Brief Summary

Trade mark and copyright infringement — Use of similar marks — The appellant, Quad Africa Energy (Pty) Ltd, was the exclusive distributor of confectionery products for The Sugarless Company (Pty) Ltd, which held a registered trade mark for the S SUGARLESS logo. Following a notice of termination of the distribution agreement, the appellant launched a competing product under the SUGARLEAN brand, using packaging similar to that of the respondent. The respondent alleged trade mark infringement, copyright infringement, passing off, and unlawful competition. The High Court initially ruled in favour of the respondent, leading to an appeal. The Supreme Court of Appeal upheld the appeal, declaring that the appellant infringed the respondent's trade mark and copyright, and ordered the removal of infringing marks and packaging, as well as the delivery of infringing materials.

Comprehensive Summary

Summary of Judgment

1. Introduction

This was an appeal to the Supreme Court of Appeal of South Africa concerning multiple forms of intellectual property and related delictual relief, arising from the marketing of competing confectionery products under similar branding and packaging. The proceedings involved claims and counterclaims based on trade mark infringement, copyright infringement, passing off, unlawful competition, and statutory relief under the Counterfeit Goods Act 37 of 1997.

The appellant was Quad Africa Energy (Pty) Ltd (QAE). The first respondent was The Sugarless Company (Pty) Ltd (TSC), an Australian company trading out of Victoria. The second respondent was the Companies and Intellectual Property Commission (CIPC), cited because the dispute included a request to endorse TSC’s registered trade mark with a disclaimer; the CIPC did not participate in the litigation.

The dispute originated in urgent proceedings in the Gauteng Local Division of the High Court, Johannesburg before Van der Linde J, where TSC sought interdictory and ancillary relief alleging that QAE’s competing SUGARLEAN products unlawfully encroached upon TSC’s S SUGARLESS trade mark and packaging. QAE opposed the main application and brought a counter-application seeking an endorsement (disclaimer) on TSC’s trade mark registration in relation to the word “sugarless”. The high court granted extensive relief to TSC and dismissed the counter-application.

QAE obtained leave to appeal against specified parts of the high court’s order, including the refusal to grant the disclaimer, findings of copyright infringement and passing off in relation to later packaging iterations, and Counterfeit Goods Act relief in respect of “new” and “future” packaging. TSC obtained conditional leave to cross-appeal on a narrow issue concerning the scope of trade mark infringement relief in relation to a revised SUGARLEAN logo.

The general subject matter of the dispute was whether QAE’s branding and packaging for SUGARLEAN confectionery unlawfully copied or too closely resembled TSC’s S SUGARLESS branding and packaging, and whether TSC could claim (through its registration) exclusive rights that would restrict competitors’ use of the descriptive word “sugarless”.

2. Material Facts

TSC applied on 16 September 2015 for registration in South Africa of the S SUGARLESS logo and became proprietor of trade mark registration number 2015/26225 in class 30, covering a broad range of goods including confectionery. Shortly before that, on 7 September 2015, QAE was appointed as the exclusive distributor of TSC’s confectionery products in South Africa.

On 16 April 2018, QAE gave notice of termination of the distribution agreement. After that notice (but before termination took effect), TSC discovered that QAE had launched a competing confectionery brand, SUGARLEAN, using packaging that was identical to TSC’s packaging except that TSC’s S SUGARLESS logo was replaced with an S SUGARLEAN logo featuring an inverted “S” device. This “first infringing packaging” was treated as the most direct instance of copying.

Following correspondence, QAE represented that it had stopped using the first infringing packaging and was changing it. It nonetheless indicated that it would continue distributing a limited quantity of the first infringing packaging until depleted and undertook to destroy remaining stock of that packaging once replacement packaging was received. QAE then introduced a “new packaging” which differed more materially from TSC’s packaging, but retained a version of the SUGARLEAN branding that remained contentious in the litigation. QAE also proposed “future packaging” featuring a revised SUGARLEAN logo (removing the inverted “S” element and altering the logo presentation), while continuing to sell certain existing product lines under the earlier SUGARLEAN logo due to printing and supply constraints.

In the high court, TSC sought urgent relief alleging that QAE’s conduct infringed its registered trade mark and copyright, amounted to passing off and unlawful competition, and involved counterfeit goods. QAE’s counter-application sought an endorsement of TSC’s registered trade mark to reflect that registration conferred no exclusive right to the word “sugarless” separately and apart from the composite mark.

The SCA treated as material that the word “sugarless” is an ordinary descriptive English word meaning “containing no sugar” or “free from sugar”, and that the high court had itself characterised it as descriptive (an adjective) while nonetheless refusing the disclaimer. It was also material that, for purposes of the copyright enquiry on the later packaging, the dispute ultimately turned on objective similarity between TSC’s packaging artwork and QAE’s later packaging (new and future), rather than on whether QAE had had access to or had previously used TSC’s packaging as a reference point.

3. Legal Issues

The central questions the SCA was required to determine were, first, whether TSC’s registered trade mark should be endorsed with a disclaimer under the Trade Marks Act, such that registration would give no right to exclusive use of the word “sugarless” apart from the mark as a whole. This was primarily a question of law, informed by the descriptive character of the term in relation to the goods.

Second, the court had to decide whether QAE’s new and future packaging (as opposed to the “first infringing packaging”) infringed TSC’s copyright, specifically whether those works constituted an adaptation of TSC’s original works as defined by the Copyright Act. This required the application of legal standards to a visual comparison and thus involved a mixed question of application of law to fact, including a value judgment about whether similarity was “substantial” and “recognisable”.

Third, the court had to decide whether the new and future packaging amounted to passing off, which is a question of fact and evaluation centred on whether there was a reasonable likelihood of deception or confusion among members of the public when considering the overall get-up.

Fourth, on TSC’s cross-appeal, the court had to decide whether the revised SUGARLEAN logo (without the inverted “S” device) infringed TSC’s registered S SUGARLESS logo under section 34(1)(a) of the Trade Marks Act, which again required the application of established principles to the factual comparison of the marks and an evaluative prediction about likely deception or confusion.

Finally, the court had to address whether relief under the Counterfeit Goods Act could be sustained in respect of the new and future packaging, given the statutory definition of counterfeiting and its relationship to underlying intellectual property infringement.

4. Court’s Reasoning

On the disclaimer issue, the court approached the matter through section 15 of the Trade Marks Act, read with section 9, emphasising that the enquiry is not whether the mark as a whole is registrable, but whether the mark contains matter incapable of distinguishing within the statutory meaning. The court held that “sugarless” bears its ordinary colloquial meaning, namely “containing no sugar” or “free from sugar”, and is therefore inherently descriptive of goods (including confectionery) offered as free from sugar. The court rejected the notion that such a purely descriptive word could, through use, become inherently capable of distinguishing in the trade mark sense so as to justify exclusivity over the word itself.

The court relied on authority explaining the function of disclaimers: while registration confers rights in the mark as a whole, a disclaimer serves the practical purpose of ensuring that registration does not operate to inhibit other traders’ use of ordinary descriptive language and to prevent the registered proprietor from asserting rights in a descriptive element per se. It considered the high court’s refusal of the disclaimer unjustified, particularly given the statutory mechanism designed to provide commercial certainty and to avoid compelling competitors to rely on defensive litigation (such as invoking descriptive use defences) to continue legitimate descriptive speech. In consequence, the court held that the disclaimer should have been granted and that, as a corollary, interdictory relief aimed at preventing use of the words “SUGARLESS” and “SUGARLESS CONFECTIONERY” could not be sustained.

On copyright infringement regarding the new and future packaging, the court restated the conventional requirements: the claimant must show ownership of copyright in an original work qualifying for protection and that the respondent committed an act reserved to the copyright owner, such as reproduction or the making of an adaptation. The court emphasised that infringement requires both objective similarity (a substantial and material correspondence) and a causal connection (derivation). However, because QAE conceded that a causal link would be established if objective similarity were found, the decisive question became whether the new and future packaging were objectively similar to TSC’s packaging in the manner required for an “adaptation”.

The court focused on the statutory definition of “adaptation” for artistic works, namely a transformation in which the original or substantial features remain recognisable. It rejected an approach suggesting that the mere use of a “senior work” to create a “junior work”, without sufficient resemblance in the actual creative composition, constitutes an adaptation. The court reaffirmed that copyright does not protect ideas, themes, or general concepts (such as depicting fruit or chocolate to indicate flavour), but protects original expression, and that “substantiality” involves a value judgment of materiality to the copyrighted work rather than a mechanical or purely quantitative enquiry.

Applying these principles, the court held that the high court had erred in concluding that the new and future packaging infringed copyright. The court considered that the similarities identified by the high court—such as a shiny black background and depictions of confectionery and fruit—were attributable to common industry practices and common subject matter, rather than copying of protectable expression. The court regarded the differences in the later packaging as not merely cosmetic and found that the packaging did not display the kind of slavish copying or adapted plagiarism that would justify a finding of objective similarity. On that basis, the court held that copyright infringement was not established in respect of the new and future packaging.

On passing off, the court reiterated that the delict is not designed to confer monopolies but to prevent misrepresentations that are likely to confuse the public into believing that one trader’s goods are those of another, or are associated with them. It assumed, in TSC’s favour, that TSC had reputation in its get-up sufficient to satisfy the first requirement, but was not persuaded that TSC had established the second requirement of a reasonable likelihood of deception or confusion in relation to the new and future packaging. It stressed that the court must assess the overall impact of the get-up on the notional average customer, allowing for imperfect recollection, and must consider the relevant purchasing context.

In applying this test, the court accepted that black packaging and depictions of product contents are common in the confectionery trade and that their presence did not, without more, produce a misrepresentation. It considered the absence (in the later packaging) of the striking features associated with TSC’s mark, including the prominent “S” device in concentric circles, and gave weight to the addition of a bold diagonal purple block on QAE’s later packaging. These differences, in the court’s assessment, were sufficient to dispel a reasonable likelihood of confusion. The passing off finding in relation to the future packaging accordingly could not stand.

Flowing from the failure of passing off and the rejection of copyright infringement for the later packaging, the court also set aside the high court’s additional relief framed as unlawful competition based on “fruits and labour” and alleged misuse of confidential information. The court noted, on the papers, that the claimed “specifications” and “confidential information” were not identified with sufficient detail to define the scope of the interdict, and further cautioned (by reference to authority) against using unlawful competition as a vague residual category when established causes of action such as copyright and passing off are not made out.

On the cross-appeal concerning trade mark infringement by the revised SUGARLEAN logo (without the inverted “S” device), the court applied the established principles for comparison under section 34(1)(a) of the Trade Marks Act, including an assessment of resemblance by appearance, sound, and sense, and the perspective of the average consumer with imperfect recollection. The court accepted that both marks shared the element “SUGAR”, but held that the marks were nevertheless sufficiently different in their visual and aural qualities, particularly given the additional elements of TSC’s composite mark (including the prominent “S” device). The court also endorsed the principle that where trade names or marks incorporate descriptive elements, some risk of confusion is inevitable, and comparatively small differences may be sufficient to avoid actionable confusion. On that reasoning, the cross-appeal failed.

On the Counterfeit Goods Act relief, the court held that the high court had not undertaken the required statutory enquiry and had treated counterfeiting as if it followed automatically from trade mark or copyright infringement. The court reaffirmed that counterfeiting requires more than mere infringement and must satisfy the statutory definition. Because the court found that copyright infringement and (for relevant purposes) trade mark infringement had not been established in relation to the new and future packaging, the Counterfeit Goods Act relief in respect of that packaging could not be sustained.

5. Outcome and Relief

The Supreme Court of Appeal upheld QAE’s appeal against the specified portions of the high court order and dismissed TSC’s cross-appeal, each with costs including the costs of two counsel. The court set aside the high court’s order and substituted it with an order that, materially, granted the disclaimer endorsement on TSC’s trade mark registration so that registration conferred no exclusive right to the word “sugarless” separately and apart from the mark.

The substituted order preserved relief in relation to the trade mark infringement and copyright infringement findings connected to the earlier infringing conduct (including use of the inverted “S” SUGARLEAN logo and the first infringing packaging), while removing the findings and associated relief based on copyright infringement, passing off, and counterfeiting in respect of the new and future packaging. It also removed interdictory relief premised on exclusive rights to the descriptive word “sugarless” as a standalone element.

The substituted order included wide-ranging ancillary relief directed at removal and delivery-up of infringing marks and packaging, provision for inspection and deletion of infringing artworks (including the involvement of the sheriff and an independent IT expert), disclosure orders, and an enquiry for damages or a reasonable royalty under the Trade Marks Act and/or Copyright Act. The substituted order also included punitive costs consequences in the court below (as reflected in the substituted order), while the appeal and cross-appeal costs followed the result in the SCA.

Cases Cited

In Re: Joseph Crossfield & Sons Limited [1910] 1 Ch 13 (Court of Appeal).

Association of Amusement and Novelty Machine Operators and Another v Minister of Justice and Another 1980 (2) SA 636 (A).

Falkiner v Whitton 1917 AC 106.

Yuppiechef Holdings (Pty) Ltd v Yuppie Gadgets Holdings (Pty) Ltd [2016] ZASCA 118.

Cadbury (Pty) Ltd v Beacon Sweets & Chocolates (Pty) Ltd and Another [2000] ZASCA 2; 2000 (2) SA 771 (SCA).

Philip Morris Inc's Trade Mark Application [1980] RPC 527.

Cochrane Steel Products (Pty) Ltd v M-Systems Group (Pty) Ltd and Another [2017] ZASCA 189.

Bosal Afrika (Pty) Ltd v Grapnel (Pty) Ltd and Another 1985 (4) SA 882 (C).

De Beers Industrial Diamond Division (Pty) Ltd v Ishizuka 1980 (2) SA 191 (T).

S v Collop 1981 (1) SA 150 (A).

Chatterton v Cave (1878) 3 App Cas 403.

Eramus v Galago Publishers (Pty) Ltd and Another 227 JOC (T).

Twentieth Century Fox Film Corp v Stonsifer 140 F 2d 579 (9th Cir 1944).

Laubscher v Vos and Others 3 JOC (W).

Media 24 Books (Pty) Ltd v Oxford University Press Southern Africa (Pty) Ltd [2016] ZASCA 119; 2017 (2) SA 1 (SCA).

Capital Estate and General Agencies (Pty) Ltd and Others v Holiday Inns Inc and Others 1977 (2) SA 916 (A).

Williams t/a Jenifer Williams & Associates and Another v Life Line Southern Transvaal [1996] ZASCA 46; 1996 (3) SA 408 (A).

Payen Components SA Ltd v Bovic CC and Others [1995] ZASCA 57; 1995 (4) SA 441 (A).

Cochrane Steel Products (Pty) Ltd v M-Systems Group (Pty) Ltd and Another [2016] ZASCA 74; 2016 (6) SA 1 (SCA).

American Safety Table Co Inc v Schreiber [1959] USCA2 446; 269 F 2d 255 (2nd Cir 1959).

Moroka Swallows Football Club v The Birds Football Club 1987 (2) SA 511 (W).

Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (A).

Office Cleaning Services v Westminster Window and General Cleaners Ltd (1946) 63 RPC 39 (House of Lords).

Puma AG Rudlof Dassler Sport v Rampar Trading (Pty) Ltd and Others [2010] ZASCA 140; 2011 (2) SA 463 (A).

Legislation Cited

Trade Marks Act 194 of 1993.

Counterfeit Goods Act 37 of 1997.

Rules of Court Cited

No rules of court were expressly cited in the judgment.

Held

The Supreme Court of Appeal held that the word “sugarless” is inherently descriptive and incapable of distinguishing confectionery goods in the trade mark sense, with the consequence that TSC’s trade mark registration should be endorsed with a disclaimer stating that registration gives no right to exclusive use of the word “sugarless” separately and apart from the composite mark.

The court held that TSC did not establish copyright infringement by adaptation in relation to QAE’s new and future packaging because the required objective similarity (in the protectable expression) was not shown. Similarities relied upon by the high court were attributable to common industry practices and depiction of product content rather than to copying of the original artistic work.

The court held that TSC did not establish passing off in relation to the later packaging, because the overall get-up differences were sufficient to negate a reasonable likelihood of deception or confusion in the marketplace.

The court held that TSC’s cross-appeal failed because the revised SUGARLEAN logo (without the inverted “S” device) did not so resemble TSC’s registered S SUGARLESS logo as to be likely to deceive or confuse, particularly given the descriptive character of shared elements and the overall differences between the marks.

The court further held that Counterfeit Goods Act relief in respect of the new and future packaging could not stand, because counterfeiting is not established automatically by mere infringement and, on the findings made, the required underlying infringements in respect of that packaging were not proven.

LEGAL PRINCIPLES

The judgment applied the principle that statutory intellectual property monopolies are exceptional and do not extend to monopolising ordinary descriptive language. A registered trade mark may be endorsed with a disclaimer under section 15 of the Trade Marks Act where it contains matter not capable of distinguishing under section 9, and the disclaimer serves to prevent the proprietor from inhibiting competitors’ legitimate descriptive use of that matter.

In copyright law, infringement by adaptation requires a substantial and material objective similarity such that the original or substantial features remain recognisable, and mere use of a prior work as inspiration or reference does not establish infringement where only general ideas, themes, or common subject matter are shared. The assessment of substantiality entails a value judgment about what is material to the copyrighted work, and copyright does not protect ideas as distinct from expression.

Passing off requires proof of reputation and a reasonable likelihood of deception or confusion based on the overall impact of the get-up on the notional average consumer in the relevant market context; the law does not confer monopolies over common or functional features (such as prevalent industry colour choices or illustrations indicating product contents).

For trade mark infringement under section 34(1)(a) of the Trade Marks Act, the comparison must be between the marks as wholes, assessed by appearance, sound, and sense, from the perspective of the average consumer with imperfect recollection. Where descriptive elements are prominent, courts accept that small differences may suffice to avoid actionable confusion and do not permit traders to monopolise ordinary descriptive words.

Relief under the Counterfeit Goods Act requires satisfaction of the statutory concept of counterfeiting, which is not coextensive with trade mark or copyright infringement and requires an additional enquiry beyond establishing infringement alone.

Quad Africa Energy (Pty) Ltd v The Sugarless Company (Pty) Ltd and Another (1176/2018) [2020] ZASCA 37; [2020] 2 All SA 687 (SCA); 2020 (6) SA 90 (SCA); 2020 BIP 426 (SCA) (9 April 2020)