Beverage get-up round-up

In brief 7 min read

Recent Federal Court beverage cases illustrate the challenges involved in protecting and enforcing secondary marks on food and beverage product packaging. We review two cases serving as cautionary tales for food and beverage companies that they must pay close attention to their products’ get-up.

Stone & Wood v IP Development Corp

In Stone & Wood v IP Development Corp [2018] FCAFC 29, Stone & Wood, brewers of a craft beer called ‘Pacific Ale’, unsuccessfully alleged passing off and misleading or deceptive conduct regarding a competitor product called ‘Thunder Road Pacific Ale’. The Full Court of the Federal Court has now upheld the first instance judgment, dismissing Stone & Wood’s claims. 

In essence, Stone & Wood’s case was that it had developed a substantial reputation in the words ‘Pacific Ale’, such that relevant consumers would be misled into thinking that Thunder Road  Pacific Ale was associated with it. Stone & Wood’s case was not that the get-up of the respondent’s bottle was misleading, but, rather, that the mere use of the words ‘Pacific Ale’ constituted misleading or deceptive conduct.

At first instance, Justice Moshinsky dismissed Stone & Wood’s claims. His Honour found that the dominant feature of the Stone & Wood bottle and associated marketing was the Stone & Wood logo, rather than the name ‘Pacific Ale’, which occupied a subsidiary position. His Honour found the labels, packaging and overall ‘look and feel’ of the two bottles to be very different. There was no evidence of actual confusion in the marketplace and Justice Moshinsky did not think there was likely to be any.

The Full Court dismissed the appeal and found no error in His Honour’s reasoning. Like the trial judge, the Full Court found the get-up and packaging of the two products to be very different.

Frucor Beverages Ltd v The Coca-Cola Company

Frucor Beverages Ltd v The Coca-Cola Company [2018] FCA 993 was an appeal to the Federal Court from a decision of the Trade Marks Office in which Frucor’s trade mark application for  the colour Pantone 376C (described by Frucor as ‘V’ green) regarding energy drinks in class 32 was held to be deficient. The fatal flaw in Frucor’s application, both in the Office and on appeal, was that the colour of the swatch accompanying it was, mistakenly, a different shade of green from Pantone 376C. This article focuses on the aspect of the Federal Court’s decision where Justice Yates considered what the position would have been if the trade
mark application had correctly attached Pantone 376C.

In essence, Justice Yates found that even if the correct colour had been attached, Frucor’s ‘substantial, consistent and conspicuous’ use of ‘V’ green since 1997 did not constitute use as a trade mark, and could not satisfy the conditions for registration under section 41 of the Trade Marks Act 1995 (Cth). Accepting that there could be more than one mark on a product, Justice Yates nevertheless found that the V logo was the consistent and dominant badge of origin across the V product range. The difficulty for Frucor was that its use of other block colours for varietals other than traditional ‘V’ suggested that it was using colour in a descriptive sense to indicate varietal, rather than as a badge of origin. Justice Yates was not satisfied that, before the filing date, ‘V’ Green functioned as a separate trade mark alongside and independently of the ‘V’ logo.

Secondary marks

Both Stone & Wood and Frucor were attempting the challenging task of claiming an exclusive reputation in a secondary mark on their beverage get-up.

The dominant mark on the Stone & Wood bottle was the Stone & Wood logo. To be able to assert an exclusive reputation in ‘Pacific Ale’ or ‘Pacific’ alone, Stone & Wood needed to establish a reputation in that expression ‘shorn of direct or clear contextual relation’ with Stone & Wood. The evidence fell short in this respect. The words  Pacific Ale’ appeared in conjunction with Stone & Wood (rather than on their own) in almost all cases. The issue was compounded by the fact that the secondary mark ‘Pacific Ale’ had a descriptive aspect (albeit ‘imprecise and evocative’ in the words of the Full Court). There was evidence from Stone & Wood’s own website describing Pacific Ale as being ‘inspired by our home on the edge of the Pacific Ocean’ and suggesting that Pacific Ale was a ‘style of beer’.

Similar issues arise where the secondary mark is the colour or shape of the food or beverage packaging, which may have a descriptive or functional aspect. In Frucor’s case, Justice Yates considered that the use of colour across the ‘V’ product range was predominantly descriptive, to indicate varietal. The evidence did not establish that ‘V’ green was functioning as a separate and independent trade mark from the ‘V’ logo. In the shape context, Coca-Cola unsuccessfully asserted in The Coca-Cola Company v PepsiCo [2014] FCA 1287 that it had such a reputation in the waisted silhouette of its contour bottle that consumers would be misled or deceived by a Pepsi bottle having a waisted silhouette. The court was not satisfied that consumers were so familiar with the mere outline or silhouette of the shape (absent its other features) as to associate it automatically with Coca-Cola.

Expert evidence and consumer testing

Without persuasive evidence, the court is likely to find that consumers are responding to the dominant mark on the product, which will ordinarily be the word mark or logo. This raises the question of what evidence is necessary to prove that the secondary mark is functioning independently as a trade mark.

Stone & Wood at first instance presented evidence from a wine marketing expert, Professor Lockshin, to the effect that consumers do not normally use their cognitive processes when buying consumer packaged goods. Rather, they make purchasing decisions based on their subconscious memory of ‘dominant cues’ such as a sub-brand like ‘Pacific’, colour or logo. Professor Lockshin was not asked to carry out any tests in relation to the products in issue, although he accepted that it would be possible to test the propositions contained in his report.

In the absence of any testing, Justice Moshinsky did not accept it was established that consumers would subconsciously respond to the subbrand ‘Pacific Ale’ or ‘Pacific’ as a dominant cue. Rather, the evidence
was equally consistent with ‘Stone & Wood’ being the dominant cue on the bottle.

This raises the question of whether consumer surveys or testing are necessary or desirable in cases of this kind. The position that emerges from Stone & Wood, and other cases such as The Coca-Cola Company v PepsiCo, is that where the reputation of a secondary mark (particularly one having descriptive or functional aspects) is in question, and there is no evidence of actual confusion, it may be difficult to persuade the court that deception is likely based on marketing expert opinion alone. This, of course, depends on the quality of the competing expert evidence presented by both sides, but it is worth bearing in mind the potential need for testing in such circumstances.

Where consumer survey evidence is presented, however, it should be anticipated that it is likely to be the subject of extensive criticism. Frucor relied upon two consumer surveys in support of its reputation in ‘V’ green, both of which were heavily criticised by Coca-Cola (the reasons included that the surveys did not examine the proper universe of the relevant market; the results were skewed towards people already familiar with ‘V’; the sample was drawn from self-selected members of a rewards program; and, perhaps most importantly, the surveys did not demonstrate trade mark use because they did not separate out the role of colour from that played by the ‘V’ logo). What is clear is that in the case of secondary marks on product packaging, any consumer survey must be designed with great care, to best ensure that relevant trade mark use and reputation of the secondary mark are established.