issues in turn.
UNLAWFUL
COMPETITION
[13]
The relief sought by the applicants in
this regard [as
per
prayer
3 of the notice of motion] is an order interdicting and restraining
the first, second, third, fourth, fifth and sixth respondents
from -
13.1
Trading
in unlawful competition with the applicants by dealing in the course
of trade or otherwise in liquor products represented
as whisky or
"whisky flavoured " when they are not whisky; represented
as Scotch Whisky when they are not Scotch Whisky;
or in products sold
under any of the get-ups or labels illustrated in annexures "A"
and "B" [of the notice
of motion] or get-ups or labels
similar thereto, which misrepresent that the products are whiskies or
Scotch Whiskies when they
are not; and
13.2
Passing
off any liquor product as whisky or "whisky flavoured" when
it is not whisky, or as Scotch Whisky when it is not
Scotch Whisky;
or any product sold under any get-ups or labels, illustrated in
annexures "A" and "B" [of the
notice of motion]
or get-ups or labels similar thereto as whisky or Scotch Whisky when
it is not.
[14]
The grounds raised by the applicants in
support of their submission that the first respondent continue to
trade unlawfully in competition
with members of the first applicant,
are that the changes made continue to bring confusion to and to
mislead members of the public
in that the products create the
impression of being whisky through the shape of the bottles, colour
of the liquid, type of traditional
labelling and wording such as
double distilled and premium quality and claim to alcohol content of
43,5%.
[15]
Conversely, the respondents deny having
any intention of pretending that either of the first respondent’s
products are whiskies,
nor do its customers perceive the products as
such. They deny ever attempting to market the relevant products as
whiskies let alone
Scotch Whiskies, or to confuse anyone to believe
that the relevant products are whiskies. According to them, both the
ROYAL DOUGLAS
and KING ARTHUR products are marketed and sold as
spirit aperitifs and are understood in the marketplace to be exactly
that.
[16]
The question is, are the relevant products, dressed in the new
get-ups, creating the impression
of being whisky?
The
Law Applicable
[17]
South African courts have on a number of
occasions interdicted the sale of liquor other than Scotch Whisky,
using Scotch
indiciae
such
as Scottish names or traditional Scottish dress, including kilts and
tartans. I was referred to a number of cases along this
line, but, I
do not find it apposite that I mention each and every one of those
cases in this judgment. I shall refer only to the
cases I find most
helpful in resolving the issue before me.
[18]
The principles on which liability for
unlawful competition rests were restated in the Supreme Court of
Appeal judgment in
Pexmart
CC
v H Mocke Construction (Pty) Ltd
[1]
as follows:
"[62] …
In
Schiltz
v Butt
[2]
the following
was stated:
'As a general rule, every person
is entitled freely to carry on his trade or business in competition
with his rivals. But the competition
must remain within lawful
bounds. If it is carried on unlawfully, in the sense that it involves
a wrongful interference with another's
rights as a trader. that
constitutes an
injuria
for which the
Aquilian
action
lies if it has directly resulted in loss.'
…
[63]
There is no closed list of acts that
constitute unlawful competition. The following are well-known:
(a)
trading in contravention of a statutory
prohibition;
(b)
fraudulent misrepresentation made by a
rival trader as to that trader's own business or goods;
(c)
the publication by a rival of injurious
falsehoods concerning the competitor’s business:
(d)
the passing-off by a rival trader of
that trader's goods or business as being that of a competitor;
(e)
the employment of physical assaults and intimidation designed to
prevent a competitor from
pursuing her or his trade;
(f)
the unfair use of a competitor’s
fruits of labour;
(g)
the misuse of confidential information
in order to advance one's own business interests and activities at
the expense of a competitor’s;
(h)
the inducement or procurement of a
breach of contract: an action for damages (and, in appropriate cases,
for an interdict) will
lie against any person who intentionally and
without justification induced or procured another to breach a
contract made with any
other person; and
(i)
interference with character
merchandising rights."
[19]
In this instance, the conduct complained
of is trading in contravention of the
Liquor Products Act, the
alleged fraudulent misrepresentation made by a rival trader as to
that trader's products; and the passing-off by a rival trader
of that
trader's products as being that of a competitor. It follows that the
applicants must on the evidence furnished in their
papers prove that
the first respondent is trading in contravention of the
Liquor
Products Act, falsely
representing the relevant products as those of
the members of the first applicants, and/or passing-off the relevant
products as
that of the members of the first applicant, that is, the
first respondent is falsely representing the ROYAL DOUGLAS and KING
ARTHUR
products or passing them off as whiskies or Scotch Whiskies.
[20]
The false representation that a product
has certain characteristics relating to, for example, its nature or
its origin, amounts
to unlawful competition. Unlawful competition
will be present where the marketing of a product results in or
constitutes a false
misrepresentation which causes, or which is
likely to cause, confusion among or deception of a substantial number
or prospective
purchasers. e.g. that it has a distinctive attribute
peculiar to that which is marketed by his competitor, and which
misrepresentation
occasions financial loss to him (the
competitor).
[3]
[21]
Misrepresentation in this context is said to be in the marketing of
goods in a way which leads
a significant section of the public to
think that those goods have some attribute or attributes which they
do not truly possess.
Misrepresentation would then arise where
confusion or the likelihood of confusion occurs between these goods
and other goods which
do possess that attribute or those
attributes.
[4]
Application
of the Law to Facts
[22]
From the applicants' submissions on this
point, it is evident that the main
indiciae
of the conduct complained of, are
the use of indicators that the relevant products are whisky
per
se
and/or of Scottish origin or with
Scottish connections, like for instance, the type of get-ups there
are dressed in.
[23]
It is evident from the papers that the
applicants' main complaint is that the respondents are falsely
representing to the public
that the ROYAL DOUGLAS and KING ARTHUR
products are Scotch Whisky or whisky when in effect they are not. It
is also evident that
the respondents concede that the relevant
products are not Scotch Whisky or whisky and the respondents also
deny that they have
represented the said products to be Scotch Whisky
or whisky. According to the respondents, the said products are
represented to
the public as whisky flavoured spirit aperitifs.
[24]
According to the respondents, the labels
and the sets of get-up used by the first respondent to dress its
ROYAL DOUGLAS and KING
ARTHUR products contain various elements which
distinguish the aforesaid products from whisky and Scotch Whisky and
do not convey
to the ordinary purchaser that the products are those
of the applicants. I beg to differ with the argument by the
respondents.
[25]
The distinguishing elements on the
products, on which the respondents base their argument, like: the
phrase 'Spirit Aperitif' on
the label; the phrase 'Whisky Flavoured'
on the label; the phrase 'Produced and Bottled in South Africa; and
the plain black and
gold background, are to me not enough to sustain
their argument.
[26]
The test, in my opinion, is simply
whether on a comparison of the appearance of the products of the
first applicant's members and
those of the first respondent, it can
be said that there is a reasonable probability of confusion if the
products of members of
the first applicant and those of the first
respondent are used together in the ordinary course of business.
[5]
[27]
I should mention, without digressing, that the court in
Cobwell
AG,
above, was dealing with the registration of trademarks, but I
am of the view that the principle used thereat in relations to the
likelihood of confusion, finds application in this instance.
[28]
I think the crux is how a substantial number of members of the public
would and are likely to
perceive the products and whether the
appearance of the first respondent's products in the 'improved' sets
of get-up taken together
with the other attributes like the shape of
the bottle, the colour of the liquid/content and the names used -
ROYAL DOUGLAS and
KING ARTHUR; the dominant features of the label
itself - the type of letters used for the names, the crest, the word
'double distilled'
which is mostly associated with whisky, the word
'whisky flavoured ' and the alcohol strength, will not confuse them.
The question
is, do the sets of get-up as a whole represent to the
public that the product is a South African whisky flavoured aperitif
or do
the sets of get-up represent that the relevant products are
whisky or Scotch Whisky? Thus, in order to determine the reasonable
probability of confusion the attributes on which the first respondent
relies to distinguish the relevant products must be considered
in
their entirety based on their overall impression on an ordinary
member of the public.
[29]
It is indeed so that, perhaps, when individually perceived the said
attributes may distinguish
the relevant products from the products of
the first applicant's members, but my view is that when collectively
viewed those attributes
give an appearance of the relevant products
being Scotch Whiskies or at the very least whiskies. The products'
outer appearance,
in my view, will and/or is likely to convey to the
ordinary purchaser that the relevant products are those of the
applicants, and
as such, the appearance is likely to cause confusion
between these products and the products of the first applicant's
members.
[30]
As regards passing-off, which is also conduct the applicants are
complaining about, the applicants'
argument is that the first
respondent is passing off the relevant products as whisky or "whisky
flavoured" when they
are neither whisky or whisky flavoured, or
as Scotch Whisky when they are not Scotch Whisky.
[31]
The court in
Hoechst
Pharmaceuticals (Pty) Ltd v The Beauty Box (Pty) Ltd (in
Liquidation)
[6]
stated the
following in regard to passing-off -
"Confusion
per se
does not give to an action for passing-off. It does so
only where it is the result of misrepresentation by the defendant
that the
goods which he offers are those of the plaintiff or are
connected with the plaintiff."
As I have already made a finding
that the respondents are falsely misrepresenting the relevant
products as those of the applicants,
it follows that the relevant
products are being passed-off as those of the applicants.
[32]
The next question is whether the
relevant products are sold and/or marketed in contravention of the
Liquor Products Act.
CONTRAVENTION
OF THE
LIQUOR PRODUCTS ACT
[33
]
It is the applicants' contention that
the second sets of get-up remain designed to confuse and mislead
members of the public as
to the nature of the liquid in relation to
which they are used. The products, it is alleged, are designed to
have the public associate
the liquor with whisky and Scotch Whisky,
when each of these representations is false. The products are said to
contain false information
about the nature of the alcohol strength of
the liquor and that it is whisky flavoured, whilst double distilling
is, according
to the applicants, a quality associated with whisky.
[34]
Accordingly, so it is argued, by placing
these products on the market, the respondents are acting in breach of
the
Liquor Products Act (section
12 read with
section 11
(2) (d)).
The
Applicable Law
[35] The
salient provisions of the Act are the following:
''11.
Use of certain particulars in connection with the sale of liquor
products
(1)
No
person shall sell any liquor product in a container. unless the
prescribed particulars of such liquor are indicated in the prescribed
manner on the label of such container and on the package of such
container.
(2)
No person shall in connection
with the sale of liquor product -
(a) …
(b) …
(c) …
(d) use a class designation, or
any word or expression that so resembles a class designation that it
will deceive or is likely to
deceive, unless it is the applicable
class designation for the liquor product concerned.
(e) …
12.
Prohibition
of false or misleading description for liquor products
(1)
No person shall use any name,
word, expression. reference, particulars or indication in any manner,
either by itself or in coherence
with any other verbal, written,
printed, illustrated or visual material, in connection with the sale
of liquor product in a manner
that conveys or creates or is likely to
convey or create a false or misleading impression as to the nature.
substance, quality,
composition or other properties. or the class,
cultivar, origin, age, identity, or manner or place of production, of
the liquor
product.
(2)
..."
[36]
As already stated, the respondents'
argument is that the relevant products are not whisky or Scotch
Whisky but spirit aperitif vodka
based products with flavouring,
colouring and sugar added and fall under the classification spirit
aperitif. The products fall
within the class designation spirit-based
liquors as provided for in
section 9
of the
Liquor Products Act.
[37
]
The applicants' main complaint is that
the respondents are in contravention of the Act because it is in
their interest to ensure
that any spirit sold under the guise of a
"whisky" complies with the legal definition of whisky as
set out in South African
law. Nor should customers be misled about
the qualities of the product they are purchasing, such as the alcohol
strength. The applicants
are also saying that the contents of the
relevant products are not whisky but 'a sweet syrupy beverage'. They
contend further that
the contents of the relevant products do not
have a whisky flavour and the liquor strength is 34,98% instead of
the 43,5% stated
on the label.
[38]
What requires further determination,
therefore, is whether what is contained in the relevant products is
as depicted on the labels
of the relevant products.
[39]
It is common cause that the contents of the relevant products are not
whiskies. It is also not
in dispute that the contents are spirit
(vodka) based and contain flavours which the respondents say are
whisky flavours with an
alcohol strength of 43.5%. In essence, the
relevant products are both vodka products to which whisky flavouring
is added. The spirit
whisky has not been added to the products, only
whisky flavouring. As such, the products are not whiskies, nor are
they whisky
based.
[40]
If one is to accept that the relevant products are not whisky it
would thus be irrelevant to
compare them to the class designation of
whisky products as defined in the
Liquor Products Act. What
, to me,
is in dispute, which requires resolution is whether indeed the
contents of the relevant products have whisky flavouring
in order to
qualify as whisky flavoured spirit aperitif, and whether the alcohol
strength thereof is 34,98% and not 43,5% as suggested
by the
respondents?
[41]
It is, indeed so, that the law in South Africa does not allow any
liquor product to be sold if
the description thereof does not match
the contents. It is thus upon the applicants to prove that the
contents of the relevant
products are not whisky flavoured and that
the alcohol strength thereof is 34,98% and not 43,5% as indicated on
the labels.
Are the Relevant Products Whisky
Flavoured?
[42]
The argument by the applicants is that
the first respondent is in breach of the Liquor Product Act by using
the misleading description
"whisky flavoured" on the
relevant products when in fact the relevant products do not have any
flavouring attributable
to whisky. In determining whether the
relevant products are whisky flavoured, the applicants provided the
evidence of Gary Wadmore
("Mr Wadmore ") and Shona Glancy
("Ms Glancy") who did a sensory analysis of the ROYAL
DOUGLAS product. It
was not necessary to taste a sample of the KING
ARTHUR product because, according, to the respondents, the contents
of the two
products are the same.
[43]
Mr Wadmore is said to be a store manager
of a whisky retail store, WhiskyBrother, selling only whisky and
whisky related items.
The shelves of the retail store are said to be
lined with approximately 400 different whiskies, including Scotch
Whisky. WhiskyBrother,
is consequently, a member of the first
applicant and/or has some attachment to the first applicant.
Although, Mr Wadmore is said
to have worked in a retail store for a
number of years tasked with the duty to, amongst others, purchasing
stock, customer services
and sales, administration and concluding
whisky tasting for the public and consumers, there is no prove
provided in the papers
as to the qualifications which makes him an
expert in whisky tasting. In my view, on the evidence provided, he is
neither an expert
in the tasting of whisky nor does he qualify as an
independent witness due to his closeness to the first applicant.
[44]
This, however, cannot be said about Ms
Glancy, who is a scientist employed by the Scotch Whisky Research
Institute ("the SWRI").
The SWRI is a research institute of
the first applicant. Ms Glancy holds a Bachelor of Science (BSc)
degree from the University
of Glasgow and a Diploma in Distilling
(Dipl. Distil) from the Institute of Brewing and Distilling. She is
also a member of the
Institute of Brewing and Distilling and a member
of the Royal Society of Chemistry (MRSC). At the time of providing
the evidence
in this matter, she had been employed by the SWRI for
approximately nine years and held a position of Analytical Services
Manager.
One of her duties entailed managing the scientists which
carry out analysis of samples of spirits sent to the SWRI by the
first
applicant and to prepare reports based on the results of that
analysis. She is also a member of the SWRl's Sensory Panel, which
assesses and describes the sensory characteristics of spirits for the
purpose of providing sensorial information to clients and
supporting
flavour research, amongst other things. This is done primarily by
smelling or "nosing" samples provided to
the panel.
[45]
It is Ms Glancy's evidence, having participated in the sensory
assessment of a specimen of the
ROYAL DOUGLAS product that the
sensory attributes of ROYAL DOUGLAS are not consistent with a spirit
which has whisky produced in
accordance with the South African
definition as its sole alcoholic ingredient. And that the major
sensory attributes of the sample
tasted are aromas of orange,
pineapple and artificial apple which are atypical of a whisky
produced in accordance with the South
African whisky definition.
[46]
Ms Glancy opined further that although one can detect fruit aromas in
genuine whisky, such aromas
will form part of a complex,
multi-layered flavour profile. What, however, she found in ROYAL
DOUGLAS was that the orange, pineapple
and artificial apple aroma
dominated the spirit giving it a one dimensional profile. The other
elements found in whisky were absent.
She concluded as such that
considering that ROYAL DOUGLAS does not actually contain whisky, and
does not have the sensory attributes
of whisky it cannot be
accurately described as whisky flavoured. She further rejected the
fifth respondent's argument that whisky
has no distinct flavour, as
there are definite and distinguishing flavours which can be
attributed to whisky.
[47]
To the contrary, there is no evidence on the side of the respondents
to rebut Ms Glancy's evidence.
To my mind, the evidence proffered by
the respondents does not establish that the relevant products have
whisky flavouring. Their
evidence that the flavouring they purchase
from Creative Flavours International (Pty) Ltd is a whisky flavour,
without establishing
how the whisky in the flavouring has been
acquired, does not assist their case. Their contention that taste
differs from person
to person and that since the test is purely
subjective it would be impossible for a person to precisely identify
when a product
will be deemed to be whisky flavoured, is to me,
baseless and unsubstantiated and at best speculative.
[48]
I hold therefore that the evidence of Ms
Glancy carry more weight than that of the fifth respondent in this
regard. Flavour assessments
in SWRI are carried out as standard
procedures with trained and experienced sensory panellists. The
assessments are completely
objective and based on the collective
opinions of a number of whisky sensory experts.
Is
the alcohol strength 43,5% or 34,98%
[49]
In proving the alcohol strength of the
relevant products the applicants produced the evidence of SWRI. The
respondents on the other
hand, produced a certificate by an entity
identified as Vinlab (Pty) Ltd ("Vinlab") which confirms
the alcohol content
of random samples of the relevant products tested
at the first respondent's request. The respondents' submission is
that Vinlab
is an IS017025 independent wine laboratory in
Stellenbosch South Africa. However, the certificate is not
accompanied by an affidavit
to introduce it into evidence or to
confirm its results or to explain the chain of receipt of any of the
products in respect of
which any tests might have been done.
Consequently, the applicants applied to have these certificate and
the allegations concerning
them be struck out or not be admissible as
hearsay evidence.
[50]
I seem to agree with the applicants that
the certificate without any affidavit to confirm the results amounts
to hearsay evidence
and is as such inadmissible. There is also no
explanation provided by the respondents for the absence of the
affidavit. I hold,
therefore, that the certificate has no evidential
value and should not be considered.
[51]
Thus, the applicants' contention that
the alcohol strength of the relevant products is 34,98% stands.
PRELIMINARY
ISSUES RAISED
[52]
The respondents raised a number of
preliminary issues in their papers as defences to their proposition
that the applicants have
not made out a case for the relief they
seek. For the decisions I have come to on the merits of this
application, I opted not to
deal with all the preliminary issues
except the points on abuse of process and strike-off, which might
have relevance to costs.
I deal hereunder with those points.
The Stale Facts and/or Abuse of
Process Argument
[53]
The respondents' argument is that the
applicants in their founding papers rely on out dated information
including information obtained
seven months prior to the launch of
this application. At the time of launching the application, the
applicants were in possession
of the new ROYAL DOUGLAS label and in a
position to obtain current and relevant information in respect of the
label and get-up
used by the first respondent to market, distribute
and sell its ROYAL DOUGLAS products, so it is argued. According to
the respondents,
they caused the new label affixed to the ROYAL
DOUGLAS products, to be sent to the applicants' attorneys in order to
alleviate
various issues of concern to the applicants.
[54]
I agree with the applicants that this
argument by the respondents cannot fly. The respondents' allegation
in their papers that they
ceased use of the first get-up in December
2016 cannot be correct. The evidence does show that the respondents ,
in a letter dated
6 August 2016, notified the applicants of their
intention to change the get-up for ROYAL DOUGLAS products without
informing them
when such changes would be made, this despite
pertinently being challenged to provide the date when the second
get-up would be
launched. Of importance is that nothing was said
about the KING ARTHUR products in the said letter.
[55]
The evidence shows that the relevant
products bearing the first set of get-up were still available in the
market place after January
2017, in particular on the first
respondent's website. Mr Hoenselaar, an employee tasked with the
day-to-day duties and responsibilities
of the first respondent which
included IT, was tasked to effect the changes. According to his
evidence he was instructed by the
fifth respondent to make changes to
the first respondent's website in July 2016, to the title link
"WHISKY" found on
the page entitled "Alcoholic Range"
to "WHISKY FLAVOURED SPIRIT APERITIF". He also changed the
title page entitled
"WHISKY" to "WHISKY FLAVOURED
SPIRIT APERITIF". Only during January 2017, was he instructed to
update the first
respondent's website with the photographs depicting
the relevant products in the second sets of get-up. There is no
indication
of when in January 2017 the instruction was given or when
such update was done. As late as in March 2017, the first
respondent's
website still showed that the ROYAL DOUGLAS products
were available for sale in its first set of get-up. Crucially, the
respondents
themselves concede in their evidence that they continued
marketing and selling ROYAL DOUGLAS and
KING
ARTHUR products in their first sets
of get-up at least until December 2016.
[56]
The application was launched on 18
January 2017 and only on 8 February 2017, belatedly so, a month after
the application was launched
did the respondents inform the
applicants that the use of the relevant labels ceased in December
2016 and that the new labels were
launched in January 2017, but
still, the website was only finally changed after March 2017 when the
applicants had already instituted
this action.
[57]
I am inclined to accept that the
applicants had no other option but to approach court for the relief
they sought against the respondents.
Another thing is, even though in
their answering affidavit the respondents undertook not to continue
using the first sets of get-up
but their failure to make such
undertaking an order of court in that they refused to tender costs of
the application, should count
against them. In any event, the
applicants' success in obtaining an order interdicting and
restraining the respondents from using
the second sets of get-up is
an indication that they were entitled to approach court for relief in
the first place.
The
Strike-Off Argument
[58]
The respondents submit that the content
of the replying affidavit which ought to be struck-off and the basis
for such striking-off
are as follows:
58.1
Paragraphs 11, 18.3, 35, 36, 44, 48.2.7,
86 to 88 which deal with the website known as
www.milestonebevarage.co.za
including images of the website
portrayed in paragraph 11.
58.2
Paragraphs 12 and 15 which pertain to
previous litigation between the First Applicant and other members of
the Haupt family, under
case number 2001/33506.
58.3
Paragraph 16 and 38, which deal with the
manner in which the ROYAL DOUGLAS product has been marketed and
designed.
58.4
Paragraph 21, which deals with whether
or not the products sold as ROYAL DOUGLAS and KING ARTHUR are whisky
flavoured.
58.5
The affidavits of Shona Glancy, Tammy
Lea Pretorius and Gary Wadmore, attached to the Replying Affidavit.
58.6
The second sentence of paragraph 28 and
paragraph 43, which deal with the history between the First Applicant
and other members
of the Haupt family.
58.7
Paragraphs 46 and 47, which deal with
settlement negotiations between the parties and constitute a breach
of privilege.
[59]
The contention is that the mentioned
content is irrelevant, vexatious , privileged and/or hearsay and is
new matter which ought
to have been disclosed in the founding
affidavit, and not the replying affidavit, and the respondents have
not been afforded an
opportunity to address that new matter. This,
however, is not correct.
[60]
Firstly, from the perusal of the
respective affidavits filed of record , it is apparent that the
contents the respondents seek to
strike as new matter are produced in
the replying affidavit as a result of the revelations made in the
answering affidavit and
could not have been foreseen by the
applicants.
[61]
Secondly, the respondents delivered two
further affidavits in response to the said replying affidavit. In
fact, the respondents
responded to the applicants' replying affidavit
by filing a fourth set of affidavits in which they dealt with the
evidence they
sought to strike-off. This, in my view, was the
opportunity for them to respond to the new allegations in the
applicants' replying
affidavit. That they chose not to do so can only
be laid at their door step.
[62]
It is not in dispute that the third
respondent represents, in these proceedings, the Thistle Trust which
was set up by the fifth
respondent's late father and that, that Trust
is the applicant of trade mark application 2012/28550 ROYAL DOUGLAS
WHISKY. It is
also on record that the said trade mark application was
filed for the very product complained of in these proceedings. What
is
further on record is that the fifth respondent took over the
family business which was run by his late father including the
Thistle
Trust. The respective businesses in this regard are
inter-linked and, for purposes of these proceedings, the fifth
respondent cannot
be delinked from their operation. I am as such
persuaded that all the evidence provided by the applicants relating
to the Haupt
family was necessary and provided a holistic picture of
the history of the businesses involved and how each is linked to the
other.
The history of the Haupt family was also included by the
applicants in their attempt to prove their argument of 'the
Briderick-poisoned
chalice' principle.
[63]
I do not find the evidence of Ms Glancy
and Mr Wadmore irrelevant. It is the respondent's contention that the
liquor they are selling
as ROYAL DOUGLAS and KING ARTHUR products do
not contain whisky but are only whisky flavoured. In response
thereto, the applicants
produced the two affidavits as proof that the
relevant products are neither whisky nor whisky flavoured. Although I
ended not accepting
the evidence of Mr Wadmore, that, however, does
not make it irrelevant. I did not accept it only because it was not
admissible
not that it was irrelevant.
CONCLUSION
[64]
I, as such, align myself with the words
of the court in
Long John
International Ltd v Stellenbosch Wine Trust (Pty) Ltd
[7]
that:
"It
follows from what I have said that a person who falsely and culpably
represents to the public that his products are products
of a
particular character, composition or origin known by the public under
a descriptive name which has gained a public reputation,
without
passing them off as the product of the plaintiff , who produces what
may be termed the genuine products, and who thereby
causes
patrimonial loss to the plaintiff, commits the delict of unlawful
competition, and is liable in damages to the plaintiff.
It follows
also that the injured party is entitled to an interdict restraining
such conduct where such patrimonial loss has occurred
or is likely to
be caused. Perhaps I should add that I take the view that where all
the above elements are present save that of
fault (or culpability),
an interdict would still be justified."
[65]
I hold, therefore, that the respondents
have attempted to disguise the sale and marketing of the relevant
products as those of the
applicants by using the sets of get-up in
conjunction with the other attributes as stated in paragraph [28] of
this judgment. They
have as such falsely misrepresented the relevant
products as those of the applicants and by so doing have traded and
continue to
trade
off
the
reputation of Scotch Whisky or whisky through the use of the name
'whisky flavoured spirit aperitif'. They should be interdicted
from
continuing with this conduct.
COST
[66]
The respondent's counsel made a request
that should I find in favour of the applicants, I should defer
judgment on costs and allow
the parties to make submissions in that
regard. I in that sense would defer the costs for later adjudication.
ORDER
[67]
Consequently, I make the following order
1.
The draft order marked "A" is made an order of court.
E.M.
KUBUSHI
JUDGE
OF THE HIGH COURT
APPEARANCES
Counsel for Applicants:
Adv. R. M.
Robinson
Adv P. Moll
Instructed by:
D
M KISCH INC. t/a KISCH IP
Counsel for First, Fourth
and Fifth Respondents:
Adv. C. E.
Puckrin
Adv. P. Ferrier
Instructed by:
ADAMS
& ADAMS
Date
heard:
19 September 2018
Date
of judgment:
04 March 2019
“
A”
IN THE HIGH COURT OF SOUTH
AFRICA
(GAUTENG DIVISION, PRETORIA)
Case number:
2882/17
In
the matter between:
THE
SCOTCH WHISKY ASSOCIATION
FIRST APPLICANT
CHIVAS
BROTHERS LTD
SECOND APPLICANT
CHIVAS
HOLDING (IP) LTD
THIRD APPLICANT
PERNOD
RICARD SOUTH AFRICA (PTY) LTD
FOURTH APPLICANT
and
MILESTONE
BEVERAGE CC
FIRST RESPONDENT
WAYNEL
DISTRIBUTORS CC
SECOND RESPONDENT
THE
TRUSTEES FOR THE TIME BEING OF THE
THISTLE
TRUST (004828/2002)
THIRD RESPONDENT
THE
TRUSTEES FOR THE TIME BEING OF THE
T
AND S HAUPT FAMILY TRUST (021433/2014)
FOURTH RESPONDENT
SEAN
PETER HAUPT (ID: [….])
FIFTH RESPONDENT
CELESTE
O HAUPT (ID: [….])
SIXTH RESPONDENT
THE
MINISTER OF AGRICULTURE , FORESTRY AND
FISHERIES
SEVENTH RESPONDENT
DRAFT ORDER
It
is ordered as follows:
1.
The
First, Second, Third, Fourth, Fifth and Sixth Respondents are
interdicted and restrained from -
1.1.
Selling;
offering for sale; promoting; marketing or distributing, products
with the get-up and/or labels, or using in the course
of trade or
otherwise, the get-up and/or labels. or similar get-up or labels to
those illustrated in the documents at A1,
A:2.,
B1 and B2 hereto (hereafter the
"offending trade dress"); and
1.2.
using
in any manner in the course of trade or otherwise the name or
description "whisky", “whiskey” or any
derivation thereof in relation to any product that does not satisfy
the statutory requirements for whisky;
1.3.
representing a product to be whisky or
to have a connection to whisky or to be in any manner related to
whisky when it is not so;
1.4.
using
in any manner in the course of trade, or otherwise. the words
"Scotch"; ''Scotland"; "Scottish";
or any
word or phrase of which "Scotch"; "Scotland";
"Scottish" form part, or labels and representations
which
include insignia or any other representations evocative of Scottish
or UK origin in relation to any liquor product which
has not been
wholly manufactured or produced in Scotland.
2.
The
First, Second, Third. Fourth, Fifth and Sixth Respondents are
interdicted and restrained from representing, directly or indirectly,
that any product bottled, sold, marketed, distributed or otherwise
made available by them -
2.1.
is whisky or "whisky flavoured"
when it is not whisky;
2.2.
is whisky flavoured when it is not so;
2.3.
has an alcohol content of 43% or 43.5%
or an alcohol content level in excess of 43% when it does not have an
alcohol level content
of 43% or more;
2.4.
is Scotch Whisky when it is not Scotch
Whisky.
3.
The
First, Second, Third, Fourth, Fifth and Sixth Respondents are
interdicted and restrained from -
3.1.
trading in unlawful competition with the
Applicants by dealing in the course of trade or otherwise in liquor
products -
3.1.1.
represented as whisky or "whisky
flavoured" when they are not whisky;
3.1.2.
represented as Scotch Whisky when they
are not Scotch Whisky;
3.1.3.
or in products sold under any of the
offending trade dress;
3.1.4.
represented as having an alcohol level
content other than the actual alcohol level content of the product;
3.2.
passing off any liquor product as whisky
or "whisky flavoured" when it is not whisky, or as Scotch
Whisky when it is not
Scotch Whisky; or any product sold under any of
the offending trade dress.
4.
The
First, Second, Third, Fourth, Fifth and Sixth Respondents are
interdicted and restrained from trading in unlawful competition
with
the Applicants through contravening
Section 41
of the
Consumer
Protection Act No. 68 of 2008
or
Sections 11
and/or 12 of the
Liquor
Products Act No. 60 of 1989
by -
4.1.
using in the course of trade or
otherwise, in relation to any product, the offending trade dress;
4.2.
using the words "whisky",
"whiskey", "whisky flavoured" or any other
derivation thereof in relation
to any product which is not whisky, or
by
4.3.
using the word "Scottish" or
representations of Scottish or UK origin, insignia or emblems in
relation to any product
which is not Scotch Whisky; or by
4.4.
representing any products to be whisky
flavoured; or by
4.5.
representing any products to have an
alcohol content other than the actual alcohol content.
5.
The
First, Second, Third, Fourth, Fifth and Sixth Respondents are ordered
to deliver up for destruction to the Applicants' attorneys
within
seven (7) days of the granting of this Order any sachets, bottles,
labels, cartons, catalogues, packaging, promotional material
or other
materials which are in breach of the aforesaid Orders or with any of
the offending trade dress or trade dress similar
thereto in their
possession or under their control.
6.
The
First, Second, Third, Fourth, Fifth and Sixth Respondents are ordered
to discover and make available for inspection by the Applicants
within 14 days of the granting of this Order, all invoices, accounts
or other records which show or tend to show the supply to
any party,
by sale or otherwise, of any product bearing the names ROYAL DOUGLAS
and/or KING ARTHUR or with the offending trade
dress or trade dress
similar thereto or any other product which breaches the terms of the
foregoing Orders.
7.
In
the event of the First, Second, Third, Fourth, Fifth and/or Sixth
Respondents not complying with any Orders made in terms of
paragraphs
5 and 6 hereof within twenty (20) days of the date of this Order, the
Sheriff of this Honourable Court is authorised
to -
7.1.
attach and seize wherever (s)he may find
same and deliver up to the Applicants' attorneys for destruction any
sachets, bottles,
labels, cartons, catalogues, packaging, promotional
material or other materials which are in breach of the aforesaid
Orders or
bearing the names ROYAL DOUGLAS and/or KING ARTHUR or with
the offending trade dress or trade dress similar thereto in their
possession
or under their control; and
7.2.
attach and seize wherever (s)he may find
same and deliver up to the Applicants' attorneys all invoices,
accounts or other records
which show or tend to show the supply to
any party, by sale or otherwise. of any product bearing the names
ROYAL DOUGLAS"
and/or "KING ARTHUR" or with the
get-ups or labels bearing the offending trade dress or trade dress
similar thereto.
8.
The
Seventh Respondent is authorised and directed to seize and remove,
alternatively instruct his administering officer to seize
and remove,
wherever he or his office may find same, all the First, Second.
Third. Fourth, Fifth and Sixth Respondents' ROYAL DOUGLAS
and/or KING
ARTHUR products (including the liquor products and their containers,
packaging and labelling) as a result of such products
being in
contravention of
Sections 11(1)
; (2) or (3) or
12
(1) of the
Liquor
Products Act No. 60 of 1989
by using in the course of trade or
otherwise, in relation to any products; any of the offending trade
dress or trade dress similar
thereto.
8.1 All products
seized and removed as contemplated in paragraph 8 shall be declared s
forfeited to the State
and liable for destruction by the State,
alternatively
they shall be held by the State pending
prosecution by the State of the First, Second, Third, Fourth, Fifth
and Sixth Respondents
for contraventions of the Liquor Product Act 60
of 1989.
9.
It
is directed that an enquiry into the damages suffered by the
Applicants as a result of the unlawful behaviour of the First,
Second, Third, Fourth, Fifth and Sixth Respondents be held.
10.
The
First, Second, Third, Fourth, Fifth and Sixth Respondents are ordered
to make discovery of the documents contemplated in paragraph
7.2 for
the purposes of the enquiry into damages within 30 days of the date
of this order.
11.
The
judgment on costs of the application is deferred for later
adjudication.
By
order:
[SEE
PDF and RTF Versions For Annexures A1, A2, B1 & B2]
[1]
(159 /2018)
[2018] ZASCA 175
(3 December 2018)
[2]
1986 (3) SA 667
(A) at 678F- H.
[3]
See William Grant & Sons Ltd & Another v Cape Wine &
Distillers Ltd & Others 1990 (3) SA 897 (C).
[4]
Elida Gibbs (Pty) Ltd v Colgate Palmolive (Pty) Ltd
1988 (2) SA 350
(W) at 358F - 359A.
[5]
See Cowbell AG v ICS Holdings Ltd 2001 (3) SA 941 (SCA).
[6]
1987 (2) SA 600
(A) 6190 .
[7]
1990 (4) SA 136
(D) at p143F-I.