The appellant is PepsiCo Inc (Pepsi), the registered proprietor of trademark PEPSI. The respondent is Atlantic Industries (Atlantic), a subsidiary of The Coca-Cola Company and the registered proprietor of trademarks TWIST, LEMON TWIST and DIET TWIST. Both parties’ trademarks are registered in class 32 which includes ‘mineral and aerated waters and other non-alcoholic drinks’. During 2006 Pepsi applied for the registration of another class 32 trademark, PEPSI TWIST. Atlantic opposed the application and Pepsi countered by applying for the expungement of Atlantic’s mark. The Registrar of Trade Marks referred the matter to court. A full bench allowed Atlantic’s application and dismissed Pepsi’s counter-application. Pepsi appealed to the Supreme Court of Appeal (SCA), which held as follows:
Application for expungement of Atlantic’s mark
Section 24 of the Trade Marks Act 194 of 1993 entitles an interested party to apply to have the trade mark register rectified. Pepsi argued that Atlantic’s mark wrongly remained on the register in terms of sections 9 and 10(2)(a)-(b) of the Act, which provides that a mark shall be removed from the register if the mark (a) is not capable of distinguishing the goods and services of the proprietor from the goods and services of another person, either by prior use or by its inherent nature; or (b) consists wholly of a sign or indication which may serve, in trade, to designate the kind, quality, intended purpose, value, geographical origin or other characteristics of the goods or services.
Pepsi’s case rests on the contention that the word ‘twist’ is a common English word which is simply descriptive of the kind, quality or characteristics of the goods to which Atlantic’s marks relate and is not intrinsically capable of distinguishing its beverage from those of other proprietors. Pepsi referred to the New Shorter Oxford English Dictionary, which includes the meaning of ‘twist’ as slang for a noun meaning ‘a curled piece of lemon etc. peel used to flavour a drink’. The court however held that the South African market would not be familiar with such slang but would at most create a mental connotation with an exotic drink. Therefore, the court determined that like a made-up word, a common word which is arbitrary when applied to a specific product is an example of a mark ‘inherently capable of distinguishing”. In this regard the court emphasised that purely descriptive marks may not be registered, and that the test to be applied in this regard is laid out in the case of Registrar of Trade Marks v W & G Du Cros Ltd  UKHL 588 as being ‘whether other traders where likely, in the ordinary course of their business and without any improper motive, to desire to use the same mark…in connection with their goods’ and thus for a word to be truly distinctive of a proprietors goods, and not merely a descriptive mark, ‘it must generally speaking be incapable of application to the goods of anyone else’ (On-line Lottery Services (Pty) Ltd v National Lotteries Board & another  ZASCA 86).
Therefore, the court held that ‘twist’ is not merely descriptive of Atlantic’s beverages and any trader wishing to use such a word for their soft drinks in South Africa would not be doing so for the sake of using it in its ordinary meaning. The court concluded that the mark TWIST, as applied to soft drinks, is integrally capable of distinguishing Atlantic’s beverages from those of other producers and held that Pepsi’s expungement application was correct to fail.
Registration of Pepsi’s Marks
The court confirmed that Pepsi’s proposed marks cannot be registered if Pepsi has no bona fide claim to ownership thereof, and furthermore section 10(14) of the Act provides that registration of a mark is prohibited if it is identical to a registered mark of another proprietor or so similar thereto, that the use thereof in a related marked would likely deceive or cause confusion, unless the proprietor of the trademark consents to the registration of such mark.
The court held that the proposed PEPSI TWIST mark is not identical to Atlantic’s mark. The subsequent question therefore is whether there are sufficient similarities to create a likelihood of deception or confusion with consumers. In this context the SCA referred to the test laid out by it in Yuppiechef Epson Holdings (Pty) Ltd v Yuppie Gadegets Holdings (Pty) Ltd  ZASCA 118:
‘what is required is a value judgment on the question of the likelihood of deception or confusion based on a global appreciation of the two marks and the overall impression that they leave in the context of the underlying purpose of a trademark, which is that it is a badge of origin. The value judgement is largely a matter of first impression and there should not be undue peering at the two marks to find similarities and differences.’
Referring to its judgement of Mettenheimer & another v Zonquasdrif Vineyards CC & others 2014 (2) SA 204 (SCA), the SCA reiterated that there is an inter-relationship between the similarity of the marks and the similarity of the goods to which the mark applies. However, the main consideration remains whether the combination has a likelihood to cause confusion or deception. Relevant considerations in this regard include (i) the use of the goods in question; (ii) the likely users of the goods; (iii) the physical nature of the goods; and (iv) the channels through which the goods reach their markets. The SCA also added that the courts will usually identify the dominant features of a mark and should these features be present in other marks, the greater the likelihood of deception or confusion.
In light of the above the SCA held that the goods to which the competing marks would be applied are identical and hence, if Pepsi was allowed to register their mark, they will be using such mark in terms of similar carbonated beverages, directed at the same consumers as that of Atlantic, and utilizing the same trade channels. Pepsi argued the mark PEPSI is so widely known that consumers would recognize and recall its products (“conceptual prominence”). However, the SCA expressed doubt as to whether a brand’s existence and reputation can be regarded in terms of sec 10(14) of the Act, instead one must only place the products side by side and disregard extraneous matters in determining confusion or deceptive similarities. The court added that even if one had regard, Pepsi’s conceptual prominence was no more than that of Atlantic’s TWIST.
The court confirmed it is not vital to prove all consumers would be confused, it is sufficient to prove that a substantial number of them may be confused. Especially in light of the fact that the consumers of carbonated soft drink are a large group of persons of all ages, sophistication and education, and is often bought impulsively, without wary inspection of the packaging. Finally concluding that the denial to register Pepsi’s mark PEPSI TWIST, was correct.
The SCA dismissed Pepsi’s appeal with costs.
The court confirmed in determining if a mark should be registered, the main test remains if the mark will likely cause confusion or deception amongst consumers and that the court will have a look at the nature of the South African market itself and not a market in general, when determining the factors related to same.
Written by Danmari Bouwer and supervised by Nicola du Toit, 20 August 2018