Trade mark owners should be concerned at SAB ruling

Cause for concern

The approach of the court seems to be based to a large extent on the issue of a proprietor being able to show a real likelihood or probability of harm, and this harm must, moreover, be of an economic nature. The court acknowledged that the section of the Trade Marks Act concerned is intended to protect a trade mark's selling power, rather than its dignity. Based on this, the court then stated that it cannot be inferred from a mere observation of the marks concerned that there is a likelihood of economic harm. This is seen not to be permissible in a democracy such as that which we have in South Africa. It is ironic that the court's recognition that a trade mark's selling power may be protected, did not lead it to accept that a likelihood of economic harm exists. The whole philosophy regarding the protection of well known trade marks is in fact that traditional principles that do not require a likelihood of confusion do not suffice to provide adequate protection for well-known marks. This, conversely, is also a safety mechanism. It is clear that the dilution protection in our Trade Mark Law is granted only to well known trade marks. There is therefore not necessary such a big threat to our democracy as may be perceived.

The view accepted in our law for decades, is that goodwill in relation to a product is protected. Goodwill is universally accepted to be a favourable disposition towards a product. Obviously it is difficult to determine the parameters of the existence of goodwill. It is thus also difficult to place boundaries on proving dilution. If is for this reason, as mentioned, that dilution provisions have been introduced, and specifically, that there is no requirement that the likelihood of confusion must exist. Questions that arise is how it can be established that there is a likelihood of economic harm, if in this circumstances of the case, a remedy was not granted. A very practical point relates to the annual importation of thousands of counterfeit goods from overseas.

Allowing counterfeiters to escape?

The situation currently is that if a blatant copy is made of a famous trade mark, it is possible to have the police confiscate the particular goods. This is however dependent on the goods being infringing goods as defined in the Trade Marks Act. With the new direction set by the Constitutional Court, there could be a way for counterfeiters to escape. This is mainly if they would add some form of social comment in the proximity of the famous trade mark. For instance, the well known Nike trade mark is depicted on a t-shirt, along with a statement that it is being manufactured in a democracy since 1994. According to the court's approach, there would be no likelihood of economic harm. However, if it is not possible to prevent the importation of such clothing, it could mean, in particular if the prices are lower, that members of the public would buy such clothing, instead of that of the proprietor. This would appear to hold the potential for a very real kind of economic harm. For that matter, on what basis would a trade mark proprietor be able to prevent the use of its trade mark along with a pornographic product? Who would really think that Adidas has brought out condoms. Should it be said that in a democracy the danger of aids warrants the use of famous marks for public health benefits, and thus have constitutional protection, no pun intended? Recent case law in the United States is however not far removed from the approach followed by the Constitutional Court. In particular, there is a controversy in the United States regarding the Victoria's Secret case, in which the question was raised whether relief will be granted only if there is proof of actual dilution of the economic value of trade marks. Legislation has been proposed in this regard.

'Our law has now moved back 10 years'

The ruling has perhaps raised more questions than it has answered.

In particular, it would from now on be extremely difficult for trade mark attorneys to advise their clients on the extent to which they can obtain protection against dilution of their marks. It may be that legislation in South Africa would also be required to clarify the issue. It appears preferable to have focused on the limits of parody, instead of the issue of economic harm, as the gist of the matter seems to be what the limits for the use of a famous trade mark would be. The sequence adopted by the Supreme Court of Appeal on this aspect was however rejected.

One could remark, if cynical, that our law has now moved back 10 years, to the position it was in before the dilution provisions were made law, that is, 1995. Uneasy lies the firm that has a well-known trade mark.