Law & Practice

SOUTH AFRICA: Misrepresented Whisky Leaves Bad Taste

Published: January 13, 2021

Liézal Mostert ENSafrica Johannesburg, South Africa

Verifier

Jeremy Speres Spoor & Fisher Pretoria, South Africa

The South Africa Supreme Court of Appeal (SCA) rendered a notable decision holding that unlawful competition extends well beyond passing-off and can also result from misrepresenting the nature or make-up of goods, as well as trading in contravention of a statute. Milestone Beverage CC and Others v. The Scotch Whisky Association and Others, (1037/2019) [2020] ZASCA 105 (Sept. 18, 2020).

Milestone Beverage CC (Milestone) sold vodka-based goods as “whisky-flavoured” drinks. At one time, the goods were sold as whisky. The goods incorporated get-ups that suggested a Scottish origin or heritage, including tartan patterns (shown below). The product names, such as Royal Douglas, also alluded to them having a Scottish heritage, and the labeling of the goods made use of the expressions “Premium Quality” and “Double Distilled,” words which the SCA found have a close association with whisky.

branded whisky bottles

The Scottish Whisky Association (SWA) and other whisky manufacturers objected to the sale of these goods on the basis of unlawful competition. They argued that the goods and their overall get-up falsely projected a Scottish origin and that Milestone was unlawfully competing by misrepresenting the goods as being Scotch whisky, alternatively whisky, or having a connection with whisky when this was not the case. The SCA found in favor of the SWA.

As far as get-up is concerned, Milestone had changed the get-up used after initial objections:

different branded whisky bottles

The SCA, however, held that a trader that has been found to have competed unlawfully through misleading get-up is under an obligation to go even further to distinguish its offering in the future than traders that have not previously been found liable for the same conduct.

The SCA also found that Milestone sold the relevant goods in contravention of the requirements of the Liquor Products Act (Liquor Products Act 60 of 1989) and that this in itself amounted to unlawful competition. Some of the requirements that Milestone contravened were (1) selling products where the description did not match the content, and (2) representing that the alcohol content of the goods was 43 percent when it was only 34.98 percent.

The SCA lastly found that a competitor has locus standi to bring a complaint and obtain injunctive relief when a party trades in contravention of a statute. A trader can therefore bring action against a competitor for trading in contravention of a statute if that action misleads consumers to purchase goods in preference to those of other traders.

Although every effort has been made to verify the accuracy of this article, readers are urged to check independently on matters of specific concern or interest. Law & Practice updates are published without comment from INTA except where it has taken an official position.

© 2021 International Trademark Association