Trademarking well-known brands in South Africa

Whereas an ordinary trade mark serves the function of distinguishing the trade mark owner's goods or services from those of his competitors, and acts as a badge of origin for consumers; a well known brand does far more. It has unique selling power, inherent advertising value and commercial magnetism which reach beyond the immediate product it identifies. This "creative silent salesman" has great value. This value is protected by trade mark law.

Whereas the ordinary garden variety trade mark has to concern itself with mundane matters of registration and renewals, its classification of goods or services, territoriality and borders, use or non-use, likelihood of consumer deception or confusion - well known brands have grown to transcend these limitations.

Owners of well known trade marks should be satisfied, but there are critical commentators who point out that we may begin to deal with a limitation on free speech, a lack of legal certainty (as was provided by the registration system), absolute monopolies, and effectively a new form of copyright. These are risks for unsuspecting trade mark users.

Brand evolution

Our current Trade Marks Act (No. 194 of 1993) came into force in 1995. Prior to that the old Act (no. 62 of 1963) did not provide for the protection of well known marks. Provision was made only for classic infringement (which is use of an identical or confusingly similar mark in respect of the goods or services for which the trade mark was actually registered). Proprietors of well known marks could register their marks as defensive registrations for other goods or services in special circumstances. The common law action of passing off further provided occasional relief in that it acknowledged that a trader's reputation can extend beyond his immediate field of activity.

But the registration of defensive trade marks and the occasional passing off remedy did not take into account the nature and needs of the well known mark, and the abuses it may be prone to. These problems were amplified in South Africa due to its isolation prior to 1990 - when many well known foreign trade marks fell prey to local entrepeneurs .

The new Act made radical protection available to the proprietors of both registered and unregistered well known brands.

Firstly, the principle of dilution was established. There can be no unliscensed use of a mark which is identical or similar to a well known mark in the course of trade in relation to any goods or services where such use would be likely to take unfair advantage of or be detrimental to the distinctive character or the repute of the registered well known mark (Section 34(1)(c)). This pohibition applies even in the absence of deception or confusion.

Secondly, unregistered well known marks, which might not even be used in South Africa, are protected, alongside registered marks, against the use of reproductions, imitations or translations on goods or services identical or similar to those for which the mark is well known, where there is a likelihood of deception or confusion (Section 35(3)).

Whereas the dilution provision is intended to protect against the "blurring" and "tarnishment" of famous marks; this Section 35(3) provision intended to provide a practical solution to the problems of foreign businessmen whose marks were known in South Africa but who did not have a business here.

Dilution can be described by either of the words "tarnishment" or "blurring". Tarnishment typicallly occurs where the mark is used in an unfavourable association; this would typically affect the well known brand's selling power negatively.

Blurring typically occurs where a trade mark's distinctive ability is weakened by use of the mark on non-competing goods, or in a generic sense. The German Courts found in favour of well known perfume brand 4711, where a smelly truck used by a sewage company carried the prominent number 4711 on it, which referred to the sewage company's actual telephone number.

To illustrate, let's consider how these changes would have affected the life of a sample well known brand, the homegrown consumer icon - LUCKY STAR pilchards. LUCKY STAR has been a registered trade mark in South Africa since 1949 for "fish and fish products". It commands a 70% share of the market for canned pilchards in South Africa, and is undoubtably well known.

Until 1995 LUCKY STAR enjoyed registered trade mark protection only against use of identical or confusingly similar marks for fish and fish products. As it enjoyed a substantial reputation under the common law too, it might have been able to succeed in a passing off action against confusing use in respect of similar goods such as canned tomatoes, or (at a stretch) similar services such as those of fishmongers.

From 1995 onwards LUCKY STAR came to enjoy protection against dilution - which means no use by others on any goods or services where tarnishment or blurring is likely. Further, should its registration lapse for any reason, even should it stop selling pilchards in South Africa, the mark will still enjoy protection under the Trade Marks Act - provided only that the LUCKY STAR reputation lives on.

McDonald's test case

So far so evolved by 1995; but the wings still had to be tested and spread. In timely fashion entered the besieged McDonald's Corporation. Although it may be hard to imagine now, in 1992 it was asked in South Africa if people had heard of them. The McDonald's Corporation had registered the McDonalds trade mark here in the 1950's, but never used it. A South African company made application to cancel the McDonald's registration for non-use. McDonald's opposed the application, inter alia, because it said its mark was well known in South Africa.

Saved by the bell as it were as the new Trade Marks Act had just come in, McDonald's pointed out that its well known mark (even if unregistered due to potentially successful cancellation proceedings) would still enjoy trade mark protection here - therefore the court should exercise its deiscretion and not expunge the well known unused registrations.

The Courts had a difficult hurdle to clear. What constitutes well knowness? A question made all the more difficult as McDonald's submitted insubstantial (and essentially hearsay) evidence of a reputation amongst an essentially small group of affluent persons. At the same time, the case drew a great deal of international attention.

The Pretoria High Court found that the bar was too high for McDonald's - knowldge of the trade mark had to pervade all levels of South African society. The Apellate Division looked harder for accomodation of the golden arches - it said the test was the same as for passing off, namely 'Do a substantial number of persons interested in that particular field of trade know the mark?' (1997 (1) SA 1 (A) )

Some rules on hearsay evidence were nipped and tucked and there we had McDonalds as a well known mark in 1996. We now also have a rather easy test to determine what constitutes well knowness.

Subsequent to the McDonald's decision, the Trade Marks Act was amended to provide that registered well known marks may not be removed from the trade marks register for non-use. So the evolutionary process also brought immunity to well known marks against the classic premise that a trade mark registration is lost through non-use.

Battle of the bleaches

What then if you have a well known mark and someone uses a similar mark on identical goods, under circumstances where you might not be able to show likely confusion or deception? In other words, if the proprietor of a well known mark can not prove classic trade mark infringement - can he fall back on the anti-dilution provision in the Act to save him? After some uncertainty in case law, the Cape High Court said yes in a battle between bleaches.

ALBEX bleach (Albion Chemical Company (Pty) Limited) is one of the best selling bleaches in the Westen Cape. ALL BLAX bleach (FAM Products CC) entered the market professing that it removes "all blax spots" and that it pays homeage to the New Zealand rugby team! Too close said ALBEX, not so said ALL BLAX. ALL BLAX agreed that the marks may be similar but they are not confusingly similar. It admitted that the ALBEX mark is well known, but argued that ALBEX could not show classic infringement, and did not have a full-back position on anti-dilution. Not true said the Court.

The Court found that the wording of the Act is clear. The Act speaks of use of a similar mark on any goods or services (therefore also on those for which the well known mark is registered). The Act further says "regardless of the absence of deception or confusion". So there is dilution.

The Court in any event found passing off and classic infringement also. The Court could not find the link between rugby and bleach!

South African law may be over-lenient compared to other jurisdictions where protection of well known marks against dilution is concerned. VICTORIA'S SECRET is a famous lingerie brand in the USA. A sex shop opened called "Victor's Little Secret". Victor admitted Victoria's Secret was famous, but argued that there could be no finding of dilution as actual blurring or tarnishment had to be proved, and it wasn't. The US Supreme Court agreed (and Victor kept his little secret) (Moseley -vs- Secret Catalogue, Inc). A South African court would probably not have found the same.

For one, our dilution provision (section 34(1)(C)) requires only a likelihood of unfair advantage or detriment. US law further provides anti-dilution protection only to famous marks, and a famous mark is far more renowned than a well known mark is in South Africa. Yet in South Africa well known marks enjoy even more protection than famous marks do under similar circumstances in the US.

The problem crept as the dilution provision (Section 34(1)(c)) and the unregistered well known mark protection provision (Section 35) both refer simply to "well known". The McDonald's judgment then left us with essentially one definition for "well known" which is used in both scenarios. To be fair, in trade South Africa law should be distinguishing between the two forms of protection: dilution protection for famous marks, and unregistered protection for well known marks.

The very defence raised by Victor's Little Secret was also raised by Laugh It Off Promotions CC in the BLACK LABEL/BLACK LABOUR T-shirt case; namely that the trade mark proprietor (SAB/BLACK LABEL) had to prove the unfair advantage and detriment. But the dilution was so glaring in that case that both the Cape High Court and the Supreme Court of Appeal were willing to draw an inference of likely dilution from a simple comparison of the marks. No direct evidence of detriment was submitted by South African Breweries and counsel for Laugh it Off argued that some form of direct evidence from members of the public had to be provided. The Appeal Court simply asked whether the message on the T-shirt is not likely to create in the mind of consumers a particularly unwholesome, unsavoury, or degrading association with SAB's mark? It found that anyone who has seen the T-shirt will not be able to disassociate it with SAB's trade marks.

The inference on comparison is in fact clear - this was likely dilution. Also in the ALBEX/ALL BLAX-case the Court did not call for direct evidence of harm, and drew an inference of likely dilution.

So, a well known brand has now evolved even further and has also started to speak for itself, making the burden of proof in dilution cases far easier.

The Black Label-case raised another defence which was untenable, namely a constitutional right of feedom of speech; and the right to parody, to make fun and deliver social comment through the vehicle of a well known mark. The Supreme Court of Appeal made short shrift of this defence in view of the predatory intent of Laugh It Off. Once the soapbox was stashed away, Laugh It Off was in the business of marketing clothing, and using well known marks to do so. The Court found that the racial slurs were unfair and unjustified, and, particularly in a society such as South Africa, prejudice to the trade mark far outweighted the right to freedom of expression.

Although trade marks are subject to constitutional limitations, and although the over-sensitivity of trade mark users should not be humoured, the freedom of expression does not entitle one to damage intellectual property rights anymore than it does entitle one to damage private property, such as in the example of graffitti-spraying on walls.

The philosophy of branding

After conclusion of the BLACK LABEL - case, a bigger philosophical concern may remain - as has been debated by authors such as Naomi Klein (NO LOGO).

It is true that our world is highly branded, we are subjected to brand communication on conscious and unconscious levels. Brands invade our public and private spaces and brandmarketing assimilates our culture. But, says Klein and followers, they do so on their own terms and we, the public, are not allowed to engage in a dialogue, or to talk back.

Strict trade mark laws are gags. Popular movements and trends such as "culture jamming" and "reclaiming of the streets" (which involves actions such as vandalising billboards overnight), or having impromptu street parties with large crowds to deface branded public spaces, have evolved. The owner of Laugh It Off Promotions is himself an apparent follower and famously claimed that he was performing "ideological jujitsu" on Black Label in which the weight of the brand would be used against itself. He didn't get his grip quite right though as his own primary objectives were commercial rather than ideological.

The well known brand marches on. South Africa is currently negotiating a bilateral free trade agreement with the USA. In the intellectual property chapter, there is likely to be agreement that the dilution provisions presently afforded well known registered marks be extended to well known unregistered marks. Well known brand owners would then truly not have to register their trade marks to enjoy far-reaching protection. And, like copyright, well known trade mark rights will be acknowledged and statutorily protected across borders without registration or public record.

New frontiers await, and it may indeed be a brave new world for trade mark owners and users in which the weight afforded well known marks may be increasingly called into question.