After
being punished by a gorgeous yet savage Two Oceans
Trail Run,
I was hoping that a read of the three High Court trade mark judgements
discussed below would take my mind off my aching limbs. The first did just that, the second was moderately
interesting and the last made Bastard Hill seem rather pleasant
in comparison!
Presto produces cellular
confinement systems
used for soil stabilisation and erosion control. In the 90s, Presto licensed certain patents, know-how
and its GEOWEB trade mark to PRS. The parties ultimately fell out, proceedings
were instituted and settlement was reached in 2001. The settlement expressly repealed most of the
original licence and provided a new, altered licence to PRS for a limited
period. Unfortunately, the settlement did
not expressly retain the acknowledgement of Presto’s proprietorship of the mark
nor the provisions forbidding PRS from adopting or registering the mark other
than in terms of the licence.
After
expiration of the settlement licence, PRS filed an application for the mark in
SA. Presto then sought revocation of the
registration on the basis that PRS had no bone
fide claim to proprietorship (s 10(3)) and that its application was made mala fide (s 10(7)).
The
court found that implicit in the settlement licence was an acknowledgement of
Presto’s proprietorship of the mark. The
court also adopted a wide interpretation of mala
fides and accepted that bad faith in relation to claims of proprietorship
does not necessarily involve breach of a legal obligation (in this case, a
contractual obligation). Accordingly,
even though the express provisions acknowledging Presto’s proprietorship of the
mark terminated upon settlement, the court still found that reliance on that
state of affairs fell short of “the ethical standards of acceptable
commercial behaviour.”
Importantly,
the judgement highlights the flexible nature of objections based on lack of bona fide proprietorship and mala fides, emphasising morality and
ethics (things that perhaps us trade mark lawyers aren’t too bothered
by!). It also emphasises the need for
clearly drafted settlement agreements – implicit terms are notoriously
difficult to prove and one is left with the feeling that this dispute might not
have arisen if the settlement agreement contained express proprietorship
provisions.
Aloe Vera owns trade
mark registrations for an eagle device in classes 5 and 32 and has established
a reputation in the device in respect of its health and wellbeing products. Taisho applied to
register its own eagle device in the same classes. Aloe Vera opposed Taisho’s applications on
the basis of a likelihood of confusion or deception arising from Aloe Vera’s
reputation (s 10(12)) and its prior registrations (s 10(14)).
The
court cited two contentious aspects of the recent Foschini v
Coetzee
judgement with approval. Firstly, the
court favoured the approach of using the classification system as the starting
point for assessments of similarity.
Secondly, and perhaps most contentiously, the court cited the comments in
Foschini regarding the need to limit monopolies in light of a general policy
against anti-completive practices. In
Foschini, that approach was used to limit the goods/services scope of
Foschini’s monopoly. In this case
however, the court used the same reasoning to limit Aloe Vera’s monopoly in
respect of the similarity of the marks. The
court found that Aloe Vera cannot claim a monopoly in respect of an eagle
irrespective of the manner in which it is depicted. Having regard to the dissimilarities between
the devices viewed as wholes, the court dismissed the opposition.
This
case emphasises the difficulty in proceeding on the basis of conceptual
similarity alone and is in line with the reasoning of the Registrar in the Sun
International v La Chemise Lacoste case, also incidentally involving a
depiction of an animal, where it was reiterated that “trade marks do not create
monopolies in relation to concepts or ideas” (cited in La Chemise
Lacoste v Rong Tai Trading). It is
also noteworthy that the anti-monopoly sentiment first expressed in Foschini
has now spread to another court, albeit in the same division.
This
judgement had me scratching my head a fair bit.
Luckily I’m not the only one; one learned commentator, who shall remain
anonymous, mentioned that the judgement seems “confused and confusing on more
than one level.” Many thanks to Adv. Mark
Seale
(who acted for the applicant and is not the anonymous commentator!) for very
kindly sharing his heads (here and here) and the notice of
application for leave to appeal, which is to be heard in May.
The
applicant claimed that the respondent was infringing its registration for
INFINITY in respect of tyres and wheels.
The respondent relied on the section 36 “prior use” defence but also counter-claimed
for expungement of the mark on the basis of, amongst others, section 10(3).
The
court apparently disregarded the express wording of section 36 in allowing the
defence. Section 36 requires the party
raising the defence to show use predating the date of first use or the
application date of the registered mark, whichever is earlier. Having apparently accepted that the applicant
began using the mark before the respondent, the court strangely went on to
hold: “Nothing turns on the date Applicant commenced using the trade mark…as it
bases its claim squarely on the registration…”
Regarding
the counter-application for expungement, the court adopted a rather harsh
interpretation of what constitutes “sharp practice” vitiating a bona fide claim to proprietorship. The court found that simply because the
applicant had applied to register the mark two weeks after discussions with the
respondent, had delayed enforcing the mark and had only filed its application
sometime after it began using the mark, the applicant’s conduct approached
“sharp practice”.
Finally
and most interestingly, the court considered the tricky question of whether a
distributor, licensee or some other party besides the source of the goods/services
can claim proprietorship of the mark (See Wilkhof Trade Mark Licensing at p 154 onwards for a full,
fascinating discussion). The court found that in order for an
applicant to have a bona fide claim
to proprietorship, it must intend to use the mark in respect of its own goods. Given that the applicant in this case imported
its goods (as opposed to manufacturing them itself), it was found to lack such
intention and its registration fell to be expunged accordingly. In support of this stance, the court relied
on the definition of “trade mark” in section 2(1). This despite the authors of Webster & Page writing that “It is clearly arguable that as the distinguishing function
is given more weight in the 1993 Act, it should be possible for a distributor
in the absence of a person claiming greater title to the mark to register such
mark as his trade mark. Such an interpretation would give full meaning to the
words “any other person” in the definition.”
What makes this aspect of the judgement so interesting is that typically
the manufacturer or the original source of the goods/services would be the one
claiming that the trade mark applicant (usually an errant distributor or
licensee) lacked bona fide
proprietorship. Interestingly in this
case, a third party succeeded in raising this ground. Watch this space for a report on the appeal
judgment!
