Confused and diluted in SA
Some trademark laws appear to be out of step with the rest of the world
THE trademark laws of the world are, by and large, harmonised — or at least well on their way to becoming so. In an era where companies operate in a global village, a multinational should ideally get the same protection for its brand in all the countries where it operates.
It is for this reason that South African trademark law offers the same sort of protection to trademark owners that many other countries offer. First, it offers protection against consumer confusion, in other words a situation where the trademark owner finds that a competitor has a similar trademark, and consumers are confused about who the products come from.
Second, it offers protection against what is loosely referred to as “dilution”. What this means is that the owner of a trademark that is well known will have recourse if it finds that a third party (not necessarily a competitor) has a similar trademark in circumstances where, even though there is no consumer confusion, other detrimental things happen. For example, an erosion of the distinctiveness of the wellknown trademark (referred also to as “blurring”), or a tarnishing of the reputation of the well-known trademark.
It is the second form of protection that concerns us here. A recent US Trademark Office decision involving Chanel shows how it can work. A Canadian individual applied to register the trademark Chanel for real estate development services. Chanel opposed the application, claiming it had registrations and rights in respect of a wide range of goods including perfumes, jewellery, handbags, sunglasses and retail services; and Chanel claimed that the real estate trademark would blur its well-known trademark.
Chanel filed a lot of evidence in support of its opposition. The company was founded by Coco Chanel, the brand has been around for at least 90 years
Many believe that in SA trademark dilution is dead in the water
(the famous little black dress goes all the way back to 1926), and it’s extremely well known in the US. It showed that the company monitors things very closely and that it’s made a concerted effort to ensure that it has exclusivity in the name Chanel in all product areas.
It also showed that the Canadian has made a habit of using famous names like Givenchy, Cartier, Versace and Dior for units in his buildings.
The tribunal made the point that distinctiveness and fame are not the same thing, that fame is hard to prove, and that to succeed the trademark owner must show that if “the general public encounters the mark in almost any context, it associates the term, at least initially, with the mark owner”. It emphasised that in dilution cases a company does not need to prove confusion, competition or actual economic injury — what it does need to establish is an association that “impairs the distinctiveness of the famous mark”. It said that courts will consider various issues in cases like this, including the degree of inherent distinctiveness of the trademark, and the extent to which it is used exclusively by the owner. It held that Chanel is a household name in the US, and it held that there was dilution because a substantial number of people seeing Chanel in relation to real estate would be reminded of the fashion trademark, even if they didn’t believe there was a connection.
It was a bit like a UK case where Ford opposed an application to register a trademark comprising the word “Fraud” in a logo form remarkably similar to the Ford logo. The opposition was based on dilution and the hearing officer made very short work of it. He accepted that Ford had the necessary reputation. He had no problem with the argument that the public would make a link between the two brands, even if they weren’t confused, and he accepted that, because the word ‘“fraud” has negative connotations, the Ford trademark would be tarnished.
Again, nice and easy. But don’t expect the same in SA. That’s because in the famous tarnishing case of SAB v Laugh-It-Off (involving satirical tshirts), the Constitutional Court introduced a further requirement — the need to prove a likelihood of economic loss. This was something SAB was unable to do because there was no proof that the t-shirt had affected the sales of Black Label beer in any way. And it’s something that few companies will be able to do. It’s led to a situation where many believe that in SA trademark dilution is dead in the water. Certainly retired judge and IP expert Louis Harms has voiced these concerns.
So, in SA we don’t provide the protection against dilution that many other countries do. But on top of that, it’s also arguable that we no longer provide the same level of protection against confusion that other countries do.
The problem very simply is this: in cases where the likelihood of confusion is raised, our courts seem to be interpreting trademark rights in an increasingly restrictive way. We’ve had one case where, to the surprise of many, the Supreme Court of Appeal found that an inherently strong trademark, Zonquasdrift, could co-exist for wine and wine grapes, because wine and wine grapes are not similar goods.
The court applied tests that deal with things like the composition of the goods and the trade channels through which they’re sold. We’ve had another case where a court held that the trademark Due South could co-exist for various goods because the goods fell into different classes of the classification system, seemingly suggesting that the classification system pretty much determines the issue. In the Due South case the court also cited competition law as a reason for a restrictive interpretation of trademark rights. It’s a topic in its own right.
It’s quite possible that the Chanel and Ford cases would have been determined differently in SA. Which suggests that, in an era of increasing harmonisation, SA is acting in a way that’s a bit unharmonious.
BLURRING THE LINES In the Chanel case the tribunal noted that in dilution cases a company does not need to prove confusion, competition or actual economic injury — what it does need to establish is an association that ‘impairs the distinctiveness of the famous mark’