Legal Articles

Coca-Cola proves unreasonable exploitation of well-known SPRITE mark

Introduction
In 2018 The Coca-Cola Company and Norwegian soft drink manufacturer O Mathisen AS (OM) became embroiled in a trademark conflict after OM introduced a soft drink named Jallasprite. After OM filed an application to register JALLASPRITE as a trademark, Coca-Cola advised that it would commence legal action. Based on this reaction, OM changed the name of its drink to JallaXXXXXX. However, Coca-Cola was unsatisfied with this approach and filed for a preliminary injunction with the Oslo City Court, arguing that:

  • the name Jallasprite contravened Section 4 of the Trademark Act and Section 25 of the Marketing Control Act; and
  • the name JallaXXXXXX breached good business practices, with reference to Section 25 of the Marketing Control Act.

Arguments
When the case went to court, Coca-Cola demanded that:

  • OM should be ordered, through a temporary injunction, to cease selling, distributing or marketing soft drinks under the name Jallasprite or JallaXXXXXX; and
  • Coca-Cola should be awarded attorneys’ fees.

With respect to the initial use of the name Jallasprite, Coca-Cola argued, among other things, that SPRITE is a well-known trademark and that the names Sprite and Jallasprite are similar. Further, the goods at issue were identical (ie, lemon-flavoured soft drinks). OM’s use of the name was thus found to be the unreasonable exploitation of a well-known mark, which could damage its distinctiveness and lead to trademark dilution.
With respect to the amended name JallaXXXXXX, Coca-Cola argued that:

  • OM had clearly communicated to the media that the ‘X’s replaced the letters of the word Sprite; and
  • people were likely to interpret the ‘X’s as censorship of the word Sprite.JallaXXXXXX would therefore be interpreted as a continuation of Jallasprite, which amounted to the unreasonable:
  • exploitation of another party’s reputation; and
  • advertisement of OM’s product through an association with Coca-Cola’s well-known mark.Coca-Cola argued that the need for a temporary injunction rested mainly on the increased damage to the reputation and goodwill associated with its SPRITE mark which would eventuate if OM was allowed to continue using the name Jallasprite or JallaXXXXXX.OM argued that it had not infringed any trademark rights or violated Section 25 of the Marketing Control Act. It further argued that there was no risk of confusion between the names Sprite and Jallasprite (or JallaXXXXXX), and that Coca-Cola had no basis for interpreting JallaXXXXXX as censorship. Consequently, OM argued that there was no basis for a temporary injunction.

Decision
The court decided the case based on three different situations:

  • the sale of bottles with labels marked ‘Jallasprite’;
  • the sale of bottles on which a label marked ‘Jallasprite’ had been covered by a label marked ‘JallaXXXXXX’; and
  • the sale of bottles with labels marked ‘JallaXXXXXX’.With respect to the situation where bottles and advertising were still marked ‘Jallasprite’, the court found that OM had made sufficient efforts to discontinue this use and that there was no need for a temporary injunction. The court therefore did not address the use of the name Jallasprite in particular. The court further found that the practice of covering the name Jallasprite where it was printed directly on bottles by gluing a paper label over the top did not require a temporary injunction. The bottles themselves were made of dark glass, and it would take a determined effort to remove the labels and see the original printed name that they had covered. This constituted a minimal risk that did not justify a temporary injunction.This essentially does away with the trademark aspects of this conflict. The name JallaXXXXXX bears no resemblance to the name Sprite, and if OM had chosen to call its soft drink JallaXXXXXX to begin with, there would have been no problem. The problem from Coca-Cola’s perspective was that the name JallaXXXXXX intentionally referenced the conflict with Coca-Cola and deliberately made it look like censorship. This was a play on Coca-Cola’s trademark and contravened fair marketing practices. The court agreed with Coca-Cola in this respect, based on the case’s history and specific statements made to the press by the chair of OM’s board of directors.The court found that Coca-Cola had established a reasonable likelihood that the name Jallasprite infringed the mark SPRITE and that OM had:
  • explicitly admitted to the press that the ‘X’s in JallaXXXXXX replaced the letters of the word Sprite;
  • used a picture of a bottle marked Jallasprite with an attached sticker saying “SUED” in the media;
  • presented the conflict as one between a local producer and a large and unrelenting company; and
  • generally used the conflict strategically in the media.Taken together, these findings established a need for Coca-Cola to avoid further damage. As such, the court ordered the temporary injunction with respect to the use of the name JallaXXXXXX.

Comment
Although the court may have overstated OM’s ability to manipulate the press (it is not unlikely that OM’s chair made comments off the top of his head when the opportunity arose instead of following a deliberate media strategy), it was arguably correct in finding in Coca-Cola’s favour. However, the court did have some doubts with regard to this decision, although it is hard to see why. The court’s doubts were based on whether the damage to Coca-Cola was significant enough to warrant a temporary injunction. However, OM is large enough to be expected to follow fair marketing practices and, based on the extent of the media coverage which the case received, the potential for further damage to Coca-Cola was real.
One comment made by the court is particularly notable – namely, that the risk of confusion regarding a common origin of Sprite and Jallasprite could to some extent be mitigated by OM’s offer to inform the public through posters that there was no such common link. It is difficult to imagine a situation in which the legitimate owner of a particular trademark should accept use that is otherwise infringing simply because of an effort to educate the public through the use of posters.

More broadly, this case is yet another illustration of how the Marketing Control Act is relevant when the limits of trademark protection are reached. In particular, the case shows how the courts can rely on context (in this case, the actual behaviour of the parties towards the market) when deciding whether a particular name or logo can be used freely.
For further information on this topic please contact Tom Ekeberg at Zacco by telephone (+47 22 91 04 00) or email (tom.ekeberg@zacco.com). The Zacco website can be accessed at www.zacco.com.

Leave a Comment