When is a crispy not a crispy? If it`s more like a cake or a cookie? What if its form is not derived from nature, but from care? It is clear that the profitability of a product can be affected by complex VAT rules. As it stands, P&G won`t have to refund the tax to HMRC as VAT is currently included in the Pringles price, but that may not be the end of the debate. Although the judges of the P&G Court of Appeal refused leave to appeal, the Pringles manufacturer can now appeal directly to the House of Lords for leave to appeal. The judges of the Court of Appeal disagreed with the High Court`s decision. Lord Justice Jacob said the VAT court had correctly concluded that pringles were similar enough to potato chips to put them on the tax net. He rejected the potato test, adding that the topic “raises an Aristotelian question: Does the product have a potato essence?” He felt that this question was “not feasible or complex to analyze”, asking instead whether a reasonable man on the street would conclude that Pringle`s potato chips look and are made from potatoes. He concluded that the answer would be yes. `All the following products, put up for human consumption in the unaltered state, namely chips, sticks, cabbage and similar potato or potato flour products, as well as salted products obtained by the swelling of cereals or cereal products; and salted or roasted nuts, excluding nuts. The London VAT Court ruled that P&G`s regular Pringles should be classified as chips. However, a Supreme Court judge overturned that decision, saying the pringles did not meet the legal definition of “chips” and could therefore be sold tax-free in the UK.
The company said the potato chips did not contain flours other than potatoes such as pringles and were generally not packaged in tubes. What do the words “chips” or “chips” mean? My dictionary reference indicates that the word “crispy” is an adjective of various meanings such as “dry and brittle” or “fresh and firm” (“crunchy salad”) or “clear and spicy” (“crispy thought”). My dictionary also points out that although the word is an adjective, it also has a British meaning, namely salty thin snacks like what we call potato chips. Then the circle closes, a thin salty snack in America is a “chip”, in England it is a “chip” or “chips”. Judge Warren`s decision means Pringles` maker, Proctor & Gamble, is exempt from paying VAT on its snacks, unlike regular chip makers. P&G pointed out at the Supreme Court hearing that pringles don`t look like chips, don`t feel like chips, or taste like potato chips. They also claimed that the snack is not made like a chip because it is cooked from baked dough and packed in tubes. The chips “give a crunchy feel under the tooth and must be cut into shredded pieces when chewed,” P&G`s lawyers argued.
“It`s completely different with a Pringle, actually a Pringle is designed to melt on the tongue.” Despite detailed legal arguments that Pringles contain ingredients other than potatoes, Lord Justice Mummery thought the answer to the question of chips was very simple: “Most children, when asked if raspberry jellies were `made` there, would have the good sense to say `yes` despite raspberries.” A High Court judge, Nicholas Warren, agreed that Pringles were not “made from the potato” within the meaning of the VAT Act 1994 for the purposes of the tax office exemption. To qualify for the exception, Justice Warren stated, a product must be “wholly or substantially made from the potato.” Pringles, he said, are not as qualified because they are made from potato flour, cornmeal, wheat starch and rice flour, as well as fat and emulsifier, salt and spices with a potato content of about 42%. Pringles makers yesterday celebrated a Supreme Court ruling that snacking is not a chip. When the courts ruled that M&S tea cakes were exempt from VAT because they were zero cakes and not VAT biscuits, M&S received a £3 million discount. A year later, £100 million could have been owed to Procter & Gamble if they had won the argument that Pringles were not chips. Elena Baranova reports on the decisive verdict. However, “chips” in England are the usual reference for what we Americans call French fries, a British use perhaps best known around the world in terms of “fish and chips”. Instead of using the word “chips” as we do in America, the British call small, salty snacks like chips “chips.” The company had successfully challenged a VAT court`s ruling that Pringles should be valued at 17.5% because the product fell under the definition of “potato chips, potato sticks, potato sprouts and similar products made from potato or potato flour or potato starch”. Are Pringles “potato chip-like and made from potatoes”? That`s the question the Court of Appeal judges answered, stating that the Pringles have enough “potato” to be classified as crispy that Procter & Gamble (“P&G”), maker of the snack, ends up without a nine-figure tax refund hoped for. After a thorough review of the ingredients, manufacturer and packaging, the judge declared that Pringles were not “made from the potato” within the meaning of the VAT Act 1994. He said that to qualify for the exemption, a product “must be made entirely or substantially entirely from the potato.” The question in this case is whether the name PRETZEL CRISPS is unique enough to be a brand of pretzel crackers or whether it is too general to serve as a brand. As the U.S.
Court of Appeals reminds us in this case, to be protected as a trademark, a product name must be clear enough to indicate a specific source of a product, while a generic term is a “general descriptive name of a class of goods or services” that is “by definition incapable of indicating a particular source of goods or services.” The usual example I use with my customers is “groceries,” a common descriptive reference that in itself does nothing to refer to a particular food brand, but it is the “common descriptive name of a class of. services”, it is therefore a “generic” reference. Since it`s generic, anyone who runs a grocery store can call it exactly that, a grocery store. What makes a grocery name protectable as a trademark is when something distinctive is associated with the grocery store reference, such as a KROGER® grocery store or an ALBERTSONS® grocery store. Under UK VAT regulations, most food is exempt from UK VAT of 17.5%, but Revenue and Customs argued that Pringles falls under the “chip” exemption under the VAT Act 1994, which distinguishes snacking for tax purposes by saying: P&G, who sells more than 500 million Pringles each year, pointed out that, unlike potato chips, their product has a regular shape that “cannot be found in nature”, as well as uniform colouring and texture and a “mouth-melting taste”. She insisted that her customers didn`t think of Pringles as chips. In PRETZEL CRISPS, the Trademark Trial and Appeal Board (TTAB), a judicial division of the U.S. Patent and Trademark Office, concluded that the word PRETZEL is naturally generic for pretzels and the word CRISPS is generic for crackers. The combination of the two words as the name for pretzel crackers is therefore generic and therefore cannot benefit from trademark protection.
The TTAB`s reasoning on the meaning of “chips” confuses me a little. To achieve this, the TTAB referred to a dictionary definition of “crispy” as something “that crumbles easily” or “brittle” as “a crunchy cracker.” To that, I answer, yes, crackers can be crispy, but so can salad. If the justification for TTAB is correct, then “chips” could also mean “salad”. I wonder if the TTAB has gone a step further to make the American adjective “crisp” a noun, a word synonymous with “crackers”. A word smith could play this game with almost any adjective.