Nestlé fails to prevent use of 'break' marks for chocolate-coated wafer finger products

The North Gauteng High Court of Pretoria has handed down judgment in the matter between Nestlé (Société des Produits Nestlé SA and Nestlé South Africa as the applicants) and Iffco (International Foodstuffs Co and Iffco South Africa (Pty) Ltd as the respondents) (Société des Produits Nestlé SA v International Foodstuffs Co (November 27 2013)).

The facts placed before the court were that Nestlé is the proprietor in South Africa of the 'two-finger wafer' trademark and 'four-finger wafer' trademark (depicted below), both in Class 30 of the Nice Classification covering “chocolates and chocolate confectionary products”.

Nestlé is also the proprietor of various word marks (HAVE A BREAK…HAVE A KIT KAT; HAVE A BREAK; HAVE A BREAK, HAVE A KIT KAT and TAKE A BREAK).

Iffco is the registered proprietor of the word marks QUANTA BREAK and TIFFANY BREAK in Class 30. Both parties use their respective trademarks in relation to chocolate-coated wafer finger products, as depicted below.

In June 2011 Nestlé instituted proceedings and sought interdictory relief on the basis of trademark infringement in terms of Sections 34(1)(a), 34 (1)(c) and 35 of the Trademarks Act 194/1993 and passing off as of common law. Nestlé also sought an order that the registrar of trademarks expunge Iffco’s aforementioned trademark registrations. Iffco denied all allegations of possible trademark infringement and, in turn, filed a counter-application for the expungement of Nestlé’s two and four-finger wafer trademarks in terms of Section 10(5) of the act.

The court applied long-standing principles of trademark infringement and compared the parties’ marks in respect of their similarities and differences and considering whether a substantial number of persons of the public would be confused as to the origin of the goods. Based on the overall impression of the marks, having regard to the marks visually, aurally and conceptually and the surrounding circumstances, the court held that the marks were not similar and that confusion was not likely to occur. In particular, with respect to the alleged infringement of the 'finger wafer' trademarks, the court noted that consumers would not perceive the finger wafers on the packaging of Iffco’s products as indicating the origin of the product. This, the court held, would merely have the consumer believe that this was the product contained inside the packaging. Moreover, if the consumer was thus not confused by the packaging, it would not be confused after opening the product and seeing the shape of the product.

The court was also of the view that, although it is common cause that Nestlé’s Kit Kat product is well known, protection under Section 35(3) is afforded where there is no registration for a trademark and the only reliance would be on the goodwill of the mark in South Africa. As Nestlé, having registrations in South Africa, could not get over the hurdle of showing confusion for the infringement action to succeed in terms of Section 34, the court naturally followed suit in relation to Section 35(3).

When considering the alleged passing off, the court agreed that it is not necessary to provide actual evidence of confusion and that an inference can be drawn of possible confusion. However, if so, the evidence adduced in this manner must be of the most cogent sort. As the court did not conclude an infringement of Nestlé’s trademarks and no evidence was given by Nestlé of actual confusion, it found that Iffco’s get-up as a whole did not constitute passing off.

The further issue which had to be considered is the counter-application for expungement of Nestlé’s 'finger wafer' trademarks. Section 10(5) makes provision for a mark to be removed from the register in the event that the mark consists exclusively of the shape of the goods where such shape is necessary to obtain a specific technical result. The court held, that in order to succeed with its attack, Iffco would have to show that the “essential functional features” of the 'finger wafer' trademarks are attributable only to the technical result or, are necessary only to obtain the specific technical result.  

Iffco adduced evidence that the trapezoidal shape of the finger wafers are necessary for demoulding the chocolate bar and went as far as to say that, without this shape, the demoulding is totally impossible. The question which then arose was whether, if the marks have other non-functional features, their registration would still be barred. The court respectfully agreed with the decision in Lego Juris A/S v OHIM in that the terms 'exclusively' and 'necessary' (which are also used in Section 10(5)) ensures that only in the event that the trademark in its entirety incorporates a technical results would the mark not be capable of being registered or vulnerable to be removed. In other words, Section 10(5) would be applicable only where all the essential characteristics of the mark are functional. The court acknowledged that Nestlé’s 'finger wafer' trademarks include an “apron” around the bottom edges and, as pointed out by counsel for Nestlé, a chocolate slab obviously is not in the shape of fingers. These are important non-functional features which rendered Nestlé’s 'finger wafer' trademarks not solely a shape for resulting in a technical solution.

Finally, the court ruled on the expungement of Iffco’s QUANTA BREAK and TIFFANY BREAK trademarks. In light of the court’s decision in the main application for infringement that the dominant feature of Nestlé’s mark is not the word 'break', being an ordinary word which was in fact disclaimed, the court held that the expungement of Iffco’s marks failed.

The court dismissed each of the applications brought by the parties.

Gerard du Toit, Spoor & Fisher, Pretoria