New Zealand Law Society - Did Coca-Cola get what it wanted for Christmas?

Did Coca-Cola get what it wanted for Christmas?

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Although Santa Claus, or Father Christmas, as I like to call him, is strongly linked with The Coca-Cola Company thanks to its regular advertising featuring him since the 1930s, the High Court did not give Coca-Cola the Christmas present it was probably hoping for in its decision issued on 10 December 2013 – The Coca-Cola Company v Frucor Soft Drinks Limited and Pepsico Inc [2013] NZHC 3282.

In 2010 Coca-Cola issued proceedings against Frucor Soft Drinks Limited and Pepsico Inc. Frucor is the current bottler and distributor of Pepsi products in New Zealand. The proceedings related to the release of the following bottles, known as the “Carolina” design, in New Zealand in October 2009:

Photo of 3 Pepsi Cola bottles, showing their shape. 

Coca-Cola had also issued proceedings in Germany and Australia. The proceedings are still to be heard in Australia and are under appeal by Coca-Cola after it lost in Germany.

Coca-Cola is the market leader for cola drinks in New Zealand. It holds 91% of the market share. The actual sales figures are confidential, but sales are in the tens of millions of bottles in New Zealand every year. Pepsi’s market was not disclosed, but it is obviously less than 9% and was described by the judge as “very low”. In terms of the Carolina bottle, as at October 2013, a mere 600,000 bottles had been sold since October 2009.

Coca-Cola claimed trade mark infringement, passing off and a breach of the Fair Trading Act. Coca-Cola relied on the following trade mark registrations:

Technical drawing of Coca Cola bottles, showing their shape. 

It relied on the following bottle shapes as the basis for its passing off and Fair Trading Act claims:

Photo of 2 Coca Cola bottles, showing their shape. 

Apart from the usual considerations of similarity of trade marks and the goods and services involved, the more interesting aspect of the judgment is whether Frucor and Pepsi have been using the Carolina bottle itself as a trade mark.

What does acting “as a trade mark” mean? The purpose of a trade mark is to aid consumers in distinguishing different goods and services from one other. Trade marks act as a short cut to customers when making purchasing decisions.

The problem with shapes as trade marks is that it is more difficult to distinguish products on the basis of shape alone, absent any other branding. Normally logos, fonts and particular colour schemes are used to provide the cues to customers. Shapes are a normally an ancillary consideration.

In finding that the shape was acting as a trade mark, the judge took note of Pepsi’s evidence that the Carolina bottle had been specifically designed to appeal to customers, Pepsi’s own applications for registration of various bottle shapes as trade marks, and to the 90 or so existing trade mark registrations for bottles.

While a shape alone can act as a trade mark, this is typically only the case where there are extensive sales over a long period of time, as well as evidence from consumers indicating that they recognise the shape per se as a trade mark, neither of which appeared to exist in this case.

It is probably fair to say that the Carolina bottle has the ability to function as a trade mark at some point in the future, provided it received the right promotion and achieved an increase in sales, but does not function as a trade mark in its own right at the present point in time.

The judge then went on to consider whether the Carolina bottle was confusingly similar to Coca-Cola’s registered trade marks, and to Coca-Cola’s bottles as they are presented in trade.

Coca-Cola placed a lot of emphasis on the waist of its bottle. The waist was said to be the primary, and probably only, feature in common with the Carolina bottle.

Despite the fact that both sets of bottles have a waisted shape, it was noted that a waist is a common feature in bottles, the waists were not the same anyway, and in particular there is no band around the waist of the Carolina bottle as there is in the Coca-Cola bottles. Key differences were the horizontal wave pattern on the lower section of the Carolina bottle and no vertical fluting or bulging sides on the Carolina bottle.

Even though Frucor’s New Zealand sales were modest, the judge considered that they were sufficient that any confusion or deception with Coca-Cola’s bottles would have surfaced.

It was a decisive loss for Coca-Cola, but not surprising given the differences in the bottles, and the challenges that shape trade marks present. The decision has been appealed to the Court of Appeal.

Kate Duckworth is a partner of Catalyst Intellectual Property in Wellington.

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