The Western Cape High Court on Friday, 1 April 2011, emphatically dismissed an application by Irvin & Johnson Limited (I&J) for leave to appeal against the Court's judgment of 17 March 2011, wherein I&J was interdicted from unlawfully competing against Sea Harvest Corporation (Pty) Limited (Sea Harvest) by passing off its new Oven Crunch product as Sea Harvest's well-known Oven Crisp product.
The interdict accordingly remains in force and I & J was in effect ordered to remove its Oven Crunch product from retailers nationwide with immediate effect and to cease all marketing and advertising campaigns relating to this product.
According to the AC Nielsen figures, Sea Harvest currently holds 46% of the market share of the South African retail frozen fish market, making it the market leader in this category. Its Oven Crisp product range accounts for approximately 22% of the total amount of coated fish products sold in South Africa and have been a favourite with customers for the past 20 years. Oven Crisp is available in 2800 stores throughout South Africa, including Pick 'n Pay, Spar and Shoprite Checkers. Almost 2.5 million boxes of Oven Crisp, tipping the scales at approximately 950 000 kg, are sold annually in South Africa.
Most South African consumers would know that these two competitors have been competing in the relevant market for a number of years. Their products have however always been clearly distinguishable by their packaging, which differs in colour, size, fonts used and the like.
I&J recently launched its own crumbed fish product, Oven Crunch, in direct competition with Sea Harvest's successful Oven Crisp range.
Sea Harvest was shocked to find that the packaging of the Oven Crunch product appeared to be styled to be confusingly similar to Sea Harvest's Oven Crisp packaging, clearly in an attempt to latch on to the repute and goodwill that Sea Harvest had built up over the past 20 years in its Oven Crisp range. Sea Harvest immediately took action to put a stop to these unlawful marketing tactics and launched urgent High Court proceedings.
The matter ended up before the Western Cape High Court in March 2011, where Sea Harvest, represented by well-known South African law firm Cliffe Dekker Hofmeyr Inc. had brought an application for an urgent interdict against I & J.
According to Eben van Wyk, head of Cliffe Dekker Hofmeyr's Intellectual Property Law department, "The passing-off action, on which Sea Harvest based its application, protects the goodwill or reputation of a trader's business, merchandise or services against a false representation by a competitor that the business, merchandise or service of the competitor are that of, or associated with Sea Harvest. It also provides protection against deception as to trade source or trade connection."
The court was accordingly called on to determine whether the packaging of I & J's Oven Crunch was reasonably likely to confuse members of the public into believing that the Oven Crunch product was Sea Harvest's Oven Crisp product or was associated with Oven Crisp in some way.
The court had no doubt that I & J's packaging was deceptively similar to the packaging of Sea Harvest's Oven Crisp product and was convinced that there was a reasonable likelihood that members of the public would be confused into thinking that I & J's Oven Crunch product was the same as Sea Harvest's successful Oven Crisp.
One of the concerns raised in the High Court ruling was the difficulty which the judge herself had in remembering which product was that of which competitor, an easy mistake to make considering the substantial similarity between the packaging of the two products. The court found that "Both have dark blue boxes of similar size. Both have yellowish writing with a similar font at the top of each box. Both are called Oven 'Something' and whether the three pieces of similarly shaped fish appear on the left or right hand side of the box, and one has a piece of parsley displayed whilst the other has two lemon wedges displayed, to my mind really does not matter."
The court accordingly ruled in favour of Sea Harvest and I & J was interdicted and restrained from using any get-up which is confusingly or deceptively similar to Sea Harvest's Oven Crisp get-up and trade mark for its Oven Crunch product.
I & J applied for leave to appeal the court ruling and the parties again appeared before the Western Cape High Court, on 1 April 2011. Sea Harvest opposed this application and also applied for a court order that the Court's initial interdict not be suspended in the event that leave to appeal be granted, in light of the further significant reputational damage Sea Harvest would suffer, should I&J be allowed to sell its Oven Crunch product pending the appeal.
In the ruling handed down on Friday 1 April 2011, Acting Judge Cloete held that I & J had no reasonable prospect of success on appeal. In support of its application for leave to appeal I&J conducted an "impromptu" market research, which ironically indicated that there had been actual instances of confusion where consumers had mistaken the Oven Crunch product to be Sea Harvest's Oven Crisp product, despite the circumstances surrounding the market research which can at best described as an artificially contrived situation. Sea Harvest in the words of its counsel called this a "promotional tainted circus". The court also ruled that any inconvenience caused by the ruling was by I&J's own making, as they were forewarned by Sea Harvest not to launch the product in current form.
As a result, the court dismissed I&J's application for leave to appeal with costs.
According to Regardt Botes, senior associate at Cliffe Dekker Hofmeyr, "the effect of the ruling is that the interdict granted by the Court initially will be enforced and I & J will have to effect removal of their infringing Oven Crunch product from trade immediately and cease with all advertising, marketing and promotion of the Oven Crunch product in contravention of the ruling".
Mr Felix Ratheb, Sales and Marketing Director of Sea Harvest, said that although Sea Harvest is flattered by its major competitor trying to copy it , it welcomes the ruling as it enforces the reputation and goodwill that Sea Harvest built up over the past 20 years in its well-known and well-loved Oven Crisp range from infringing action by its competitors. Mr Ratheb further stated that the copycat tactics resorted to by I&J is testimony to the great quality products its company is delivering to customers. Sea Harvest is proud of its quality products which have seen its market share increase from 30% to 46% over the past few years, establishing itself as the market leader in the retail frozen fish industry in South Africa.
Regardt Botes (senior associate) and Eben van Wyk (director) of Cliffe Dekker Hofmeyr acted on behalf of Sea Harvest who both, as well as the advocate they instructed, Adv Derek Harms, are intellectual property law specialists.
Written by Eben van Wyk, Director and National Head of the Intellectual Property Practice and Regardt Botes, Senior Associate, Intellectual Property Practice at Cliffe Dekker Hofmeyr business law firm.