BRITISH AMERICAN TOBACCO / AFRICAN GOLD PIPE TOBACCO / 2015 – 2816F (FAC)
- Ruling of the:
ASA Appeal Committee
- In the matter between:
LEONARD DINGLER (PTY) LTD
BRITISH AMERICAN TOBACCO SOUTH- RESPONDENT/APPELLANT AFRICA (PTY) LTD
27 February 2017
The hearing took place on 16 February 2017
Leonard Dingler (Pty) Ltd ("appellant”) lodged a complaint with the Advertising Standard Authority of South Africa ("ASASA”) on 18 December 2015 against British American Tobacco of South Africa ("respondent”). The appellant stated its complaint as follows: "... The Advertiser’s AFRICA GOLD product has a similar overall packaging to that of the Complainant’s BOXER pipe tobacco product and is sold in the same low price segment with similar pricing, to the same target market. The AFRICA GOLD packaging is alike to BOXER’s packaging in that it is also dominantly orange and it too contains a black and gold geometric shape in the centre containing the brand name, where the brand name is in an arch-style typeface as is closely similar to that of the Complainant’s BOXER packaging.” The appellant contended that in so doing, respondent acted in breach of clause 8 (exploitation of advertising goodwill) and clause 9 (imitation) of Section II of the Advertising Code. The second leg of the complaint reads: "Furthermore, the packaging of the AFRICA GOLD pipe tobacco product contains the statement or claim ‘MAKOYA/ORIGINAL NO. 1’ which is likely to mislead consumers into believing that AFRICA GOLD pipe tobacco has existed for some time and is the top selling, or number one selling, pipe tobacco in the market. Such statement or claim is grossly inaccurate, since the AFRICA GOLD product and packaging is new and has only been in the market place for approximately 4 (four) months. It is in fact the BOXER product which is the number one selling pipe tobacco in South Africa.”
The complaint is that the respondent is thereby creating the impression that its product is number 1 on the market, that it is the original or real product, and the original number 1 product. Appellant contended that the claim needed to be substantiated, and called upon the respondent to do so. Appellant submitted that respondent breached article 4 of Section II of the Code.
To support its case that respondent acted in breach of the above clauses of the Code, the appellant submitted reports based on some researches/surveys, together with some supporting affidavits.
The respondent disputed appellant’s claims.
- Firstly, it argued that ASASA had no jurisdiction to hear the matter because according to it, the "nature of the dispute between the parties is really one involving trade mark rights, and not an advertisement”. At a later stage, well into the proceedings, the respondent was also to challenge ASASA’s jurisdiction on the ground that respondent was not its member. With regard to the merits, respondent presented its summarized defence as follows before going into details:
The Directorate handed down its Ruling dated 4 March 2016. It upheld appellant’s complaint in terms of clause 9 and, having done so, decided that it was not necessary to consider the complaint in relation to clause 8. With regard to the labelling ‘MAKOYA / ORIGINAL / NO.1’, the Directorate found that this was in breach of Clause 4.3.1 of Section II of the Code. Respondent’s point on lack of jurisdiction was dismissed, the Directorate holding that packaging is advertising. The Directorate accordingly ordered respondent to withdraw its packaging of the product with immediate effect.
"11.2.1 The complainant has not shown that it has acquired the requisite advertising goodwill relevant to its complaint in terms of clause 8 of section II of the Code;
11.2.2 It is unlikely that confusion will result from BATSA’s AFRICA GOLD packaging;
11.2.3 The complainant has not made any or sufficient allegations to sustain a complaint in terms of clause 9 of section II of the CODE;
11.2.4 BATSA’s claim ‘MAKOYA / ORIGINAL NO 1’ does not need substantiation and is not misleading.
The respondent also attacked the surveys and other documents on which the appellant relied.
12. The complaint in respect of all three clauses of the Code therefore stands to be dismissed with costs.”
Before the Advertising Industry Tribunal
The respondent appealed the Directorates Ruling to the Advertising Industry Tribunal ("AIT”). After considering the matter, the AIT issued its Ruling on 4 October 2016. The Ruling summarized respondent’s grounds of appeal as follows:
- "That the dispute related to trademark issues and, as such, does not fall within the jurisdiction of the ASA;
- The advertisement or promotion of tobacco products is prohibited in terms of the Tobacco Products Control Act 83 of 1993 and the respondent’s conduct, which constitutes advertisement, is in contravention of the provisions of this Act;
- The Directorate misconceived the requirements of clause 9 and, in consequence, misapplied it in this instance; and
- The directorate read the words ‘MAKOYA / ORIGINAL and NO 1’ out of context. That these words read in their proper context are descriptive of the appellant’s product and not relevant to others.”
Apparently, the argument relating to the contravention of the Tobacco Products Control Act 83 of 1993 was meant to oust the Directorate’s jurisdiction. It seems this argument was not taken further by the respondent; in any case, it is difficult to see how it mattered in this case. It was at this stage, before the AIT, that the respondent for the first time disputed the jurisdiction of the ASASA on the basis that respondent was not its member. This was in the wake of the judgment in the matter of Herbex (Pty) Ltd v The Advertising Standards Authority  (14/45794) (24 April 2016) (ZAGPJHC), which ruled that the ASASA had no jurisdiction over anybody who is not its member.
The AIT overturned the Directorate’s finding that the respondent breached Clause 9; it did, however, uphold the Directorate’s finding regarding the words ‘MAKOYA / ORIGINAL / NO 1’. No order was made as to costs.
Before the Final Appeal Committee
The appellant lodged a notice of appeal against the Ruling of the AIT to the Final Appeal Committee. It will be recalled that, whereas the appellant had specifically also invoked clause 8, the Directorate, upon finding in favour of the appellant on the basis of Clause 9, said that it was not necessary to make a finding in respect of Clause 8; it therefore refrained from doing so. The appellant decided to also take this on appeal to the FAC. In response to the appellant’s notice of appeal, the respondent lodged a counter-appeal.
By the time the matter came to be heard by the FAC, the following were the issues to be decided.
- That the AIT failed to make a ruling on the point taken by the respondent in limine, namely, that the ASASA did not have jurisdiction as the matter related to trade mark issues.
- Whether the AIT was right in its ruling that respondent had submitted to the jurisdiction of the ASASA.
- Respondent’s contention that the AIT should have made appellant to pay the costs of the appeal.
- Whether respondent’s AFRICA GOLD packaging offended against clause 9 of Section II of the Code.
- Appellant’s contention that the AIT failed to make any finding in respect of clause 8 of Section II of the Code, despite the fact that appellant had invoked it in its complaint to the Directorate.
- Appellant’s contention that although it had relied on Clause 4.1 of Section II of the Code, again the AIT failed to make a ruling thereon. This particular point was abandoned by the appellant at the hearing of the appeal; no further reference to it will therefore be made.
It would be more convenient to deal with these points separately.
That the AIT was wrong in finding that the respondent submitted to the jurisdiction of the ASA
The above argument arose because the respondent argued that the ASASA had no jurisdiction over the respondent, as the respondent was not its member. This point was also abandoned by the respondent a day before the hearing of the appeal; there is therefore no need to consider it, except to state that a lot of effort was expended over it, with submissions covering several pages.
Whether respondent’s AFRICA GOLD packaging offended against Clause 9 of Section II of the Code
The material provisions of clause 9.1 read:
"An advertiser should not copy an existing advertisement ... or any part thereof in a manner that is recognisable or clearly evokes the existing concept and which may result in the likely loss of potential advertising value ... This will apply notwithstanding the fact that there is no likelihood of confusion or deception ...” (Own emphasis).
It is not in dispute that appellant’s packaging of its BOXER pipe tobacco has been there for 95 years, and that appellant still continues to spend a lot of money advertising it. Respondent’s product was launched only recently, in August 2015. It is not in dispute that by and large common colours are used on both packaging. Both packagings use a more or less identical shade of orange, combined with the colours black and gold, and prominent black geometric shape in the centre with the brand name therein in an arch-style typeface.
In its Notice of Appeal against the Ruling of the AIT, paragraph 53 thereof, the appellant states the following:
"53. Upon a comparison of the packing of the two products as a whole, it is clear that the dominant and distinctive features of the BOXER packaging have been imitated and/or exploited in the AFRICA GOLD packaging namely:
53.1 The use of the combination of the colours orange, black and gold;
53.2 The use of a golden ribbon running across the packing;
53.3 The use of a solid black geometric shape;
53.4 The use of a golden border around the solid black geometric shape;
53.5 Both brand names appear in the centre of the solid black geometric shape on the packaging;
53.6 Both brand names appear in an arch-style typeface; and
53.7 Similar placement of the solid black geometric shape on the packaging (i.e in the centre).”
That the above common features exist, cannot be disputed. The thrust of respondent’s defence was that the colours were generic, and that the appellant did not, as it were, have any monopoly over their use. The respondent expended a lot of energy in trying to show that appellant did not acquire any advertising goodwill in the so-called "Naked Boxer Label.” The Naked BOXER Label was a packaging appellant had used to test as to which product members of the public would associate it with. Respondent denied that appellant had made sufficient allegations to justify a complaint in terms of clause 9, and contended that it was unlikely that consumers would be confused between the parties’ two products. It said there were differences between the two packagings.
In its Ruling, the AIT overturned the Directorate’s finding that respondent breached clause 9. The AIT found, inter alia, that there was no intention shown on the part of the respondent to copy. It said the comparison of the two products showed more differences than similarities, and went on to list four such differences. No similarities were listed; however, as we have said above, appellant mentioned no less than seven of them. That colours are generic, as the AIT has said, is true. In fact, it is hard to think of anything that exists which is not generic; what sets one thing apart from the other would depend on how creative we are in using a combination of generic features to make it peculiar or distinctive. The AIT concluded:
"In the circumstances, we conclude that the BOXER and AFRICA GOLD products each have distinctive distinguishing (sic) characteristics on their respective packaging. There can be no reasonable likelihood of confusion therefore between the two products placed side-by-side in the store. .... The Directorate erred in finding that the provisions of clause 9 of section II of the Code have been infringed on the basis of the colour combination alone”. (Own emphasis.)
We do not agree with the conclusion of the AIT, or its reasoning. Firstly, the likelihood of confusion is no requirement for the transgression of clause 9; indeed, as our emphasis in para 12 above shows, the clause expressly excludes this. The statement by the AIT emphasized by us in paragraph 15 above, is therefore wrong. Nor is it true, as our other emphasis at the end of paragraph 15 above shows, that the Directorate found in favour of appellant on the basis of colour combination "alone”. The Directorate mentions the geometric shape, and in the centre an arch-style typeface. The Directorate did not lightly infer intention to copy; it did so on the following basis: "It should also be mentioned that the respondent provided no explanation for the similarities highlighted by the complainant. No creative brief was presented, and nothing was submitted to show a logical and perhaps coincidental progression that resulted in this particular packaging. ... In the absence of any compelling evidence to the contrary, the Directorate can only conclude that the respondent’s packaging was intentionally designed to utilise the same combination of key elements.” Note that the Directorate speaks of a combination of key elements, which, as said a few lines above, are not just a combination of colours "alone” as the AIT suggests to be the case. There is no other pipe tobacco on the market with a packaging as similar as the two products in question. We agree with the Directorate’s Ruling for the reasons given above, that the respondent violated Clause 9 of Section II of the Code.
That the AIT failed to make a ruling on the point that the ASASA had no jurisdiction as the matter related to trade mark issues
It may be true that there was no such specific ruling; but the fact that the AIT dealt with the merits of the case indicates that it did not find in favour of the respondent on the point. In our view, the whole dispute is about packaging and both parties agree so; that being the case, the dispute is about advertising and the ASASA does have jurisdiction. In our view, the packaging in dispute is, in the words of Clause 4.1 of Section I of the Code, "intended to promote the sale of AFRICA GOLD”. In fact, if one reads the clause further, it is quite striking how broad the definition of the word "advertisement” is. We therefore endorse the finding of the Directorate that the ASASA has jurisdiction.
Having dismissed the respondent’s argument of lack of jurisdiction, we now proceed to consider the points relating to the merits of the case.
Appellant’s contention that the AIT failed to make a finding against respondent in terms of clause 8 of Section II of the Code.
Clause 8 prohibits the exploitation of another’s advertising goodwill:
"8.1 Advertisements may not take advantage of the advertising goodwill relating to the trade name or symbol of the product or service of another….
In considering matters raised under this clause consideration will be given to, inter alia, the likelihood of confusion, deception or the diminution of the advertising goodwill ...”
We have already found that respondent violated Clause 9. Respondent’s intention was to take advantage of appellant’s advertising goodwill of some 95 years. We are required to give consideration to, amongst others, the "likelihood of confusion deception” etc. As far as confusion is concerned, it is hard to see how a consumer could be confused by the similarities in the packagings to the extent of buying one product instead of the other, given the legal requirement that the buyer must name the tobacco they want to buy; they do not pick up the product from the shelves. Regarding the likelihood of "deception”, it is indeed there. Because of the similarities between the packagings, the consumer may be deceived into thinking that AFRICA GOLD comes from the same stable or even manufacturer, as the BOXER tobacco. Of course, the reverse may also be true; but firstly: it is the distributor of BOXER who is the complainant, and secondly, we are contrasting the popularity of a packaging of some 95 years existence, with the one which appeared only recently.
Having made a finding of violation of both clauses 8 and 9, it should, however, be mentioned that in practice the consequences would be the same. This might explain why the Directorate did not find it necessary to make a specific finding in respect of clause 8. What is not clear, however, is why the AIT, having dismissed appellant’s complaint in terms of clause 9, did not deal with clause 8 and make a finding in that regard.
The parties discussed, but could not reach an agreement on, the question of costs relating to respondent’s objection to the ASASA’s jurisdiction on the ground that respondent was not a member. Our orders below will show that the appellant is in any event the successful party, at least substantially so. There is no reason why costs should not follow the results; that being the case, it is not necessary to deal separately with the costs relating to the jurisdictional objection referred to above. The following Orders are made:
- The counter-appeal noted by British American Tobacco South Africa (Pty) Limited (respondent) is dismissed.
- The appeal noted by Leornard Dingler (Pty) Limited (appellant) is upheld.
- The Orders made by the Advertising Industry Tribunal in its Ruling dated 4 October 2016 are hereby set aside and substituted as per Order 4 below.
- The following Orders made by the Directorate in its Ruling dated 4 March 2016, are hereby confirmed and reinstated:
- The Respondent’s current packaging of its AFRICA GOLD pipe tobacco must be withdrawn.
- The process to withdraw the packaging must be implemented with immediate effect upon receipt of this Ruling.
- The withdrawal of the packaging must be completed within the deadlines stipulated in clause 15.3 of the Procedural Guide, and in cognisance of clause 15.5
- The packaging may not be used again in its current form.
Respondent to pay Appellant’s costs including costs consequent upon the employment of two counsel, on a party-party basis and on the High Court tariff; such costs to include the costs of the complaint to the Directorate, the appeals and counter-appeals to the Advertising Industry Tribunal and the Final Appeal Committee.
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