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[1992] ZASCA 113
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Royal Beech-Nut (Pty) Ltd. t/a Manhattan Confectioners v United Tobacco Company Ltd. t/a Willards Foods (584/90) [1992] ZASCA 113; 1992 (4) SA 118 (AD); [1992] 2 All SA 337 (A) (3 June 1992)
Case No 584/90
IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)
In the matter between:
ROYAL BEECH-NUT (PROPRIETARY) LIMITED
t/a MANHATTAN CONFECTIONERS
Appellant
and
UNITED TOBACCO COMPANY LIMITED
t/a WILLARDS FOODS
Respondent
CORAM
: Corbett CJ, Hefer, Nestadt, Goldstone JJA et Nicholas
AJA.
DATE OF HEARING
: 11 May 1992
DATE OF JUDGMENT
: 3 June 1992
JUDGMENT
CORBETT
CJ/
2
CORBETT
CJ:
The appellant applied
unsuccessfully to the Transvaal Provincial Division for a final interdict based
upon an alleged passing-off
by the respondent. With the leave of this Court the
appellant now appeals against the whole of the judgment of the Court a quo. The
facts upon which the appeal must be decided are reasonably straightforward and
may be summed up as follows:
The appellant is a South African corporation which in 1989 acquired the
business, together with the goodwill and trade marks pertaining
thereto, of a
company known as Manhattan Confectioners (Pty) Ltd. The business formerly
conducted by Manhattan Confectioners (Pty)
Ltd was started in 1947 by a family
partnership, which traded as "Manhattan Confectioners", and this business was
taken over in 1967
by Manhattan Confectioners (Pty) Ltd.
3
The partnership manufactured and distributed certain
confectionery products known as marshmallows and gums and from the inception
of
the business it used in relation thereto a trade mark consisting of the word
MANHATTAN written in a special manner (to which I
shall later refer). The
partnership's successors-in-title have continued to run the business in the same
way and to make use of the
MANHATTAN mark. At present MANHATTAN confectionery,
in the marshmallow and gum categories, is sold throughout the Republic of South
Africa and in certain neighbouring countries. The usual retail outlets are
supermarkets, specialist confectionery stores, rural trading
stores and cafes.
The number of retail distributors selling MANHATTAN confectionery is estimated
at 6000 and appellant's turnover
in the field of marsh-marshmallows and gum
confectionery amounted in the year ended 28 February 1989 to Rll,5m. This
represents a
29% share of the South African market for these products.
4
Over the years appellant and its predecessors in
the business (to whom I shall collectively refer as "Manhattan Confectioners")
have
extensively advertised and otherwise promoted their MANHATTAN
confectionery. It is alleged on behalf of appellant, and not disputed
by
respondent, that the trade mark MANHATTAN enjoys a "considerable reputation" in
the confectionery field and has become distintive
of the goods marketed by
Manhattan Confectioners.
The respondent trades, through one of its divisions, as "Willards Foods".
This division manufactures and distributes what are termed
"salty snacks",
mainly potato chips. Since about 1964 the trade mark WILLARDS has been used in
relation to respondent's potato chips.
This mark has acquired a substantial
reputation in the field of salty snacks, especially potato chips, and has become
distinctive
of respondent's products. At the time of the litigation in
5
the Court a quo 37% of the potato chips sold in
South Africa (through about 23 000 outlets) were WILLARDS chips; and in the year
1988
respondent's sales of products bearing the WILLARDS trade mark exceeded
R100m in value. Respondent markets its products through the
same kinds of
outlets as does appellant.
In July 1989 respondent commenced marketing potato chips in packets upon
which appeared not only the WILLARDS trade mark but also
the mark MANHATTANS. In
the main answering affidavit filed on behalf of respondent it is stated that the
word MANHATTANS and the
style of its depiction on respondent's goods (about
which more anon) was used in order to symbolize the well-known skyline of
Manhattan
Island in the City of New York and not as an attempt to imitate the
mark used on appellant's confectionary products. This is not
disputed by
appellant.
6
It is appellant's case, as presented on appeal, that in
marketing its potato chips under the trade mark MANHATTANS respondent is passing
off its product "as being connected in the course of trade" (the words used in
appellant's heads of argument) with the appellant.
And it seeks relief in the
form of a final interdict. I should perhaps at this point make it clear that
none of the trade marks hitherto
referred to is registered under the trade marks
legislation.
It is trite law that by adopting the trade mark of his rival, or one so
closely resembling it as to be calculated to deceive or cause
confusion, a
trader may be held to have impliedly represented that his goods are those of his
rival or that they are connected in
some way with his rival. If such conduct
causes or is calculated to cause his rival damage, either in the form of
diversion of custom
or damage to or misappropriation of his goodwill, then the
delict of passing-off is committed
7
and the guilty party may be restrained by
interdict from such conduct.
One of the elements which a plaintiff in a
passing-off action based upon such an implied representation must establish is a
reputation
in such trade mark. By this is meant that by user or advertising or
some similar means the trade mark has become associated in the
mind of the
purchasing public with goods emanating from the plaintiff and has thus become
distinctive of his goods. Because only
if there is such a reputation will the
user by the defendant, on his own goods, of this mark, or one deceptively
similar, be capable
of amounting to an implied representation that defendant's
goods emanate from the plaintiff or are connected in some way with the
plaintiff
and thus be capable of causing consequential damage to the plaintiff. In this
case there is no dispute that appellant's
trade mark MANHATTAN has acquired a
reputation and in the mind of the
8
purchasing public has become distinctive of the goods marketed
by Manhattan Confectioners under that trade mark. The two main issues
debated on
appeal were:
(a) whether appellant has established (for the onus is on it) that the
respondent's use on its products of the trade mark MANHATTANS
is likely to cause
deception or confusion in the sense described above; and
(b) whether respondent's aforesaid use of the trade mark MANHATTANS is
calculated to cause consequential damage to the
appellant.
I shall proceed to
consider issue (a).
The first point to note in regard to the question of deception or confusion
is that the parties do not carry on their activities in
a common field. They
manufacture and market different kinds of product: certain types of
confectionery in appellant's case and
9
salty snacks, mainly potato chips, in respondent's
case. Appellant attempted, on the papers and in argument, to make out the case
that the parties were in fact engaged in the same or closely related fields of
activity; and in this it was said that they both marketed
in the same kinds of
outlets what were termed "impulse foods" or "snack foods". I do not propose to
enter into the question as to
what these so-called classes of food comprehend,
for, in my view, the classifications are artificial and ignore what I conceive
to
be a very substantial distinction between marshmallows and gums, on the one
hand, and potato chips on the other. Certainly any confusion
which might arise
owing to the use by respondent of the MANHATTANS mark could never result in the
diversion of custom from the appellant:
at most it could cause damage to his
goodwill or amount to the partial misappropriation thereof.
The fact that the parties are not engaged in
10
the same field of activity does not, of course, preclude a
finding of passing-off: it is merely a factor to be taken into account
in
deciding whether there is a likelihood of deception or confusion and/or whether
the plaintiff has suffered or is likely to suffer
damage as a result of the
defendant's activities (see
Capital Estate and General Agencies (Pty) Ltd and
Others v Holiday Inns Inc. and Others
1977 (2) SA 916
(A), at 929 E - H;
Hollywood Curl (Pty) Ltd and Another v Twins Products (Pty) Ltd (1)
1989
(1) SA 236
(A), at 251 F-I). Appellant's counsel recognised this and, while
conceding that respondent's use of the MANHATTANS mark could not
lead the
purchasing public to think that respondent's goods (i e potato chips) were the
goods which they associated with appellant's
MANHATTAN mark (i e confectionery),
nevertheless contended that there was a likelihood of the public being deceived
into thinking
that respondent's product was "another horse out of the same
stable" (cf
Hollywood Curl
case, at 251 G).
11
In
the Lorimar Productions
cases 1981 (3)
SA
1129 (T) Van Dijkhorst J stated (at 1141 F - G):
"It is, however, only in the exceptional case where there will be passing off
yet no actual common field of activity. Competition
is normally the casus belli.
In general terms competition involves the idea of a struggle between rivals
endeavouring to obtain the
same end. It may be said to exist whenever there is a
potential diversion of trade from one to another. For competition to exist
the
articles or services of the competitors should be related to the same purpose or
must satisfy the same need."
In my view, the Court will not readily conclude that in
the case of disparate goods the defendant's product will
be regarded as another horse from the plaintiff's stable.
There must be cogent grounds to justify this conclusion.
And it must be borne in mind that what has to be gauged
is the likely reaction of ordinary members of the
purchasing public, not that of lawyers or traders or
persons engaged in the kinds of business conducted by the
parties.
12
There are a number of other
features in this particular case which have a direct and important bearing upon
the issue of deception
or confusion. In the first place, it is to be noted that
the appellant places no reliance whatever upon the get-up of its and the
respondent's goods. Indeed various photographic exhibits included in the papers
show that, apart from the trade marks MANHATTAN and
MANHATTANS, the respective
get-ups are entirely different. And what is striking is the variety of get-ups
used by both parties for
the different products marketed by them. Appellant's
counsel sought to neutralize dissimilarity of get-up by arguing that there could
be deception or confusion flowing from "audial" (i e aural) use of the marks.
What he sought to convey was that persons who had only
perceived the mark
aurally and had not seen it in the context of the get-up of the goods could be
deceived or confused. The same
argument was addressed to the Judge a quo, who
dismissed it partly on the ground that this was not the
13
case made out by appellant in the founding affidavit. I agree.
All that appellant's counsel could point to in the founding affidavit
was an
averment, in the context of establishing distinctiveness, to the effect that
Manhattan Confectioners had "advertised its products
on radio and (had)
participated in radio promotions in which its MANHATTAN confectionery (had) been
promoted". This does not constitute
even an attempt to make out a case based on
aural use of the mark; and, in any event, it falls far short of the evidence
which would
be needed to do so. In the second place, although the words used to
constitute the respective marks of the parties are almost identical,
that is
where the resemblance ends. In the case of appellant's mark the word MANHATTAN
is depicted in capital letters, which vary
in height: the letters HA in the
middle of the word are of equal height, while the other letters progressively
diminish in size towards
the beginning and end of the word. The word appears
against
SEE ORIGINAL JUDGEMENT PICTURE
14
a background or frame of the same shape, i e long
curved sides top and bottom and short vertical sides at each end. Sometimes this
frame or background which might be described as a "truncated ellipse" is
bordered by one or more different-coloured lines; in other
cases it is plain.
This is how it appears on a packet of marsh-mallows:
Two samples of
respondent's use of the MANHATTANS mark on its packaging were placed before the
Court by appellant, the one relating
to chips with a "mild mustard" flavour, the
other "plain salted" chips. The general design and format of the packet is in
each case
virtually identical, only the background colour differs. In the one
case it is red and in the other
Two samples of respondent's use of the MANHATTANS mark on its packaging were
placed before the Court by appellant, the one relating
to chips with a "mild
mustard" flavour, the other "plain salted" chips. The general design and format
of the packet is in each case
virtually identical, only the background colour
differs. In the one case it is red and in the other
15
reddish brown merging into black. The front of the packet (I take the "mild
mustard" version by way of example) has this appearance:
SEE ORIGINAL
JUDGEMENT PICTURE
16
The immediate foreground is a pile of potato chips and in the
middle distance is depicted a segment of the skyline of Manhattan Island
at
night. On the reverse side of the packet appear, inter alia, the word MANHATTANS
(twice), written in the same style as on the
front but in smaller script, the
trade mark WILLARDS in larger form and a slogan, appearing fairly prominently in
cursive script,
"That's good times". It is respondent's claim, and it must be
accepted, that this slogan (which seems to appear on the packaging
of virtually
all respondent's products) has been extensively used by respondent in
advertising its various WILLARDS products and
has become closely associated with
its products.
From the aforegoing it appears:
(1) That the appearance of appellant's mark consisting of the word MANHATTAN
with its elliptical frame or background is completely
different from that of
respondent's MANHATTANS
17
mark, as it appears on the two examples placed before the
Court.
(2)
That on the front of the
respondent's packet (which appellant was at pains to emphasize would be the
aspect of the packet most likely
to be displayed to the customer) whenever the
MANHATTANS mark appears it is in conjunction with the distinctive picture of
potato
chips and the eye-catching Manhattan skyline. This conjunction is
emphasized by respondent in its advertisements on television of
its MANHATTANS
chips.
(3)
That on the respondent's packet the
well-known trade mark WILLARDS appears back and front. Admittedly on the front
the WILLARDS mark
is less prominent than the MANHATTANS mark, but they are close
to one another and if one looks at the latter one would tend also
to see
the
18
former. Also on the back of the packet and just below the WILLARDS mark there
appears the slogan "That's good times".
Thirdly,
there is no evidence of actual confusion or deception in the sense that members
of the purchasing public have been misled
into thinking that the goods on which
respondent uses the MANHATTANS mark emanate in some way from the appellant. Lack
of evidence
of actual confusion or deception is never in itself decisive, but it
is a significant factor. By the time that the matter came to
Court in April 1990
respondent had been marketing potato chips under the MANHATTANS mark for some
nine months.
Fourthly, although appellant and respondent use the same kind of outlets for
the marketing of their respective products, these are
generally displayed on
different shelves or separate areas on shelves. A
19
retailer would not normally mingle confectionery
and potato chips. Moreover, respondent's products are often, although not
always,
displayed for sale together with other WILLARDS products on a
distinctive stand with the WILLARDS mark prominently displayed on it.
Fifthly, appellant's case postulates the ordinary member of the purchasing
public being led to think, because of respondent's afore-described
use of the
MANHATTANS mark, that appellant had extended its business activities into the
manufacture and marketing of potato chips.
As appears from other cases, such
"line extension" does occur in certain circumstances and types of business
activity and this may
provide a basis for a claim of passing off. In the present
case, however, there is no suggestion in the evidence that confectionery
manufacturers do, and are known to, diversify into the production of salty
snacks and potato chips.
20
Whether or not a case of deception or confusion has been made
out depends upon a factual inference to be drawn from the evidence.
The Judge a
quo, having considered all the relevant factors and circumstances concluded that
it was not likely that a substantial
portion of the public would be confused by
the respondent's use of the MANHATTANS trade mark. Having considered the
submissions of
appellant's counsel to this Court I remain unpersuaded that the
Judge a quo reached a wrong conclusion. Accordingly the appellant
failed to
establish an essential element of its claim for passing-off. Issue (b), that of
consequential damage to the appellant,
consequently falls away.
The appeal is dismissed with costs, including the costs of two counsel.
M M CORBETT HEFER JA) NESTADT JA) CONCUR GOLDSTONE JA) NICHOLAS AJA)