Brand Bullies: IP and the SMEs

Afro Leo has recently come across several articles (see here and here) appealing about the difficulties faced by small companies in defending trade mark infringement claims. Soulsa failed to take an iffy decision on appeal because of cost and suffered a name change, Orange Ink used the press and found themselves agreeing to a restrictive use agreement (a positive outcome from their point of view) and the other, Bodtrade 54, were so elated in defending an opposition in the UK by Virgin Enterprises that they have claimed it as a "David and Goliath" type victory. Does this make a case for the introduction of legislation against unlawful trade mark infringement threats (as in the UK) or is it really a case that South African companies, especially SMEs, are either naive about brand protection or are simply chancers prepared to take the risk?

Trade mark litigation in RSA is often about aggressive letters of demand with so many "thereofs", "wherefores", "mutatis mutandi", "inter alias" and broad claims of "unfair advantage", "detriment", "undesirables" and "infringement" that companies capitulate in the dense wordage without properly defending the case. In reality they should consult a lawyer but often do not. Some realise that these letters, if ill-conceived, are excellent material for the likes of Noseweek (who get copies quite frequently) and others enter their own defence. Costs, without a doubt, are a factor - few income statements of SMEs even have a provision for this type of expense even though, on a worldwide level, the relative cost of trade mark litigation in RSA is surprisingly cheap. The result is that lawyers will continue to send aggressive letters with broad claims and why should they not do so? They are effective. It is also very unlikely that "unlawful threats" provisions will be introduced and the disapproving words of the SCA in recent decisions are unlikely to change the way in which trade mark litigation is conducted.

The SMEs, of course, are also brand owners with the advantages of local legislation available to them. Few though invest in filings and even fewer in cheap pre-clearance searches before choosing trade marks. Not all SMEs are chancers; many are looking to create their business as cost effectively as possible and most are ignorant of the importance of brand protection which is actually an opportunity for lawyers seeking new clients, for CIPRO seeking higher filings and for the SAIIPL - one acronym that sadly, very few SMEs even know about.

Thanks to Mary-Ellen Field for the Forbes article.