Wednesday, 3 July 2013

RSA: Appeal decision: Adidas v Pepkor - do four stripes infringe?

The Supreme Court of Appeal (“SCA”) in South Africa recently deliberated over a Western Cape High Court decision in favour Pepkor Retail Limited (“Pepkor”) who had succeeded in defending infringement and passing off claims by Adidas AG and Adidas International Marketing BV (“Adidas”) in respect of their famous 3 stripe device and related footwear get up. The SCA decision is recorded as Adidas AG & another v Pepkor Retail Limited (187/12) [2013]ZASCA 3 and the earlier decision summarised on Afro-IP here.

Facts

Adidas has its three stripe trade mark registered as the subject of several trade mark registrations covering footwear. It was also not disputed that its trade mark and related footwear get up have a significant reputation in South Africa. Pepkor is a large retail organisation in South Africa that caters for the low to middle class market. The offending footwear complained of by Adidas bear two and four stripe devices. Apart from denying any deceptive similarity between the two and four stripes applied to Pepkor’s footwear and Adidas’ trademarks, Pepkor raised a number of other defences or contentions, namely that:

1.       The stripes featuring on their footwear were not trademarks but decorations or embellishments;
2.       The protection afforded by Adidas’ registered trademarks is limited to three parallel stripes (and not to any other number of parallel stripes) configured in terms of its trade mark registrations. The first appellant has impermissibly sought to expand the scope of the protection afforded by its registered trademarks by claiming generic features of shoes as constituent elements of its trademarks;
3.       The Adidas three stripe trade mark is so notorious, recognisable and distinctive that there is no likelihood that a consumer of the goods concerned would, when confronted with trainers featuring two or four parallel stripes in a decorative fashion, be confused into believing that they are the goods of, or are associated with, the appellants; and
4.       Adidas’ reliance on previous South African judgments and foreign judgments is misplaced and of extremely limited assistance, since those cases cannot assist the factual enquiry and comparative analysis the SCA is enjoined to make on the facts of the case.

Decision

Acting SCA Judge Southwood held that:

1.       There was no evidence that the marks would be perceived as pure embellishment or decoration. The fact that other marks appear on the footwear is irrelevant;
2.       The registered marks are to be considered as they appear on the register and their scope of protection considered accordingly;
3.       Fame is to be considered as part of the overall assessment when one considers whether a likelihood of confusion takes places. The more distinctive a trade mark the more likely confusion will occur when the mark is used on competing products; and
4.       Adidas is entitled to rely on South African (and other) judgments, as persuasive, if not decisive precedents, if they were decided by applying the same principles (as he felt were now involved) to the same or similar facts.

afraid this may open the floodgates
On the question of trade mark infringement, Southwood held that on four of the six offending shoes the marks as used were not sufficiently similar to give rise to a likelihood of confusion and hence there was no infringement. For the remaining two offending shoes, he felt that the marks created the same general impression:

“The likelihood of at least momentary deception or confusion where the purchaser must select the goods from those on display was therefore shown.”

Hence there was infringement of Section 34(1)(a) of the Trade Marks Act 194/93.


Turning to the claim of passing off, Southwood acknowledged previous decisions that, when comparing the overall get up of the products and considering whether confusion is likely, one must appreciate that the appearance of wording on the products may not avoid a likelihood of confusion because there people in RSA who are illiterate. Further, that the law of passing off does not confer monopolies to successful get-ups. People are generally free to copy provide they do cause confusion.

Applying these principles to the offending shoes, Southwood found the Pepkor was guilty of passing off in respect of certain of the shoes but not others. The relevance of prominent third party trade marks helped avoid a successful claim against two of the shoes.

The judge (supported by a full bench of five judges) granted the interdict accordingly, and awarded costs and an enquiry into damages to Adidas.

Comment


The judgement provides welcome clarification on the tests for infringement, in particular that the more distinctive a trade mark is the greater the likelihood of confusion. It also illustrates that a defence based on ornamental or decorative will only work in limited circumstances. It is also interesting that Adidas was successful against a larger number of shoes in the passing off claim. 

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