There are rules for infringement
It must be established that consumers are likely to interpret the mark as being that of plaintiff’s trademark
SECTION 34 of the Trade Marks Act 194 of 1993 provides how a registered trademark is infringed. It is by the unauthorised use in the course of trade of an identical trademark, or of a mark so nearly resembling it, in relation to the same or similar goods or services in respect of which the trademark is registered. The use must be likely deceive or cause confusion.
The plaintiff bears the onus of proving trademark infringement by a third party and must be able to establish (i) its trademark registration; (ii) unauthorised use in the course of trade by the defendant; iii) of the registered trademark or a confusingly similar mark; (iv) in relation to the goods or similar goods in respect of which the mark is registered.
In addition to the above factors, our courts have held that there can be trademark infringement only if use of the mark is such that it creates the impression that there is a material link in trade between the defendant’s goods and the undertaking from which those goods originate. In other words, it must be established that consumers are likely to interpret the mark, as it is used by the defendant, as designating or tending to designate the undertaking from which the goods originate, as that of the plaintiff.
This precedent was set out in the landmark case of Verimark (Pty) Ltd v BMW AG where the Supreme Court of Appeal dismissed BMW’s claim that Verimark’s incidental use of a BMW car and logo in the advertising of a car polish product infringed BMW’s registered trademarks. The court made it clear that a trademark’s function is to serve as a badge of origin and that the use of a trademark for purely descriptive purposes will not necessarily create the impression of a material link. It was held that consumers would consider the presence of the BMW logo as incidental, and part of the car, and would accept that the choice of the car was fortuitous. It was held that Verimark’s use of the BMW logo would not detrimentally affect the advertising value thereof.
Shortly after the Verimark decision, the Supreme Court of Appeal in the matter of Commercial Auto Glass (Pty) Ltd v BMW AG, upheld a claim by BMW based on infringement of its trademark. BMW had claimed that Commercial Auto Glass was infringing its registered BMW, BM and 3 SERIES trademarks by advertising replacement windscreens under the names “BMW E30 3 Series 83-92”, “BMW E36 3 Series 91-97” and “BMW E46 3 Series 98”.
When discussing the “material link” argument, the court found that “…in line with developments in Europe and the UK, the defendant’s use must have been ‘trademark use’, meaning that –
“[t]here can only be primary trademark infringement if it is established that consumers are likely to interpret the mark, as it is used by the third party, as designating or tending to designate the undertaking from which the third party’s goods originate.
“What is, accordingly, required is an interpretation of the mark through the eyes of the consumer as used by the alleged infringer. If the use creates an impression of a material link between the product and the owner of the mark there is infringement; otherwise … not.
The plaintiff bears the onus of proving trademark infringement by a third party
The use of a mark for purely descriptive purposes will not create that impression but it is also clear that this is not necessarily the definitive test.”
Having first been on the losing side, and shortly thereafter on the winning side of the “material link” argument, one would think that BMW would have sat up and taken note of this particular requirement for proving trademark infringement.
However, from the recent judgement in BMW AG v Grandmark International (18 September 2013), it is clear that they have not.
In this case, BMW alleged that Grandmark was infringing its registered designs and trademarks. As far as its trademarks were concerned, BMW alleged that Grandmark’s use of the letters BM on the labels attached to the packaging of spare parts (non-genuine BMW parts manufactured mainly in Taiwan) sold by Grandmark, infringed its registered trademarks. The wording on the labels in question was as follows: “GORDON AUTO BODY PARTS CO. LTD; MFG LOT; 1004A; GD471; BM 3 SRS 92-05 HOOD” and “BM3S01HD4 BM 3 SERIES (E46) PARTSLINK NO BM 1230 115.”
BMW’s claim was dismissed by the High Court (on the basis of the “material link” argument) but, not to be deterred, BMW then launched an appeal to the Supreme Court of Appeal. Having considered the arguments on trademark infringement, the appeal court quoted directly from the Commercial Auto Glass case (as if BMW couldn’t see that one coming) and held that:
“A customer would not view the trademark ‘BM’ in isolation of its surrounding features. In the first case it can hardly be said that the trademark is used as a badge of origin when the label states it to have a different origin. Moreover, the numbering surrounding, and immediately following, the mark clearly reflects its use to identify of the component concerned, and the same is to be said of the lettering and number on the second tag. In my view the marks are clearly not used as trademarks and the claim for infringement correctly failed.”
BMW’s claim was subsequently dismissed and it was ordered to pick up Grandmark’s costs for the appeal. Perhaps now BMW will take note of the “material link” requirement and think twice before instituting action.