A recent court case provides useful pointers to food and beverage manufacturers attempting to build and protect a reputation in their products’ appearance, reports Verity Shepherdson and Shaun McVicar.
The Federal Court case involving an enhanced water manufacturer was not only a pointer about building and protecting product reputation but also a good indicator for those businesses adopting ‘category signatures’.
The packaging and labelling of competing food and beverage products often include common visual traits that quickly provide consumers with information about the product they are looking at.
For example, they might indicate the flavour of a product, or signal that the goods belong to a product category.
The Federal Court recently considered whether the manufacturer of the first ‘enhanced water’ product on the Australian market could prevent another business from using elements which had become common to the product category.
In 2005, Nutrientwater Pty Ltd was the first company to enter the enhanced water market in Australia. Its ‘Nutrientwater’ range is a range of flavoured beverages which contain various vitamins, minerals and other ingredients.
After this, several other enhanced water products were launched in Australia, including Coca Cola Amatil’s ‘vitaminwater’ (which had already been successful in the USA), and Schweppes’ ‘Smart Water’.
The Nutrientwater, vitaminwater and Smart Water products share some common elements across their packaging and labels. They all use a form of colour and white horizontal banding on their labels, bear label colours that match the colours of the variants of the beverage (which is visible through clear plastic bottles), include quirky comments on their labels, and feature a ‘wellness’ theme.
In May 2009, Baco Pty Ltd introduced its own enhanced water product called ‘Grassroots’.
Nutrientwater commenced legal action against Baco, arguing that there is a striking similarity between the appearance of Baco’s products and its own. In essence, it claimed that this similarity meant that consumers would be misled or deceived into believing that the Grassroots products were products in the Nutrientwater range, or that they came from the same source.
Nutrientwater argued Baco had breached the law by:
• ‘passing off’ its range of enhanced water products as and for Nutrientwater; and
• engaging in misleading or deceptive conduct contrary to section 52 of the Trade Practices Act 1974 (Cth) and making false representations in breach of section 53 of that Act.
The Federal Court rejected Nutrient- water’s claims.
This was because, firstly, Nutrientwater failed to show a relevant reputation in the features that Baco allegedly appropriated. Although the Grassroots product shared common features with Nutrientwater, at the time Grassroots was introduced these were features commonly used by other products in the enhanced water market.
Secondly, although the ‘Grassroots’ get up included features of the packaging used by Nutrientwater, Baco clearly differentiated its products from those of its competitor. It did this through features of the Grassroots get up, including its name and logo.
This case reminds food and beverage manufacturers that they should act positively and quickly if they want to establish and protect a reputation in the get up of their products.
If the get up of a product contains elements that its manufacturer regards as distinctive, it should seek advice about brand protection strategies before those elements are adopted by others. If another product does adopt elements of that get up, the business should promptly seek advice to determine whether there are grounds to take action. It is important to consider this before the elements are adopted throughout the market, potentially making them generic, and not associated with the original product in consumers’ minds.
The case also reminds us that businesses are free to adopt features of competing products, as long as this is not likely to mislead or deceive consumers into mistaking the trader’s goods for the goods of competitors, and as long as they do not infringe any intellectual property rights. Traders can therefore often legitimately adopt elements of their competitors’ get up, provided they clearly differentiate the new product through elements such the prominent use of logos or brand names. While this is not a new lesson, it is an important one for traders to keep in mind — both when designing products, and considering the actions of competitors.
Freehills has been offering commercial legal advice since 1852 and has offices in Sydney, Melbourne, Perth, Brisbane, Singapore with correspondent offices in Hanoi, Ho Chi Minh City and Jakarta.
This article was written by Verity Shepherdson, Senior Associate and Shaun McVicar, Partner of Freehills.
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