Wednesday, 7 January 2009

ManU sues out of Necessity?

Legalbrief cites the subscription based Cape Argus as running a story that the Manchester United Football Club (ManU) is suing Necessities – a small accessory store based at the Cape Town Railway Station – for allegedly selling fake soccer gear. Nazaret Kasker, owner of Necessities, has indicated that the action will be defended. According to the report the papers filed by Man U explain that a Commercial Crimes Unit inspector seized goods from the store on September bearing the "infringing" Manchester United trademark. It has asked the court to order that the goods seized to be counterfeit and that all other offending goods in the store's possession should be handed over to the company. The corporation was to apply for default judgment (a judgment where no intention to defend is filed) against Necessities yesterday, which seems at odds with Nazaret Kasker's statement that he would defend. However, on what basis would he defend the case? What are commercial issues for ManU against the apparent small trader and is the legal process working as it should? The facts are sparse but here goes:


Is this not an open-and-shut case of trade mark infringement: unauthorised use of an identical mark on identical/similar goods covered by a ManU registration by Necessities or is there a possibility that Necessities could raise a defence like store trader Reed did very effectively against Arsenal in the UK (by arguing that his use of Arsenal's trade mark was as a badge of allegiance to the Club and was not trade mark use)*? Perhaps Manu's logo consists of a coat of arms that requires peculiar steps to protect that have not been followed**? Perhaps Necessities is dealing in grey goods? If there is a suggestion any defence may hold water in RSA***, then what impact does that have on how this case is handled under RSA law? Bear in mind that Necessities (apparently a small trader) is incurring stock holding costs and loss of Xmas profit for merchandise which has been in detained (on a warrant issued unopposed by a non-IP specialist Magistrate) since September. But then again, is such an apparently brand-owner friendly position not acceptable in a country like South Africa where counterfeiting is so rife that any benefit of doubt as to whether an item infringes or is counterfeit, should sit with the rights holder?

There are commercial issues too for ManU. The football club does not receive royalties on merchandise that Necessities sells and there is also the risk that such merchandise is sub standard, effecting their brand overall. However, the merchandise is sold to fans who they risk marginalising, possibly by a fan who they are now suing (according to the Argus Report, a small local trader) who has apparently not yet had a chance to have his say. How unfair? Or is it? The real risk to ManU is that if it continues to allow its brand to be sold in an unlicensed fashion it faces the prospect of losing the brand to the public altogether so one cannot blame them for being vigilant. But is court action their only recourse? Is there not a case for legitimising Necessities by making and training them to be a licensee or are they a trader that they would never do business with? Perhaps contact would have put the trader on notice allowing them to scurry away fake goods? No doubt these were all considered beforehand.

* see for example Arsenal v Reed

** Dr Alberts has kindly pointed me to paragraph 3 of the Commercial Auto Glass decision (Harms ADP) and paras 11 and 13 of the Verimark decision where the European cases involving Reed v Arsenal and others were discussed

*** see Manchester Corp v Manchester Palace of Varieties Ltd [1955] P 133; [1955] 2 WLR 440 discussed here http://www.geocities.com/noelcox/Ip.htm

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