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Trade marks with a twist

by Dr Stuart Gardiner on 18 April 2018

Recently the Supreme Court of Appeal denied registration of PEPSI TWIST as a trade mark for a soft drink by PepsiCo. Why? 

A competitor, Atlantic, had already registered TWIST, LEMON TWIST and DIET TWIST as trade marks for the same goods. There entries blocked registration of PepsiCo’s trade mark applications.  PepsiCo tried to eliminate the block by attacking Atlantic’s prior registrations as wrongly registered.

The attack was directed at the word TWIST. PepsiCo relied on dictionary definitions of the word “twist” as “a curled piece of lemon etc. peel used to flavour a drink” and “a drink consisting of a mixture of different spirits or other ingredients, such as gin and brandy etc.” It followed, urged PepsiCo, that TWIST was an entirely descriptive word for a type of beverage and it could not therefore function as a registered trade mark for such goods.

The essential function of a trade mark is to enable consumers to identify a particular product with reference to the mark and to thereby distinguish the product from the same or similar products emanating from a different product source.

The court found that most South African consumers would not associate the word TWIST with the dictionary definitions proposed by PepsiCo.  Consumers of soft drinks would regard the word TWIST in the Atlantic trade marks as a brand name without specific meaning.TWIST was therefore not descriptive of the Atlantic product and it could function as a trade mark for the product.  In other words, TWIST is not a world which traders in the soft drinks trade would usually use to describe their product.

As a result, the court refused to order cancellation of Atlantic’s TWIST trade mark registrations.The court noted that its finding was confirmed by the evidence Atlantic had provided to show that its TWIST marks had in fact become indicative (distinctive) of its product amongst consumers in the marketplace through extensive use. 

It remained for the court to decide whether PepsiCo’s applications for PEPSI TWIST could still qualify for registration in the face of Atlantic’s prior TWIST registrations on the register.  The Trade Marks Act prevents registration of a trade mark which, when compared with marks already on the register, would, in the view of the court, be likely to confuse or deceive consumers as to the source of the product featuring the mark. In other words, would consumers find the marks concerned confusingly similar.

On the evidence and applying the established legal tests for confusing similarity, when comparing the relevant TWIST marks both side by side and separately (taking note of their dominant features), the court found that a substantial number of consumers of the kind of goods in question would find the marks confusingly similar.  In testing for confusing similarity, the court considered the overall first impression made by the marks being compared, their visual, aural and conceptual similarities, the use of the relevant goods, their nature and their trade channels to market.  The court found that PEPSI TWIST incorporated the sole dominant and distinctive feature, TWIST, of Atlantic’s trade mark registrations.  There was therefore a likelihood of the PepsiCo mark causing consumer deception or confusion requiring the court to deny it registration.

The court left the question open as to whether regard could be had to the contention that the mark PEPSI is so widely known that consumers would instantly note and remember it (known as conceptual prominence).  This would provide an argument that consumers would not confuse the PEPSI TWIST mark with the Atlantic TWIST marks because consumers would know the PEPSI mark indicated PepsiCo as the source of the product and not some other source.  Put differently, could the court look beyond a comparison of the marks themselves and take note of surrounding factual circumstances actually relating to the marks in the marketplace when testing for confusing similarity?

The court was able to avoid the issue by holding that even if consumers recognised that a product marked PEPSI TWIST emanated from PepsiCo consumers might be confused or deceived into believing that beverages featuring Atlantic’s TWIST marks emanated from the PEPSI stable. This was sufficient to establish the confusing similarity required to bar registration of PEPSI TWIST.

The addition of a second word to a primary mark such as PEPSI COLA, PEPSI ZERO, PEPSI TWIST creates a sub-brand.  In choosing a sub-branded product, the court stated, consumers would emphasize the sub-brand, in this case, TWIST.  Confusing similarity between Atlantic’s TWIST marks and PEPSI TWIST would arise amongst a substantial number of consumers from the sub-branding of PEPSI TWIST.  Uncertainty in the mind of consumers would suffice.

Obtaining guidance from foreign judgements the court found that where an addition (PEPSI) is added to an existing registered mark (TWIST) and the registered mark does not determine the overall impression conveyed by the composite mark, the registered mark does have an independent role therein without necessarily contributing the dominant element.  For the purposes of a likelihood of confusion it is not required for the registered mark to determine the overall impression. The overall impression may nevertheless lead consumers to believe that the composite mark indicates an economic link between sources. This is sufficient to establish a likelihood of confusion as the basis for refusing PEPSI TWIST registration as a trade mark.

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