Monday, 17 August 2009

South Africa - lessons from Alliance

The latest passing off case reported here as Alliance Property Group (Pty) Ltd v Alliance Group Limited (8828/2007) [2009] ZAKZPHC 31 illustrates just how difficult it is to protect an inherently weak company name, especially when there has been trade mark neglect.

The Applicant (Alliance Property Group) sought "a permanent interdict/injunction restraining the Respondents (Alliance Group Limited) from passing-off their services in the field of property as those of the Applicant, or as being associated with the Applicant in the cause of trade by using the name, mark & trading style “Alliance Group” or any other name, mark & trading style which is confusingly or deceptively similar to the Applicant’s mark & trading styles “Alliance Group”."

The Applicant failed because they were unable to show that they were entitled to exclusivity in the name despite having used it since 1997. Factors that weighed against the Applicant included that:

a. they had failed to keep the company/close corporation name register clear of names including the word Alliance suggesting that it was a commonly used trading style;

b. the company name that the Applicants had chosen was descriptive (as opposed to fanciful or distinctive) such that "the Applicant cannot claim a monopoly [ed - not a big fan of this term - prefer exclusivity] on this widely used and descriptive term";

c. there had been a gradual erosion of whatever distinctiveness the name Alliance may have had vis-a-vis the Respondent who had used the name in one form or another since 1998 ie the Applicant had failed to take action quick enough (or in fact any action at all until this application). They had also allowed a "massive number of other businesses" to co-exist using the name Alliance;

d. because the Applicant had not registered a trade mark for the name it had to rely on trying to show a reputation in the mark which it managed to do ie a "sound reputation in the property industry and has been well known in the Durban area [presumably under their name]". However, given the adverse circumstances around the mark (eg a weak mark) it had failed to show that the name had acquired a secondary meaning [ed - I am not altogether clear there is a difference ie having a reputation but no secondary meaning in the mark];

e. the Applicant did not, in its papers, show evidence where it actually claimed rights in the name Alliance [typically this could have been achieved through proper use of a tm sign];

e. the Applicant had failed to show actual or a likelihood of confusion despite a finding that there was an overlap in businesses of Applicant and the Respondent.

In assessing the case, the Judge also spelt out bad news for the Respondent who was said to have also failed to make out a case for exclusivity in the word Alliance (see para 58) [the perils of taking this type of dispute to court] thus opening the doors for others to trade off any goodwill either of them has/had in the name. The case was heard in the Kwazulu Natal High Court by Judge Sishi who granted costs of two Counsel to the Respondent in finding for them. It is not clear whether the case will/has been appealed.

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