Wednesday 27 December 2017

Wim Alberts

The practical effect of the ClearVu SCA disclaimer decision

Last week I posted on the Supreme Court of Appeal's decision that is likely to firm up South Africa's approach to disclaimers and their unique endorsement known as an admission.

The reasoning of the SCA is, with respect, convincing, and might now bring down the curtain on the long-running CLEARVU dispute.  What does the judgment mean practically?  I asked fellow blogger Darren Olivier who acted for M-Systems and has worked in countries with vastly different approaches to disclaimers, what he thought this all means, and whether he still prefers the UK system where the Registry does not routinely call for disclaimers:

WA: Naturally “clear” and “view” separately were disclaimed, but does this also mean that no one may use the composite mark CLEAR VIEW?

DO: My reading of the judgment is that only genuine descriptive use of “clear view” e.g to describe the intended purpose of a fence in a way that is not unlawful (e.g passing off) is covered by the admission endorsement. In other words only such use of CLEAR VIEW would not clearly be an infringement of the registered mark.

WA: If one applies the above exposition of Webster & Page, if VU is the phonetic equivalent of “view” and CLEAR is disclaimed, the use of CLEAR VIEW is in fact also disclaimed in practical terms?

DO: Yes, that is correct if you apply the logic in Webster & Page and it would mean in practical terms that any use of CLEAR VIEW could not be tolerated i.e. not just genuine descriptive use. My sense though is that there remains a practical distinction between an admission and a disclaimer and therefore one should not equate a disclaimer with an admission.

However, if one concludes that CLEAR VU or CLEARVU is a composite mark consisting merely of descriptive words or their phonetic equivalents, then the logic in Webster & Page means that CLEAR VU or CLEARVU should have been rejected as a trade mark. This is what we argued in the lower court but since the M-Systems went in liquidation, we were not able to argue it before the SCA.

WA: You mean that Cochrane Steele should not have been able to then register its CLEAR VU/CLEARVU trade mark at all?

DO: Yes, unless, of course, they could establish a secondary meaning though use of the mark as a trade mark. Our argument was that they failed to establish this on the papers. The lower court disagreed.

WA: So, any combination of a word – except “clear” – with VU is thus permissible?

DO: Yes, that is correct, provided the use is not passing off or unlawful in some other way. The rights to CLEARVU are therefore quite narrow which is communicated by the endorsements.

WA: In applying the above propositions practically sight should not be lost of the decision in Slavin's Packaging (Pty) Ltd v Space Case Products (Pty) Ltd where SPACEY was held to infringe the disclaimed SPACE and CASE components of the mark. Do you agree with that?

DO: I do, when comparing the marks, the entire marks should be compared taking into account the disclaimed elements. This is what will give the CLEARVU mark its strength as a registered mark. However, the endorsement are not insignificant for they seek to limit and more clearly define scope of protection of the registered mark.

WA: Having worked in the UK system and after being involved in this case, do you prefer a system including disclaimers or one without?

DO: This case has changed my view on disclaimers. I held the view that disclaimers and admissions were rather cumbersome, unnecessary and often created more uncertainty in the scope of the protection of a registered trade mark. They also made the registration process more expensive and lengthy. The UK system took this all into account and all but abandoned the practice in the late 90s. The EU did the same although it is still possible to endorse trade marks under both systems. Both systems are however, very efficient and I enjoyed working with them.

This case could have provided a moment to argue that disclaimers/admissions should only be called for in very limited circumstances (disclaimers are discretionary and S15 of the Act is clear on that) and bring our practice more in line with Europe. The case was not argued in this way but it would have made for interesting debate. 

I think what swings it for me in supporting disclaimers now, is that in a developing country like South Africa where access to IP is still limited, unfortunately, to those in the know and often those with means, the upshot is that the SME may be prejudiced. Put differently, those with means would more easily be able to exploit the scope of protection in a registered mark made up of descriptive components, relative those without means. In this case for example, M-Systems (sadly in liquidation) has done a favour for other competitors which is arguably good for competition and the consumer. The flip side is that the registration process does take longer and can be more expensive.

WA: Cochrane’s case was that this opposition was vexatious, prompted by the earlier adwords case and to prevent them from using the trade mark to sue M-Systems for infringement (which may have been easier to show in the adwords case). How do you respond to that?

DO: I do not believe that mere bidding on an identical trade mark without more is trade mark infringement so I do not believe that Cochrane would have prevailed in an adwords case based on a registered trade mark. I am sure that they feel differently, perhaps some of my colleagues do as well.

It is probable that this opposition may not have occurred had the adwords case not commenced but that does not mean it is vexatious, and the judgment shows that. M-Systems was a genuine competitor to Cochrane Steele in a highly competitive industry.

WA:……yes, in conclusion it seems disclaimers and admissions will form part of our system for some time. The legislation is, after ‘a deal’ between the registrar of trade marks and the applicant, without which there would be no trade mark [where trade marks are formed of descriptive components].  As long as the deal is balanced.

Wim Alberts

Wim Alberts

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