South Africa: The Frankie's/Woolworths Dispute: The Law Behind It

Last Updated: 23 February 2012
Article by Gaelyn Scott and Wim Alberts

Most Read Contributor in South Africa, September 2018

From time to time disputes regarding intellectual property rights catch the attention of the public. One such case is the dispute between Frankie's and Woolworths regarding certain beverages placed on the market by Woolworths. Media reports are to the effect that Frankie's approached Woolworths to market its goods, but that Woolworths, allegedly, turned the request down, and instead reproduced its own versions of the products. Frankie's proceeded to lodge a complaint with the Advertising Standards Authority (ASA).

In its ruling last week, the ASA emphasised that it considered only the use by Woolworths of "Good old fashioned", and not the copying of specific flavours, vintage flavours or labels or shapes. It relied on clause 9 of its Code which determines that an advertiser should not copy an existing advertisement in a manner that is recognisable or clearly evokes the existing concept and which may result in the likely loss of potential advertising value. The ASA rejected the idea that "old fashioned" is in general use in relation to sodas. The evidence was accepted that Woolworths imitated Frankie's advertising. The question was asked why the particular get-up was copied. It was mentioned that Woolworths could not explain how they came up with the idea of using "Old fashioned". The final conclusion was that Woolworths was involved in intentional copying.

The ruling indicates that the bar for protecting an idea is not high. An earlier case that supports the current ruling is that in the MTN case. MTN lodged a complaint with the ASA against an advertisement of Cell C showing, amongst others, a gardener who strikes oil in a vegetable patch with a small garden trowel and immediately uses her cell phone to telephone someone to tell that person of her good fortune. MTN had a series of advertisements which "exhibited a distinctive emotive theme, namely that all \strongly felt personal moments/experiences of a idiosyncratic nature, or out of the ordinary"' events should be communicated via their services. An example is a lone man on a golf course who achieves a hole in one. He looks around but there is nobody around to share the news with, and the suggestion is that he should use his cell phone to contact someone with the help of the service provided by the complainant. The MTN idea, which is of a relatively rudimentary nature having regard to the product concerned, was nevertheless held to qualify for protection in terms of clause 9. The Frankie's case is in line with this ruling.

A different ground also relied upon by Frankie's was clause 8 of the Code. In terms of clause 8, advertisements may not take advantage of the advertising goodwill relating to the trade name of another party. The application of this rule is illustrated well by the Cresta Shopping Centre case. Here it was said by the ASA that "Any mark that is made up of common words, albeit used in a unique combination, runs the risk of competitors using such words in their common meaning in such a manner to enable it to identify the competitor." Similarly, in the Discovery Health ruling, it was said that the word "discovery" is a "common word to which no one can lay [claim to] exclusive use. It is only when the word is used in a certain combination so as to evoke the identity of another party that the use of the word could become contentious." In the Frankie's case, this clause might also have been a ground of relief, and an approach different from the Cresta case might have been followed. In other words, that there was indeed goodwill attached to the concept of an old fashioned drink. The identity of Frankie's product was evoked, and the competitor was identifiable. The ASA directorate ruled on clause 9 and accordingly did not need to consider the clause 8 component of the complaint.

An interesting question is why Frankie's did not approach the High Court? An application brought to the High Court would probably have been based on the grounds of unlawful competition, and also passing-off. Unlawful competition might relate to the circumstances in which the adoption of Frankie's products were said to have taken place, as speculated in the media. Our courts have, on occasion, looked at broader "moral" issues, such as in the well-known Bress Designs case where a businessman expressed the desire to destroy a rival by copying a lounge suite. The court held that, although the copying of the products as such was legal, the motive of the one party coloured the conduct unlawful. In the Woolworths matter, it has not been alleged that they had such a motive and it is clearly not plausible, however, the principle of a "broad" perspective is illustrated. On the other hand, in the Carling decision, it was said that there must inevitably be manoeuvres, sometimes skilfully conducted, to steal a march on a competitor. However, this is permitted as it is part and parcel of our free trade policy. The Carling decision involved the pre-emption of a competitor's marketing campaign. Here a beer named Colt 45 was intended for marketing in South Africa and marketing materials were prepared, strategic studies were done, and a short trial run was conducted. About a week prior to the launching of the beer by the appellants, however, the respondent advertised its intention to market a product to be called Stallion 54. Advertisements were placed in various newspapers and the product was available at certain liquor stores. The Colt 45 product was not yet available. Applying this to the Woolworths scenario, it appears that unlawful competition could have been a difficult cause of action on which to peg relief.

With regard to passing-off, the visual impact of both products is very different. Frankie's are colourful and very distinctive whereas, in contrast, Woolworths' products are more plain, with only basic product information displayed. In addition, the name Woolworths appears, of course, on its products, thereby helping to further distinguish the products. This leaves the copying of the descriptors. The question is whether there is a likelihood of confusion arising from the use of a word suggesting an "old-style" product, combined with a descriptive word. In other words, for example, "Olde Soft Drink Co - Cinnamon Cola -The Taste of Yesteryear" versus "Good Old Fashioned-Cinnamon Cola". In relation to the parties' ginger beer products, the use of the word "fiery" by both is fairly unusual, but still has to be read in the above context of other material being used alongside it. Here, the Sea Harvest unlawful competition case might be relevant. This matter related to the use of the words "prime cut" in relation to frozen fish products. The court held that a "long line of decisions in passing-off and trade mark cases has established that where descriptive words, as opposed to invented or fancy words, are used in a trade name or trade mark, the courts will not easily find that such words have become distinctive of the business or products of the person using them, and will not give what amounts to a monopoly in such words to one trader at the expense of others." This line of thinking would have counted in favour of Woolworths.

In summary, from a broader intellectual property perspective, the matter illustrates once again the complexities of intellectual property, specifically the view relating to the difficulty of protecting an idea or concept. It is trite that copyright law does not protect ideas unless they are in a concrete format. The registration of a patent is really the only way in which an idea can be protected in terms of conventional legal rules. However, the ASA Code does protect ideas. The principle that the ASA seems to follow is that of not requiring a high degree of inventiveness in order to allow protection. The Frankie's ruling underlines this. This is in stark contrast to what might have happened in a civil matter. Rumours abound about the continued existence of the ASA. Is there an overlap with the Consumer Protection Act? It is suggested that a consumer body in a governmental structure would have been hardpressed to deliver this ruling in a relatively short period of time. One can only hope the ASA will flourish, and dispense "Good old fashioned" advertising justice!

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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