March 01 2010
Have you ever picked up a new brand of your favourite product in the supermarket and noticed that its packaging looks suspiciously similar to that of your trusted old brand? A recent case between the producers of NutrientWater and Grassroots Enhanced Water acts as a reminder that it is difficult to stop a little shrewd copying of packaging unless it infringes registered rights or is likely to confuse customers.
Australia has seen a recent boom in a new beverage category - namely, water with added vitamins, minerals and flavours, sometimes called 'enhanced waters'. NutrientWater Pty Ltd was the first to bring this category to Australia with its clear plastic bottles containing waters in a rainbow of colours, with names like "Dragonfruit: Endurance" and "Pomegranate Berry: Rehab".
Inevitably, there have been new entrants to the enhanced waters market, including Baco Pty Ltd with its Grassroots product.
NutrientWater took exception to the similarities between the packaging of Baco's product and its own product and sued Baco in the Federal Court for passing off and misleading or deceptive conduct and false representations under the Trade Practices Act 1974 (Cth).
In her decision Justice Kenny noted first that the design of Baco's products had taken on various features of NutrientWater's packaging. Both products consist of brightly coloured waters in clear plastic bottles. The labels of both products incorporate a band of white and a band of colour approximating the colour of the water in the bottle, and the names of Baco's flavours, including "Dragonfruit & Grapefruit Power On" and "Pomegranate & Blueberry Recovery" are very similar to NutrientWater's flavour names.
In fact, Baco was open about the fact that it had used other brands of enhanced water, including NutrientWater, for reference when designing its product and had adopted aspects of the packaging of those other brands. However, Baco claimed that the reason for this was to ensure that its products were "immediately recognisable as being a competitor in the enhanced water category". Baco referred to these elements as a 'category signature', but argued that it was careful to differentiate its product by using additional elements such as a distinctive name, logo and other packaging features.
This is the crux of the matter. Justice Kenny referred to numerous authorities that state that the mere fact that a party copies the design or packaging of a competitor's product does not itself infringe the competitor's rights, as long as it is clear to the consumer that the copier's products are not those of the competitor. Justice Kenny referred to Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd ( 2 NSWLR 851), where a competitor tried to take advantage of the success of the SOLO branded soft drink by producing a similar drink with a product name and packaging derived from the SOLO product's advertising and get-up. The advertisements for SOLO lemon squash highlighted the fact that the drink was just like "those great lemon squashes that pubs used to make", so the competitor called its product PUB SQUASH. The competitor's advertising campaign focused on the endeavours of a heroically masculine character, as did those for the SOLO soft drink, and the competitor sold its PUB SQUASH in cans of the same size and same shade of yellow, with a similar medallion-type label to those of the SOLO soft drink. Despite the competitor's copying, both the trial judge and the Privy Council on appeal found that there was no passing off because the competitor had sufficiently differentiated its product from the SOLO soft drink.
Justice Kenny was satisfied that the distinctive elements of the packaging of Baco's Grassroots product, such as the prominent letter 'G' and central grass-coloured band, were sufficient to differentiate Baco's product from NutrientWater's product and so dismissed NutrientWater's claims.
Interestingly, Justice Kenny found that in designing its NutrientWater product, NutrientWater had itself substantially copied a US product called vitaminwater, which was later introduced to the Australian market. It seems that the owner of the vitaminwater brand, Coca-Cola, took no court action against NutrientWater for this copying, although this may be because it did not have a sufficient reputation in vitaminwater in Australia at the time that NutrientWater hit the shelves to support a case. NutrientWater has also not taken court action against Coca-Cola over confusion caused by the introduction of its vitaminwater to the Australian market after NutrientWater was established, even though much of the evidence presented by NutrientWater in this case concerned instances of customer confusion between the NutrientWater and vitaminwater products, rather than Baco's Grassroots product.
This case highlights that copying is not always by its nature unlawful. Many companies take inspiration from other products, use them for reference or even copy aspects of other products without censure from the courts because even though the similarities are clear, shoppers still know which product they are putting into their trolley. That said, copying from competitors should never be undertaken without careful considerations of the legal ramifications and any copying of products by a competitor warrants close scrutiny and consideration of legal position and options. The overall likelihood of confusion is not always determinative, especially where registered rights are concerned, and in any case, it can be difficult to predict when a judge will see a likelihood of confusion.
For further information on this topic please contact Lisa Lennon or Gina Tresidder at Gilbert + Tobin by telephone (+61 2 9263 4000), fax (+61 2 9263 4111) or email (firstname.lastname@example.org or email@example.com).
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.