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

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

By Darren Olivier   Wednesday, July 03, 2013   No comments:

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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RSA: Adidas v Pepkor - four stripes do not infringe

RSA: Adidas v Pepkor - four stripes do not infringe

By Darren Olivier   Tuesday, December 13, 2011   1 comment:

decorative or a trade mark?

IP livewire from Cluver Markotter, Jeremy Speres, has kindly provided Afro-IP with a summary of the very recent Adidas v Pepkor judgement handed down earlier this month in the Western Cape. Afro Leo feels that this is another High Court IP case which is ripe for appeal, but what do you think?

"In a judgement that is somewhat challenging to read at times, the Court touched on issues that have been quite topical in the local IP industry recently, including use as a trade mark as opposed to mere decorative use, the doctrine of acquiescence, survey evidence and, interestingly, the argument that where the complainant’s mark is well-known, likelihood of confusion is diminished.

Here the respondent, Pepkor Retail Limited, the operator of popular local retailers Pep Stores and Ackermans, had been selling various shoes bearing either 2 or 4 parallel stripes contrasting in colour to the material upon which they are placed.

Adidas sought interdictory relief against Pepkor on the strength of its various registered trade marks consisting of three, equally wide, equally spaced, parallel stripes contrasting in colour to the material upon which they are placed, as well as on the ground of passing off.

It was common cause that the only differences in question between Adidas’s marks and Pepkor’s shoes were the number of stripes and the device and label of origin used (Pepkor used various other marks on their shoes beside the stripes).

One of Pepkor’s defences was that the stripes on its products are used purely decoratively and that they do not function as a trade mark.  The court accepted that it was open to Pepkor to make this argument (at para 43) although ultimately the court appeared to decide the matter on the basis that Pepkor’s marks were not confusingly similar to Adidas’s.  In accepting that Pepkor could raise decorative use as a defence, the court relied on the remarks of Judge Harms in Puma v Rampar Trading (discussed by Afro-ip here) at para 27:

One also cannot use a trade mark and then argue that it was used as ornamentation. It could be different if one is dealing with changes to the mark, for instance, if the registered mark consists of three stripes it would be a question of fact whether the use of two or four stripes would be perceived as decorative or as trade mark use but one could not, I would think, use the same argument in relation to the use of three stripes.

Unfortunately, the court did not consider the judgement of the European Court of Justice in Adidas AG v Marca Mode CV (Case C-102/07) where it was found that generally, the public’s perception that a mark is used decoratively cannot limit the registered proprietor’s protection where that mark is so similar to the registered mark that the public is likely to be confused.

Pepkor also sought to argue that Adidas had acquiesced in the use by others of branding consisting of two and four parallel stripes.

It is to be noted that some have forcefully argued that the doctrine of acquiescence does not form part of our law, most notably Adv. Alasdair Sholto-Douglas SC in New Media Publishing (Pty) Ltd v Eating Out Web Services CC 2005 (5) SA 388 (C) where the question was not ultimately decided. In this case however, the court seemed to accept that the doctrine is applicable (at paras 44 and 114) but found that it had insufficient evidence before it to show that Adidas had in fact acquiesced.

Regarding survey evidence, Adidas commissioned a market survey which seemed to find that consumers form a general impression of Adidas’s marks and that quite a few participants gave “stripes” as opposed to “three stripes” as their answer for identifying an Adidas product (at para 38).

Highlighting the difficulties involved in survey design and the great weight given to proof of actual confusion, the court gave the survey short shrift, finding that Adidas could have attempted to show actual confusion by showing the survey participants Pepkor’s shoes, which was not done.

Finally, and most interestingly, the court appeared to accept an argument that has generally not found favour in the courts (see Webster and Page at para 6.6.7), providing a rare example of the renown of a complainant’s mark actually counting against the complainant’s case!  

Pepkor argued (see pg 35 and para 80) that the renown of Adidas’s three stripes excludes the possibility of less or more than three stripes causing confusion, i.e., where a mark is renowned, likelihood of confusion is diminished.

Here the court appeared to accept this argument (at paras 116-119) in combination with the doctrine of imperfect recollection.  The reasoning of the court appeared to be that Adidas could not rely on the imperfect recollection of consumers (i.e. consumers failing to recollect that the Adidas mark consists of three stripes as opposed to two or four) given that Adidas’s three stripes are so well-known.  

One gets the sense though that this finding was informed more by the fact that potential decorative use was involved and the “requirement of availability” (in the words of the ECJ in Marca Mode)."

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Afro Leo's two cents worth:

* This is another judgement that fails to appreciate that markings on shoes (other than word marks) are more valuable than word marks when it comes to protecting a brand and are very strong source identifiers. Copycats should clearly use their marks decoratively if they want to escape infringement.
* It is interesting that Adidas did not rely on the unfair advantage or detriment provisions when pleading trade mark infringement but did do so under the heading of passing off.
* Afro Leo feels that these types of cases are better suited to arguments that well known brands are diluted under the infringement provisions, interested that passing off is considered wide enough to include dilution at common law and wonders why the Judge did not appear to address the passing off dilution arguments in more detail.
* The Judge, on the other hand, has been very bold to fly in the face of local decisions using arguments that generally mean that less protection is given to reputable marks because they are known, and that the South African public is less likely to be confused in the post economic sanction period!
* As far as acquiescence is concerned, Afro Leo had the privilege of listening to Adv Burt Bester try to persuade Judge Harms in the KG footwear SCA matter that it formed part of RSA law, to no avail.

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