Friday, 15 June 2012

Wine, Grapes and Trade Marks - the summary

Source: zonquasdrift.de

Thanks to a Jeremy Speres tip-off on Wednesday Afro Leo was able post a note entitled Wine, Grapes and Trade Marks as an aperitif to Jeremy’s unedited, full bodied and somewhat cheeky summary below. 

"In a judgement that’s bound to get the talking heads a-jabbering, Adv. Alasdair Sholto-Douglas SC has pulled off quite a feat by convincing Davis J, sitting in the Western Cape High Court, that near identical trade marks used in relation to wine and grapes are not confusingly similar.  You can download the judgement here: Adv. Sholto-Douglas’s fancy footwork is available here and that of Adv. Morley SC (for the applicants) is available here.

Background

The First Applicant owns the registered mark ZONQUASDRIFT in class 33 in respect of alcoholic beverages (except beer) and the Second Applicant, a company owned by the First Applicant, owns a wine producing farm called ZONQUASDRIFT and sells wine under that mark.  The First Respondent runs a business from a farm 1 kilometre away and is, as far as the applicants are concerned, a rather naughty neighbour.  According to the applicants, the First Respondent’s use of the trading name ZONQUASDRIFT WINEYARDS CC in relation to farming services and grapes amounts to trade mark infringement, which name is also “undesirable” in terms of the Close Corporations Act.  The First Respondent, in turn, counter claimed for the expungement of the First Applicant’s mark on the basis that, amongst others, it consisted exclusively of a geographic term.

Claims

Regarding trade mark infringement, the applicants relied on section 34(1)(b) of the Trade Marks Act which extends infringement of a mark to situations where the respondent employs the mark, or a similar mark, in respect of similar goods or services, and not just identical goods or services, provided deception or confusion in the marketplace is likely.  The Court accepted the approach, laid down by the same Court in New Media Publishing (Pty) Ltd v Eating Out Web Services, that the appropriate test is to consider whether the combined effect of the resemblance of the marks on the one hand and the goods or services on the other results in a likelihood of deception or confusion.  The Court appeared to accept that the marks were essentially identical and was effectively left with a decision as to whether a mark registered in relation to alcoholic beverages would be infringed by the same mark used in relation to grapes.

In deciding against a likelihood of deception or confusion, the Court applied the well-known factors established in the British Sugar case, being 1) the respective uses and users of the goods or services; 2) the physical nature of the goods or services; 3) the respective trade channels; 4) whether in practice the goods are likely to be found in supermarkets; and 5) the extent to which the goods or services are competitive.

Some anomalies

Strangely, regarding factor 3, the Court considered the trade channels the Second Applicant had actually utilised instead of considering the general trade channels for the type of goods as registered.  Accordingly, the Court weighed this factor against a likelihood of deception or confusion given that the First Respondent sold its grapes on the local market to cooperatives, whereas the applicants exported their wine to Germany.

Regarding factors 4 and 5, the Court also appeared to weigh these against a likelihood of deception or confusion given that the First Respondent does not produce wine but sells grapes which do not appear in supermarkets and which do not compete with wine.  Adv. Morley however argued, for the applicants, that there is no clear delineation between farms producing and selling grapes or selling grapes and wine or selling wine exclusively, and that this link between the source of grapes and wine supported an argument for a likelihood of deception of confusion.  The Court however didn’t really address this and proceeded to dismiss a likelihood of confusion on the basis that the public would not be confused into believing that ZONQUASDRIFT wine was produced using ZONQUASDRIFT VINEYARDS grapes. 

Regardless of whether the public would assume that ZONQUASDRIFT wine was produced using ZONQUASDRIFT VINEYARD grapes, the finding on this point is likely to be controversial given that it appears to be a narrow interpretation of the deception or confusion test.  Even if the public would not be believe that the wine was produced from the grapes, they may well, upon encountering the grapes, believe that there is at least some connection in trade between the producer of the grapes and the producer of the wine.  For instance, the buyers at the wine cooperatives that the First Respondent sells its grapes to may well consider the grapes to originate from the producer of the wine.  This is particularly so in light of the initial interest confusion doctrine.

Canoe Connotation

Interestingly, the Court placed much significance on the geographic nature of the mark in arriving at its decision.  The Court appeared to accept that Zonquasdrift is apparently an area surrounding a crossing of the Berg River in the Riebeek Valley where grape farming does in fact take place.  This the Court found to operate against a likelihood of deception or confusion in that the public would associate the First Respondent’s ZONQUASDRIFT VINEYARDS mark with a geographical place and not with the Second Applicant’s wine.  Perhaps then this judgement is not as controversial as it is being made out to be and that in another case, also involving wine and grapes where the mark has no geographic meaning, a court may be willing to find a likelihood of deception or confusion despite this judgement.

Even more interesting is the fact that, despite apparently considering the mark to be geographic, the Court refused to consider the counter application for expungement of the registered mark.  The reasoning appears to be that because expungement was advanced as a defence to the main application, which was shown to have failed, there was no need to consider further defences.  I suspect that this may have been the result of the respondents arguing that should the main application fail, then the counter application should not be pursued, with a view to avoiding costs.   

Concluding remarks
One thing’s for sure though - trade mark attorneys everywhere will be thanking Adv. Sholto-Douglas  – wine producers will now surely be advised to make application in class 31 (covering grapes) in addition to class 33 (covering wine).  Nothing puts a smile on a trade mark attorney’s face faster than a quick additional application fee.  Good thing too – somebody’s got to pay for Darren’s haircut! 

Afro Leo's espresso


No man[e] - Afro leo's trim
This case seems ripe for appeal because the infringement test has not been applied correctly but does it mean that the SCA would, applying the test as it should have been, find any differently? 

I agree with the clean-living-crew-cut Jeremy who seems to infer that this case does not mean that wine and grapes are not similar goods. So it gets down to the strength of the mark ZONQUASDRIFT, which remains registered, and this tips the balance for me. Although the global appreciation test allows one to consider the strength of the registered mark (and therefore also its weakness) in assessing a likelihood of confusion, there is a point beyond which the Court logically cannot go unless the court invalidates the mark, which it was not prepared to do here. In other words, unless grapes and wine are regarded as dissimilar goods which the Court did not appear to say (in my view correctly), there must be a likelihood of confusion if an almost identical mark remains registered.


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