Another Tequila Sunrise

Tequila is widely known as a liquid which, for a short while, turns you into a wiser, more attractive and better person.?After that, things fall apart but it still ensures that you get a good night’s sleep.

?Such is the fame acquired by this particular liquor that it featured prominently in the case of GPS Restaurante v Cantina Tequila (Mexican Connection CC) (1997) 1 All SA 603 (2).?The case involved two restaurants, both wanting to operate under the name “Cantina Tequila”.?The applicant, GPS, operated a Mexican-style restaurant under the name Cantina Tequila in Brixton, Johannesburg.?The respondents’ businesses formed part of the Cantina Tequila restaurant chain, a handful of Mexican restaurants in the Western Cape.?In 1996 the first respondent, Mexican Connection, launched a Cantina Tequila restaurant in Rosebank, Johannesburg.?GPS brought an urgent application, contending that the respondent’s conduct amounted to a wrongful passing off. ?The court held that GPS has established goodwill throughout the Johannesburg area and that, whatever reputation Mexican Connection might have built up in Cape Town, it was not entitled to infringe on the goodwill which GPS has acquired in Johannesburg.?GPS was granted an interdict restraining Mexican Connection from using the tradename Cantina Tequila in relation to its restaurant in Rosebank.?

?Did the parties, by slugging it out in court, miss out on an opportunity of arriving at a quicker, more amicable solution which would have benefited both of them??Assume that, on the eve of GPS launching its application, both parties agreed to mediation.?They were fortunate in finding a mediator who had considerable experience in passing off, trademarks and advertising.?The mediation started early in the morning, and started to make interesting progress when, with the assistance of the mediator, the parties realised that the true issue was whether the Respondent’s Rosebank restaurant would jeopardise the turnover, or future growth plans, of the Cantina Tequila operated by GPS in Brixton.?

?Further discussion revealed that most of the GPS patrons were families, wanting a quiet evening meal and lunch time business people.?They mostly came from the Brixton / Belgravia / Langlaagte / Rossmore area.?The Cantina Tequila restaurants in the Western Cape were aimed at a somewhat different market – late night partygoers, who came for the live music, the attractive waitrons who circulated from table to table offering tequila shots, by the general vibe and hubbub.

?The mediator persuaded the parties to defer their litigation for a two week period, and conducted a market survey in that time to ascertain in greater detail the client makeup of the Brixton and Rosebank restaurants.?The parties agreed that the survey would consist of seven neutrally phrased questions to find out why patrons had chosen the outlet, and where they had learnt of its existence.

?The mediator also established that, while both parties envisaged opening up further branches at some future date, Mexican Connection had much more proactive expansion plans than did GPS.

?As a trade-off, Mexican Connection also agreed that, after the two week period, GPS could relaunch its application, that both parties could use the market survey results, and that Mexican Connection would not, in the court proceedings, challenge urgency and such like procedural matters.

?The market survey was illuminating.?It showed that the two restaurants had a completely different client demographic and profile from each other. After the two weeks, the parties held a further mediation session at which they agreed on which magazines and advertising channels each of them would be permitted to use, and each agreed that they would never serve certain signature dishes forming an important part of the other outlet’s menu.?As regards future expansion, each of them chose five neighbourhoods in the Johannesburg Vaal Triangle area in which they might wish to open up in the next decade, and each was granted exclusivity in respect of that area – both parties undertook to respect the area-based exclusivity rights of the other party.

?The positive outcome of the mediation led to the controlling shareholders of, respectively, GPS and Mexican Connection, developing a cordial relationship.?In the years thereafter they frequently shared knowledge and information and marketing tips and, eight years after the threatened litigation, opened up a joint venture Cantina Tequila in Centurion, which proved to be a roaring success.?Undoubtedly, the mediation outcome was far more beneficial than any litigation could ever have been.