Much Ado about Nutting: Nutella Vs. Nutello
29 November 2012
In the recent Singapore Court of Appeal (CA) case of Sarika Connoisseur Café v. Ferrero, the CA was asked to resolve several issues on the matters of well-known trademark infringement, dilution and passing off.
Sarika Connoisseur Café (the Appellant) is the owner of the “TCC – the connoisseur concerto” café chain in Singapore. The Appellant started selling an espresso-based drink, Nutello, in August 2007, which incidentally contained Ferrero’s (the Respondent) popular chocolate-based hazelnut spread, sold under the trademark Nutella, as one of its ingredients. The High Court had previously found against the Appellant, and held that the Appellant’s Nutello had infringed the Respondent’s well-known Nutella mark. The Court further held that the Appellant’s mark amounted to dilution and passing off of the Respondent’s mark.
Well-known Mark Infringement
The CA, in a run of the mill judgment, found the Nutello mark to be confusingly similar to the Nutella mark, and that the Appellant had indeed infringed upon the Respondent’s well-known trademark. The CA’s decision was partially based on the opinion that the more distinctive the registered mark, the more alteration is needed in the other mark to avoid infringement. Nutella, being an invented word, was found to be highly distinctive; consequently, the CA found that the Appellant’s mark did not contain enough differences to distinguish itself from the Respondent’s mark.
Dilution by Blurring
The CA’s take on the question of the existence of dilution turned out to be more fascinating. The Appellant argued that it is conceptually incongruous to find both infringement and dilution. In English, it means that if the consumers are confused, thinking that the goods are of the same origin, then that is infringement but not dilution, because there is no whittling away or lessening of the identification of the Respondent’s mark. However, if the consumers do not think that the goods are from the same source then there is dilution and not infringement, because the consumers would merely associate the Appellant’s mark with the Respondent’s mark without confusing them for each other, thereby reducing the exclusivity of the Respondent’s mark. The CA disagreed and held that confusion and dilution are not mutually exclusive, because a portion of the public could be confused as to the origin of the goods but at the same time, the remaining lot may not think that the parties are related.
The Appellant also contended that their use of the mark Nutello did not take away any customs from the Respondent’s business. As a matter of fact, the Respondent’s sales figures for products under the Nutella mark had increased by 20% each year since the launch of the Appellant’s product. The Appellant claimed that as the products of both parties are not in competition, the Respondent would not suffer any loss of actual or future sales. The CA disagreed and held that dilution by blurring is primarily concerned with the erosion of a trademark’s exclusivity. It is sufficient for the Respondent to show probability of damage to its well-known trademark’s advertising quality or symbolic function. In other words, the dispersion of the identity of the earlier mark means that its exclusivity is likely to be damaged.
To put it simply, imagine a socialite appearing at a party she is hosting, to find another lady guest wearing the same dress as her. Though the guests can still easily tell them apart, the embarrassing loss of exclusivity will not go unnoticed, no less so by the host, who would most probably strike the lady off her future guest lists.
Passing Off
In finding that the Appellant had passed off its Nutello mark as the Respondent’s Nutella mark, the CA held that evidence of the Respondent’s expansion into the drinks market in France could be admitted to show their intention of such an expansion in Singapore as well. Therefore, if the Appellant was allowed to use the mark Nutello, the Respondent would be prevented from expanding into the drinks market under their Nutella mark and this would constitute sufficient damage caused to the Respondent to satisfy the requirement for a passing off claim.
In a Nutshell…
It is sometimes tempting to incorporate a famous mark or at least a significant part of a well-known mark into one’s trademark, especially if your product actually contains the product of the well-known mark as one of its ingredients. However, this case has shown that it is not a wise move to do so even if you think that the products are not identical. Even though the process of coining an inventive mark and marketing it would initially be a tough nut to crack, especially for startups and small businesses, it is crucial in establishing a successful brand and avoiding complications in the long run.
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