Afro-IP: Search results for crocs

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Wednesday, 29 August 2018

Another questionable Ad Campaign from KFC

By AfroTwiga Wednesday, August 29, 2018 No comments:

Regular readers will recall this bloggers post, here, about KFC's ad campaign that was certainly tasteless and flirted with consumer protection laws. Well, the marketing team at KFC is at it again, this time flirting with trademark law.

On a street in Nairobi can be seen an ad encouraging customers to "Come in your shorts and crocs", with a signboard a few dozen meters down the road that reads "We won't judge."

The word mark "Crocs" was submitted by Crocs, Inc., a Delaware Corporation, for trademark protection at the Kenyan Industrial Property Institute in 2011.

Photo credits: Abdulmalik Sugow

So, KFC is using the registered trademark of another company in a commercial activity - i.e., their advertising campaign. This is not per se infringement, but it raises some issues.

1. Is KFC stating, implicitly or explicitly, that Crocs, Inc. has endorsed their product? This blogger thinks the answer is probably "no" based on the context of the use. Nothing from the ads would seem to indicate that there is an endorsement.

2. Is KFC diluting or tarnishing the Crocs trademark? This question is a bit harder to answer. The implication by the ads is that you can go to a KFC in any state of dress, even wearing a super casual outfit or one that is not suitable for being seen in public (adults in Nairobi are almost never seen in public wearing shorts). Is this disparaging on the Crocs trademark? Certainly Crocs are known for comfort and are not generally considered formal attire, so perhaps it is in line with the brand that Crocs, Inc. seeks to portray. Nevertheless it seems that Crocs, Inc. should be the (only) one deciding the reputation they seek, independent of any advertising campaign of other companies.

3. Is KFC taking unfair advantage of the Crocs trademark? Perhaps here the answer is also "no" since there would seem to be no direct relationship between a croc and fried chicken (even if, as it has been reported, crocodile meat tastes like chicken). On the other hand, KFC is clearly trying to associate itself with the casual/relaxed reputation earned by the footwear at issue.

In conclusion, this blogger appreciates the activities of KFC only insofar as they allow speculation as to the limits of IP law.

Crocs bitten back in SA High Court decision

By Darren Olivier Wednesday, April 23, 2008 No comments:

In MORESPORT (PTY) LIMITED v COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE AND OTHERS (36853/2006) [2008] ZAGPHC 95 (27 MARCH 2008), the High Court has set aside a search and seizure warrant issued by a magistrate in respect of 5015 pairs of alleged counterfeit CROC beach model shoes. The search and seizure warrant had been issued ex parte and was set aside because Crocs had failed to disclose a defence raised by Moresport in correspondence with Crocs' attorneys. The Court held that the defence was relevant and material and should have been disclosed. The legal teams included Senior and Junior Counsel for both Moresport and Crocs.

The defence raised by Moresport was that its actions were lawful under Section 15(3A) of the Copyright Act 98 of 1978 (general exceptions from protection of artistic works). The judge relied on National Director of Public Prosecutions v Basson 2002 1 SA 419 (SCA): "where and order is sought ex parte it is well established that the utmost good faith must be observed. All material facts must be disclosed which might influence a court in coming to its decision and the withholding of such facts entitled a court to set aside an order."

Afro-IP reported on a similar Croc case involving Shoprite Checkers here. The earlier decision (in favour of Crocs) was handed down by the Cape High Court whereas this case found itself in the High Court (Transvaal Provincial Division). Afro-IP also notes that the supplier of Moresport, Holey Shoes is involved in litigation with Crocs Inc in other jurisdictions - one reason why this may have been an important strategic decision for both Holey and Crocs.

Crocs Counterfeit Raid stands up in SA High Court decision

By Darren Olivier Tuesday, February 19, 2008 No comments:

Afro-IP was alerted by Nola Bond to a recent decision of the Cape High Court in favour of Crocs Inc (“Crocs”) and others defending an appeal brought by Shoprite Checkers against a counterfeit goods seizure in South Africa. Shoprite Checkers is a large retail chain operating throughout South Africa. Crocs successfully seized over 10000 pairs of footwear destined for Shoprite Checkers’ stores early in 2007. Shoprite Checkers sought to set aside the warrant and subsequent seizure on the grounds including that the seized goods were not counterfeit goods. Crocs seized the goods on the basis that they were a reproduction or an adaptation of their design/drawings of the famously ugly and successful, strapless shoe.

One of the grounds raised by Shoprite Checkers’ Counsel was that the exception set out in S15(3)(a) of the Counterfeit Goods Act applied, namely that copyright in an artistic work of which three dimensional reproductions were made to the public with the consent of the copyright owner is not infringed if any person, without the consent of the owner reverse engineers the work, provided the work has a utilitarian purpose and it is made by an industrial process. Judge Zondi found that Shoprite Checkers had not shown that the confiscated version of the shoe was reproduced from an authorised reproduction. The Court held that the Shoprite Checkers was not entitled to make three dimensional copies by reference to the drawings. It also held that the Magistrate had correctly issued the warrant. Consequently, Shoprite Checkers’ appeal failed.

The decision illustrates:

1. The relative ease (in the sense that only a prima facie case needs to be set out following full and frank disclosure) of obtaining an ex parte warrant for the seizure of counterfeit goods in SA;
2. Once a prima case is established, to set aside the warrant, the “counterfeiter” has the onus of showing why it should not have been given eg why the goods were not counterfeit;
3. That Shoprite Checkers was so confident of their position that they sought an indemnity cost order.

SA: Pick ‘n Pay Crocked

By Darren Olivier Wednesday, May 28, 2008 No comments:

The ever alert Msawenkosi Gaxo (Bowman Gilfillan) has brought Afro-Ip's attention to the latest counterfeit goods case reported here as PICK ‘N PAY RETAILERS (PTY) LTD v THE COMMISSIONER OF SOUTH AFRICAN REVENUE SERVICES AND OTHERS. Crocs' lawyers have again been very active and instructed the seizure of 19524 pairs of alleged counterfeit sandals from Pick ‘n Pay, a large South African supermarket chain. The case concerns the procedural and substantive correctness of the detention and if not correct, whether the sandals should be returned to Pick ‘n Pay.

The Court held, in dismissing the application by Pick ‘n Pay, that the Customs and Excise Act did not require an inspector to apply his mind to whether or not the offending goods were counterfeit (which is a decision for the Court in granting the warrant); the legislature did not intend the rules of natural justice to be complied with as a pre-requisite for the granting of the warrant under section 6(1) of the Counterfeit Goods Act; the contention that the first to third respondents failed to divulge all material facts was found to be devoid of merit; and whether the shape of the shoe performs a trade mark function is a factual enquiry the outcome of which is dependent upon whether the members of the purchasing public rely thereon as a guarantee of provenance. All that Crocs need show, to obtain the warrant, is a prima facie case of ownership of the IP rights and reasonable grounds that an act of counterfeiting had taken, was taking or was likely to take place.

Afro-Ip has commented before on the ease in which it is possible to obtain a warrant for counterfeit goods seizures in South Africa. In this case, Crocs (pictured alongside studying for the case) managed to persuade the magistrate that it had a prima facie case based on rights in the shape of its sandals as a well known mark despite it not being registered. Magistrates in South Africa are not specialist IP lawyers and there is considerable jurisprudence on registrability/protection in shape marks to consider (see for instance Ipkat's comments here) as well as the exclusive concept of a "well known" mark. Consequently, one feels that the provisions of the CGA favour rights holders over distributors and consumers who are often not represented when warrants are requested. Perhaps such favour is justified given the huge problem of counterfeiting (and associated health risks) not just in South Africa but on the continent? We would welcome your views.

SARS lose twice in Court

By Darren Olivier Sunday, June 07, 2009 No comments:

The South African Revenue Services (SARS) find themselves on the wrong end of two recent Court decisions.

Marius Gerber (Bowman Gilfillan) kindly forwarded Afro Leo a link to this article published at Fin24.com describing how the tax court upheld a taxpayer's claim to deduct a payment of R50m (about $5.5million) for a radio station's trade mark and name for income tax purposes. The case arose when the SABC sold off its regional radio stations in 1996 in a public bidding process. The taxpayer was the successful bidder and purchased a radio station from the SABC for R65m. R50m of the purchase price was allocated to the trade mark and the name of the station. Sars was of the view that the trade marks and the name of the radio station was not worth R50m and that the bulk of the purchase price should have been allocated to goodwill. Sars consequently disallowed the taxpayer's claim. The Court held that the Income Tax Act does not require that taxpayers perform a formal valuation of trademarks to obtain a tax deduction and there was no evidence to suggest that the contract between the taxpayer and the SABC was a sham. The article clarifies that it is no longer possible to claim a deduction for such expenditure.

Afro Leo has always wondered about trade mark valuations and who is more qualified to do them; accountants or lawyers. In the UK his experience is that law firms were not prepared to take on the risk attached to what many consider to be a black art. In RSA however, IP lawyers feel uniquely qualified for the job. Comments welcome together with a link to the case.

Diligent Msa Gaxo (also Bowman Gilfillan) presented Afro Leo with this synopsis of the appeal decision in the Crocs/Moresport case reported on by Afro-IP last year here. Of relevance to practitioners will be these cites relating to the level of proof required for obtaining warrants for the search and seizure of counterfeit goods.

"Legal representative[s] presenting an application before a court might have an ethical duty to bring to the attention of the court issues of law that might affect its decision, but that is another matter. " “...this is clearly so, because at that stage the judge … is not required to adjudicate on the dispute on whether the goods are indeed counterfeit or not but merely to make a decision on whether there are reasonable grounds for believing that an act of dealing in counterfeit goods has taken place or is taking or is likely to take place.” The Supreme Court of Appeal accepted the submission that at that stage of the proceedings the customs officer need only satisfy the court that a prima facie case exists and is not required to prove on a preponderance of probabilities that the seized good are indeed counterfeit. The full case can be located here.

Afro Leo finds himself contemplating the balance between the dire need to stop counterfeiting by making it relatively easy to obtain search and seizure warrants, and the reality that courts with little or no knowledge of the intricacies of IP law are easily persuaded to issue warrants in circumstances where there is not likely to be an infringement at all. He suggests that this judgment leaves too much open to the vague concept of an "ethical duty" to disclose.