Thursday 21 April 2016

Afro Leo

Aggregator site needs to get permission to use trade marks says judge in RSA

illustrative use!
Car Find (Pty) Ltd ("Car Find") successfully approached the high court in Johannesburg on an urgent basis to restrain Car Trader (Pty) Ltd ("Car Trader") from using the trade mark CAR FIND on their website to denote a link to Car Find’s website. The two aspects of interest are the case for urgency and the finding of the court on trade mark use.

Car Trader has an aggregator site listing a range of different sites linked to the sale of motor cars and related services. They describe their services as “software products designed to assist car dealerships maximise efficiencies and profits through the leverage of market data and systems”. The court describes their services as follows:
“In summary, the website provides for direct access by dealers to multiple portals simultaneously, without having to access each such portal separately”.

non-enhancing use!
Car Find has two trade marks; CARFIND in class 38 covering telecommunication services including portals and CARFIND.CO.ZA in class 35 covering advertising services in particular. So the services are identical, satisfying this element of the S34(1)(a) infringement test.
The applicant relied only on S34(1)(a) of the Trade Marks Act which is relatively straightforward. You can review the provision here
Identical trade marks - no likelihood of confusion required
The judge held that the mere use of an identical trade mark of necessity causes confusion and hence it is not necessary to show a likelihood of confusion. Afro Leo has no problem with the statement as it stands. However, it needs to be appreciated that not all forms of use of another's identical trade mark is an infringement or actually causes confusion. For example, it is not necessarily an infringement to say "I am selling Coca-Cola, Sprite and Pepsi" if you are a corner café or for a blog to have a useful list of other blogs, denoted by name or if you run a comparison site. Indeed all cases are quite common. The reason why one is not likely to infringe in these circumstances is because the trade mark is not used in the sense contemplated by the infringement sections of the legislation (so called trade mark use requirement) and/or because it is a pure descriptive use to denote the goods or services of the other (S34(2)(b) defence).
Was the use identical?
It is not altogether clear from the decision whether the identical mark was being used because the registered trade marks take two different forms; one being the word mark CARFIND and the other CARFIND.CO.ZA. However, one cannot infringe both marks by using a single mark that is deemed to be identical because logically that is not possible. As a result, it seems that there is an error in reasoning on the infringement of one of the marks, most likely the CARFIND.CO.ZA mark. We know that because of the wide ambit of identical trade mark use infringement, the test for "identity" is interpreted strictly (LTJ Diffusion) and one would have expected the same to apply in this case.
Is this trade mark use?
On the question of “use” the court relied on the dictionary definition of "use" perhaps not realising that "use" is defined in the Act as "use in relation to the performance of services". Regardless though, there is a need to also establish whether that use affects one of the functions of the trade mark (Interflora) ie trade mark use. These functions include the origin function, the investment, quality or advertising function of that trade mark. In cases where there is bona fide descriptive use, there is not likely to be so-called "trade mark use" and vice versa. Harms touches on this relationship, and the need to show trade mark use in (Century City at para 18 and in Verimark at para 7). However, there is very little argument or reasoning on which functions of the trade mark were affected in the Car Find judgement.
The closest is the reasoning that "the direct access to portals [provided through the use of the trade mark in the link], including that of the applicant, in fact enhances the website and therefore the services offered by the respondents. It moreover, implies that some link in the course of the trade exists between the respondents and the applicant. The respondents deny any connection with the applicant or that the website implies as much. No factual foundation for the latter denial exists and I am satisfied that the objective dealer, upon accessing the website, may well infer a link between the respondents and the applicant."
Afro Leo's difficulty with this conclusion is that:

  •  the use of a link to enhance the site eg make it richer or more accessible and user friendly does not necessarily imply trade mark use affecting one of the functions of the trade mark. Consider a blog portal listing other blog portals by name or the comparator website, for example.  The link enhances the sites but does this imply a link between the portals. Could the link simply not imply that the blogger or comparator has gone to the trouble of linking to another blog or site? Could it not be that the CAR FIND link enhances the site simply because it makes it easier to recognise the services provided through that link?
  • the relevance of "enhancement" is perhaps more appropriate to whether there is an advantage to using the trade mark and whether this advantage is unfair. However, this is a factor under the dilution provisions and not S34(1)(a) infringement.
  • what is there to imply some sort of link between the websites? If the trade mark simply points to the site of that other party, why would it necessarily create a link between the aggregator and the services on that site, especially if competitor sites are also referenced. Is there not an also an argument that the dealer is a businessman, acutely aware of his market, and that he would not imply an economic link between the two without something more? It is, of course, not to say that an economic link could not be present but given the nature of the decision (a final interdict in a reported case likely to set a precedent for these increasing disruption businesses ie aggregator sites that are ultimately pro consumer), Afro Leo would have expected to see some guidance as to why the judge comes to that conclusion.
The court heard the matter despite the fact that Car Find had known of the alleged infringing use for three months before launching the application. The judge reasoned that:

“…the infringement of a trade mark is at stake, which by its nature implies some urgency, as ‘The life of a trade mark depends on the promptitude with which it is vindicated…’ (Kerr on Injunctions 363, quoted in Tullen Industries Ltd v A de Souza Costa (Pty) Ltd 1976 (4) SA 220 (W) 220B).”

The judge went on to say that as:
-          no prejudice was alleged,
-          the matter was relatively straightforward (factually)
-          it was succinctly set out in the papers with arguments fully ventilated
-          certainty was important on an issue relevant and important in the industry
the court was prepared to hear the matter on an urgent basis. 

This is great news for trade mark owners enforcing their rights. Typically courts are loathe to hear matters as urgent if there is a delay by the applicant, even of a few days. It seems that the case was presented in a simple way and the judge felt it necessary and expedient to deal with it immediately. Again, this approach is to be celebrated. However one does wonder if it may have been perhaps a little bold given some of the complexities in a case like this and the fact that it is a first of its type case in RSA.

It is understood that the case is going on appeal. The decision can be found here.

Original post updated with format changes and to include link to case.

Afro Leo

Afro Leo

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