Exploitation without the imitation - Protecting your goodwill through The ASA

In today’s modern economy, advertising is an essential vehicle through which a trade mark proprietor promotes a brand and aims to increase awareness of the brand in the minds of the public. In the same vein it is frequently through advertising that an infringer aims to exploit and take advantage of the goodwill and reputation which a trade mark proprietor has acquired in a brand.

As illustrated by the recent Multix Cling Wrap / Glad Wrap / 21102 (28 February 2013) matter, a well-constructed complaint to the Advertising Standards Authority (“the ASA”) can provide a relatively efficient and inexpensive mechanism through which proprietors can enforce their intellectual property rights. The ASA’s provisions on the exploitation of advertising goodwill can also pose a danger to foreign products entering the South African market for the first time.

The Code of Advertising Practice (“the Code”) is the guiding document of the ASA and applies to all types of advertising, including product packaging, radio, television, online, print advertising and billboards and makes provision for both consumer and competitor complaints.

In the Multix Cling Wrap matter the South African manufacturer and distributor of Glad Wrap lodged a competitor complaint in respect of the packaging of Multix Cling Wrap based on the clauses of the Code which seek to prevent advertisers from imitating the advertising of competitors and/or exploiting the advertising goodwill which their competitors have established.

Glad Wrap has been sold in South Africa in packaging featuring the following elements, which have remained unchanged over a number of years:

  • A yellow background;
  • The trade name appearing in a bold white font against a red background; and
  • The product length and/or width details in a bold white font against a blue background on the right-hand side of the packaging.

In April 2012, Multix Cling Wrap entered the South African market. The packaging of the Multix Cling Wrap product included the following elements:

  • A yellow background;
  • The trade name appearing in a bold red font against a white background (the same colours as on the Glad Wrap packaging, simply inverted); and
  • The product length and/or width details in a bold white font against a blue background on the right-hand side of the packaging.

The complainant was of the view that the packaging of the Multix Cling Wrap was confusingly similar to that of its Glad Wrap product and, rather than attempting a costly and protracted application to court based on the common-law grounds of passing-off or unlawful competition, lodged a complaint with the ASA’s Directorate – the first complaint level at the ASA.

Clause 9 of Section II of the Code deals with the imitation of advertising and prohibits advertisers from copying existing advertisements, or any part thereof, in a manner that is recognisable and evokes the existing concept and could result in the likely loss of potential advertising value, notwithstanding the absence of deception or confusion.

In its response to the complaint, the respondent provided evidence that the packaging of its Multix Cling Wrap products had been used in Australia since 2005 and had now simply been adopted in South Africa. The complainant had only started using its Glad Wrap packaging in 2006 and it was therefore impossible for the respondent to have copied the complainant’s packaging, which did not yet exist in 2005.

In the circumstances, the Directorate dismissed this aspect of the complaint, finding that there was no conscious copying of original intellectual thought or work and, accordingly, that the respondent did not imitate the complainant’s packaging.

The second basis for the complaint was Clause 8 of Section II of the Code, which deals with the exploitation of advertising goodwill and prohibits advertisers from taking advantage of the advertising goodwill relating to the trade name or symbol of the product or service of another.

When considering matters involving an alleged exploitation of goodwill, the ASA always gives consideration to whether the concept of an advertisement constitutes the “signature” of the complainant’s products or services; is consistently used; is expended throughout media; and is prominent in the mind of the consumer.

Having considered the evidence before it, the Directorate was satisfied that the complainant had advertised its Glad Wrap packaging with the particular colour combination, spent significant amounts on promoting the product in the particular get-up and enjoyed significant sales of the product in the particular get-up. In addition, no other cling wrap product in South Africa made use of the same colour combination on its packaging.

In view of the above, the Directorate found that the complainant had established advertising goodwill in the specific way that the colour combination had been used on its Glad Wrap packaging in South Africa. While the Directorate was satisfied that the respondent did not imitate or copy the complainant’s product packaging, the complainant had established goodwill in the get-up of its packaging in South Africa and the respondent’s entry into the South African cling wrap market with this unique colour combination was likely to diminish the goodwill that the complainant had established in South Africa.

In the circumstances, the respondent was ordered to withdraw its packaging and desist from using it again in future.

This article was published in the Business Day Business Law and Tax Review supplement on 8 April 2013

Date published: 2013/05/09
Author: Eben van Wyk and John Foster

Tags: trade mark news the asa brand goodwill