Société des Produits Nestlé SA and Another v International Foodstuffs Co and Others

Nestlé and Iffco are international competitors in the chocolate market. Nestlé alleged that Iffco's 'Break' chocolate bar infringed Nestlé's registered trade marks in its 'Kit Kat' chocolate bar - both in terms of the physical shape of the product and the word marks used. Nestlé held registered shape trade marks for its 4 finger wafer and 2 finger wafer chocolate bars, which had been marketed and sold in South Africa for 50 years. Iffco's 'Break' chocolate bar was almost identical in shape to Nestlé's Kit Kat bar, differing only in a superficial decorative pattern embossed on top. Nestlé also claimed that Iffco's use of the word 'Break' infringed Nestlé's registered word marks including 'Have a Break, Have a Kit Kat'. The North Gauteng High Court dismissed Nestlé's application for interdictory relief. Iffco counter-applied to expunge Nestlé's shape trade marks from the register, arguing they were solely functional/technical in nature, and brought a review application challenging the Registrar's administrative decisions in registering those marks. Both applications were dismissed by the High Court. Both parties appealed.

• Whether the Registrar acted lawfully in permitting amendments to trade mark applications during the registration process, particularly endorsements clarifying that marks consisted of three-dimensional shapes
• Whether Nestlé's finger wafer shape trade marks were validly registered or should be expunged under section 10(5) of the Trade Marks Act 194 of 1993 as consisting exclusively of shapes necessary to obtain a technical result
• Whether Iffco's use of the shape of its Break chocolate bar and depictions thereof on packaging infringed Nestlé's registered shape trade marks under section 34(1)(a) (confusing/deceptive similarity) and section 34(1)(c) (taking unfair advantage or being detrimental to the distinctive character or repute of well-known marks)
• Whether Iffco's use of the word 'Break' infringed Nestlé's registered word marks under sections 34(1)(a) and 34(1)(c)
• Whether the defences of waiver, acquiescence and estoppel barred Nestlé from enforcing its trade mark rights
• Whether two-dimensional pictorial representations in trade mark applications could be objectively interpreted as depicting three-dimensional shapes

The appeal by Nestlé succeeded with costs (including two counsel) to the extent that: The first and second respondents (Iffco) were interdicted from infringing Nestlé's registered trade mark numbers 1999/23579 (4 finger wafer shape) and 1999/23580 (2 finger wafer shape) by making unauthorised use in the course of trade in relation to chocolate and/or confectionary products of any finger wafer shape marks of the types illustrated in the founding affidavit, including depictions on packaging or labelling, or any finger wafer shapes confusingly and/or deceptively similar to Nestlé's registered marks. Iffco was ordered to pay Nestlé's costs. The cross-appeal by Iffco against dismissal of their counter-application (to expunge Nestlé's shape marks) and review application was dismissed with costs (including two counsel).

The binding legal principles established are: (1) Two-dimensional pictorial representations in trade mark applications must be interpreted objectively through the eyes of the notional ordinary consumer, considering the commercial context and history of use. Where a distinctive product shape has been extensively marketed, two-dimensional depictions will be perceived as representing three-dimensional shapes. (2) Section 16(5) of the Trade Marks Act 194 of 1993 grants the Registrar (and the court) unfettered discretion to permit amendments to pending trade mark applications, including amendments that clarify or limit the scope of protection claimed. This discretion is not constrained by section 25 which governs alterations to registered marks. However, the discretion must be exercised judiciously, and amendments causing injury or prejudice should not be allowed. (3) Under section 10(5), a shape mark is not unregistrable merely because one element of the shape serves a technical function. The provision targets monopolies over technical solutions or functional characteristics. Where a shape contains distinctive non-functional elements (such as a plinth base, finger configuration, or distinctive proportions), it does not consist 'exclusively' of shape necessary to obtain a technical result. (4) Use of a shape identical or nearly identical to a registered shape trade mark constitutes trade mark use (as a badge of origin) rather than descriptive use where: (a) the registered shape has acquired distinctiveness and reputation through extensive use; (b) the shape is used in commerce as a source identifier; and (c) consumers perceive the shape as indicating origin. Such use infringes under section 34(1)(a) where there is likelihood of confusion or deception. (5) Under section 34(1)(c), use of a mark identical or similar to a well-known registered mark that causes 'blurring' (dilution of distinctiveness by association with multiple sources) constitutes infringement. Where competitors are in the same market, economic harm from blurring may be self-evident from the primary facts. (6) Disclaimers in trade mark registrations reflect recognition that disclaimed features are not distinctive of origin. There is no infringement where the only similarity between marks consists of similarity to disclaimed features. (7) For defences of waiver or estoppel to succeed, the trade mark proprietor's conduct must unequivocally indicate waiver of rights or amount to a representation that rights will not be enforced, and the alleged infringer must have relied on such conduct to its detriment.

The Court made several non-binding observations: (1) Expert evidence about how a trade mark would be perceived by ordinary consumers is irrelevant - interpretation is a matter for the court applying the objective test. (2) The absence of evidence of actual confusion over an extended period of side-by-side selling is not determinative - likelihood of confusion is a matter for the court to decide and no significance attaches to absence of such evidence. (3) Market survey evidence showing consumer recognition of a shape is relevant (though not conclusive) to objective assessment of how the notional ordinary consumer would perceive trade mark applications depicting that shape. (4) The inclusion in specifications of goods that cannot take the claimed shape does not necessarily mean the mark is not a shape mark - it may simply indicate the applicant included goods it did not intend to use with the mark, which could be addressed through removal procedures under sections 10(4), 24(1), 27(1)(a) or 27(1)(b). (5) It is common in the confectionary industry to depict actual products on packaging, but whether this constitutes descriptive use depends on whether the depicted shape is capable of distinguishing the products and whether the public perceives it as a badge of origin. (6) One cannot use a trade mark and then argue it was used merely as ornamentation. (7) The Court noted differing outcomes in overseas tribunals regarding the same Nestlé marks, including findings by the UK IPO that the marks were unregistrable (currently under appeal), and findings by OHIM's Second Board of Appeal that non-functional elements were sufficient to make the shape recognised as a badge of origin despite being 'rather banal'. (8) The defence of acquiescence does not form part of South African law. (9) Where an applicant succeeds on one ground of infringement, it may be unnecessary to determine other grounds or related claims (such as passing off under section 35(3)).

This case is significant in South African trade mark law for several reasons: (1) It confirms that two-dimensional pictorial representations in trade mark applications can be objectively interpreted as depicting three-dimensional shape marks, particularly where the shape has been extensively used and promoted in commerce. (2) It clarifies the broad discretion of the Registrar under section 16(5) to permit amendments to pending applications, including substantial amendments, though caution must be exercised where prejudice may result. (3) It provides important guidance on section 10(5), holding that shape marks are not unregistrable merely because one element (like cross-sectional shape) serves a technical function, if other distinctive non-functional elements are present. The focus is on whether the mark grants a monopoly over technical solutions. (4) It confirms that shape marks can function as badges of origin and that use of identical or highly similar shapes constitutes trade mark infringement, not merely descriptive use. (5) It demonstrates the application of section 34(1)(c) protection against 'blurring' of well-known marks, particularly where competitors use identical distinctive features. (6) It illustrates the effect of disclaimers in trade mark registrations - features disclaimed cannot ground infringement claims based solely on similarity to those features. (7) The case demonstrates the strict requirements for establishing defences of waiver and estoppel in trade mark disputes. This decision strengthens protection for distinctive product shapes as trade marks in South African law.