Tuesday, 12 December 2017

Afro-Buff

A SERIOUS THING HAPPENED ON THE WAY TO THE FORUM: ESTOPPEL AND TRADE MARK INFRINGEMENT

INTRODUCTION

When a trade mark rights holder (statutory/common law), is estopped, on the way to the forum, or anywhere else, from acting against a perceived infringing party, it would not be a funny thing*.  But that is in fact exactly what the respondent in the recent ruling in Honda Giken Kogyo Kabushiki Kaisha t/a Honda Motor Co Ltd v Big Boy Scooter [2017] ZAGPPHC 513 suggested should happen.  In the conventional passing off/infringement situation, the respondent would not have used for a long period of time, and the rights holder would have acted speedily.  Clients were advised in the latter regard that inaction could open up, to the respondent, the “defence” of acquiescence (for more detail see 2014 De Jure 172).  

THE HONDA JUDGMENT

In giving content to this concept, the court in the Honda ruling (paragraph 11/46) made the following historical references:

“[In] Burnkloof Caterers (Pty) Ltd v Horseshoe Caterers (Green Point) (Pty) Ltd 1974 (2) SA 125 (C) at 137 …Friedman AJ stated:

‘It would appear, however, from the following passage from the judgment of WESSELS, J., in Policansky Bros. v Hermann and Canard, 1910 T.P.D. 1265 at pp. 1278 - 9, that in the field of trade marks our law recognises acquiescence as a defence distinct from that of estoppel:

‘The equitable principle that if a person lies by with a full knowledge of his rights and of the infringement of those rights, he is precluded from afterwards asserting them, has been adopted by our Courts. It forms a branch of the law of do/us ma/us. The principle of lying by is not unknown to the civil law, though its application is not so often met with in our system of law as it is in English law. Sometimes the rights are lost through mere acquiescence, at other times by estoppel, as where the element of prejudice exists in addition to acquiescence. Thus acquiescence can be proved by definite acts or by conduct.’

Whether an applicant can be said to have acquiesced in the conduct complained of, is a question of fact... Acquiescence is, in my view, a form of tacit consent, and in this regard it must, however, be borne in mind that, as WATERMEYER, C.J., said in Collen v Rietfontein Engineering Works, 1948 (1) SA 413 (AD) at p. 422:

‘Quiescence is not necessarily acquiescence,’ and that ‘conduct to constitute an acceptance, must be an unequivocal indication to the other party of such acceptance".

Reference was then made to the judgment in Turbek Trading CC v A & D Spitz Ltd  [2009] ZASCA 158:

"[15] Turbek's first line of defence was a reliance on what counsel referred to as an 'equitable defence' of delay: if a party delays in enforcing its rights the party may in the discretion of the court either forfeit the rights or be precluded from enforcing them. The factual basis of the defence was, briefly put, that Spitz had known since 1 October 2001 of Turbek's trade mark applications and its use of the mark 'KG' on footwear but only took steps to enforce its alleged common-law rights when it instituted the present proceedings during July 2007. This delay, according to the submission, amounted to acquiescence which disentitled Spitz from attacking the registrations or obtaining an interdict. Counsel relied on a statement by Patel J that our law recognises a defence of acquiescence distinct from estoppel and that the doctrine can be applied to halt cases where necessary to attain just and equitable results (Botha v White…. That Patel J had failed to take account of binding authority that contradicted his bald statement and that he had misread authority on which he sought to rely was pointed out by Thring J in New Media Publishing (Pty) Ltd v Eating Out Webb Services CC ... During argument it became clear that counsel was unable to contend more than that delay may in a suitable case be evidence of an intention to waive, evidence of a misrepresentation that might found estoppel, or evidence of consent for purposes of the volenti non fit iniuria principle. In other words, counsel was unable to substantiate his submission that acquiescence is a substantive defence in our law. Delay, in the context of trade mark law, may provide evidence of a loss of goodwill or distinctiveness but that was not Turbek's case on the papers. All this does not mean that delay may not have procedural consequences; for instance, it may be a factor to take into account in exercising a court's discretion to refuse to issue a declaration of rights or an interim interdict or, maybe, even a final interdict, leaving the claimant to pursue other remedies such as damages. Maybe this was what Patel J had in mind. If not, he erred." [the court’s emphasis]

The Honda court stated (paragraph 47), with reference to the above passage, that it is apparent that acquiescence no longer forms part of our law.  Considering the facts an estoppel defence was rejected.  It can be noted that the approach in the Turbek ruling was endorsed in Société des Produits Nestlé SA v International Foodstuffs [2014] ZASCA 187 (paragraph 66).

It is interesting in view of the above to have brief regard to estoppel, which is still applicable in our law.

ESTOPPEL

Estoppel is defined as follows by Sonnekus The Law of Estoppel in South Africa (2012) 2:

“The doctrine of estoppel by representation as applied in the courts of South Africa may generally be said to consist of the following. Where a person (the representor) by his words or conduct makes a representation to another person (the representee) and the latter, believing in the truth of the representation, acts thereon and would suffer prejudice if the representor were permitted to deny the truth of the representation made by him, the representor may be estopped - that is precluded, - from denying the truth of his representation.”

The person that has used a trade mark (B) and wishes to rely on estoppel to ward of an infringement action by the proprietor of a registered mark (A), will have to overcome certain obstacles. Amongst others, there would have to be proof of a (mis)representation. Silence (or inaction by A) can indeed, in certain circumstances, amount to a representation (Sonnekus 165). Also required, is that A must have had a duty to speak. In other words, A should have foreseen that B would have made the wrong inference from A’s “silence” and acted to his prejudice (Sonnekus 165). 

This introduces the issue of negligence. Negligence would require an answer to the question whether the reasonable person in the circumstances would have foreseen prejudice to a third party and would have taken steps to prevent detrimental consequences (Sonnekus 243). In the situation under discussion, this would inevitably involve questions as to the period of inaction. Periods of a few years usually feature. Significantly, in Oriental Products (Pty) Ltd v Pegma 178 Investments Trading CC 2011 (2) SA 508 (SCA), it was even said that inaction for a mere two months was sufficient to constitute negligence (paragraph 21). Should A have been aware of B’s use, before B can rely on estoppel? There is case law to the effect that a person can by his negligence be estopped from contending that he was not aware of the nature and contents of a document signed by him (Sonnekus 249 note 50). So A could not necessarily rely on the fact that he was not aware of B’s use of the trade mark. 

On the other hand, in favour of A, is the approach, as per Grobler NO v Boikhutsong Business Undertaking (Pty) Ltd 1987 (2) SA 547 (B) that there cannot be a misrepresentation if ownership (of immovable property) can be established from official records (at 562A). This view would, naturally, apply to intellectual property and the Register of Trade Marks, in the case of registered marks of course. However, mere knowledge by B of the existence of A’s registered mark is not always the decisive factor. So, when A informs B that he has no objection to B’s use, and A changes his position and object, for instance after obtaining legal advice, B could raise the estoppel defence (Webster & Page South African Law of Trade Marks (1997) 12-84). In summary, what might be decisive in estoppel cases, is whether a representation was made. In this regard it is worth noting and adapting what was said in William Grant & Sons Ltd v Cape Wine & Distillers Ltd 1990 (3) SA 897 (C), being that “[t]he mere lapse of a number of years during which plaintiffs took no action does not in itself justify a finding of acquiescence on their part” (at 924A). In other words, such circumstances do not necessarily constitute a representation in the context of estoppel. 

Elsewhere, in the United Kingdom, for instance, a period of five years is and was relevant.  First, with regard to acquiescence, section 48 of the Trade Marks Act of 1994 states the following: 

“(1) Where the proprietor of an earlier trade mark or other earlier right has acquiesced for a continuous period of five years in the use of a registered trade mark in the United Kingdom, being aware of that use, there shall cease to be any entitlement on the basis of that earlier trade mark or other right— 

  1. to apply for a declaration that the registration of the later trade mark is invalid, or 

  1. to oppose the use of the later trade mark in relation to the goods or services in relation to which it has been so used, 

unless the registration of the later trade mark was applied for in bad faith.”  There must thus be knowledge.  The same principle featured, secondly, under the old honest concurrent regime.   The Registrar’s previous practice was contained in his Working Manual (Journal No 6171, chapter 6, par 11.17.2, own emphasis):

“As a starting point, the mark should have been in use for a reasonable period, usually about five years, prior to the application date. This means the other party, against which the applicant is claiming honest concurrent use, has a reasonable time in which to become aware of the applicant, and to make any challenge. It must be stressed however, that this period is only a guideline. Where circumstances dictate otherwise, this period can be reduced (or, indeed, increased). It may be possible to reduce this period if e.g. the applicant has spent a massive amount on advertising his product and/or has had a very good turnover, even though his use only predates his application by a couple of years. Conversely, the period of use may need to be substantially more than five years, if the turnover is so small that it diminishes the weight that can be given to the length of use.” 

CONCLUSION

In conclusion, and whatever the technical differences between acquiescence and estoppel may be, it is always prudent for a client to assert his rights at the earliest opportunity.  In the words of Harms DP (Turbek paragraph 15):

“ll this does not mean that delay may not have procedural consequences; for instance, it may be a factor to take into account in exercising a court’s discretion to refuse to issue a declaration of rights or an interim interdict or, maybe, even a final interdict, leaving the claimant to pursue other remedies such as damages.”

Prof Wim Alberts

Footnote *: Contrary to the title of A Funny Thing Happened on the Way to the Forum, which is of course actually a musical and a film of some years ago, which was a farce popular round about 1962 (https://en.wikipedia.org/wiki/A_Funny_Thing_Happened_on_the_Way_to_the_Forum).
Read More

Tuesday, 5 December 2017

Darren Olivier

Is the ADEC Logo too close?

A new political party has just emerged in South Africa and it is called the African Democratic Change (ADeC) lead by Dr Makhozi Khoza. It's new logo has caused some outcry and much attention for the new party. This is why:


On the left hand side is the logo of the ANC and on the right hand side, that of ADeC. On the face of it there are a number of distinguishing factors; the use of blue, the juxtaposition of the various elements making up the mark and the fact that many of these elements are not uncommon in local political party logos. You can see that in this illustration below:


The use of circles, colour combinations of yellow and green and flames/sun type elements are quite common. One could argue that people/voters are used to these combinations and will focus on other parts of the logos, and not be confused. But is this the end of the matter? 

The reality is that there are certain very stark similarities in the logos, especially the use of the black, green and yellow combination in the flame device in the ADeC logo. These colours are identical to the ANC colours (in exact pantone colour it appears), and also are juxtaposed in the same combination i.e. black, yellow then green. There are other important similarities too; the clenched hand holding a torch & spear, and the circle and wheel device and flag/flame flying concepts.

Passing Off and Trade Mark Infringement

Under South African law it is possible to own rights in colour combinations if one can establish a reputation in them, or if they are registered as such in the colour combination at the national trade mark office. It is almost certain that even if the ANC have not registered the colour combination, that it will be able to establish a reputation in those colours. The question then is whether as a result of that reputation, the use of the combination by ADeC may result in a likelihood of confusion.

Importantly, it is then not the entire ANC logo that is compared with the ADeC logo, but simply the colour combination in which it can show a reputation. Once can immediately see then, that arguments for a likelihood of confusion become greater and quite possibly could succeed. This ground is known as passing off.

Under trade mark infringement it really depends on how the mark is registered. If the colour combination is registered then the enquiry is much the same, though it could be more straightforward. If there is found to be use of an identical trade mark for identical services (as covered by the registered trade mark), then there is no need to show a likelihood of confusion, and the ANC would prevail.

Under the Advertising Standards Association Code

This is a code that regulates advertising in South Africa against advertising that is in conflict with the code. The new ADeC logo will qualify as an advert under the code and could be open to an objection by the ANC, if it can show that there is misuse of its advertising goodwill in the colour combination. This enquiry is very similar to the ground of passing off explained above, and if the ANC can show a likelihood of confusion then they will prevail.

However, there is an even stronger potential ground under the code and that is "imitation". If there is imitation of an advertising concept then, even if there is no likelihood of confusion, the ASA Code could be used to stop advertising with that logo amongst members of the ASA, which include industry bodies regulating print, media and online advertising in the country. This could prove powerful even though the ANC or ADeC are not likely to be members of the ASA - the ASA's recent ruling in the Herbex case  (on jurisdiction of the ASA and its indirect effect over non members) may come to their aide on this point.
 
The difficulty with using the code is that political advertising is excluded from the scope of the code. Consequently this forum would only be available in very limited circumstances.

Under the IEC Code

This code is aimed at ensuring free and fair elections in South Africa. The code has specific provisions against "plagiarising other party's symbols, names and acronyms" and can impose a fine of R200 000 against a wrongdoer. Plagiarism is arguably more difficult to show than imitation and passing off because it implies actual copying, and is more a copyright term. (This is not really a copyright dispute as the colour combination is probably not able to meet the originality threshold for copyright to exist). That said, if one accepts that the colour combination is that of the ANC as an advertising concept or under passing off, then copying of that may sway the decision maker, rendering it plagiarism under the IEC code.

Additional comments

This is not the first time, political parties are having a spat over logos. Indeed the ANC took on COPE in a similar (but different) dispute many years ago as reported on this blog here. Some may well say that this is intentional by ADeC, that the media coverage is well worth the legal risk and it probably is. As mentioned in these posts (here and here) on the new UKIP logo in the UK and the public commentary on the possible furore with the Premier League over logos, it is important for political parties to get proper registered protection for their symbols. 




Read More

Saturday, 2 December 2017

Afro Leo

Has South Africa’s IP agenda been captured?

Recently Afro Leo caught up with Prof Sadulla Karjiker and Dr Madelein Kleyn to discuss the Anton Mostert Chair of Intellectual Property Law’s Commentary on South Africa’s Draft Intellectual Property Policy Phase 1 2017 (the Draft) from the Department of Trade & Industry (DTI). Serious concerns were raised, not just about the Draft but also about South Africa’s position on IP in general, and the consequences are potentially far-reaching.

Context

The Draft is South Africa’s second attempt to formulate a policy after the IP Regulatory Framework debacle in 2013 attracted widespread criticism and condemnation. You can read about those using the search function on the blog here (top right). That effort was binned and the subsequent IP Draft was made available in August 2017.

The Anton Mostert Chair of Intellectual Property Law (the Chair) is an independently-financed division that forms part of the Faculty of Law at the University of Stellenbosch. It seeks to safeguard and promote the integrity and quality of South African intellectual property law. Its first chair, Prof Owen Dean, was a very outspoken critic of a number of recent endeavours to amend and create new IP laws and policies. For example, the Chair took the DTI to task over its attempt to introduce traditional knowledge legislation, and, arguably, was successful, as the Department of Science & Technology is now championing bespoke legislation, which is what the Chair called for.

Commentary

Prof Dean retired at the end of 2016 and Prof Karjiker took up the mantle. The Commentary is compiled by Prof Karjiker and Dr Kleyn and if you expected them to be more docile, pandering or diplomatic than their predecessor, you are in for a surprise. The second paragraph of the Introduction sets the tone: “We can only bemoan the poor quality of the 2017 Draft IP Policy” and the remainder of the document is of a similar ilk. You can read it all here.

It’s not all negative. Essentially, the Chair welcomes the concept of an IP Policy but laments the limited scope of the document, which is essentially confined to pharmaceutical patents and public health, though recognising that some passing mention is made of the role of IP in stimulating the economy, competition law and IP, and traditional knowledge protection. The Chair calls for the re-establishment of an effective Standing Advisory Committee on IP Rights, which was so influential in updating the laws toward the end of the last century, amongst other things.

Discussion

During our animated conversation over the Commentary, the concern over the IP landscape in South Africa becomes more apparent. “We are lamenting the poor quality of stewardship of IP in South Africa, and there is no sign of improvement,” exclaimed Sadulla, amidst concerns that the process, the decision makers and influencers are not fully disclosed. There is real suspicion that the DTI has been “captured by anti-IP rhetoric from action groups who venture politically-attractive propositions that IP inhibits access, whether it be to healthcare, books or job creation through competition.”

Sadulla and Madelein accept that South Africa has certain requirements as a developing economy and needs to formulate a bespoke IP policy. Indeed they welcome robust debate on the issues. However, they feel that “South Africa has become a playground for proxy wars”; that local experts in intellectual property are not being consulted or being ignored, and that the influencers are from very powerful corporate interests and global in nature “who are engaged in their own ideological battles that are being tested in South Africa,” explains Sadulla. The problem is even more far-reaching as there is “also a perception that if these influencers are successful in undermining IP rights in South Africa, the effect will resonate within the rest of Africa too”, he went on.

Their view is that the DTI is ill equipped to deal with these influencers because they have all but abandoned the Standing Advisory Committee on IP, which once was so influential and now exists only in name, if at all.  The establishment of the Inter-Ministerial Committee on Intellectual Property (IMCIP) focusses on limited fields of IP and industry sectors, and includes no private-practice IP specialists, they explain in the Commentary together with other indications supporting their view.

They argue that it is evident from the Draft that the DTI is unable to properly interrogate the sweeping, but politically attractive, sentiments of baying action groups. For example, explains Madelein “[the Draft] incorporates very selective commentary and suggestions of the former framework debates but most proposals have been completely ignored, and without explanation. The result is a high-level overview of limited scope without substance”. It is difficult then not to conclude that there is not “an insidious agenda”, that the DTI have taken an “anti-IP stance whereby they are attempting to whittle away or dilute intellectual property rights,” Sadulla chimes in.

Comment

The Commentary is of course one of a number on the Draft. It is important though because the view of the Chair does not appear to be tainted by anything other than a genuine interest in producing appropriate world class IP laws and policies in the country. They clearly feel that they are not being heard or are being ignored, with little or no feedback from the DTI and no real debate on the issues. Their conclusion that there is a capture of the IP agenda may well be using the same politically charged rhetoric that they complain of but if it is true, and their case is plausible (if not compelling) then the IP community (not just locally but also abroad) should take notice because damage will be done. The DTI has a case to answer and another opportunity to do so now that it has comments on the Draft. Can they emerge as a true leader for Africa on IP policy? Sadulla and Madelein are not holding their breath, but let’s hope so.
Read More

Thursday, 16 November 2017

Afro Leo

Zimbabwe: African Resilience Shines Through

Brenda Matanga  sent Afro-IP a message today to re-assure the IP community and investors that Zimbabwe remains open for business.
 
Its business as usual” she exclaimed as she updated on the Zimbabwe Institute of Patent & Trade Mark Agents' talk this afternoon on the procedure for trade mark oppositions at ARIPO. She described the attendance as being a "full house of IP practitioners" including the Deputy Chief Registrar who made a presentation.
 
"We are good. ... Zimbabweans just calmly getting along as if nothing is happening. Just playing it by the ear too… but we are working."
 
Earlier today, @DarrenTOlivier tweeted "I am reliably told by the effervescent receptionist at @ARIPO that it's business as usual at their offices and at Zimbabwe Intellectual Property Office (ZIPO) based in Harare. Basically, if you want to invest in Zim, they will help you!"
 
Today's talk: phot creds - Brenda Matanga







Read More

Wednesday, 15 November 2017

Aurelia J. Schultz

Kenyan Company Secures Music Licensing Rights to Stream Global Catalog

Select your location on Mdundo
The big international music news in Africa is usually about an African artist signing with an American label, but this time, Mdundo.com has flipped the meza.  Mdundo has licensed the rights to stream Warner Music's catalog in Kenya, Uganda, Tanzania and Nigeria (one of these things is not like the others...). Disrupt Africa and Billboard provide some details, including much optimism from Mdundo CEO Martin Nielsen and Africa Warner Music South Africa Director Tracy Fraser.

Mdundo has been operating for five years and happens to one of Afro-Ng'ombe's favorite spots to find new African tracks.  (See a little footnote here from Kingsley's tour d'Africa in 2012.)  The Kenyan company received start-up capital from Berlin-based incubator 88mph, which focuses on web and mobile startups that target the African markets.  From the beginning, it sought to set itself apart as a service that not only provided accessible music to listeners but also paid artists.  (Phillip Nyalenda broke down the payment math last year here.)  Originally, Mdundo users purchased music via scratch cards like those used for mobile top-up minutes.  Now they can download, stream and pay directly from their phones or PCs. 

Mdundo features music from around the continent and has specific website arrangements targeted for users in Kenya, Tanzania, South Africa, Nigeria, Uganda, Ghana, Mozambique, Zimbabwe and Zambia.  The news reports do not mention why South Africa, Ghana, Mozambique, Zimbabwe and Zambia are not included for streaming rights.  Speculations, especially from people and animals hanging out on an IP blog, may focus on copyright law and issues commonly associated with digital music, such as internet service provider (ISP) liability and making available rights.  But not all of the countries where the Warner catalog will be available through Mdundo have these in their current laws.  This leads Afro-Ng'ombe to shrug, moo, and assume it has something to do with market demand verses costs; South Africa and Ghana may already have platforms distributing Warner's music. (And to this Zed music fan, it seems Zambia and Zimbabwe are often left out.)  In any case, and it is quite exciting to see an African-based company distributing external content instead of vice versa.

As always, thoughts and more info are welcome in the comments!  For those interested in more info about Mdundo, there is an in-depth interview with CEO Nielsen here.

Hat tip to @dorianpeters and @ellabmosheim.
Read More