Siqalo Foods (Pty) Ltd v Clover SA (Pty) Ltd

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: Ponnan JA, Carelse JA, Matojane JA, Daffue AJA and Siwendu AJA
• Judgment Date: 31 May 2023
• Citation: 2023 JDR 1842 (SCA)
• Hearing Date: 15 May 2023
• Docket Number: 425/2022
• Court: Supreme Court of Appeal

Ponnan JA (Carelse and Motojane JJA and Daffue and Siwendu AJJA concurring):

[1]

This appeal is concerned with the lawfulness of, inter alia, the names, words, expressions or marks (the marks) depicted on the product container label (the product label) of the appellant's STORK BUTTER SPREAD (the product).

[2]

The appellant, Siqalo Foods (Pty) Ltd (or more accurately its predecessor), was incorporated and launched in 2018, when Remgro (Pty) Ltd completed its purchase of Unilever South Africa (Pty) Ltd's margarine 'spreads' business. The appellant's product line includes the STORK range consisting of, amongst others, the product.

[3]

The respondent, Clover SA (Pty) Ltd, a wholly-owned subsidiary of the Clover Group, is a manufacturer, marketer and purveyor of branded foods and beverages. It manufactures and sells what is described as a modified butter product under its registered trade mark BUTRO, which has been in use since July 1985.

[4]

The complaint of the respondent is that the appellant had commenced promoting, marketing, distributing and selling the product as a butter product, when it was in fact not such a product, but a modified butter product. The respondent objected to such trade by the appellant on the basis that the product label misrepresents the particular nature, substance, attributes, character and composition of the product, thereby misrepresenting modified butter as a butter product.

2023 JDR 1842 p3

Ponnan JA (Carelse and Motojane JJA and Daffue and Siwendu AJJA concurring)

[5]

The respondent's case is that the marks on the product label are proscribed in at least two respects by the Agricultural Product Standards Act 119 of 1990 (the Act) and the relevant regulations published thereunder (the regulations). [1] The first regulates and prescribes, amongst others, the size of the marks that may be imprinted on a product label or container (s 3 of the Act read with regulations 2(1)(d) and (e) and 26(7)(a)) and, the second prohibition forbids the use of any mark that conveys or creates, or is likely to convey or create, a false or misleading impression as to the nature, class or identity of a product (s 6 of the Act read with regulations 32(3)(a) and 32(4)).

[6]

The respondent accordingly applied on 5 March 2021 to the Gauteng Division of the High Court, Pretoria (the high court) to interdict and restrain the appellant from competing unlawfully with the respondent and trading in contravention of the Act and the Regulations. The application succeeded before Vuma AJ, who issued the following order on 12 November 2021:

'1.

That the Respondent is interdicted and restrained from:-

1.1

competing unlawfully with the Applicant by using, selling, offering for sale, promoting, advertising, delivering, marketing and/or in any way distributing for the purpose of sale, modified butter products in a container and/or any other packaging and wrapping material having a label imprinted thereon:-

1.1.1

as illustrated in the documents attached hereto as Annexures CF 2.1 – 2.6;

1.1.2

that is similar to the labels illustrated in Annexures CF 2.1 – 2.6;

1.1.3

in which the word "butter" appears as a dominant aspect or feature.

2.

That the Respondent is interdicted and restrained from trading in contravention of section 3 and 6 of the Agricultural Product Standards Act, 119 of 1990, as read with Regulations 2, 3, 17, 18, 27 and 32 of the Regulations, GN R1510, published under that Act in Government Gazette 42850, dated 22 November 2019, by using, selling, offering for sale, promoting, advertising, delivering, marketing and/or in any way distributing for the purposes of sale, or offering for sale, modified butter products in a container and/or any other packaging and wrapping material having an offending label imprinted thereon.

3.

The Respondent is ordered, within 7 (SEVEN) daysof this order, to:-

3.1.

remove an offending label from all modified butter packaging and wrapping material, and modified butter marketing and promotional material in their possession or under their

2023 JDR 1842 p4

Ponnan JA (Carelse and Motojane JJA and Daffue and Siwendu AJJA concurring)

control; and

3.2.

where an offending label is incapable of being removed from such material, to destroy the material.

4.

Costs of this application, including the cost consequent upon the employment of two counsel are awarded to the applicant.'

The appeal is with the leave of the high court.

[7]

It was common ground that the product is not butter, but something entirely different – namely, a modified butter. Butter is a primary dairy product – a product derived from or manufactured solely from milk. It may not contain any animal, vegetable or marine fat. [2] Butter is therefore 'pure butter'. By contrast, modified butter merely has the general appearance of butter, but it is not pure butter. It is an imitation of butter. The product comprises a blend of 62% plant oils (fats) and other ingredients, but only 38% primary dairy product.

[8]

The product is as depicted here:

[9]

Notably: (a) the word BUTTER is, when compared to all other words on the label, dimensionally oversized and, therefore, visually accentuated; (b) the word BUTTER is in bold blue font, capitalised and superimposed on a white letter-shadowed background, further enhancing its visual accentuation; (c) the appellant's goods mark,

2023 JDR 1842 p5

Ponnan JA (Carelse and Motojane JJA and Daffue and Siwendu AJJA concurring)

STORK, which appears above the word BUTTER, is dimensionally of a much smaller size when compared to both the words BUTTER and SPREAD – it is, by contrast, not superimposed on a white letter-shadowed background, thus, also further enhancing the visual accentuation of the word BUTTER on the product label; (d) the words MODIFIED BUTTER, as it appears in the phrase MEDIUM FAT MODIFIED BUTTER SPREAD WITH SUNFLOWER AND PALM OILS, are not in bold and are much smaller dimensionally than the words BUTTER and SPREAD – that phrase appears in a condensed and neutral script and is imposed on a dominant colourful graphic; and, (e) the words WITH SUNFLOWER AND PALM OILS, which define the composition of the product, [3] are comparatively so small relative to the rest of the mark as to fade into obscurity. The cumulative consequence of all of these considerations is that they serve to under-accentuate the words MODIFIED BUTTER.

[10]

The respondent accordingly contends that the product label, viewed as a whole, not only contravenes the statutory labelling prohibitions, but also misrepresents or is likely to create the misleading impression that the appellant's modified butter product is in fact a butter product. The ineluctable conclusion, so the contention proceeds, is that the appellant's product label was devised with exactly that misrepresentation and misleading impression in mind.

[11]

Five questions arise for consideration: First, do the marks on the product label contravene the statutory labelling requirements? Second, does the appellant's product label misrepresent, or is it likely to misrepresent and create a misleading impression regarding the respondent's product, as a product of another nature, composition, class or identity? Third, if the appellant is found to trade in contravention of these statutory prohibitions, does that trade constitute unlawful competition? Fourth, did the respondent have an alternative remedy available to it in lieu of this application? Fifth, was the Minister of Agriculture, Land Reform and Rural Development (the Minister) a necessary party and should she have been joined as a party to the suit?

As to the first:

[12]

Sections 3(1)(a)(iii) and (v) of the Act empower the Minister to prohibit the sale

2023 JDR 1842 p6

Ponnan JA (Carelse and Motojane JJA and Daffue and Siwendu AJJA concurring)

of a product, unless the labelling of that product complies with the prescribed requirements. In terms of regulation 2(1)(d), '[n]o person shall sell a dairy product or an imitation dairy product in the Republic of South Africa . . . unless a container and outer container in which such product is packed, is marked with particulars and in a manner set out in regulations 26 to 31'. And, in terms of regulation 26(7)(a), '[n]o word or expression [on a label] may be bigger than the class designation unless it is . . . a registered trade mark or trade name'.

[13]

The regulations define:

(i)

'class designation' as 'the type of dairy product . . . as specified by these regulations';

(ii)

'dairy product' as 'a primary dairy product, a composite dairy product or a modified dairy product';

(iii)

'imitation dairy product' as 'any product other than a dairy product or a fat spread, that is of animal or plant origin and in general appearance, presentation and intended use corresponds to a dairy product';

(iv)

'primary dairy product' as 'milk or a product that has been derived or manufactured solely from milk'; and

(v)

'modified dairy product' as 'a product that, in so far as it relates to general appearance, presentation and intended use, corresponds to a primary dairy product, and of which not more than 50 per cent of the fat content, protein content and/or carbohydrate content has respectively been obtained from a source other than a primary dairy product.'

[14]

It is not in dispute that the class designation of the appellant's product is 'modified butter', not 'butter', and the words STORK BUTTER SPREAD and the words BUTTER SPREAD, individually or compositely, are not registered trade marks. The appellant attempts to suggest that, where regulation 26(7)(a) speaks of 'a registered trade mark or trade name', it distinguishes between a registered trade mark, on the one hand, and a trade name, on the other. It accordingly contends that STORK BUTTER SPREAD is a trade name, not a registered...