SOCIETE DES PRODUITS NESTLE S. A. v. MULTITECH LANKA (PVT) LIMITED

029-SLLR-SLLR-1999-V-2-SOCIETE-DES-PRODUITS-NESTLE-S.-A.-v.-MULTITECH-LANKA-PVT-LIMITED.pdf


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SOCIETE DES PRODUIT§ NESTLE S.A.
v.MULTITECH LANKA (PVT) LIMITED
SUPREME COURTFERNANDO, J..
WADUGODAPITIYA, J. ANDGUNASEKERA, J.
S.C. APPEAL NO. 21/98
C. OF THE WESTERN PROVINCE
C. (CIVIL) NO. 26/97/ (3)
APRIL 26 AND 27, 1999
Intellectual property – Infringement of rights of registered owner of a mark -Unfair competition – Sections 117 and 142 of the Code of Intellectual ProperlyAct, No. 52 of 1979 – Plaintiffs right to an interim injunction.
The plaintiff company had been selling its chocolate beans in Sri Lanka underthe registered trade mark of ‘Smarties* in a gaily-coloured cylindrical containeror tube. Its rival, the defendant company, very recently started importing similarchocolate beans from Australia and packing and selling them as 'sweeties* (anunregistered trade mark) in a no less gaily-coloured oblong box. The plaintiffinstituted action in the High Court of the Western Province alleging that thedefendant's get-up was confusingly similar to that of the plaintiff and that it waslikely to mislead the purchasing public thus violating the plaintiffs rights undersection 117 of the Code of Intellectual Property Act, No. 52 of 1979 and thatthe use of the defendnt's get-up was also an act of unfair competition under section142 of the Act. The trial Judge refused to grant an interim injunction on the groundthat the plaintiff was guilty of attempting to mislead the Court, there was a failureto disclose a fact and that in any event the marks in dispute were not similar.
Held:
The plaintiff had not attemped to rhislead the Court by holding out thatits product was packed in a container of the same shape as the defendant's,particularly in view of the fact that the containers had been produced andwere available for examination by the trial Judge. There was a failureby the plaintiff to disclose the fact that it'also sold "Smarties* under adifferent get-up but that was not a material fact.
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the case cannot be decided by amply totting up and weighing resemblancesand dissimilarities upon a side by side comparison of the marks: the issueis whether a person who sees one in the absence of the other and whohas in his mind's eye only # recollection of that other would think the twowere the same.
The evidence established, prima facie, at least an act of unfair competitionwhich entitled the plaintiff to the issue of an interim injunction.
Per Fernando, J.
. . this was eminently a case in which the interim injunction inquiry andtrial should have been taken up together.*
Cases referred to:
Thiagarajah v. Majeed – (1935) 4 CLW 41, 42.
Sumeet Research and Holdings Ltd. v. Elite Radio & Engineering Co.,Ltd. – (1997) 2 Sri LR 393, 402-3.
Murugesu v. Northern Divisional Agricultural Producers' Co-operative UnionLtd. – (1952) 54 NLR 517.
Perera v. Perera – (1963) 67 NLR 445, 449.
APPEAL from the Order of the High Court of the Western Province.
K. Kanag-lswaran, PC with Nigel Bartholomeusz, Miss Dilshani Wijayawardana
and Miss Vindya Weerasekera for the plaintiff-appellant.
A. Parathalingam, PC with Faiser Musthapha for the defendant-respondent.
Cur. adv. vult.
June 2, 1999.
FERNANDO, J.
This appeal is about competition in selling multi-coloured chocolatebeans, so popular with children.
The plaintiff-appellant company (the plaintiff) had been selling itschocolate beans in Sri Lanka, under the registered trade mark of
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"smarties", in a gaily-coloured cylindrical container or tube. Its rival,the defendant-respondent company (the defendant) very recently startedimporting similar chocolate beans in bulk from Australia, and packingand selling them as "sweeties" (an unregistered mark) in a no lessgaily-coloured oblong box.
It is not disputed that the trade mark “smarties" was first registeredin Sri Lanka for chocolate beans almost 50 years ago; and that fromabout 1990 the rights in respect of that trade mark belonged to theplaintiff. The plaintiff says that throughout that period chocolate beanshad been imported into Sri Lanka, and sold in such containers andunder that mark.
The plaintiff instituted this action in the High Court of the WesternProvince on 30.9.97, pleading two causes of action: that the defendantwas using the mark “sweeties" so nearly resembling “smarties" (bothvisually and phonetically) as to be likely to mislead the purchasingpublic, thus violating the plaintiffs rights under section 117 of the Codeof Intellectual Property Act, No. 52 of 1979 (the Act); and that thesale of chocolate beans as "sweeties” in a get-up similar to that usedby the plaintiff was an act contrary to honest practices in commercialmatters, constituting an act of unfair competition within the meaningof section 142 of the Act. It obtained an ex parte enjoining order,and notice of interim injunction; the defendant filed objections; andby order dated 3.4.98 the learned High Court Judge refused to grantthe interim injunction sought by the plaintiff. It is against that orderthat the plaintiff now appeals to this Court with leave.
With its plaint the plaintiff produced a sample of its container as"A5", and of the allegedly infringing container as "A7", and I mustnow examine the significant features of the rival containers. 1
(1)The word "smarties" is- not in a standard font; the letters. are in lower-case, and are gently curved and somewhat stylized;and the letters are in white. For “sweeties", the defendant has
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used letters which are, in*those respects, absolutely identicalto “smarties” (except, of course, for the letters "m", “a", and “r").
In both, the letters have been placed in a chocolate brownsurround (which emphasises the white letters), virtually indenticalin shape, colour and proportions, though not in size; and theedges of that surround are outlined by a series of curves orscallops, which are more or less parallel -to the white letters.
Both "smarties" and "sweeties" (with their respective surrounds)appear on very similar chocolate brown backgrounds on whichchocolate beans of many bright colours are randomly scattered.
There are, however, some differences. Thus, just above thecentre of "smarties" (and its surround) appears "Nestle" in smallwhite letters, while above "sweeties" (and its surround) – butmore to the left – there appears "Aussie" in similar white letters.In addition, below "sweeties" there appears "Product of Aus-tralia” in tiny white letters.
There, is also on the “smarties” container a chocolate colouredstrip, running the full length of the tube, containing informationin tiny letters (within two boxes, outlined in white) about itsmanufacture (in Malayasia) and ingredients. On two sides ofthe "sweeties" container there are two boxes, also outlined inwhite, with similar information.
The containers are quite dissimilar in shape: the former is acylindrical tube whose length is roughly 1.5 times its circum-ference, while the latter is a rectangular box whose length ismore than double its width, and whose width is more thandouble its depth.
It seems to me, prima facie, that the similarities mentioned at (1)
and (2) above are such as to lead almost irresistibly to the conclusion
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that "sweeties" and its surround musKiave been designed by a personwho had seen, if not scrutinized, the "smarties" tube; and such aperson could not have helped noticing the striking background patternof randomly scattered multi-coloured chocolate beans, however commonthat might otherwise have been in itself. I must recall, too, that a caseof this sort cannot be decided by simply totting up and weighingresemblances and dissimilarities, upon a side-by-side comparison :theissue is whether a person who sees one, in the absence of the other,and who has in his mind's eye only a recollection of that other, wouldthink the two were the same (Thiagarajah v. Majeed’>).
The plaintiff pleaded that ;
"B . . . the labelling and packaging of the carton with thetrade mark "smarties" across it has a distinctive colour scheme,trade dress and get-up. The plaintiff and its predecessors intitle have consistently and continuously used a standard trade dressand have not altered the essential character of the carton anymanner whatsoever. The continuity of the said multi-coloured cartonhas been maintained in such a way as to preserve the absoluteidentification of the plaintiff's product in the minds of consumerswith the plaintiff alone and has an established reputation andgoodwill in Sri Lanka since 1950 … A cylindrical carton of theplaintiffs product is annexed hereto marked "A5" . . .
12 . . . the defendant was distributing and marketing a brandof chocolate beans/buttons, enclosed in a carton identical and/orconfusingly similar to that of the plaintiff's carton, with theword "sweeties" written across it . . . The plaintiff annexes heretoa carton of (the defendant's) product… marked A7 … “ (emphasisadded).
In its objections, the defendant pleaded that the plaintiff hadobtained the enjoining order by wilful suppression, misrepresentation,and/or misstatement of material facts, and that an interim injunction
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should therefore be refused. The first point was that "smarties" aresold in Sri Lanka only in cartons in the shape of a tube in two differentsizes (20 gms and 36.5 gms for Rs. 18 and Rs. 29, respectively),while “sweeties" are sold in boxes in three different sizes (20 gms,36 gms and 60 gms, for Rs. 15, Rs. 25 and Rs. 35, respectively);and that the plaintiff failed to state to Court that it does not sellits "smarties" in boxes. The second point was that "the plaintiff hasfalsely stated to Court that its trade get-up . . . has been maintainedin a manner to preserve the absolute identification of theplaintiffs product in the eyes of the consumer", because in fact“smarties" were being sold, particularly in the Duty Free shop atKatunayake, in a tube with a different get-up (and one such tube wasproduced as "Z6").
The learned High Court Judge upheld these two contentions,observing that the plaintiff when applying for an interim injunctionagainst the defendant using the box with the trade mark "AussieSweeties" had made some attempt to mislead the Court by holdingout that its product was also packed in a cardboard box; and, further,that the tube "Z6" indicated that the plaintiff's averment as to theconsistent and continuous use of a standard trade dress, withoutalteration, so as to preserve the absolute identification of the plaintiff'sproduct with the plaintiff, was "far from the truth", and was made inorder to mislead the Court.
It is necessary to determine whether there was, in either instance,a misrepresentation or suppression of fact; and, if so, whether it wasmaterial.
Did the plaintiff suppress a fact by failing to state either thatits product was not sold in boxes or that it was sold only in tubesand thereby lead the Court to believe that both were sold in containersof the same shape? The plaintiff averred that "smarties" were soldin a "cardboard pettiya" (in the Sinhala plaint), and in a "carton” (inthe English translation). "pettiya" and "carton" are synonyms for "box"
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or "container". They are not descriptive of shape (or size or colouror material). Thus, one can quite properly speak of a wig-box, or ahat-box, or an ice-cream or yoghurt or margarine carton, even if theyare all cylindrical in shape. The fallacy of the defendant's contentionis the assumption that a "carton" or a “box" is necessarily oblong(or rectangular) in shape: on the contrary, it may be cylindrical(or round), triangular, semi-circular, or even spherical. But, even if Iwere to assume that a "carton" or a “box" or a °pettiya“ is generallyoblong, yet in paragraph 8 it was “a cylindrical carton (and in Sinhala,cylindarakara nalayak', ie tube) of the plaintiffs product" which theplaintiff annexed. So, there was no room for anyone to think that theplaintiffs product was being sold in oblong boxes. Apart from all that,the fact remains that the containers themselves had beenproduced. The essence of the plaintiffs case – and the vital issuefor consideration, even at the enjoining order stage – was the questionof confusing visual (and phonetic) similarity. That question couldnot have been determined, even prima facie, upon a reading of averbal description. An examination of the containers was necessary.Indeed, the nature of the claim was such that if the containers hadnot been produced, the learned trial Judge should probablyhave said that he was not satisfied that a prima facie case had beenmade out. Since the containers were available, whether or notthe attention of the learned trial Judge was specifically drawn to themby counsel, it was his duty to have examined them, whereuponit would have been immediately obvious that one container wascylindrical and the other oblong. Taken together – as indeed theymust be – the plaint and the annexes more than adequately disclosedthat the containers were quite different in shape.
i hold, therefore! that the learned trial Judge was in error inconcluding that the plaintiff had attempted to mislead the Court byholding out that its product was packed in a container of the sameshape as the defendant's.
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Was the plaintiff’s avermenUthat it consistently and continuouslyused (etc) the get-up depicted in "A5" either a misrepresentationof facts (in that it implied that “smarties" were sold only in thatget-up), or a suppression of facts (in that it failed to disclose that“smarties” were also sold in the get-up depicted in "26“)?Mr. Parathalingam, PC, for the defendant sought to interpret paragraph8 of the plaint as if it implied that the plaintiff had only used theget-up in ”A5“. Paragraph 8 contains neither the word "only" noranything equivalent; nor can it be construed as implying anything ofthe sort. A manufacturer may use more than one get-up for the sameproduct : one may be "absolutely identified" with that product, whilethe other(s) may or may not be. The assertion that one get-uphas been consistently and continuously used, and absolutely identified,etc., does not imply, in law or logic, that no other get-up has beenused. In essence, the plaintiff's claim – right or wrong – was thatit had certain rights in respect of the get-up "A5". It asserted – rightlyor wrongly – in support of that claim that it had consistently andcontinuously used (etc) that get-up. It then alleged that the get-up“A7", is confusingly similar, and that by using that get-up the defendanthad contravened sections 117 and 142 of the Act, and hadinfringed the plaintiffs rights. It is not contended, on behalf of thedefendant, that – if the pleaded facts are established – that is nota valid claim. However, it is unnecessary to express an opinionon that question. What is relevant at this stage is to consider whetherthe maintainability of that claim would be affected by that factthat “smarties" are also sold in the get-up "Z6". The learnedtrial Judge did not cite any authority – nor did Mr. Parathalingam -suggesting that the plaintiff's rights in respect of the get-up "A5“ wouldbe extinguished because it also used the get-up "Z6". To put it anotherway, if the plantiff had pleaded in paragraph 8 that it also sold“smarties" under another get-up, would its rights in respect of"A5" have been extinguished, or even diminished? No authority hasbeen cited to that effect, and I am not satisfied, prima facie, that theplaintiff's cause of action would have been affected; certainly,the learned trial Judge did not think so. Such a view would result
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in absurdity: it would amount to homing that if a manufacturer usesonly one get-up for his product, no rival may imitate it; but if he usestwo, any competitor may imitate one get-up with impunity: and, further,two competitors, between them, may imitate both. Thus, while Iexpress no opinion as to the merits of the plaintiffs claim, the useof the get-up "Z6“ was not material either to that claim or to thedefendant's defence. It is true that the use of "Z6“ was not disclosed,but that was not a material fact.
I hold that the learned trial Judge erred in holding that “Z6“was inconsistent with the truth of any portion of paragraph 8 ofthe plaint, or that the non-disclosure of "Z6" was intended to misleadthe Court.
Not only did the learned trial Judge misdirect himself on bothpoints, but he also made certain other observations which suggestthat he failed to take into consideration the relevant factors. Hesaid, for instance, that the plaintiff admitted that chocolate beansbearing the trade mark "smarties" had been imported into andsold in Sri Lanka by several traders besides the plaintiff, andthat although the plaintiff has no objection to chocolate beans bearingthe trade mark “smarties" being imported into and sold in Sri Lankaby others, it was taking objection to the defendant importing and sellingby using the trade mark "smarties". That was irrelevant to theissue. The fact that the plaintiff did not object to the sale of chocolatebeans to which the trade mark "smarties" had – presumably lawfully- been applied is not at all inconsistent with its objecting to theuse of an – allegedly – unlawfully confusing mark or get-up.
Further, the learned trial Judge observed that when "A5“ and "A7“are compared they can be identified as being distinct although therewere certain similarities. He proceeded to identify these in detail. Ineffect, he did a “side-by-side" comparison, quite forgetting that acustomer buying goods will not have the opportunity of comparing themin that way, but would depend on his recollection – so that it would
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be the "outstanding characteristics" that are relevant. He brushed asidethe similarities, which have been outlined earlier in this judgment; andtreating the dissimilarities as being fundamental, he concluded that"A5" and "A7" were not, prima facie, identical or confusingly similar.He thus failed to apply the proper test, referred to in Thiagarajah v.Majeed'>. Further, he failed to consider whether the available evidenceshowed, prima facie, that the defendant had taken features of theplaintiff's get-up "A5" "contrary to honest practices in industrial orcommercial matters" within the meaning of section 142 of the Act.I referred to the ambit of that phrase in Sumeet Research and HoldingsLtd v. Elite Radio & Engineering Co. Ltd:,<2) and need say only thatthe learned trial Judge failed to give due consideration to distinctivefeatures of the get-up in "A5". The white letters of smarties as wellas their chocolate-brown surround were distinctive: even if he mightconceivably have assumed that it was more than a coincidence thatthe defendant had incorporated one of these features in "A7", heshould certainly have considered whether the use of both (and that,too, in a very similar and distinctive background) was, prima facie,a deliberate "taking" of the idea or concept of the plaintiffs get-up;and, if so, he should have gone on to consider whether in using theplaintiff's get-up as a model, as it were, there was inequitable conduct,or "something underhand or sharp", on the part of the defendant.
At the conclusion of the hearing, for the reasons now stated, wewere of the opinion that the evidence before the learned trial Judgeestablished, prima facie, at least an act of unfair competition, and thathe had erred in law in refusing to issue an interim injunction. We,accordingly, set aside the order dated .3.4.98, and granted an interiminjunction pending the final hearing and determination of the action.
In regard to costs, I cannot overlook the fact that this was eminentlya case in which the interim injunction inquiry and the trial should havebeen taken up together (see Murugesu v. Northern Divisional Agri-cultural Producers' Co-operative Union LtdP] and Perera v. Pereraw.)Expense and delay might have been avoided if the plaintiff had invited
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the learned trial Judge to do so. At 4he same time, the defendant’sobjections were not only technical but tenuous as well. I, therefore,order the defendant to pay the plaintiff a sum of Rs.15,000 towardsits costs.
WADUGODAPITIYA, J. – I agree.
GUNASEKERA, J. – I agree.
Order of the High Court set aside;Interim injunction granted.