The Coca-Cola Company v Frucor Soft Drinks Ltd

• Jurisdiction: New Zealand
• Judge: Wylie J
• Judgment Date: 10 December 2013
• Neutral Citation: [2013] NZHC 3282
• Docket Number: CIV-2010-404-6703
• Court: High Court
• Date: 10 December 2013

BETWEEN

Under the Trade Marks Act 2002 and the Fair Trading Act 1986

In the Matter of (i) Trade Mark Infringement

(ii) Passing Off

(iii) Breach of the Fair Trading Act 1986

The Coca–Cola Company

Plaintiff

and

Frucor Soft Drinks Limited

First Defendant

Pepsico Inc

Second Defendant

[2013] NZHC 3282

CIV-2010-404-6703

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

Claims in relation to trade mark infringement, passing off and breach of the Fair Trading Act 1986 — parties were in the business of selling soft drinks in New Zealand — defendants introduced a new glass bottle in 2009 — plaintiff alleged defendants had used and intended to continue using the new bottle shape and silhouette of its shape as a sign, and that this sign infringed three registered trade marks the plaintiff held in NZ that protected what it described as its “contour bottle” — key issues in relation to alleged infringement of trade mark were: (a) what sign or signs defendants were using; (b) whether the signs had been used as trade marks; (c) whether defendants' signs were similar to any of plaintiff's three registered trade marks; and (d) whether defendants' signs were likely to deceive or confuse.

Counsel:

B Gray QC, G Arthur and L Carter for the Plaintiff

A Brown QC, A Ringwood and G Williams for the Defendants

[RESERVED] JUDGMENT OF Wylie J

Wylie J

CONTENTS

		Para No.
A.	Introduction	[1]
B.	Factual Background
	(i) Coca-Cola	[6]
	(ii) Coca-Cola in New Zealand	[15]
	(iii) Pepsi	[24]
	(iv) Pepsi in New Zealand	[32]
	(v) Competition between Coca-Cola and Pepsi	[40]
C.	PepsiCo's Carolina Bottle	[42]
D.	TCCC'S Response to Launch of Carolina Bottle	[60]
E.	The Judgment in Germany	[66]
F.	TCCC's Claim Under the Trade Marks Act 2002
	(i) Trade Marks Act 2002	[73]
	(ii) The pleadings	[86]
	(iii) Matters not in dispute	[91]
	(iv) What has to be compared?	[97]
	(v) TCCC's registered trade marks	[98]
	(vi) What sign or signs are the defendants using?	[102]
	(vii) Have the signs been used as trade marks?	[127]
	(viii) Are the defendants' signs similar to any of TCCC's three registered trade marks?	[143]
	(ix) Are the defendants' signs likely to deceive or confuse?	[193]
	(x) Summary in relation to TCCC's claims under the Trade Marks Act	[205]
G.	Passing off
	(i) Summary of legal requirements	[207]
	(ii) The arguments	[210]
	(iii) Reputation of TCCC's contour bottle in New Zealand	[212]
	(iv) Are persons likely to be misled?	[214]
	(v) Likely damage	[219]
	(vi) Summary	[221]
H.	Fair Trading Act	[222]
I.	Costs	[228]

A. Introduction

1 In 2009, the defendants, Frucor Soft Drinks Limited (“Frucor”) and PepsiCo Inc (“PepsiCo”), started selling cola and lemonade soft drinks in this country in a new 300 ml glass bottle. The plaintiff, The Coca-Cola Company (“TCCC”) alleges that the defendants have used and intend to continue using the new bottle shape and the silhouette of its shape as a sign and that this sign infringes three registered trade marks it holds in this country. TCCC says that these trade marks protect what it describes as its “contour bottle”.

2 The defendants say that their sign comprises a combination of one or other of PepsiCo's Pepsi, Pepsi Max and 7UP trade marks, together with its glass bottle (which it refers to as the “Carolina bottle”), which they point out incorporates a horizontal embossed wave pattern. They deny that the shape or silhouette of the Carolina bottle has been, or is likely to be, taken as use of a trade mark. They say that each of their combination signs is used as a trade mark to denote and distinguish their cola and 7UP products from TCCC's products in this country.

3 In relation to the cause of action alleging infringement of trade mark, the key issues can be broadly summarised as follows:

• (a) What sign or signs are the defendants using?;

• (b) Have the signs been used as trade marks?;

• (c) Are the defendants' signs similar to any of TCCC's three registered trade marks?;

• (d) Are the defendants' signs likely to deceive or confuse?

4 TCCC also alleges that the defendants' products being sold in the Carolina bottle are being passed off as products, or products associated with it, and further, that the defendants' products breach the Fair Trading Act 1986 because they mislead or deceive customers into believing that they are its products, or products associated with it.

5 The defendants deny both passing off and breach of the Fair Trading Act. They say that there are significant differences between the contour bottle and the Carolina bottle, and that in every case, their bottle features one or more of their word and device marks, Pepsi, Pepsi Max or 7UP. They say that they have clearly and adequately labelled their product, that the labelling differentiates their product from TCCC's product, and that there is no likelihood of confusion or deception.

B. Factual Background

(i) Coca-Cola

6 Coca-Cola is a cola flavoured carbonated soft drink. It is made to a secret recipe first created by a pharmacist, a Dr John Pemberton, in 1886. The fledgling enterprise's accountant, a Mr Robinson, named the new drink Coca-Cola, and penned what TCCC refer to as the “spencerian script logo” which has since become synonymous with the product.

7 The drink was first served from a fountain at Dr Pemberton's pharmacy in Atlanta, Georgia, in 1886, and he registered his Coca-Cola syrup and extract label as a copyright with the Patent Office in the United States.

8 In 1888, a Mr Candler began to acquire control of the Coca-Cola recipe and intellectual property from Dr Pemberton and his partners. The purchase was finalised in 1892 and TCCC was incorporated. In 1893, the Coca-Cola spencerian script logo was registered as a trade mark with the United States Patent Office.

9 At an early stage, TCCC's bottler identified the need for a distinctive package for Coca-Cola. He called for a bottle that “a person could recognise as a Coca-Cola bottle when feeling it in the dark, so shaped that, even if broken, a person could tell at a glance what it was”. In response TCCC commissioned the design of a distinctive glass bottle.

10 A prototype of the contour bottle was designed by a Mr Samuelson in 1915. This first contour bottle was patented by an entity known as the Root Glass Company on 16 November 1915. The bottle was then modified and slimmed down to work with then current bottling equipment and it went into production in 1916. It was approved by the Bottlers' Association, and it became the standard bottle for Coca-Cola. It was the only packaging used by TCCC for the next 40 years. The bottle shape has evolved over more recent years, but it has remained materially consistent throughout. Its evolution can be seen in the following photograph, which was produced in evidence for TCCC. It shows a range of Coca-Cola bottles over the years. Relevantly, it shows the development of the glass contour bottle from 1915 to 1991. The bottle on the right is a plastic bottle made of polyethylene terephthalate. Such bottles are referred to as “PET bottles”. As can be seen, they also have a contour shape:

11 From initial sales of nine drinks a day in 1886, Coca-Cola has grown to become a major worldwide brand. TCCC has developed a range of carbonated soft drinks including Fanta, Sprite lemonade, Diet Coke (which was introduced in 1982), and Coke Zero (which was introduced in 2005).

12 By 2009 (the relevant year for the purposes of these proceedings), TCCC was operating in more than 200 countries, marketing more than 500 brands and 3,300 beverage products. Its net operating revenue disclosed in the 2009 annual report was approximately $31 billion (US) and its operating income was $8.2 billion (US). According to TCCC's 2009 annual report, Coca-Cola, Diet Coke, Sprite, and Fanta were four of the world's top five non-alcoholic sparkling beverage brands, and 24.4 billion unit cases of TCCC products were sold worldwide. 1

13 Eighteen percent of TCCC's product sales were in the Pacific region.

14 Coca-Cola is sold in the contour bottle in most countries around the world. From 2000-2009, worldwide sales of Coca-Cola and Diet Coke in the contour bottle grew from 1.5 billion unit cases (more than 80 million in glass), to more than 3.5 billion unit cases (more than 500 million in glass).

(ii) Coca-Cola in New Zealand

15 In New Zealand TCCC operates through a wholly-owned subsidiary — Coca-Cola Oceania Limited. Coca-Cola Oceania has responsibility for the selection of TCCC products for sale in New Zealand, and the marketing and advertising of those products. TCCC also partially owns an entity known as Coca-Cola-Amatil (NZ) Limited. This entity has responsibility for the production and distribution of TCCC products in New Zealand. Coca-Cola-Amatil and Coca-Cola Oceania work closely together. TCCC owns all of the intellectual property rights in its products that are manufactured, distributed, or sold in New Zealand.

16 Coca-Cola products available in New Zealand include Coca-Cola, Diet Coke, Coke Zero, Sprite, Sprite Zero, Fanta, Lift, Lift Plus, GlacÉau Vitamin Water, Keri, Kiwi Blue, Powerade, Schweppes, Mother and Fuse Tea.

17 Coca-Cola has been sold and supplied in the contour bottle in New Zealand since 1939. The following dates are...