Rolls Royce, rappers and trade mark dilution

As the rapper is presumably not in the business of making aircraft engines or luxury motor vehicles, we can probably assume that the parties aren't in competition, and that the complaint deals with what many of us simply refer to as "dilution". The term isn't strictly accurate, because it refers to a form of trade mark protection that covers any unauthorised use of a registered trade mark that is well known, if that use either dilutes or tarnishes the registered trade mark, or takes unfair advantage of its reputation. Confusion as to the origin of the products is not a requirement.

After adopting a low profile for a number of years, dilution is suddenly back in the news in South Africa. Let me explain. Although the South African Trade Marks Act of 1994 makes provision for what I'll refer to in this article as "dilution infringement", the Constitutional Court put a serious dampener on things in 2005.

In the case of SAB v Laugh-it-off, the court held that SAB's trade mark registration for the Black Label logo had not been infringed (through tarnishing) by a small company that sold a T-shirt that commented unfavourably on SAB's labour practices, through the use of a similar-looking logo that featured the term Black Labour, on the basis that it's necessary to prove a likelihood of economic loss, something that SAB had failed to do.

Many in the field interpreted this as the death-knell for dilution infringement. Leading IP judge Louis Harms declared it dead in the water.

Things changed in December 2014 when the Supreme Court of Appeal gave its judgment in the long-running case of Nestlé v Iffco One of the issues there was whether Iffco had infringed trade mark registrations for the shape of the Kit Kat chocolate by selling chocolate that looked very similar, and in packaging that showed a representation of the product. Not only did the court find that there was conventional infringement (what I'll refer to in this article as "confusion infringement"), but it went on to hold that there was dilution infringement too.

The court said that this form of protection had been introduced in 1994 to "protect the commercial value that attaches to the reputation of a trade mark, rather than its capacity to distinguish the goods or service of the proprietor from those of others". It accepted that the court "must be satisfied by evidence of actual detriment or unfair advantage", but it went on to say that, in some cases, this may be "self-evident".

This, it felt, was such a case: "The loss of the unique shape of Nestlé's Kit Kat bar as a distinctive attribute will inevitably result in a loss of advertising or selling power to Nestlé"¦ this will clearly result in 'blurring' of Nestlé's finger wafer shape trade mark"¦economic harm to Nestlé is consequently self-evident"

So will our courts now be more inclined to grant claims for dilution infringement? Time will tell, but it is worth bearing in mind that, in the Nestlé case, the parties were direct competitors. The finding that there was dilution infringement didn't really add anything in practical terms, because the court had already found that there was confusion infringement.

Things will become really interesting when someone claims dilution infringement in a case where the parties don't compete and there's no likelihood of confusion. Will a court be prepared to accept that there's a likelihood of economic harm? We'll see.

Source: The Times