In a decision entered last month, the Antimonopoly Committee prohibited an Odessa firm from selling a soft drink that it found deceptively similar to the brand and label used by Pepsi.
Until a few months ago, Odessa-based Garant-2 Ltd. produced a cola beverage under the Peps! brand. The firm labeled its Peps! beverage bottles using a design strikingly similar to that used by Pepsi.
Late last year, Zaporizhya’s Slavutych brewery, which is licensed to make and sell Pepsi in Ukraine, took notice and filed a complaint with the Antimonopoly Committee, alleging that Garant-2 was utilizing “ill-willed competitive tactics” aimed at tricking customers into thinking its beverages were genuine Pepsi drinks.
In late August, the committee ruled in favor of Slavutych, ordering Garant-2 to stop using the Peps! brand.
“Customers came to us complaining about the quality of the fake Pepsi product last summer,” said Ihor Tovkach, vice president at Baltic Beverages Holding, the Western beer and beverage maker that owns Slavutych.
“They thought this product was ours because the design was very similar to the Pepsi design. Obviously we were upset about this, and thought it was a violation of our rights.”
A one-liter bottle of Peps! sold for about Hr 2 per bottle, half the price of a genuine Ukrainian-made Pepsi. Tovkach also said that the imitation product tasted bad, which reflected poorly on Pepsi.
“The average customer thought this was our product,” Tovkach added.
Garant-2 stopped producing Peps! last spring, about the time managers became aware that an investigation had been launched against it.
Natalia Rehulska, Garant-2’s lawyer, said her company would not comment on the case until it had received the committee’s written decision.
She did say, however, that her company had filed a request to patent the Peps! trademark, and that it would make a final decision concerning whether it would resume using the brand after a decision has been made on the patent application.
Rehulska described Garant-2 as a 10-year-old beverage company that also produces drinks under the Karolina brand, but she would not provide specific production or sales figures.
She denied noticing a strong resemblance between the Peps! and Pepsi brands.
“I wouldn’t say that the two brands are similar,” she said.
Slavutych acquired the rights to produce Pepsi in Ukraine in 2001. In addition to Pepsi, Slavutych also produces 7-Up, another PepsiCo product. Both are produced at the Slavutych brewery in Zaporizhya.
The company sells about 40 million liters of Pepsi a year. At Hr 2.14 per liter, that’s about $16 million in sales.
Slavutych’s Tovkach is not sure how many imitation drinks Garant-2 sold, nor is he sure how much damage his company sustained due to the bogus Pepsi. The case was Slavutych’s first battle with copycats. Next time, the company will react more quickly, he said.
“We had to gather a lot of evidence in support,” he said. “The committee told us ahead of time to gather as much evidence as possible. This was our first experience with such a matter.”
Because Slavutych did not ask to be compensated for its losses, Garant-2 faced no monetary penalty.
“I think we could have sued them to demand compensation for losses, but I am not sure whether we will do that. It is a long process,” he said. “We are generally happy. Our interests, as well as PepsiCo’s, were defended.”
The decision upholding the Pepsi trademark comes as Ukrainian officials have stepped-up efforts to combat trademark copycats.
In March, the Antimonopoly Committee came to the defense of Bacardi and Company, which produces Martini-brand Italian vermouth, ruling that Kharkiv-based Osan employed “ill-willed” tactics when it began producing an alcoholic beverage called Martin last year.
In another case, a Kyiv appellate court on Jan. 17 upheld a ruling supporting UDV North America, owner of the Smirnoff vodka brand. The decision was a blow to a Russian firm that registered its vodka in Ukraine as Smirnov.
Trademark lawyers called the decisions important precedents that will help protect trademarks in the future.
