EGYPT | AMENDMENT OF EXAMINATION FEES FOR PATENTS

Due to volatility in the Egyptian currency there have been several changes to official fees payable for patent examination in Egypt . The changes in local currency have however had little impact on the real cost making only negligible changes to the US dollar equivalent . Furthermore, in an attempt to encourage Egypt’s young inventors to make use of the patent system the Ministry of Science, Research and Technology  (which is responsible for IP matters in Egypt), has allowed an exemption for students in educational institution from paying the examination fees.

Adams & Adams launched an Associate Office in Egypt in 2016. The office acts as a hub for the North African region servicing not only Egypt but also Morocco, Tunisia, Algeria and Libya . As a result of this development we have been able to substantially reduce our fees for IP matters in this region.

For more information on filing patent and design applications in Egypt or any North African jurisdictions , please contact us at africaip@adamsadams.com

 

NTHABISHENG PHASWANA

Partner
Attorney

View Profile

FARZANA RASSOOL

Associate
Attorney

Send Email

POSITIVE INVESTMENT REFORM IN EGYPT PROMPTS URGENCY TO SECURE BRAND PROTECTION

Hot on the heels of amendments to the laws governing exports, earlier this year the Egyptian President, Abdel Fattah El Sisi, passed Law No. 72 of 2017 along with his Minister of Investment and International Cooperation, Dr Sahar Nasr. Law No. 72 of 2017 is a reform of Investment Law No. 8 of 1997 and aims to bring about reform to an economy that has seemingly under-performed in terms of its expectations in recent years. The law is an ambitious one and aims to attract foreign direct investment to Egypt through:

  • instituting of a set of enticing investment guarantees and incentives;
  • codifying social responsibility norms;
  • introducing new investment systems;and
  • establishing a new arbitration centre which aims to make settling disputes easier and cheaper.

Egypt is Africa’s second largest economy and is projected to grow at 4.5 percent in fiscal year 2017/18, according to the International Monetary Fund. The Egyptian government has been credited with making positive regulatory changes to facilitate the growth of the economy (for example, the amendment to the laws governing exports).

Of the developments in the law, the investment guarantees will certainly be of interest. The investment guarantees seek to establish and provide a sense of financial comfort and security to the investors, in order to further encourage economic development and growth throughout Egypt and include :

  • The right of a “fair and equitable treatment” to all investors, domestic or foreign;
  • The legislation further expands on its nature of equality, stating the guarantee that no sort of discrimination regarding gender or project size would take place;
  • Foreign investors are guaranteed the right to a residence permit for the duration of their investment project;
  • All investment projects are guaranteed immunity from nationalization;
  • Funds from investment projects are guaranteed not to be seized, except if required for the public good, and not without full compensation preceding the actual date of expropriation;
  • Investors have the full right to “create, manage, and expand,” their project whilst abroad, and with foreign currency[6]. In managing their project from abroad, the right is further guaranteed to transfer and liquidate project profits without restriction;
  • All cash transfers related to foreign investment are guaranteed the right to free movement and full conversion to a recognized currency, without any delay;
  • Foreign investors have the ability to import and export any and all raw materials, products, production requirements, machinery, transportation means, and other essentials related to the project without having to register for a license from either the Register of Imports/Exports;
  • Foreign Investment projects are allowed to employ up to 20% of the workforce from abroad – a statistic that was increased from the previous 10%;
  • Foreign workers employed to a FDI project are also guaranteed the right to transfer their “financial entitlements” freely abroad.

Adams & Adams welcomes the legal reform and have confidence that it may have a positive effect on the economic climate in Egypt. A previous post on the Adams & Adams website referred to the new laws governing export in Egypt;

“The decree (Decree No. 43 of 2016) provides that a record shall be created at the General Organisation for Export and Import Control (“GOEIC”) for factories and companies eligible to export their products into Egypt. This amends Decree 992 of 2015 and all previous contradicting legislation and changes the position for exporters of products into Egypt substantially. The purpose of the legislation is to act as a safeguard against counterfeit products entering the Egyptian market with a view of protecting the interests of both consumers and trade mark owners.

Certain formalities are prescribed by the decree and we recommend engaging with us as to whether it is necessary for your products to be registered with the GOEIC in Egypt, if you intend trading in that jurisdiction.”

Allied to GOEIC approval, there is, naturally, a pressing need to secure trade mark registrations in this African economic powerhouse as soon as possible. In this regard, we are currently offering significantly discounted rates for obtaining trade mark protection in Egypt. Despite the very recent increase in the gazetted official fees, we can file an application for under $600.

For further information and queries on any intellectual property matters in Egypt and across Africa, please contact africaip@adamsadams.com.

SIMON BROWN

Partner
Trade Mark Attorney

View Profile

DARREN OLIVIER

Partner
Trade Mark Attorney

View Profile

NICHOLAS ROSSLEE

Associate
Trade Mark Attorney

Send Email

TRADEMARKS 2018 | GETTING THE DEAL THROUGH

Getting the Deal Through has published the fourteenth edition of Trademarks, which is available in print, as an e-book and online here. Getting the Deal Through provides international expert analysis in key areas of law, practice and regulations for corporate counsel, cross-border legal practitioners, and company directors and officers.

This volume covers expert local insight into the major trademark law issues across multiple jurisdictions, covering: ownership and scope of trademarks, application for registration, appeal of failed applications, third-party opposition to registration, duration and maintenance of marks, assignment, markings, types of trademark enforcement proceedings, procedural format and timing, discovery, litigation costs, defences and remedies and appeals.. Debbie Marriott and Eugene Honey, both Partners; and Reinhardt Biermann, an Associate at Adams & Adams, provided content for the South Africa Chapter.

To purchase the full publication CLICK HERE.

To read the South African Chapter CLICK HERE

Trademarks-3D-Block-1

Reproduced with permission from Law Business Research Ltd. Getting the Deal Through: Trademarks 2018, (published in September 2017; contributing editors: Claus Eckhartt and Christine Fluhme, Bardehle Paganberg Partnership) 

DEBBIE MARRIOTT

Partner
Trade Mark Attorney

View Profile

GTDT_Accreditation_Dark

EUGENE HONEY

Partner
Trade Mark Attorney

View Profile

GTDT_Accreditation_Dark

REINHARDT BIERMANN

Associate
Attorney

E-Mail Reinhardt

GTDT_Accreditation_Dark

DATA PROTECTION & PRIVACY | GETTING THE DEAL THROUGH

Getting the Deal Through has published the sixth edition of Data Protection & Privacy, which is available in print, as an e-book and online here. Getting the Deal Through provides international expert analysis in key areas of law, practice and regulations for corporate counsel, cross-border legal practitioners, and company directors and officers.

This volume covers many of the most important data protection and data privacy laws in force or in preparation throughout the globe. The laws governing data protection are becoming ever more significant as information becomes indispensable to commercial and public life. Topics covered include: breaches of data protection, exemptions, other affecting laws, PII formats, legitimate processing, notifications, accuracy, security obligations and breaches, registration formalities, penalties, transfers and internet use and electronic communications marketing. Danie Strachan and André Visser, both Partners at Adams & Adams, provided content for the South Africa Chapter.

To purchase the full publication CLICK HERE.

To read the South African Chapter CLICK HERE

Data-Privacy-3D-Block-1

Reproduced with permission from Law Business Research Ltd. Getting the Deal Through: Data Protection & Privacy 2018, (published in August 2017; contributing editors: Hunton & Williams) 

DANIE STRACHAN

Partner
Commercial Attorney

View Profile

GTDT_Accreditation_Dark

ANDRE VISSER

Partner
Commercial Attorney

View Profile

GTDT_Accreditation_Dark

SANDTON & CAPE TOWN LAW SEMINAR SERIES HIGHLIGHTS LATEST INTELLECTUAL PROPERTY AND COMMERCIAL LAW DEVELOPMENTS

The annual legal Crammer events presented by leading intellectual property and commercial law firm, Adams & Adams, took place recently in Johannesburg and Cape Town, respectively – bringing together in-house legal representatives, entrepreneurs and executive decision-makers for a morning of intensive panel discussions and presentations. In focusing on trade mark, copyright, patent, commercial and property law developments, legal professionals and industry guest speakers reviewed interesting updates and legislative developments on subjects ranging from innovation funding, copyright and brand development, to data protection and a number of significant IP and commercial case law studies.

In various discussions – mainly centred on trade marks, patents and commercial law – speakers brought attention to topical matters affecting organisations in a South African context. An enthralling keynote address was delivered by historian and storyteller, Michael Charton, who, in the spirit of the event, was able to cram hundreds of years of South African history into a thought-provoking and insightful story presentation, “My Father’s Coat.”

The firm’s biggest and boldest Crammer® event to date, subjects ranging from tech innovation funding; to due diligence in IP; data protection and policy in light of happenings such as the “GuptaLeaks”; rules around community schemes; trade mark judgments by the SCA; and a number of significant IP cases drew a great deal of interest. There was even time to squeeze in a fascinating chat about the now-infamous ‘monkey selfie’ by Cape Town Partners, Charné Le Roux and Phil Pla.

“These kinds of innovative events and seminars are an important part of our firm’s efforts in actively engaging with both clients and lawmakers so that we are able to pro-actively promote our customers’ interests,” commented firm Chairman, Gérard du Plessis. “In another innovative move, and as part of our annual Africa IP Network Week in September, Adams & Adams co-hosted the inaugural Africa Patent Examination Summit with the European Patent Office (EPO), where registrars, officials and examiners from twenty African jurisdictions, as well as regional bodies such as WIPO, ARIPO and OAPI met to discuss the various approaches to patent examination available and to gain insights into developments in this regard around the world.”

Adams _ Adams_Crammer_The Panel_ 172
Adams _ Adams_Crammer_Guest Speaker_Michael Charton_049
Adams _ Adams_Crammer_Breakout Sessions_097
Adams _ Adams_Crammer_Breakout Sessions_052
Adams _ Adams_Crammer_Arrival036
Adams _ Adams_Crammer_Arrival013
Adams _ Adams_Crammer_Arrival_063
Adams _ Adams_Crammer_Arrival016
Adams _ Adams_Crammer_Breakout Sessions_015

GERARD DU PLESSIS

Partner & Firm Chairman
Trade Mark Attorney

View Profile

DARREN OLIVIER

Partner & Crammer MC (Johannesburg)
Trade Mark Attorney

View Profile

PHILIP PLA

Partner & Crammer MC (Cape Town)
Patent Attorney

View Profile

KENYA | AMENDMENTS TO COPYRIGHT LAW

Kenya’s Copyright (Amendment) Bill of 2017 recently came before its National Assembly.  The Bill proposes various amendments to the Copyright Act, 2001 and, once enacted, will be known as the Copyright (Amendment) Act 2017.

The Bill proposes amendments to, inter alia, the definition of a copyright author, a copyright work, the functions of the Kenyan Copyright Board and the exclusive rights of a copyright owner. It also envisages changes to the defence of fair dealing, particularly in relation to computer programs.

But perhaps the most newsworthy amendments are those relating to collecting societies as they are known under the current Act. Once the Bill is enacted, Collecting Societies will officially be known as Collective Management Organisations. The role of these organisations will include the collection and distribution of royalties. The Bill also envisages stricter control being exercised in relation to the collection and management of royalties.

For further information and queries on any intellectual property matters in Kenya and across Africa, please contact africaip@adamsadams.com

KIM RAMPERSADH

Senior Associate
Trade Mark Attorney

View Profile

RECORDAL OF INTELLECTUAL PROPERTY RIGHTS IN KENYA

The principal legislation governing counterfeit goods in Kenya is the Anti-Counterfeit Act of 2008. Kenya is one of the few jurisdictions in Africa to have legislation dedicated to anti-counterfeiting.

Section 34 of the Act read with the Regulations of 2010 provide that a trade mark proprietor may apply to the Commissioner of the Kenya Revenue Authority (KRA) for a recordal of its intellectual property rights.

The effect of an approved application with KRA is that it empowers the Commissioner to detain suspected counterfeit goods imported into Kenya. Detection of counterfeit goods at the point of entry is beneficial before it is disseminated into different parts of the country where it may be more challenging to track.

The application for recordal is accompanied by:

  • a power of attorney;
  • an indemnity in favour of KRA;
  • proof of the applicant’s intellectual property right;
  • an affidavit sworn to by an authorised representative of the applicant;
  • a specimen of the genuine goods which are sought to be protected; and
  • payment of an official fee.

Once the application has been submitted, the Commissioner shall consider and deal with the application within three working days.

It must be satisfied that there is a prima facie case that:

  1. the goods claimed to be protected are, in fact, protected;
  2. the IP right(s) on which the application is based subsists; and
  3. the applicant is the owner of the IP right.

The Commissioner shall, in writing, inform the applicant whether the application has been granted and, if so, stipulate the duration thereof. The duration may not extend beyond the last day of the period for which the intellectual property right subsists. Conversely, if the application has been rejected, written reasons must be provided by the Commissioner.

In view of the simplified processes set out above, it is recommended that brand holders consider recording their intellectual property rights with KRA.

It is recommended that, complementary to this, members of KRA be provided with training on the protected goods.

TAYYIBA NALLA

Senior Associate
Trade Mark Litigation Attorney

View Profile

AN SA TWIST IN THE ‘COLA WARS’ | COURT RULING

The Supreme Court of Appeal handed down a landmark decision on Friday involving a trade mark dispute between two of the world’s largest beverage manufacturers, PepsiCo Inc (Pepsi) and Atlantic Industries (Atlantic), a wholly-owned subsidiary of The Coca-Cola Company.

This case was not your typical “cola war”, but rather involved TWIST, the well-known carbonated beverage brand which has been available in South Africa since the 1970s (originally as LEMON TWIST). Atlantic is the proprietor in South Africa of the TWIST, LEMON TWIST and DIET TWIST trade marks in relation to non-alcoholic drinks falling in class 32.

In 2006, PepsiCo applied to register the trade marks PEPSI TWIST and a PEPSI TWIST label, also in relation to non-alcoholic beverages in class 32.

Atlantic opposed the registration of PepsiCo’s PEPSI TWIST trade mark applications on the basis, firstly, that they were confusingly similar to Atlantic’s prior, registered trade marks and, secondly, that Pepsico could not claim to be the bona fide proprietor of the PEPSI TWIST trade marks, given that they wholly incorporated Atlantic’s TWIST mark.

PepsiCo countered by seeking the removal of Atlantic’s registered trade marks from the Trade Marks Register, alleging that they were descriptive of the goods to which Atlantic’s marks relate and not inherently capable of distinguishing its beverages from those of other proprietors.  It is trite that words which exclusively describe the goods to which they are applied cannot be registered as trade marks.

In support of its contentions, PepsiCo relied heavily on two dictionary definitions of the word “twist”, being “a curled piece of lemon etc. peel used to flavour a drink” and “a drink consisting of a mixture of two different spirits or other ingredients, such as gin and brandy etc.

The matters were initially referred by the Registrar of Trade Marks to the North Gauteng High Court which dismissed both Atlantic’s opposition and PepsiCo’s counter-application, leading to the parties appealing to the Full Bench of the North Gauteng High Court.  The Full Bench upheld the appeal by Atlantic and dismissed the cross-appeal by PepsiCo, with costs.

PepsiCo petitioned the Supreme Court of Appeal for leave to appeal the decision of the Full Bench, which it was granted. The matter was heard before Judges Lewis, Cachalia, Petse, Lamont and Rogers on 28 August 2017.

Decisions from the SCA in recent years regarding confusing similarity between trade marks, including those involving the trade marks YUPPIE CHEF vs YUPPIE GADGETS, KNIGHTS vs BLACK KNIGHT and LUCKY STAR vs LUCKY FISH, although all decided on their particular facts, had overwhelmingly found against there being any likelihood of confusion, leaving trade mark attorneys and trade mark owners alike concerned that perhaps the SCA was leaning away from enforcing registered trade mark rights in South Africa.

However, the SCA returned to basic trade mark principles in the Pepsico/Atlantic case and ruled in favour of Atlantic, dismissing PepsiCo’s appeal with costs.

The Supreme Court of Appeal rejected PepsiCo’s contention that “twist” meant a beverage of mixed ingredients and commented that this definition was “obsolete English slang, known by very few, if any, South African consumers, even those whose first language was English”.  The Court also went on to state that, to most South African consumers, the mark TWIST as applied to Atlantic’s beverages is an arbitrary brand name without meaning and, when it is applied to a particular product, it is the “exemplar of a mark inherently capable of distinguishing”.

The Court also commented that this case was distinguishable from Pepkor Retail v Truworths Ltd [2016] ZASCA146, in that the trade mark THE LOOK which was the subject of that decision was, in the fashion retail industry, an expression which carried “the universal ordinary meaning of fashionable or trendy clothing or outfits”, rather than being a “covert or skilful allusion to such goods”.

In finding in favour of Atlantic in the opposition, the Court felt it necessary to only rule on the issue of confusing similarity, ie. whether the proposed PEPSI TWIST trade marks were sufficiently similar to Atlantic’s trade marks to create a likelihood of deception or confusion.

The Court found that if a side by side comparison of the marks in the market place is made, the TWIST trade mark, which is the whole of the Atlantic’s TWIST trade mark and the dominant and distinctive feature in its LEMON TWIST and DIET TWIST trade marks, when incorporated within the PEPSI TWIST trade mark, has equal prominence and essentially retains its distinctive features, which will create a likelihood of deception or confusion.

Interestingly, one of the factors which the Court took into account in finding that there would be a likelihood of deception or confusion is the worldwide trend of companies using primary and sub-brands, eg. Pepsi-Cola and Pepsi Wild Cherry. The Court held that, in these instances, the emphasis will fall on the sub-brand or consumers will refer to the sub-brand when identifying the product. As such, consumers wanting a Pepsi Twist may drop the “Pepsi” and simply order a “Twist”, as consumers are likely to equate Pepsi with the well-known Pepsi-Cola beverage.

The Court also referred to with approval the European Court of Justice judgement in Medion v Thomson Multimedia Sales Germany & Australia GmbH [2005] EUECJ C-120/04, which concerned the infringement of the LIFE trade mark by Thomson through use of its THOMSON LIFE trade mark and found that the principles laid down in that case were consistent with the principles of our law.

It would be fair to say that the lines have now been drawn and that one cannot simply add one’s house brand to a competitor’s trade mark and argue that they are different as consequence. The judgement is a victory not just for Atlantic but for the enforcement of trade mark rights in general in South Africa.

Dineo Modibedi | Associate

Kelly Thompson | Partner

 

 

*Adams & Adams represented Atlantic in the case

KELLY THOMPSON

Partner
Trade Mark Attorney

View Profile

DINEO MODIBEDI

Associate
Trade Mark Attorney

Send Email

SOCIAL MEDIA INFLUENCER RELATIONSHIPS COME UNDER FURTHER SCRUTINY

In April this year, we wrote about the phenomenon of the social media influencer – usually a celebrity or person with a large social media following who is paid to mention certain products and services, either in money or in kind. We postulated the legal ramifications of this modern form of advertising for brand owners, both internationally and in South Africa.

The obligations on influencers and marketers, in the USA at least, are contained in the USA’s Federal Trade Commission (FTC)’s very specific guidelines which state that any material connection between an advertiser and endorser must be disclosed in a clear and conspicuous manner.

The issue is one which remains in the spotlight and the FTC has since reported having addressed head-on certain non-compliant social media posts, as well as posts where the FTC was unsure as to whether any relationship existed and ought to have been disclosed.

In a press release earlier this year, the FTC stated that “After reviewing numerous Instagram posts by celebrities, athletes, and other influencers, Federal Trade Commission staff recently sent out more than 90 letters reminding influencers and marketers that influencers should clearly and conspicuously disclose their relationships to brands when promoting or endorsing products through social media.”

The FTC’s letters reminded influencers and marketers that a “material connection” between an endorser and an advertiser is a connection that might affect the weight or credibility that consumers give the endorsement and that this could include a relationship, sponsorship, payment or provision of free products.

The FTC has also seemingly become more specific with what is required to comply with the guidelines: “In addition to providing background information on when and how marketers and influencers should disclose a material connection in an advertisement, the letters each addressed one point specific to Instagram posts — consumers viewing Instagram posts on mobile devices typically see only the first three lines of a longer post unless they click “more,” which many may not do. The staff’s letters informed recipients that when making endorsements on Instagram, they should disclose any material connection above the “more” button.

The letters also noted that when multiple tags, hashtags, or links are used, readers may just skip over them, especially when they appear at the end of a long post – meaning that a disclosure placed in such a string is not likely to be conspicuous. Some of the letters addressed particular disclosures that are not sufficiently clear, pointing out that many consumers will not understand a disclosure like “#sp,” “Thanks [Brand],” or “#partner” in an Instagram post to mean that the post is sponsored.”In our April article, we had expressed doubt that Kim Kardashian’s use of “Thank you @jetluxlife!!!” in an Instagram post would comply with the guidelines and it appears that the FTC agrees. The FTC has declined to publish the names of the persons who received its letters so we will never know whether Ms Kardashian received her proverbial rap over the knuckles. Her more recent Instagram posts appear to comply with FTC guidelines which seems to indicate that she did:

KimKInstagram

The FTC has apparently sent follow-up letters to 21 of the original 90 contacted and, earlier this month, it reported that it had settled its first-ever formal complaint against two social media influencers Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell who are widely followed in the online gaming community and who were charged with deceptively endorsing the online gambling service CSGO Lotto, while failing to disclose that they jointly owned the company. They also allegedly paid other well-known influencers thousands of dollars to promote the site on YouTube, Twitch, Twitter, and Facebook, without requiring them to disclose the payments in their social media posts.

The FTC has also updated its guidelines and has become even more specific in its advice to brands and influencers. For example, it advises that tagging a brand in an Instagram picture is an endorsement of the brand and requires an appropriate disclosure. The new information covers a range of topics, including Instagram and Snapchat disclosures, obligations of foreign influencers, disclosure of free travel, whether a disclosure must be at the beginning of a post, and the adequacy of various disclosures like “#ambassador.”

So what does this mean for South African marketers and social media influencers? Not much as it remains the case that our Advertising Standards Authority has not turned its specific attention to this issue. If you have been following the latest developments, it is understandable that the ASA has had other, more pressing issues to deal with. However, as mentioned in our April article, failing to disclose that a social media post is, in fact, sponsored in some way, would likely fall foul of both the ASA Code and Consumer Protection Act.

The bottom line remains that a social media post should not mislead a consumer to think that a celebrity or influencer is giving an unbiased testimonial when, in fact, they have an interest in supporting a brand – and that requires a clear disclosure of the relationship.

Kelly Thompson | Partner

KELLY THOMPSON

Partner
Trade Mark Attorney

View Profile

GETTING THE DEAL THROUGH | FRANCHISE 2018

Getting the Deal Through has published the fourth edition of Franchise, which is available in print, as an e-book and online here. The South Africa Chapter of Getting the Deal Through, Franchise pis authored by Adams & Adams Partner, Eugene Honey.

The latest edition provides international analysis for corporate counsel and cross-border legal practitioners in such key areas of franchise as: governing bodies, laws and agencies, exemptions and exclusions from franchise laws, ground rules for franchise termination, restrictions on foreign entities and investments, confidentiality covenants in agreements, restrictions on franchise agreements and good faith obligations and franchise relationships.

To read the full publication submission, CLICK HERE.

Franchise-GTDT

Reproduced with permission from Law Business Research Ltd. Getting the Deal Through: Franchise 2018, (published in Sept 2018; contributing editor: Philip Zeidman, DLA Piper LLP) 

EUGENE HONEY

Partner
Attorney

View Profile

GTDT_Accreditation_Dark

THE DRAFT IP POLICY 2017 | SECOND TIME LUCKY FOR THE DTI?

The much anticipated draft IP Policy for South Africa has finally been published by the Department of Trade and Industry (DTI) and is now open for comment by the public. By way of background, South Africa’s first draft IP Policy was published by the DTI in September 2013, with a fairly short 30-day submission period. The stated aim of the draft IP Policy was to remedy perceived uncertainty involving IP matters, brought on by a lack of general IP policy in the country.

The original draft policy met with strong criticism and dissent in submissions and comment from stakeholders, including academic institutions, non-profit groups and law firms. Some of the more controversial criticism of 2013 draft came from organisations such as the Treatment Action Campaign (TAC), Section 27 and Médecins Sans Frontières (MSF), who all called for a change in laws relating to pharmaceutical patents and HIV/AIDS treatment. However, the biggest gripe among submission arguments was the fact that IP stakeholders had not been consulted in regard to the draft process and, as such, there was a glaring lack of public input. The policy was also widely considered to have been poorly drafted and contained blatantly incorrect statements regarding the law.

Following the criticism levelled against the draft IP Policy, the DTI agreed that the process needed to be revaluated and, in July 2016, the IP Consultative Framework replaced the 2013 draft IP Policy. In addition, an inter-ministerial committee on IP (IMCIP) was created to assist with the process and ensure that relevant stakeholders were appropriately consulted.

Adams & Adams, as Africa’s largest IP law firm, was one of a number of legal stakeholders that had expressed concerns; so when the window for public submissions was again opened for the IP Consultative Framework in the third quarter of 2016, the firm engaged heavily with the DTI and provided detailed commentary. Read the Adams & Adams comments on the draft IP Policy here.

Following the 2016 submissions and other IMCIP processes, the new draft IP Policy was reviewed by Cabinet in March and the draft IP Policy 2017 Phase 1 was approved. You can view the draft IP Policy document here. The Department of Trade and Industry has now called on all interested parties to make their submissions within 60 days, with the closing date for submissions being 23 October 2017.

Hopefully, the next phase of the process will be a smooth one.

by Dineo Modibedi | Associate

JANICE GALVAD

Partner
Patent Attorney

View Profile

ESME DU PLESSIS

Specialist Consultant
Patent Attorney

View Profile

DINEO MODIBEDI

Associate
Attorney

Send Email

HISTORICAL DEBT FOR MUNICIPAL SERVICES | CONCOURT RULES THAT NEW OWNERS ARE NOT LIABLE

On Thursday, 29 August, the Constitutional Court of South Africa handed down judgment in an application for confirmation of an order by the High Court of South Africa, Gauteng Division: Pretoria (High Court) that declared section 118(3) of the Local Government: Municipal Systems Act, 2000 constitutionally invalid. This section provides that an amount due for municipal services rendered on any property is a charge upon that property and enjoys preference over any mortgage bond registered against the property.

This judgement is important as it confirms that section 118(3) of the Local Government: Municipal Systems Act should not be interpreted that historical debt for municipal services survives transfer of a property to a new owner.

Click here for the MEDIA SUMMARY

Click here for a copy of the JUDGMENT

 

ROELOF GROVE

Partner
Property Attorney

View Profile

BACK TO THE DRAWING BOARD FOR COPYRIGHT BILL | COMMENTARY

Following some 70-plus sets of submissions and a lot of heated debate in Parliament, the decision has apparently been taken to send the Copyright Amendment Bill back to the drawing board, again.

Whilst looking better than its predecessor that made its debut in 2015, the 2017 Bill unfortunately also failed to pass muster with words such as ill-considered, nonsensical and ridiculous used to describe its provisions and practical implications.

There were glimmers of hope with the recognition of streaming as a form of infringement and the fixation of the split of needle-time royalties between the record companies and the performers, but those small victories were not near enough to save a Bill that turned out otherwise to be fraught with difficulties and legal uncertainties.

Many, many hours have been spent by members and representatives of various stakeholders ranging from the musicians, lyricists and artists to the legal fraternity, collecting societies, academics, auctioneers and galleries in making submissions and delivering comment to counter-act the potential far-reaching and negative impact of some of the proposed amendments.  The good news is that the outcries do not appear to have fallen on deaf ears and reports indicate that a special task team will be constituted to undertake a substantial redrafting of the Amendment Bill.  Cue the sighs of relief.

There are indeed many voices to be heard and many considerations of which to take account.  It is hoped that legal certainty will be the guiding principle throughout the difficult task of balancing the rights and interests of those that stand to be affected by the proposed amendments and that any workable draft that may come thereof will be such that the move to modernise our Copyright Act will be in a forward direction.

PREVIOUS COMMENTARY BY ADAMS & ADAMS ON THE AMENDMENT BILL

SUBMISSIONS BY ESME DU PLESSIS AND STEPHEN HOLLIS TO THE COMMITTEE

WERINA GRIFFITHS

Partner
Trade Mark Attorney

View Profile

WHERE IDEAS MAKE IT | SA INNOVATION SUMMIT

South Africa’s leading Intellectual Property Law Firm, Adams & Adams, has announced that it has joined as a legal and IP partner of the upcoming SA Innovation Summit in Cape Town, held from 6 to 8 September. The SA Innovation Summit as an annual flagship event on the South African Innovation Calendar, is a platform for nurturing, developing and showcasing African innovation, as well as facilitating innovation thought-leadership. Created to support and promote innovation and facilitate collaboration within its own eco-system, the initiative brings together corporates, thought leaders, inventors, entrepreneurs, academia, and policy makers to amplify South Africa’s renowned competitive edge and to inspire sustained economic growth across the continent of Africa.

In confirming the firm’s participation, Patent Attorney and Partner at Adams & Adams, Philip Pla, said, “South Africa’s rich heritage of solving problems and creating solutions is celebrated at the Innovation Summit, and as a leading IP firm with interests in the protection and commercialisation our country’s entrepreneurial genius, Adams & Adams is proud to be part of this discovery and celebration of invention and ideas.”

The aim of the summit this year is to:

  • Provide a platform where Tech Entrepreneurs and innovators can participate, grow their know-how and connections, and make their ideas come to life. With the rapid advent of the Industrial 4.0 Tech Revolution, the flexibility to integrate, and the speed to market will be absolutely critical.
  • Provide a platform where Tech Entrepreneurs and innovators can participate, grow their know-how and connections, and make their ideas come to life. With the rapid advent of the Industrial 4.0 Tech Revolution, the flexibility to integrate, and the speed to market will be absolutely critical.
  • Collaborate with government, academia and industry to build an African system for innovation on a practical level.
  • Provide curated networking with technology leaders and founders, trend specialists, policy makers and forward thinkers.
  • Bring together innovation leaders from different countries, backgrounds, disciplines and world-views, to create an innovative economic environment that will prosper the South African economy and have a positive effect on our clients’ competitive edge.• Encourage mutually beneficial deal-making between entrepreneurs and investors.
  • Grow and accelerate organisational innovation culture.
  • Facilitate the establishing of industry-leaders by presenting new market opportunities.

Pla adds that “Our interest is in helping Tech Entrepreneurs and innovators understand that apart from the working capital and fixed assets in their new ventures, their intellectual capital – their intellectual property – is a vital ingredient in the combination of assets used by successful companies for expanding their participation in industry and for maximising their profits.”

The intellectual capital of a business constitutes a significant component of its total asset base; the value of the intellectual capital could exceed the value of the fixed assets of the business or its working capital. It has been recognised that the intellectual capital of a business provides the most potent – and most effective – impetus to its earning power.

Adams & Adams, South Africa’s largest Intellectual Property law firm, as a partner of the SA Innovation Summit, will be on hand to provide advice and assistance with regard to patents, trade marks, designs, copyright and trade secrets, non-disclosure documents (NDAs), Licensing and IP commercialisation.

Visit the SA Innovation Website for more details.

PHILIP PLA

Partner
Patent Attorney

View Profile

CHARNE LE ROUX

Partner
Trade Mark Attorney

View Profile

STEVEN YEATES

Partner
Trade Mark Attorney

View Profile

RETOUCHED FASHION PHOTOS | WHAT ARE THE RULES?

The Global Advertising Lawyers Alliance (GALA) reported recently that France has enacted new legislation requiring that all altered or retouched commercial photographs of models, whose body appearance has been refined or thickened, be labelled as a retouched photograph.  The legislation comes into effect on 1 October 2017, requiring the labels ‘photographie retouchée’ or ‘photo retouchée’. This follows French legislation that requires that all models provide a medical certificate confirming their general physical well-being and the fact they are not excessively underweight.

The legislation, which applies to photographs used in France for commercial purposes, carries fines of up to €37,500 per violation for offending advertisers, and is similar to a 2012 law in Israel that governs the use of models in the advertising industry. Titled, “Weight Limitation in the Modelling Industry Act – 2012,” the law is also colloquially referred to as the “Model Act” or the “Photoshop™ Act.”

According to the Israeli version, if an advertiser (television, print or electronic) alters the appearance of the model by digital means, the advertisement must contain a notice which clarifies that the model’s body features were graphically altered. The law also prohibits advertisements which display models (both male and female) who are underweight in accordance to measuring formulas prescribed in the law (namely, the Body Mass Index (BMI).

Of the French legislation, Michel Bejot, a Partner at Bernard-Hertz-Bejot said, “The legislation, which was passed to help fight eating disorders, will have significant impact on fashion, cosmetics, and other advertisers who retouch photographs.” The new legislation does not apply to images used for editorial purposes.

The ‘retouched photograph’ disclosure must be presented in an accessible and visible way and must be clearly distinguished from the other parts of the advertising.

Insofar as South Africa is concerned, no such law yet exists, but Kelly Thompson, a partner at Adams & Adams, the South African member of GALA, says that the Advertising Standards Authority (as well as legislation such as the Consumer Protection Act) specifically prohibits false and misleading advertisements. “The question will be what can be considered false and misleading. The ASA Code says that advertisements should not contain any statement or visual presentation which directly or by implication, omission, ambiguity, inaccuracy, exaggerated claim or otherwise, is likely to mislead the consumer. While some degree of digital enhancement for advertising purposes must surely be allowed, if the image appearing in the advertisement actually misleads the consumer, that may create difficulties”, says Thompson. Of course, the French and Israeli laws deal with the wider social issues of eating disorders and model welfare, and are not limited to misleading imagery only.

As a matter of interest, the ASA previously held that an advertisement for a yoghurt product showing a model choosing a fat free product upon seeing a thinner model choosing the product, was contrary to the ASA Code in that it reinforced the artificial desire for women to want to look like the second, skinnier model. The ASA found the advertisement to be irresponsible and ordered that it be withdrawn. Interestingly, the advertisement had been presented in several countries around the world, without complaint, whereas eight complaints were received here.

In responding to news of the French legislation, Jeffrey A. Greenbaum, GALA’s Chairman and Managing Partner of Frankfurt Kurnit Klein & Selz in New York said, “Advertisers should start making plans now to include appropriate disclosures, as needed. Advertisers should also consider whether this will have an impact on a model’s willingness to participate in a campaign where retouching is planned.”

KELLY THOMPSON

Partner
Trade Mark Attorney

View Profile

THE GOVERNMENT PROCUREMENT REVIEW | SOUTH AFRICA CHAPTER

The Law Reviews has recently introduced the fifth edition of The Government Procurement Review, which incorporates contributions from six continents and 23 countries (excluding the EU chapter).

Leading thinkers at the world’s top law firms provide analysis of global legal issues and their commercial implications. The Law Reviews acts as an essential information tool for practitioners, in-house counsel, governments and corporate officers. Editors are internationally-renowned industry experts in key practice areas with a network of experts that includes more than 1,200 law firms covering 57 areas of law, creating a global road map to help our readers navigate the increasingly complex legal terrain.

The South Africa Chapter on Government Procurement has been authored by Partner, Andrew Molver, and Specialist Consultant, Gavin Noeth.

Read the South Africa Chapter by CLICKING HERE

An electronic version of the full publication can be ACCESSED HERE

Procurement-3D

Reproduced with permission from The Law Reviews. The Government Procurement Review (published in August 2017; contributing editors: Jonathan Davey, Amy Gatenby, Addleshaw Goddard LLP)

ANDREW MOLVER

Partner
Litigation Attorney

View Profile

TLR-Accred-blue-2017mini

GAVIN NOETH

Specialist Consultant
Commercial Attorney

View Profile

TLR-Accred-blue-2017mini

AS LUCK WOULD HAVE IT | TRADE MARK LITIGATION CASE STUDY

Case Study: Lucky Star Limited v Lucky Brands and 16 others. This appeal concerns the sale and marketing of fish. In the case of the appellant, Lucky Star (Ltd), this is in the form of canned fish sold under the registered trade mark LUCKY STAR. In the case of the respondents, this is in the form of cooked fish and chips sold from several restaurants operated in Cape Town, under the trade marks LUCKY FISH, LUCKY FISH AND CHIPS and LUCKY FISH & CHIPS.

Relying upon the provisions of S 34(1)(a)(b) and (c) of the Trade Marks Act no. 194 of 1993 (hereinafter referred to as “the Act”), the appellant unsuccessfully brought an application before the Western Cape Division of the High Court, Cape Town. An interdict, together with ancillary relief, was sought against the respondents’ restraining them from infringing the LUCKY STAR trade mark. The appellant also sought relief in terms of S 11(2)(b)(i) and (iii) and 11(2)(c)(i) of the Companies Act 71 of 2008 (the Companies Act) declaring that the company name of the first respondent, Lucky Brands (Pty) Ltd, was confusingly similar to the appellant’s registered trade marks, LUCKY STAR and OCEANA BRANDS and company names, Lucky Star Ltd and Lucky Star Foods. An order was accordingly sought directing the first respondent to change its name and trading name. Similar relief was also sought on the same grounds against various other respondents’.

In deciding the matter, the SCA considered S 34 (i.e. S 34(1)(a), 34(1)(b) and 34(1)(c)) of the Act. For the purposes of s 34(1)(a) the Court indicated that the appellant had to establish (i) its trade mark registrations; (ii) unauthorised use in the course of trade by the respondents’ of an identical mark or a mark so nearly resembling its registered trade mark as to be likely to deceive or cause confusion; and (iii) in relation to the goods in respect of which the mark is registered.

The appellant’s contention was that the respondents’ made use of a mark so nearly resembling its trade mark as to be likely to cause confusion.

In considering trade mark infringement, the Court reiterated that what is required is an objective comparison between the appellant’s LUCKY STAR trade mark registrations and the respondents’ actual use. The Court indicated that the enquiry is confined to the marks themselves and no regard should be given to any other features of the get-up or the indication of origin of the goods as actually marketed by the appellant and the respondents’. The Court indicated that what is required is a comparison of the appellant’s registered trade mark LUCKY STAR with the trade mark of the respondents’, LUCKY FISH or LUCKY FISH & CHIPS.

While extraneous matter should not be taken into account when comparing marks, the Court indicated that the comparison of the marks should not take place in isolation. Regard must be given to the inter-relationship between the similarities of marks and the similarities of goods and services as registered for the appellant including notional use.

When comparing the two marks, the Court indicated that the common element in the marks is the word LUCKY, which is of minor significance when the marks are looked at as a whole. The Court went on to say that the word FISH as opposed to the word STAR is distinctive and cannot be ignored. The Court further indicated that when the marks are compared side by side, and the main or dominant features of the marks are considered, namely the words STAR and FISH, there is no likelihood of deception or confusion.

The Court also disagreed with the appellant’s argument that the distinctiveness of the word FISH is diminished because it is used in the context of the sale of fish. The Court indicated that it has considerable difficulty in imagining that the notional purchaser of the respondents’ fish and chips, would focus attention only on the word “Lucky” as the words “Star” and “Fish” are at least equally significant as the word “Lucky”. The overall impression which is created is that the marks do not resemble each other closely and the average customer would not be confused or deceived into believing that the respondents’ restaurants bearing the LUCKY FISH mark is in any way associated with the appellant.

In concluding, the Court found that the appellant had not established that the marks resemble each other so closely that deception or confusion is likely to arise. Therefore, the appellant’s contentions based on S 34(1)(a) must therefore fail.

The Court further stated that as ‘the two marks are sufficiently dissimilar to each other’ that ‘no amount of similarity between the respective goods or services of the parties will suffice to bring about an infringement’, it follows that the claim based on S 34(1)(b) must also fail.

In assessing dilution (i.e. S 34(1)(c) ), the Court found that the word similar in this section must not be given too wide or extensive an interpretation. The Court goes on to say that the appropriate meaning to be given to the word was ‘having a marked resemblance or likeness, which the Court held was not satisfied in this case’. Because of the distinct lack of similarity between the registered trade mark of the appellant and the respondents’, the issue of whether the goods and/or services of  the respondents’ are, or will be the same as, or similar to those proposed by the appellant, does not have to be considered.

Lastly on the issue of the relief sought in terms of the Companies Act, the Court found that on the reasons mentioned above, there was no basis to conclude that any person would be led to believe that the other parties to the matter were associated with the appellant.

Thus, this is an important decision to note as the matter turned on a comparison of the marks alone and did not turn on a comparison of the goods and/or services.

UDI PILLAY

Senior Associate
Trade Mark Attorney

View Profile

ROCK ON! HAND GESTURES AS TRADE MARKS

Hand gestures are a part of everyday life of a large number of cultures and civilizations. People use them to indicate approval, disapproval, pleasure or displeasure with something or someone. It is a shorthand method of communicating.

Is a hand gesture a trade mark, or can it even be registered as a trade mark? The co-lead singer of the band KISS, Gene Simmons, seemed to think so. He recently applied to the United States Patent and Trademark Office to register the following hand gesture as a trade mark:

Simmons

This is a commonly known hand gesture, known as the “devil’s horns” in the rock scene.

Mr Simmons described the mark sought to be protected as “a hand gesture with the index and small fingers extended upwards and the thumb extended perpendicular“. It is important to appropriately describe a trade mark when applying to register it so that the Trade Marks Office, consumers and other businesses know with sufficient clarity what mark protection is sought for. The mark must be described with clarity and precision.

He applied to register the mark in class 41 for “entertainment, namely, live performances by a musical artist; personal appearances by a musical artist”. In the USA a trade mark application can be filed claiming either actual use thereof in trade to date, or an intention to use the mark. Mr Simmons claimed that the mark was first used by him or by a company related to him or one licensed by him, or by a predecessor in interest at least as early as 14 November 1974, and was first used in commerce at least as early as 14 November 1974. He provided a photograph of himself displaying the hand gesture as evidence of his use of the sign.

Recently, though, Forbes Magazine reported that “Simmons has apparently reconsidered whether he might have valid trademark rights to the hand gesture, as he expressly abandoned the application with the United States Patent and Trademark Office. It is also noted that his application drew a fair amount of criticism from fellow musicians and others who saw the application as a shameless overreach by Simmons. Simmons, one of the most successful musician-entrepreneurs in history, owns a stable of other trademark registrations through his Gene Simmons Company.” Nice try, God of Thunder!

What would the likely outcome have been had Mr Simmons applied to register the hand gesture in South Africa?

It is possible to register a range of different marks as trade marks in South Africa. The most common types of marks are names, slogans, logos and devices. There are, however, certain “esoteric” marks that can also be registered as trade marks. These are the so-called non-traditional trade marks (e.g. smells, sounds, etc.). The South African Trade Marks Act No. 194 of 1993 defines a mark as:

any sign capable of being represented graphically, including a device, name, signature, word, letter, numeral, shape, configuration, pattern, ornamentation, colour or container for goods or any combination of the aforementioned

The types of signs that can constitute as “marks” is widely defined. Provided that the sign is capable of graphic representation, it qualifies as a mark. Technically, it is possible to represent a hand gesture graphically. The devil is, however, in the detail. In order to ensure that the correct protection is obtained, it is extremely important that the sign be adequately represented and described on the application. It must be described clearly and precisely in the application (and in the Register) in order for consumers, the Trade Marks Office and other businesses to understand the ambit of the rights. The representation must be is clear, precise, self-contained, easily accessible, intelligible, durable and objective (the Sickmann criteria). It will require a description of the sign to be endorsed on the application similarly to what Mr Simmons has done.

Qualifying as a mark is but only the first step in the enquiry. The next step is that the mark must be a “trade mark”. A trade mark is defined as:

a mark used or proposed to be used by a person in relation to goods or services for the purpose of distinguishing the goods or services in relation to which the mark is used or proposed to be used from the same kind of goods or services connected in the course of trade with any other person

Although not often done in trade, hand gestures can technically be used, or be intended to be used, to designate the goods or services of a specific business. However, in order for it to be accepted for registration the hand gesture must also be:

capable of distinguishing the goods or services of a person in respect of which it is registered or proposed to be registered from the goods or services of another person”.

It can either be inherently so distinctive or have become distinctive by reason of prior use of the sign.

This is where gesture marks may run into difficulty. Technically, hand gestures are capable of having meaning and could distinguish the goods or services of one trader from those of another. However, inherently there is a problem with such marks. Hand gestures are not traditionally understood by consumers to be indicators of the origin of a business – even if they are novel. Businesses do not use hand gestures to identify their goods or services. A similar problem exists with shape marks. These marks are of very low inherent distinctiveness.

If a hand gesture is made by a representative of a company as part of an advertisement, consumers are highly unlikely to attach any significance to the gesture. Consumers simply do not consider hand gestures to be source identifiers. This is particularly so given the traditional use of hand gestures in South African society.

This does not, however, mean that it would be impossible for businesses to ever register hand gestures. It is possible to do so, but significant advertising and consumer education will need to take place before it can be done.

A novel hand gesture, used exclusively by a business for some time, can acquire distinctiveness, and be registrable as trade mark. Consumers will have to be educated of the value / significance of the hand gesture. It must become a symbol of the business. If the hand gesture is first registered as part of a composite device or logo, and the gesture is then later used by the business in trade, the hand gesture may acquire a sufficient level of distinctiveness and be registrable as a trade mark on its own.

An example of one such hand gesture in South Africa would that of the Mamelodi Sundowns soccer team:

Mamelodi-Sundowns-logo

The hand gesture is incorporated in their logo, though they have not registered it separately as a gesture mark.

The hand gesture has become so ingrained in their business that their fans have even started indicating their allegiance to the team by using the hand gesture. When one goes to a soccer match and a supporter uses this gesture, other soccer supporters will immediately know which team the person supports. The players of the Mamelodi Sundowns team even use the hand gesture.

The Orlando Pirates soccer team supporters use two crossed forearms held at head height.

These gestures have become distinctive of those two teams and should be considered sufficiently distinctive to be registrable as trade marks.

Although not a legitimate business, gang members often use hand signs to indicate affiliation to a particular gang.

Hand gestures, however, run the same risk as all other trade marks, namely dilution or genericide.  In an era of social media trends (COVFEFE!), the risk of a specific hand gesture quickly becoming common in the relevant industry, if not policed properly, is ever present.

The devil’s horns hand gesture is one such gesture that has been used through the ages by a wide variety of rock stars. It is a gesture synonymous with music of a certain genre. Fans of all rock stars use the symbol. It is not peculiar to one.

Heart_with_Hands_PNG_Clipart_Image

A similar problem now exists with the “hand heart” gesture used by many public figures.

The heart hand gesture is claimed to have been first used by Armin van Buuren, and to later also be used by various other famous musicians.

So too, the fate of the devil’s horns gesture. Even if Mr Simmons was the first to use the sign, as claimed by him, the sign is no longer indicative of him or of his business. Amd had Mr Simmons applied to register the hand gesture in South Africa, the application would in all likelihood be refused registration based on a lack of distinctiveness, or if it proceed to registration, be liable to cancellation.

The take home lesson for businesses is that hand gestures are novel types of symbols that they could adopt as part of their corporate identity. Admittedly, hand gestures are not equally suitable for all businesses, but they may carry significant commercial value for some. Our world is constantly evolving, why shouldn’t our marketing strategies also evolve?

It would be possible to register such signs as trade marks, but those gestures must not be common in the relevant trade and considerable consumer education will first need to take place. Once registered, businesses would then have to strictly police the unauthorized use of such hand gestures to avoid them becoming generic, and losing distinctiveness.

 

WENSEL BRITZ

Senior Associate
Trade Mark Attorney

View Profile

GETTING THE DEAL THROUGH | DOMAINS & DOMAIN NAMES

Getting the Deal Through has published the fourth edition of Domains & Domain Names, which is available in print, as an e-book and online here. Getting the Deal Through provides international expert analysis in key areas of law, practice and regulations for corporate counsel, cross-border legal practitioners, and company directors and officers.

Throughout the latest edition, the same key questions are answered by leading practitioners in each of the jurisdictions featured. Charné Le Roux, Partner at Adams & Adams, provided content for the South Africa Chapter. Coverage this year also includes new chapters on Argentina, Denmark, the Netherlands and Russia.

To read the full publication submission, CLICK HERE.

3dCoverDomains

Reproduced with permission from Law Business Research Ltd. Getting the Deal Through: Domains & Domain Names 2017, (published in June 2017; contributing editor: Flip Petillion, Crowell & Moring LLP) 

CHARNÉ LE ROUX

Partner
Trade Mark Attorney

View Profile

GTDT_Accreditation_Dark

A CRADLE FULL OF TRADE MARKS | NAMES AS MARKS

What’s in a name? A lot, apparently, as celebs abroad have realised the value, or potential value at this stage, of protecting the names of their offspring, as a brand.

This weekend, the names of Beyoncé and Jay Z’s twins were revealed – RUMI and SIR.  This bit of gossip is interesting to a jurist sitting behind her desk, because, apparently, applications have already been filed to register the dynamic duo’s names as trade marks in respect of an array of things in the US. Talk about forward thinking!

Sources have revealed (i.e. the registry in South Africa has been consulted) that no applications have recently been filed for RUMI and SIR in South Africa.  We are sure that South Africa is high up on the list of countries where the Carters will wish to protect the names of their tremendous tots and we expect instructions any day now (nudge, nudge, wink, wink).

Will the marks be accepted in South Africa? Our Trade Marks Act does specifically include a name as part of the definition of a mark which can be the subject of a trade mark application. In fact, our Act specifically provides that where application is made for registration of a trade mark which consists of a name, the registrar may require the applicant to furnish him with the consent of that person.

We are sure that an instruction to file the perfect pair’s names will be accompanied by a request that a search be conducted to determine whether the names are available for registration.  In other words, the Carters will still have to determine whether another party perhaps owns earlier rights to a mark which could prevent the registration of RUMI and or SIR.  Gasp! Cue Beyoncé’s song “Best thing I never had”.

Let’s just suppose that the dashing double are able to “Run the World” and the marks are capable of being registered, the Carters will have 5 years following the issuance of the registration certificates, to launch their empire in SA.  The principle of “use it or lose it” is equally applicable to trade marks and a trade mark registration can be removed, if not used within 5 years after grant.

Watch this space…I wonder whether the likes of Pearl Thusi, Khanyi Mbau, Emtee, T-bo and Loyiso Bala have already taken steps to stake claims on behalf of their offspring.

JANI CRONJE

Partner
Trade Mark Attorney

View Profile

OFFENSIVE TRADE MARKS IN THE MODERN CONSTITUTIONAL ERA OF FREEDOM OF SPEECH & EXPRESSION

As a general rule in trade mark law, provided that a mark is distinctive of the relevant goods or services for which it is intended to be used, and distinguishable from other parties’ prior marks in the relevant territory, such a mark would be registrable as a trade mark.  If those main requirements are met, creatives are at liberty to express their creative and imaginative ideas through trade marks and present them for registration if they so wish.  However, in addition to those main requirements, trade mark laws in most countries also contain provisions that expressly bar the registration of marks which are likely to be offensive or disparaging to an identifiable class or group of persons in society.  These provisions generally constitute an absolute ground of refusal of marks and, perhaps on grounds of morality and public policy, it appears that they are rarely challenged in practice.

The United States’ Supreme Court (the Supreme Court) has now brought to the forefront a thought-provoking debate, regarding the registrability of so called offensive or disparaging marks in terms of the US trade mark legislation, and questioning whether the provisions of the law which bar the registration of such marks can be sustained, in light of the constitutional provisions which guarantee the right of free speech.  The Supreme Court recently gave a ruling, in a case that originated from a trade mark application that was filed by Simon Tam (the founder of an Asian-American music band), to register the name of his band “THE SLANTS”, as a trade mark.

It is a known fact that the term ‘slants’ is regarded as a derogatory term, which refers to persons of east or south east Asian descent.  On that basis (and relying on the provision of the legislation which prohibits the registration of marks that may disparage persons, living or dead, or bring them into contempt or disrepute) a US Patent and Trademark Office (PTO) examiner refused Tam’s trade mark application.  The examiner was simply of the view that there is a substantial group of persons who find the term ‘THE SLANTS’ offensive, and that this disqualifies the mark from registration.  Tam unsuccessfully contested and appealed the refusal of his trade mark application before the examiner and the PTO’s Appeal Board, respectively.

For recourse, Tam then took the matter to the Federal Court, which decided that the provision of law relied on in refusing his trade mark application is unconstitutional, as it encroaches on or violates the constitutional right to free speech, and should therefore be repealed.  The PTO filed a petition in the Supreme Court for a final decision on whether the provision of law in question is in fact unconstitutional.  In the recent decision, the Supreme Court affirmed the Federal Court’s decision, and concurred that the so called ‘disparagement clause of the Lanham Act is unconstitutional.  The Supreme Court expressly stated that “speech that demeans on the basis of race, ethnicity, gender, religion, age disability or any other similar ground is hateful; but the proudest boast of our free speech jurisprudence is that we protect the freedom to express “the thought that we hate” (emphasis added).

The PTO’s main argument before the Supreme Court was that the constitutional provision or protection of the right to free speech does not apply to trade marks, as trade marks are government speech and not private speech; and as trade marks are a form of government subsidy.  The Supreme Court rejected the PTO’s argument outright, thereby confirming that the constitutional protection of free speech is applicable.  The court, in the main, held that, trade marks are in fact private speech, created or emanating from the applicants, without the government’s involvement, and that the registration of a trade mark does not mean that the government approves of its content or point of view.  In addition, it was held that the government does not subsidise the registration of trade marks, as applicants are required to bear prescribed official fees for different administrative procedures that are carried out by the PTO.

The court further held that the provision of the legislation that bars the registration of the so called ‘disparaging marks’ is discriminatory based on a “viewpoint” or an expression of a view, and that in a democratic society, free and open discussion must be safeguarded, even where such discussion or speech may be offensive to certain members of the public.  It was also the court’s view that, any restriction or limitation of the constitutional right to free speech, irrespective of the context, must serve a substantial interest and must be narrowly drawn, and that the provision which bars the registration of ‘disparaging marks’ fails to meet this requirement.

The Supreme Court’s decision is a significant development for the United States’ trade mark law, and it will undoubtedly open floodgates for new applications seeking registration of so called disparaging or offensive marks, and perhaps those seeking a review of their previously rejected marks (e.g. the mark REDSKINS that the football team, Washington Redskins, has been fighting to get registered).  One can also presume that the use of derogatory terms directed at mostly racial, ethnic, or religious groups will undoubtedly stir discomfort in society, and therefore the Supreme Court’s decision may be subject to much debate and controversy for quite some time in America, and possibly internationally.  It will also be interesting to watch the developments in other countries which value, uphold, protect and guarantee the right to freedom of speech or expression, to see if they will be persuaded by the arguments raised by the Supreme Court, to apply a less conservative approach when dealing with the relevant provisions in their laws, or to also concur that those provisions cannot be sustained in a modern constitutional era or in a constitutional state which upholds the same constitutional values.

In the South African context, our trade mark law (Trade Marks Act 194 of 1993) also clearly states that a mark that is “…likely to give offense to any class of persons” shall not be registered as a trade mark, and that if it is registered, it shall be liable to be removed from the register.  Although there appear to be no published court decisions in which this provision of the Act was considered, commentators on trade mark law agree that indeed, this provision prohibits the registration of any mark which would likely be offensive to any group of persons, including racial, ethnic, religious or any other recognised group in society.  In addition, just as in the United States, the South Africa Constitution guarantees the right to freedom of expression (which encompasses freedom of speech), and as the Constitution is the supreme law of the land, any law that is inconsistent with its provisions is, in effect, void.

But is South Africa in a position also to consider if the provision of its Trade Marks Act which bar the registration of ‘offensive’ marks can be sustained, in light of the right to freedom of expression as guaranteed by the Constitution? Despite the clear similarities between the provisions of the trade mark legislation and the constitutions of the United States and South Africa, it is difficult to conclude that the South African Constitutional Court may reach the same decision that was reached by the Supreme Court in the Tam case, if it is called to decide the same matter.  However, issues that may possibly be relevant to the court’s inquiry are briefly considered below.

Firstly, the South African Constitution unambiguously limits the right to freedom of expression and expressly states that the right does not extend to (amongst others), “advocacy of hatred that is based on race, ethnicity, gender or religion and that constitutes incitement to cause harm”.  Therefore, it may reasonably be argued that, based on the provisions of the Constitution, a mark which is offensive to a racial, ethnic or religious group etc., may nonetheless be protected by the constitutional right to freedom of expression, provided that the content of the mark does not constitute an “advocacy of hatred that is based on race, ethnicity, gender or religion and that constitutes incitement to cause harm”.  If that argument is accepted, any application of the provision of the Trade Marks Act in question, in a manner that is inconsistent with the argument should, in principle, be rendered unconstitutional.  Put differently, the question that arises is whether a mark, the content of which is regarded as simply offensive to a class of persons, based on, for example, race, gender, or religion, has the potential to promote or necessarily promote hatred of persons in the relevant class or group, or to incite harm?  If the answer is in the affirmative, the content of such a mark or the speech expressed through the mark would, therefore, not be protected by the constitutional right to freedom of expression, as they are excluded by the express limitation.  If the answer is in the negative, the reasonable conclusion would be that the content of such marks or the speech expressed through the marks is protected by the right to freedom of expression.

In addition, it cannot be disregarded that there is a link between the South Africa jurisprudence and its political history.  It is therefore not improbable that the history, mainly in respect of the discrimination or segregation of certain groups based on race, ethnicity and gender, may also influence the court’s approach in dealing with the provisions of the Trade Marks Act in question.  The court may be persuaded to exercise caution, in balancing the interests of, for example, maintaining racial, political or religious tolerance in society, and the constitutional right of freedom of expression.

That being said, the single decision that the Constitutional Court has made concerning the right to freedom of expression in the context of trade mark law, may also give more insight on the position that the court may take, if it were called on to decide the constitutionality of the provision in question[1].  Although that case dealt with completely different facts and a different provision of the Trade Marks Act, the court made its views clear on the significance of the right to freedom of expression in a constitutional democracy, and also stated that where reasonably possible (and even in the context of trade mark law) it is obliged to promote the rights entrenched in the Constitution.  The court also confirmed that unless an expressive act is excluded by the express limitation of the right to freedom of expression as provided in the Constitution itself, the expression is protected by the Constitution.  The court further held that “the constitutional guarantee of free expression is available to all under the sway of our Constitution, even where others may deem the expression unsavoury, unwholesome or degrading” (emphasis added).  Regarding the laws of general application, which may reasonably and justifiably limit the right to freedom of expression, the court held that the provision of the Trade Marks Act that was under consideration “must bear a meaning which is the least destructive of entrenched rights and in this case free expression rights.  The reach of the statutory prohibition must be curtailed to the least intrusive means necessary to achieve the purpose of the section”.

It is also arguable that the principles raised by the Constitutional Court in the case referred to above may be practically applied in the enforcement of the provision in question, as the provision is evidently broadly worded (any mark that is “…likely to give offence to any class of persons”).  The enforcement of the provision in a manner that is consistent with the principles that were raised by the Constitutional Court, particularly in respect of marks that are likely to give offence to a class of persons based on race, ethnicity, religion etc., would, in part, require an examiner to exercise discretion is deciding if such a mark falls within or outside the limitation of the right to freedom of expression (whether or not its content constitutes an “advocacy of hatred that is based on race, ethnicity, gender or religion and that constitutes incitement to cause harm”).

Overall, the US Supreme Court decision in the Tam case has no doubt laid a good foundation for a global debate on whether or not provisions of trade mark laws which bar the registration of so called ‘offensive or disparaging’ trade marks, have lost their place and relevance in the context of the modern constitutional era.  

by Dakalo Luvhimbi | Senior Associate

[1] Laugh It Off Promotions CC v South Africa Breweries International (Finance) BV 2005 (8) BCLR 743 (CC)

JENNY PIENAAR

Partner
Trade Mark Attorney

View Profile

DAKALO LUVHIMBI

Senior Associate
Trade Mark Attorney

View Profile

PLAIN PACKAGING – THE SILENT (TRADE MARK) KILLER?

A topic which has been much debated and legally contested the world over is the call for the use of plain packaging in respect of tobacco products.

Legislation demanding this change stems from the obligation of contracting parties to the World Health Organisation’s Framework Convention on Tobacco Control (WHO FCTC) to amend their domestic legislation to, inter alia, ban all tobacco advertising, promotion and sponsorship.

Australia was one of the first countries to amend its legislation. In compliance with its obligations in terms of the WHO FCTC, Australia enacted the Tobacco Plain Packaging Act of 2011. The aim of this legislation includes the improvement of public health by discouraging members of the public from taking up smoking or the use of tobacco products or to give up such use.  This legislation requires, inter alia, that cigarette packs or cartons be rectangular in shape with straight edges and devoid of any embellishments or shape. It also requires that the carton have a matt finish and, unless stated otherwise in the Regulations, that it be a “drab dark brown” colour. The legislation permits the use of the tobacco brand or business name on cigarette packs, but that use is also severely restricted. For instance, on the front outer surface of a cigarette pack, the brand may only appear once on the centre of the outer packaging and must appear below the health warnings in the same orientation as all health warnings.

In light of the onerous requirements imposed by this legislation, it was vehemently contested by the tobacco industry and went so far as needing to be considered by a World Trade Organisation (WTO) dispute-settlement panel. The panel was established in 2014 and had to consider consultations between Australia and 11 other countries and the EU. A decision was expected in May 2017. A decision has allegedly been reached and communicated to the parties to the dispute, but there have been unofficial reports suggesting that the WTO has upheld the legislation on the ground that it qualifies as a legitimate public health measure.

From a South African perspective, our most relevant legislation regulating the use, sale and advertisement of tobacco products is the Tobacco Products Control Act 83 of 1993 (‘the Act”). In compliance with our own obligations in terms of the WHO FCTC, this legislation has been amended more than once. The most notable amendment to this Act was the ban on tobacco advertising and sponsorship in August 2009. Section 6(bA) of the Act also makes provision for the Minister of Health to later prescribe in Regulations to the Act what information can be displayed on the packaging of a tobacco product, including any insert.

South Africa has, to date, amended its domestic legislation in line with international trends aimed at improving public health.  In fact, a new bill and additional regulations which further regulate the packaging of tobacco products at the point of sale is anticipated and it is further expected that South Africa will call for plain packaging and the use of graphic images on tobacco products aimed at discouraging members of the public, particularly the youth, from taking up smoking.

While the underlying reason for this expected change in legislation is indeed noble, the rights of the tobacco industry to trade will be further limited. At the heart of this limitation is the use of the industry’s trade marks. Indeed, there has already been a challenge to our current tobacco legislation to the Constitutional Court on the basis that it unfairly limits the right to freedom of expression and the right to access to information, but the Court found that the limitation of these rights was justified.

If South Africa follows suit and imposes requirements similar to those in Australia discussed above, the use of, at least, shape, colour, logo and label trade marks on cigarette cartons and wrappers may well be prohibited. Considering the exclusive right to use a mark which is granted to the holder of a trade mark registration, one can immediately see the conflict and the restriction on trade mark owners’ rights.

It will be interesting to see whether the anticipated legislation and further limitation of the right to make exclusive use of one’s trade mark is contested in South Africa, as it has been in so many jurisdictions around the world.

In the meantime, leaders in the tobacco industry would be well-advised to consider alternative innovative methods for purposes of distinguishing their products.

by Kim Rampersadh | Senior Associate

KELLY THOMPSON

Partner
Trade Mark Attorney

View Profile

KIM RAMPERSADH

Senior Associate
Trade Mark Attorney

View Profile

A SUGGESTED FRANCHISING PLAN FOR AFRICA

Africa needs to develop small and medium sized businesses across the continent. A good vehicle to adopt to substantially contribute towards this initiative, is franchising. This includes adopting successful and appropriate business systems and prudently locating them, so as to as far as possible ensure their success.

The plan should commence with a study of franchising and small business activity, as well as the potential for franchising, by franchise experts, in the relevant country or region. Once the status quo, commencement point, possible supportive regulatory framework and franchise business potential has been determined, a plan should be created to develop and support franchising, small and medium size business development.

It is suggested that a full business concept franchise model be adopted. From a legal perspective this essentially includes, the licensing of intellectual property, usually primarily trade marks, copyright and knowhow, as well as a full business system, by the franchisor to the franchisee, in return for some sort of remuneration and subject to compliance with required standards, the business model and quality control.

Although quality standards and strict compliance with the business system, are onerous to a franchisee, this usually ensures the sustainability and viability of the franchise business, on an ongoing basis. The usual benefits include comprehensive initial training and establishment support, the use of a refined business system and the right to use a trade mark and brand, which enjoys considerable goodwill.

It is to be noted that a pure distributorship agreement, agency agreements, multi-level marketing agreements, also known as network marketing, and pyramid schemes, are not franchise arrangements.

Cognisance should be taken of the franchise industry in South Africa, which is the most developed on the continent, with over 757 franchise systems which include around 35 000 business outlets and offers direct employment to around R330 000 people. These figures exclude a number of franchise systems such as motor vehicle and equipment dealerships, motor vehicle and equipment rental, fuel and service stations, hotels and a number of other businesses, which are franchise systems, but not always viewed as such.

The franchise laws and regulatory framework in South Africa can be used as a basis for consideration. This includes the Consumer Protection Act (CPA) which includes, inter alia, Regulations 2 and 3. Regulation 2 sets out what must be dealt with and included in a Franchise Agreement and Regulation 3 sets out the contents of a disclosure document, which must be given to a prospective franchisee, at least 14 days in advance of signing a Franchise Agreement. Regulation 2 attempts to include the best practices and requirements, relating to Franchise Agreements in such documents.

Pre-contractual disclosure of material issues includes the details of the franchisor, the business system, the expenses and income of a typical franchised business, the costs of the investment, establishment, set up, training and related expenses, as well as the likely working capital and estimated break-even point, as well as all other relevant information, so as to place the prospective franchisee in a position where they are able to properly assess the business to be invested into.

The spirit and intention of the CPA is to provide franchisees with consumer type rights including equality, choice, information, honest dealing, fair value, good quality, safety, privacy, fair and responsible marketing and supplier accountability. The CPA also strives towards reasonableness, equity and no unjust prices.

If at all possible an independent or government and business driven franchise association should be developed and supported, so as to promote ethical and best practice franchising, as well as of course to educate and increase the awareness and benefits, as well as possible pitfalls of franchising.

Franchise education and training are also key elements to develop an awareness and an understanding of franchising and to assist with the development of prospective franchise systems.

In addition to the legal and regulatory frame work, the Franchise Association of South Africa (FASA) has over more than 35 years promoted ethical franchising and best franchising practices. This has substantially supported and assisted with the development of franchising in South Africa and their Code of Ethics and Business Protections, is recommended for consideration.

FASA has also assisted with the establishment of the Pan African Franchise Association (PAFF). It is intended that the members of PAFF will be franchise associations in African countries. The development and establishment of franchise associations in other African countries has been slow and consequently PAFF development has been slow. There are however various PAFF initiatives to develop and support ethical and best franchising practices on the African continent.

So as to support franchising and small business development, various government initiatives should be implemented to support, empower, develop and finance, small, medium and franchised businesses. Miro and social franchising also have a great deal of potential and wherever possible and appropriate, should be considered. A micro franchisor development program should certainly be looked at and considered very carefully.

The protection of intellectual property is a key aspect for investors and franchisors granting the use of their valuable trade marks, copyright, knowhow and business systems, into the African business landscape. Although there are in many instances sufficient intellectual property laws to protect franchisors and investors, the registration and enforcement processes and practices of the intellectual property is usually a lengthy and very drawn out process and can be fraught with difficulties, to the substantial detriment and discouragement of franchisors and investors.

In addition to creating support mechanisms and facilitating the access to funding, entrepreneurship and franchising development, should also be promoted. Best practices and ethical franchising should be encouraged, developed and maintained on an ongoing basis by establishing and maintaining a supportive legal and commercial frame work, keeping up with international trends, attracting required and appropriate franchise systems and business concepts and at all times supporting small and medium sized business development.

Wherever the aforegoing have been promoted, supported and pursued, franchising has thrived, leading to the substantial development of sustainable small and medium sized businesses. Further, as the development, awareness and knowledge of the franchise concept and business model grows and develops, this provides fertile ground for local competitors and entrepreneurs to develop similar and competing businesses, which may then potentially allow those business owners to become franchisors, and if successful, to franchise their brands and business systems, to other aspiring entrepreneurs locally and internationally, leading to economic development and increased employment.

The time is therefore ripe for African governments and businesses to carefully consider this massive opportunity and to take steps along the lines of those suggested above. There is no need to re-invent the wheel. The franchise industry is already well developed in South Africa and in certain African countries, as well as internationally. It is simply the opportunity of making this a priority and then pursuing and supporting best franchise business practices and ethical franchising.

EUGENE HONEY

Partner
Attorney

View Profile

KENYA TRADE MARK OPPOSITION MATTER | COMMENTARY

The Kenyan Intellectual Property Institute (KIPI) recently published its decision to the opposition by Viiv Helathcare UK Limited (“the Opponent”) to the trade mark EFAVIR in class 5 in the name of Cipla Kenya Limited (“the Applicant”).

The Opponent is the proprietor of the mark EPIVIR which has been registered in Kenya in class 5 since 1996. Both EPIVIR and EFAVIR relate to medicinal and pharmaceutical products for the treatment of HIV.

The grounds of opposition included, inter alia, that:

  1. the mark EFAVIR is so similar to the Opponent’s earlier registered EPIVIR trade mark that it is capable of misleading consumers into believing that they are associated; and
  2. the EFAVIR trade mark is mala fide on the basis that the Applicant chose a mark so closely resembling the Opponent’s EPIVIR trade mark to compete unlawfully with the Opponent and deliberately deceive consumers.

The issues for determination were whether:

  1. the marks EFAVIR and EPIVIR are so similar that a likelihood of confusion is likely;
  2. the Opponent’s EPIVIR trade mark is well-known in Kenya; and
  3. the Applicant had a valid claim to the EFAVIR trade mark.

The Registrar determined that the suffix VIR which occurred frequently on the Register in class 5 (i.e. in 21 records) in Kenya was suggestive of treatments for viruses. It concluded therefore that the marks to be compared were the suffixes EFA and EPI and that they were not similar. It was also revealed during the proceedings that the parties’ marks had co-existed in the market for approximately 16 years without any instances of actual confusion. The Registrar also acknowledged that these were prescription drugs used to treat serious medical conditions, which meant that members of the public would be more circumspect with regard to the products being offered under each mark. In addition, doctors and pharmacists dealing with the medication, as a result of their duties to their patients and specialised knowledge, would not likely be confused.

The Opponent fell short of establishing its reputation in the EPIVIR trade mark in Kenya. In the Registrar’s view, it has failed to adduce sufficient evidence to prove that its EPIVIR trade mark was well-known in the relevant sector of the population in Kenya.

It was found that the Applicant had a valid claim to the EFAVIR trade mark, having used it in excess of 15 years without any action or compliant from the Opponent and any evidence of actual confusion. In addition, the mark EFAVIR was coined from the active ingredient in the Applicant’s anti- retroviral drug being EFAVIRENZ.

The opposition was therefore dismissed.

KELLY THOMPSON

Partner
Trade Mark Attorney

View Profile

KIM RAMPERSADH

Senior Associate
Trade Mark Attorney

View Profile

GETTING THE DEAL THROUGH | ADVERTISING & MARKETING

Getting the Deal Through has published the fourth edition of Advertising & Marketing, which is available in print, as an e-book and online here. Getting the Deal Through provides international expert analysis in key areas of law, practice and regulations for corporate counsel, cross-border legal practitioners, and company directors and officers.

Throughout the latest edition, the same key questions are answered by leading practitioners in each of the jurisdictions featured. Kelly Thompson (Partner) and Nicole Smalberger (Senior Associate) from Adams & Adams, provided content for the South Africa Chapter. Coverage this year also includes new chapters on France and Sweden.

To read the full publication submission, CLICK HERE.

GTDT-Advertising

Reproduced with permission from Law Business Research Ltd. Getting the Deal Through: Advertising & Marketing 2017, (published in May 2017; contributing editor:  Rick Kurnit, Frankfurt Kurnit Klein & Selz, PC) For further information please visit https://gettingthedealthrough.com/area/64/advertising-marketing-2017

KELLY THOMPSON

Partner
Trade Mark Attorney

View Profile

GTDT_Accreditation_Dark

NICOLE SMALBERGER

Senior Associate
Trade Mark Attorney

View Profile

GTDT_Accreditation_Dark

THE ROAD TO BRAND PROTECTION IN CHINA JUST GOT A WHOLE LOT CHEAPER

In an effort to further encourage entrepreneurship and innovation whilst enhancing the business environment in China, the Minister of Finance announced that, with effect from 1 April 2017, there will be a 50% reduction of official fees in relation to trade mark matters, including filing applications, renewals, recordals, opposition, cancellation and appeals etc.

The number of trade mark filings in China continues to rise, increasing by 28.4% to about 3.7 million in 2016. Naturally, a significant increase in new filings is anticipated as a result of the benefit of the lower official fees.

Already, the recent numbers from SINA (China IP Office) are mind-boggling:

  • Trade mark applications filed in 2016: 3.7 million
  • Trade mark applications approved for registration in 2016: 2.3 million (increased by 1.3%)
  • Provisionally / partially refused trade mark applications in 2016: 1.2 million (increased by 36.7%)
  • Trade mark opposition applications filed in 2016: 57 thousand (decreased by 3.1%)

Trade mark owners who have entered, or are planning to enter, the Chinese market should bear in mind that China follows the first-to-file system. Whilst the law protects unregistered marks where the mark has been used and enjoys a certain reputation or is recognised as a well-known mark in China, the test is a difficult one. However, the recent JORDAN judgement gives hope to owners of well-known marks.

A Chinese company, Qiaodan Sports Co, adopted, and began using a Chinese character version of the English-language name “Jordan” (the Qiaodan trade mark) in relation to sports clothing. The first two attempts (through the Trade Mark Review and Adjudication Board and then the Beijing High People’s Court) to have the Qiaodan trade mark cancelled both failed on the basis that JORDAN was not sufficiently well-known in China. The latest appeal to the Supreme People’s Court in China ruled that the Qiaodan trade mark should be cancelled as JORDAN is recognised in China as referring to Michael Jordan and his various JORDAN branded goods.

The path of proving that a trade mark is well-known in China is neither easy nor straightforward. It is therefore imperative to have your valuable trade marks registered in China as soon as possible.

Should you have any queries in relation to protecting your trade mark rights in China, please contact us at karen.lam@adamsadams.com

SIMON BROWN

Partner
Trade Mark Attorney

View Profile

KAREN LAM

Senior Associate
Trade Mark Attorney

View Profile

COLLECTIVE TRADE MARK REGISTERED IN KENYA | TAITA

The Kenyan Intellectual Property Institute recently registered the mark TAITA BASKET as a collective mark. A collective mark is a mark capable of distinguishing, in the course of trade, the goods or services of persons who are members of an association, from goods or services of persons who are not members of such an association.

The sisal Taita baskets which are produced in Kenya’s Taita Taveta County are made according to traditional art by local women who have passed down the age-old skill of basket weaving through the generations.

WIPO recently embarked on a training initiative for basket weavers in the many villages in the Taita Taveta County with a view to standardising the production and therefore the quality of the TAITA BASKETS.

Image Courtesy WIPO
Image Courtesy WIPO

The outcome of this project resulted in the formation of the Taita Baskets Association and the registration of a collective mark.

Intellectual Property registration, in this instance, has not only allowed the Taita Baskets Association to gain customer confidence and recognition in Kenya and abroad, it has also allowed a traditionally vulnerable group of people in the society to come together, commercialise their indigenous knowledge and become formidable players in their industry.

KELLY THOMPSON

Partner
Trade Mark Attorney

View Profile

KIM RAMPERSADH

Senior Associate
Trade Mark Attorney

View Profile

FLIRTING WITH CO-BRANDING | THE CONSIDERATIONS

At the supermarket a few days ago, I came across a pack of Stimorol chewing gum flavoured with Halls Menthol. I’m not an avid bubble gum-chewer, but being an ardent lover of Halls Menthol, I simply couldn’t resist buying a pack. Had it not been for the Halls Menthol “additive”, I’m sure I wouldn’t have bothered.

We are surrounded by examples of co-branding – it has become quite prolific and judging by my experience, can actually work. Co-branding is a marketing strategy that involves the collaboration of two or more brands to create a product or service that is representative of both. There are various forms or types of co-branding:

  • Ingredient co-branding: For example, the addition of OREO cookie pieces into CADBURY DAIRY MILK chocolate, KFC DORITOS crunch burgers, INTEL processors in DELL computers and of course, HALLS Menthol to STIMOROL chewing gum.
  • Same company or internal co-branding: For example, NESTLE COUNTRY FRESH ice cream with NESTLE BAR ONE sauce.
  • Joint venture co-branding: The athletic clothing range released by REEBOK and CROSSFIT, NIKE and APPLE’S NIKE+iPOD, SONY ERICSSON and ABSA VISA or MASTERCARD.

There are certainly advantages to co-branding. Co-branding can raise awareness about the brands; allow a business to introduce or expose its products or services to the loyalists of the other brand or penetrate another market; allow the business to benefit from the brand equity (or affection) held by another brand; and enhance the value or quality of the product or service in the minds of consumers.

In offering more choice to consumers; the ‘new’ product or service increases profits while reducing the costs involved in introducing new products or services as well as costs of marketing and advertising.

However, brand-holders should also bear in mind that there is a flip side to the co-branding coin. For example, co-branding could lead to the dilution of your brand. A smaller, new or less well-known brand risks being subsumed by the other more established or well-known brand. If one of the brand-holders has a greater say or hand in the co-branding exercise, this may result in a loss of control by the other brand-holder.

And if the co-branding strategy doesn’t work – if the product or service is of an inferior quality or one of the brand-holders suffers negative publicity – this could have a negative impact on consumers’ perception of the brands and consequently, the reputation and value thereof.

CO_BRANDING Considerations_2

When deciding to co-brand, it is essential to bear the following in mind:

Choose your co-branding partner carefully.

Get to know and gather information about your potential co-branding partner. It is essential to choose a partner that offers products or services that are complementary to those that you offer.  There must be a natural link between the co-branding partners and at the end of the day, the product or service offered under the co-branding exercise must be relevant and offer value to consumers. Furthermore, the co-branding exercise must have advantages for both parties and add value to both brands.

Aside from this, the brand-holders should be compatible and have synergy to reduce the likelihood of conflicts arising and ensure a better working relationship.

It is also vital to consider the reputation of the other brand and the financial and market position and operations of the other brand-holder vis-a-vis the reputation of your brand, financial and market position and operations.

Communication and participation.

There are, of course, circumstances where one of the parties may be more involved in the co-branding exercise than the other due to its expertise, know how, etc.

However, it is important that both parties participate and are involved in one way or another and that they effectively communicate with each other.  Both parties should have a say in the co-branding exercise.

Agreement.

Most importantly, the parties must have a carefully drafted and detailed agreement (as well as guidelines or rules) in place, which sets out the parameters of their relationship and governs the co-branding arrangement.

The co-branding agreement is, in essence, a type of co-licensing agreement and should thus include provisions relating to the use of intellectual property.  It is important that the brand-holders are able to maintain their separate identities and exercise control over their respective brands to maintain the integrity thereof.

Some issues that need to be considered include the retention of the proprietary rights by each brand holder once the co-branding arrangement is terminated, ensuring that the use of the brand inures to the benefit of the respective brand holders and maintaining the distinctiveness of the brands.

Lack of quality control provisions and monitoring can result in dilution or loss of control by the brand holder and aside from this, there are other risks to consider such as liability for defective products.  Thus, it is imperative that the agreement contains quality control provisions.  Branding specifications setting out how (that is, in what manner and form) trade marks will be permitted to be used and the scope of such use (including territorial considerations) as well as a marketing strategy/ plan setting out how and through what mediums the product or service will be marketed and promoted and how all of this will be monitored are crucial.

Other provisions in the agreement should deal with the exclusivity, duration and termination of the co-branding arrangement.  Grounds for termination should be widely construed to cater for a variety of circumstances – for example, if targets are not met, if there is an infringement or misuse of intellectual property, if one of the brand holders suffers negative publicity, etc.  There should also be provisions dealing with warranties, indemnities and confidentiality.  In this regard, it should be noted that entering into a co-branding arrangement may necessitate the disclosure of certain confidential or privileged information such as customer data, technology and know how, market research data, etc and the agreement should ensure that this information is not disseminated to third parties or used when the co-branding arrangement has been terminated.

The agreement should also deal with any new intellectual property, whether it be trade marks or new technology, etc, derived from the co-branding exercise.

These are, of course, just some of the considerations to bear in mind when entering into a co-branding arrangement.  Co-branding is indeed a powerful tool and can certainly provide a competitive edge when properly structured.  However, it is essential that brand holders are diligent and exercise due caution when entering into such arrangements.

AMINA SULIMAN

Senior Associate
Trade Mark Attorney

View Profile

‘DROP-CATCHING’ DEFENCE TESTED IN SOUTH AFRICAN DOMAIN NAME COMPLAINT

The practice of drop-catching in the South African context (in the .co.za domain name space) was considered for the first time in a dispute concerning the domain name darling.co.za.

So-called “drop-catching” can be described as the automated registration of a domain name that has lapsed due to non-payment of the renewal fee. As a practice, it is neither lawful nor unlawful, as the circumstances of each case will dictate whether the conduct of the registrant of the domain name contravenes the regulations applicable to the dispute.

For instance, drop-catching is not expressly prohibited by WIPO’s UDRP regulations governing domain name disputes in generic Top Level Domains, such as .com. Decisions on the issue of drop-catching in terms of those regulations have been issued in favour of the complainant, but in all the decisions the complainant had established bad faith on the part of the registrant – an absolute requirement in terms of the UDRP regulations.

In terms of the ADR regulations governing disputes in the .co.za name space, bad faith (a subjective element) is not a requirement for a complainant to succeed. Rather, abusiveness is set as a requirement, which is an objective yardstick.

In the case of darling.co.za, the complainant had a registered trade mark for the word DARLING, covering synthetic hair extensions, and had used the domain name darling.co.za for an active website for many years on which it advertised its products. Due to an administrative oversight, it allowed the domain name to lapse. The registrant’s drop-catching software immediately registered the domain name and directed it to a landing page on which it was offered for sale. Before seeking legal advice, the complainant had approached the registrant with an offer to purchase/recover the domain name. The registrant rejected the complainant’s offer and made a counter-offer to sell the domain name to the complainant for a large sum of money – a sum exceeding the costs that the registrant had incurred in acquiring the domain name.

The regulations list a number of factors on which a complainant can rely to establish abusiveness on the part of the registrant. One of those factors is where the registrant acquired the domain name primarily with the view to selling it for a sum on money exceeding its reasonable out-of-pocket expenses directly associated with acquiring or registering the domain name. The registrant’s business model, founded on drop-catching, was to register or acquire domain names that could be exploited in a generic or fair manner. The registrant contended that it could have used the domain name darling.co.za in a geographically descriptive manner and, therefore, that the domain name had not been registered in bad faith. As such, the registrant contended the registration could not be abusive.

The adjudicator ruled that the effect of the domain name registration was abusive of the complainant’s rights, notwithstanding the registrant’s intention (or lack thereof) in registering the domain name. The adjudicator ordered the transfer of the domain name to the complainant.

It appears that the case was ultimately decided with reference to the proviso in Regulation 5(c). In terms of that proviso, where the domain name in dispute is identical to the complaint’s trade mark, the onus is on the registrant to prove that the domain name is not abusive. The adjudicator ruled that the registrant had failed to adduce sufficient evidence to discharge the onus.

Given that drop-catching will very often involve a domain name which is identical to a registered trade mark, the proviso to Regulation 5(c) is likely to come to the fore in such cases.

DALE HEALY

Partner
Trade Mark Attorney

View Profile

KAREEMA SHAIK

Senior Associate
Trade Mark Attorney

View Profile

GETTING THE DEAL THROUGH | PATENTS

Getting the Deal Through has published the fourteenth edition of Patents, which is available in print, as an e-book and online here. Getting the Deal Through provides international expert analysis in key areas of law, practice and regulations for corporate counsel, cross-border legal practitioners, and company directors and officers.

Throughout the latest edition, the same key questions are answered by leading practitioners in each of the jurisdictions featured. Russell Bagnall, Partner at Adams & Adams, provided content for the South Africa Chapter. Coverage this year also includes new chapters on Costa Rica, Norway and Saudi Arabia.

To read the full publication submission, CLICK HERE.

Patents-3D

Reproduced with permission from Law Business Research Ltd. Getting the Deal Through: Patents 2017, (published in March 2017; contributing editor: Richard T McCaulley Jr, Ropes & Gray LLP) For further information please visit https://gettingthedealthrough.com/area/25/patents-2017

RUSSELL BAGNALL

Partner
Patent Attorney

View Profile

GTDT_Accreditation_Dark

USE IT OR LOSE IT! CANCELLATION OF A REGISTERED TRADE MARK FOR NON-USE

A trade mark registration in South Africa gives the trade mark proprietor statutory rights in the mark registered.  These rights are governed by the provisions of our trade mark legislation and can be terminated on various grounds, including expiry of a trade mark registration for failure to renew the registration or cancellation of a trade mark registration due to non-use, in terms of Section 27(1)(b) of the Trade Marks Act, 193 of 1994 (hereinafter “the Act”).

Section 27(1)(b) of the Act provides that any ‘interested person’ may apply to have a trade mark registration cancelled on the ground that there was no bona fide (good faith) use of the trade mark for a continuous period of five years or more, from the date of issue of the registration certificate. The effect of this provision is that a trade mark registration is not vulnerable to cancellation, for non-use, within the first 5 years after issue of the registration certificate. This period is, therefore, often referred to as the honeymoon period by trade mark attorneys.  However, after the honeymoon period, trade mark proprietors need to be aware that a trade mark registration is vulnerable to cancellation for non-use.

In order to successfully defend a cancellation action, the trade mark proprietor is required to show that the registered mark was indeed used in the relevant 5 year period.  However, the alleged use must be in relation to the goods or services for which the trade mark is registered and, in addition, the use must constitute bona fide use.

In a recent judgment, Westminster Tobacco Co v Philip Morris Products SA (925/2015) [2017] ZASCA 10 (16 March 2017), the Supreme Court of Appeal (SCA) commented on what constitutes bona fide use, for the purposes of Section 27(1)(b) of Act.  The crux of the case turned on whether Westminster Tobacco Co (“WTC”), the registered proprietor of two PARLIAMENT trade mark registrations, made use of its mark, in good faith, during the relevant 5 year period.  If not, it was liable to lose its registrations because its competitor (Philip Morris Products SA, “PMI”) had applied for cancellation of its registrations on the basis of non-use, in terms of Section 27(1)(b) of the Act.

The facts of the case are uncomplicated.  WTC registered the trade mark PARLIAMENT in South Africa in relation to, essentially, cigarettes.  PMI, however, uses the trade mark PARLIAMENT internationally in respect of one of its premier brands of cigarettes.  PMI could, therefore, not register or use the mark PARLIAMENT in South Africa, in relation to cigarettes, due to WTC’s earlier trade mark registration in South Africa.  PMI, accordingly, sought to cancel WTC’s registration, on the basis that the PARLIAMENT mark was allegedly not used in good faith, by WTC, for a continuous period of 5 years, from the date of issue of the registration certificates.

In light of the above, PMI filed a cancellation application in the High Court on the basis of Section 27(1)(b) of the Act.  The onus to prove bona fide use rested upon WTC, in terms of s 27(3) of the Act. In defending the application, WTC alleged and was able to show that it had indeed used its PARLIAMENT mark in the relevant 5 year period.  PMI, on the other hand, acknowledged that the mark was used in relation to cigarettes, but contested that the use was in good faith because, on WTC’s own version, the mark PARLIAMENT was aimed at protecting the PARLIAMENT trade mark, disrupting WTC’s competitors in the low-price cigarette market and at protecting WTC’s premium cigarette brand PETER STUYVESANT.

The High Court found that bona fide use means that a mark must be used on goods solely with the object of promoting trade in those goods and that use for an ulterior purpose, such as disrupting the business of a competitor, or protecting the trade mark proprietor’s trade in other goods, does not constitute bona fide use. PMI was, accordingly successful in the High Court and, in turn, WTC appealed the decision to the SCA.

In the appeal judgment, the SCA had regard to its own 2005 judgment in A M Moolla Group Ltd and Others v The Gap Inc and Others 2005 (6) SA 568 (SCA) and the international case of Ansul BV v Ajax randbeveiliging BV 2003 (RPC) C-40/01, in the European Court of Justice. The SCA found that the enquiry into bona fide use is a factual enquiry and required:

  1. use of the registered trade mark in relation to goods or services of the type in respect of which the mark is registered;
  1. use of the registered trade mark as a trade mark, for the commercial purposes that the trade mark registration exists to protect; and
  1. use of the registered trade mark in the course of trade and for the purpose of establishing, creating or promoting trade in the goods or services in relation to which the mark is used.

The court indicated that the use does not have to be extensive, but that it must be genuine and not merely as a token.  In other words, the use must not be solely to preserve the rights conferred by the mark, but must be consistent with the essential function of a trade mark, which is to sufficiently distinguish the goods in relation to which it is used from other goods, which have a different origin.

In addition to the above, the court also found and that it is irrelevant if the use is motivated by the fear of removal from the register or protecting the proprietor’s trade generally or even from preventing the mark from falling into the hands of a competitor, as long as the use is bona fide and genuine and principally directed at promoting trade in goods bearing the mark.  The court, however, cautioned that it is not permissible to use the mark for an ulterior purpose, not associated with a genuine intention of pursuing the object for which the Act allows the registration of a trade mark and protects its use.

In the appeal case, PMI’s argument turned on the allegation that, on the evidence presented by WTC, it was evident that the intention for launching the PARLIAMENT brand in South Africa was based on three objectives, other than the launch itself, namely, to protect the trade mark registrations, to test the commercial viability of a low price offer in the cigarette market and finally, to gain insight into the low price segment of the cigarette market. PMI, therefore, argued that there was no desire or objective on the part of WTC to build up any commercial long term sales strategy in its PARLIAMENT cigarettes and the objectives of WTC for using the mark were counter to the functions of a trade mark as defined in the Act. It, accordingly, alleged that the nature of the use, as testified to by  WTC’s main witness, did not constitute use as a trade mark for the purposes for which trade marks are afforded statutory protection and was, therefore, not bona fide use.

WTC countered the allegations of PMI with evidence that the introduction of the PARLIAMENT brand of cigarettes was for several reasons, including dealing with low priced cigarettes.  WTC also argued that its use of the mark was for commercial reasons and that the launch of the PARLIAMENT mark in small towns was geared to investigate and learn how the brand would be received by consumers and was also aimed at disrupting the sales of low priced cigarettes by its competitors.  WTC further disclosed that the implementation of the PARLIAMENT brand was purposely conservative so as not to harm its premium cigarette brand PETER STUYVASENT.

In making a determination as to whether WTC’s use of the mark was bona fide and genuine, the court applied the test set out above. The SCA found that, in the circumstances, the use of the mark PARLIAMENT was bona fide because it was affixed by WTC to goods covered by its registration, i.e. cigarettes, for the purpose of identifying the source from which the goods were derived and distinguished it from its competitors.   The Court also found that there was a commercial purpose in WTC providing different offerings aimed at different sectors of the market and pricing them differently. Accordingly, the court expressed the view that because WTC’s strategy for the PARLIAMENT brand of cigarettes precluded a full-blooded launch of a competing product in the low price segment did not mean that the launch was not genuine.

In light of the above, WTC successfully defended the application for cancellation of its marks on the basis that it, in fact, did use its trade marks in good faith and that the use was genuine.  Although it was not relevant to the SCA case, it is worth knowing that in addition to using a trade mark, trade mark proprietors may also prevent losing a trade mark registration, for failure to use the registration, by associating related trade marks (that are in use).  However, associating trade marks places some limitations on how the associated trade marks may be dealt with.  It is, therefore, important to take a considered approach when dealing with registered trade marks and to bear in mind that when it comes to registered trade marks, beware to use it or you may lose it!

By Jameel Hamid | Associate

 

GERARD DU PLESSIS

Partner & Firm Chairman
Trade Mark Attorney

View Profile

GETTING INTO THE (IP) ZONE

The recent case of Herbal Zone v Infitech Technologies [1] is a cautionary tale for product manufacturers or importers who are careless about their intellectual property (“IP”). In many respects, it is a tale as old as time in IP circles; one which sees itself played out over and over as a result of a lack of focus on the protection of intellectual property and a failure to anticipate and prepare for the daily reality of business relationships turning sour.

The case concerned a male sexual performance enhancer marketed under the name PHYTO ANDRO FOR HIM in South Africa since 2006. Herbal Zone (Pty) Limited was the sole importer of the product into South Africa. It said that the product was manufactured by Herbal Zone International Sdn Bhd, a Malaysian entity. Between 2009 and 2014, Infitech (Pty) Limited was the sole distributor of the Phyto Andro for Him product in South Africa, in terms of a distribution agreement with Herbal Zone. The facts of the case as set out in the Supreme Court of Appeal judgement do not tell us why the relationship soured but, in 2014, in advance of the termination of the distribution agreement, the shareholders of Infitech formed Herbs Oils (Pty) Limited and began marketing and selling a competing product, also under the name PHYTO ANDRO FOR HIM and in similar packaging to the original product. Despite the fact that neither party had registered the trade mark, they both used the symbol for a registered trade mark (®) on their packaging next to the name of the product.

Taking matters into its own hands, Herbal Zone published an advertisement in a popular newspaper and also wrote to pharmacies who stocked the products, warning that Herbs Oils’ Phyto Andro product was “counterfeit” and “illegal” and threatening legal action against suppliers of the product. It also took action in terms of the Counterfeit Goods Act which resulted in certain of the Herbs Oils Phyto Andro products being seized but ultimately released (again, the judgement does not say why but presumably because the Counterfeit Goods Act is difficult to invoke unless there is a registered trade mark involved). Herbs Oils retaliated by suing Herbal Zone for defamation and Herbal Zone then found itself in a position where it had to counter-sue. It counter- applied for an interdict on the basis that Herbs Oil was passing-off its product as that of Herbal Zone’s.

The passing-off case is what took centre stage but it failed, essentially because Herbal Zone was unable to show that the reputation in the PHYTO ANDRO FOR HIM trade mark (although the court accepted that there was one) belonged to it. It is essential for such a case to succeed that the person seeking an interdict establish a reputation (in the form of goodwill) in the product name. There simply wasn’t any evidence pointing to who owned that reputation. Herbs Oils claimed that it had acquired the reputation from Infitech but the SCA quickly put paid to that argument as it had merely been a distributor of the product and had acknowledged in its distributor agreement that it did not own these rights. While the packaging of the product had initially said “manufactured for Infitech”, it was later changed to read “exclusively distributed by Infitech”.This would not have indicated to the public that Infitech was the proprietor of the trade mark.

On the other hand, however, Herbal Zone also could not show that it owned the requisite reputation. Rather, it appeared that all of its commercial communications created a significant amount of confusion between it and Herbal Zone International and that their respective roles in the manufacture and distribution of the product were as clear as mud. In many cases, no distinction was drawn between the two corporate entities and, in others, it appeared to be the case that Herbal Zone was merely a distributor for Herbal Zone International. Much like Infitech, therefore, it could not have acquired any rights in the name of the product. The claim for passing-off accordingly failed and, certainly at the date of writing this article, Herbs Oils continues to advertise its competing PHYTO ANDRO product, no doubt much to the despair of Herbal Zone.

So what should product manufacturers do to avoid these situations?

  1. Register, register, register! So many IP headaches can be avoided by applying to register your distinctive product name as a trade mark. The applicant should be the entity that will actually use the trade mark. If it is not, a proper (written) licence agreement should be in place between the owner of the trade mark and the entity or person who uses it, even if it is a related entity. Get legal advice or, even better, have the licence agreement drafted by a trade mark attorney. The law requires certain essential terms to be contained in such a contract.
  1. Craft product packaging and the wording reflected on it carefully and pay close attention to any packaging regulations (dependent on the nature of the product) and the description of who the trade mark owner/manufacturer/distributor are. Do these descriptions match the true factual position? Note that the ® symbol can only be used in respect of a registered trade mark. While a trade mark application is still pending, the symbol ™ can be used next to the mark.
  1. Where multiple, related entities are involved in the production, manufacture and marketing of a product, ensure that the roles of each are clearly defined and that these roles come through in any form of business communication (e-mail signatures, website content, letterheads, etc.).
  1. Enter into written agreements with any distributors of the product which make it clear that they can and will enjoy no rights in and to the product’s name or any other intellectual property relating to the product. That agreement should spell out clearly the circumstances in which the agreement may be terminated and also that, on termination, the distributor will immediately cease using the trade mark, or anything similar. Maintain control over the way in which the distributor uses the trade mark and advertises the product.
  1. If your rights are infringed, seek legal advice before taking any steps. While in some cases a public awareness campaign may be appropriate, these can easily cross the line into defamation and could result in your ending up being the one getting sued, rather than the other way around, meaning you will be on the back foot in the litigation.

These steps are simple and relatively inexpensive when viewed against the cost of potential litigation or the cost of being unable to stop a competitor from using your brand. Quite frankly, they are steps that product owners simply can’t afford not to take.

[1] (204/2016) [2017] ZASCA 8 (10 March 2017)

KELLY THOMPSON

Partner
Trade Mark Attorney

View Profile

REPORT | IP DEVELOPMENTS IN AFRICA

Intellectual Property Law Firm, Adams & Adams, recently published the latest version of the Africa Update journal – an annual publication presenting intellectual property developments, including legislative changes and recent judgments, from across the continent.

The Update also includes news about the extension of the firm’s network of offices in Africa, along with details of visits to various countries to meet with IP officials, and reports and analysis of recent legislative and judicial developments from across the continent.

Adams & Adams’ achievements and continued growth on the continent have again been recognised internationally and recently the firm was awarded the Managing IP ‘Africa Firm of the Year’ for the third year in a row.

READ THE AFRICA UPDATE ONLINE

DOWNLOAD THE AFRICA UPDATE (36 Mb)

GERARD DU PLESSIS

Partner & Firm Chairman
Trade Mark Attorney

View Profile

SIMON BROWN

Partner
Trade Mark Attorney

View Profile

HOW STRONG IS YOUR IP ‘FORCE’?

The Star Wars ‘force’ is 40 years old this year and is undoubtedly one of the largest pop culture phenomena in the world. The brand extends beyond movies to clothing, toys, games, music, theme parks and television shows. One of the factors that has contributed to the success of the Star Wars franchise is the extent to which the maker of Star Wars, George Lucas, has sought to aggressively protect and enforce the Star Wars intellectual property.

LucasFilm (and Walt Disney) is renowned for taking on anyone who it deems to be infringing on the brand rights – even Ronald Reagan’s administration received a complaint for calling its strategic missile defence system “Star Wars.” In 2016, Lucasfilm sued the so-called “New York Jedi and LightSaber Academy” – a school that was offering classes on Jedi combat by expert “lightsaber and swordplay practitioners.” It’s claimed that the school’s use of the words “Jedi” and “lightsaber” and the “Jedi Order” logo all constitute infringement of Lucasfilm’s trade mark rights.

Lucasfilm and Walt Disney have filed numerous patents, designs and trade marks worldwide. The intellectual capital of a business or entertainment franchise constitutes a significant component of its total asset base; the value of the intellectual capital could exceed the value of the fixed assets of the business or its working capital. It has been recognised that the intellectual capital of a business provides the most potent – and most effective – impetus to its earning power. So vigorous and jealous guarding of IP rights is much like protecting your supplies and money from the raiding and pillaging Alkhara Bandits! You can find a list of Star Wars design patents and trade marks here.

What else can be learnt from the Star Wars IP story? Most businesses will protect their main brand name or logo in defending their primary IP rights, but secondary brand names and logos (“Jedi”, “Darth Vader” etc) that are not the main brand name, but which still uniquely identify the mark are also worth protecting.

Second, be uncompromising in enforcing your rights. Keep a look-out for IP infringement of your brand and don’t hesitate to act when someone is abusing your IP rights. Legal action may sometimes be expensive, but often all it takes is a friendly “letter” from your counsel. Not acting may cost your brand much more in the long-run – and nobody likes a diluted brand asset (Just ask Dooje Brolo!)

STEPHEN HOLLIS

Partner
Trade Mark Attorney

View Profile

USING GACC TO STOP COUNTERFEITS LEAVING CHINA

An all too common reality is that intellectual property right (IPR) holders may be active in enforcement against counterfeit goods in a number of jurisdictions, but ultimately might find that such goods are being manufactured in China and exported to the rest of the world for sale.

While most countries only detain goods being imported into their country, the General Administration of Customs of China (GACC) has introduced a recordal system which empowers it to detain suspected infringing goods entering or leaving China.

The IPR holder can record various types of intellectual property with GACC, including trade marks registered in China, or international trade mark registrations extending to China, as well as designs, patents and copyright, although the bulk of goods detained are on the basis of trade marks, which are the easiest to recognise and recall.  According to its statistics for 2014, GACC revealed that 96.5% of detentions related to goods being exported from China.

While specific documentation must accompany the application (such as a power of attorney, certificate of incorporation, registration certificates, colour photographs of genuine goods, details of authorised exporters, distributors and licensees), the overarching guideline is to provide GACC with as much information as possible to enable it to make a preliminary determination as to whether the goods infringe any recorded intellectual property right.

GACC will issue its written acceptance or rejection within thirty working days of receiving the application. If granted, the recordal is valid for a period of ten years, or until the expiration of the intellectual property right, whichever is shorter, and is renewable.

If GACC is of the view that goods being imported or exported may infringe an intellectual property right which has been recorded on its electronic database, it will suspend the clearance of the goods and inform the IPR holder. The IPR holder is required to confirm the authenticity of the goods, lodge a written application for detention as well as make payment of a bond (or submission of a bank guarantee), within three working days of being notified. If the IPR holder fails to comply with any of these requirements, the goods must be released, irrespective of their authenticity.

If the IPR holder has complied with the requirements, GACC will detain the goods, investigate and make a determination on the matter within thirty working days, failing which the case must be referred to Court, or the goods released. If it deems the goods to be infringing, depending on the nature thereof, the goods will either be donated once the infringing portion has been removed, sold to the IPR holder, sold on auction, or destroyed. The IPR holder is liable for storage and destruction costs. Fines are sometimes also imposed on the consignor, at GACC’s discretion.

It is recommended that IPR holders be mindful of the recordal, paying careful attention to any changes in the application which must be reported to GACC within thirty working days, failing which the recordal may be cancelled. GACC also invites training sessions to keep up to date with changes in the IPR holder’s rights, including the launch of new products or change in product packaging.

Since GACC is not obliged to detain any infringing goods unless a valid recordal is in place, this system could be a useful tool to IPR holders as part of their intellectual property enforcement strategy. The progressive initiative is a welcome tool in the crusade against counterfeit goods.

TAYYIBA NALLA

Senior Associate
Trade Mark Attorney

View Profile

GODFREY BUDELI

Partner
Trade Mark Attorney

View Profile

AESTHETIC OR FUNCTIONAL | PROTECT YOUR DESIGN

Adams & Adams’ involvement with Elle SOLVE is part of a drive to foster the uniquely imaginative capacity of SA’s creatives – and to help those gifted individuals realise real economic benefit in respect of their intellectual property rights. We see it as an imperative that this showcase of individualism is protected. In terms of the artist we also need to provide a solution to the problem of general devaluation and under-appreciation of artistic works. This begins with the artist who needs to know his or her rights in terms of creativity.

South Africa is home to many talented designers whose work is highly regarded both locally and internationally.  Design protection is, however – to their detriment – often underestimated by local designers.

Making design protection a part of your creative repertoire should be part of your creative course of action. Registered design protection provides protection for the appearance of articles intended to be multiplied in an industrial process.

Both aesthetic and functional designs can be registered in South Africa. Functional designs are those with features necessitated by the function of the article. Aesthetic designs, which are extremely important in creative design, pertain to appearance of the article including shape, configuration, pattern or ornamentation.

Examples of articles suitable for aesthetic design protection include, furniture, lighting, textiles, door handles etc.

In order to ensure your design is protected it must be new. This means that the design should not have been revealed to the public before filing an application for registered design.  Although novelty (or “newness”) is a requirement before filing an application, the South African Designs Act does allow you to disclose your design before a design application – provided you file a design application within six months of the disclosure.

Designers need to take cognisance of the process of design protection in foreign countries however.  Several countries will not enable design protection if it has been disclosed prior to filing.  It is preferable then that South African design applications be filed prior to any public disclosure of the design protection.

Intellectual property is a vital aspect of your balance sheet, and registering your designs has an important role to play in your financial well being.  A registered design may be traded like any other asset.  You can sell it, or licence it others.  It therefore allows you to prevent others from using, making, importing or selling articles which look the same or similar to yours – safeguarding your professional reputation against copycats.

Don’t donate your creative works to others – register your designs!

MARIËTTE DU PLESSIS

Partner
Trade Mark Attorney

View Profile

DISPUTE RESOLUTION REVIEW | SOUTH AFRICA

The Dispute Resolution Review provides an indispensable overview of the civil court systems of 40 jurisdictions. It offers a guide to those who are faced with disputes that frequently cross international boundaries. This ninth edition follows the pattern of previous editions where leading practitioners in each jurisdiction set out an easily accessible guide to the key aspects of each jurisdiction’s dispute resolution rules and practice, and developments over the past 12 months. The South African Chapter has been authored by Jac Marais, Andrew Molver and Renée Nienaber from Adams & Adams.

Key developments in South Africa over the past year followed global trends and included:

  • Clarification of the effect of a pending application for a restraining order and the scope of issues capable of referral to court in terms of Section 20(1) of the Arbitration Act;
  • Further progress towards more active judicial management of the dispute resolution process;
  • Approval of the International Arbitration Bill; and
  • The Community Schemes Ombud Services Act coming into effect.

To read the full South African submission, CLICK HERE, or for the full Dispute Resolution Review publication, CLICK HERE.

DisputeResolutionReview3D

JAC MARAIS

Partner
Commercial Attorney

View Profile

ANDREW MOLVER

Partner
Litigation Attorney

View Profile

RENEE NIENABER

Senior Associate
Attorney

View Profile

WHAT ARE TRADE SECRETS? HOW TO PROTECT THEM

A Trade secret is information that is useful in the industry and that is kept confidential. It is information that imparts value to its holder and one that provides a competitive edge over its competitors. Should information that constitutes as a trade secret be leaked, it could have a major negative effect on the business. Information such as customer lists, information received by an employee regarding business opportunities valuable to an employer and information provided to an employee in confidence in the course and scope of his employment could be identified as confidential[1].

Even negative information such as failed remedies or manufacture of products and failed research could be protected as a trade secret as it could save a competing business high costs if they have a what not to do guide.

 Article 39 of the TRIPS Agreement[2], provides that member states shall protect “undisclosed information” against the unauthorised use “in a manner contrary to honest commercial practices” as long as the information is:

  1. a secret in a sense that it is not generally known among or readily accessible to persons that generally deal with the type of information;
  2. has commercial value because it is secret; and
  3. has been subject to reasonable steps by the person in control of the information to keep it a secret.

This is the general guideline in determining whether information is a secret and if it can be protected as a ‘trade secret’. Member countries may have identified more criteria but Article 39[3] serves as a basis for the member states of the TRIPS Agreement[4]

The advantages of trade secrets are that trade secrets do not have to be registered and have no limited protection frame, there are no registration costs and there are no formal compliance requirements that have to be met. However, the disadvantages are that trade secrets can be reverse-engineered once the secret is made public and then anyone is at liberty to use the information.

The enforceability of the trade secrets is generally not easy and may prove to be costly – not ideal for small entities and start-ups. Nonetheless, trade secrets can still be a useful tool for small and medium businesses that do not have the resources to protect their intellectual property assets by other forms of protection such as trade marks and patents which require registration.

How to protect your trade secrets

A trade secret owner should employ as many precautions as reasonably possible such as:

  1. restricting access to confidential information physically and electronically to only those individuals that need to know the information;
  2. marking documents that they constitute confidential information;
  3. making use of non-disclosure and confidentiality agreements;
  4. maintaining information with password protection;
  5. disposing confidential information by shredding or other means designed to destroy the information;
  6. conducting exit interviews with departing employees to ensure the return of all confidential information in the employee’s possession and to emphasise confidential obligations;
  7. ensuring that there are restraint of trade provisions in the employment contracts;
  8. establishing due diligence and on-going third party management procedures;
  9. instituting and information protection team;
  10. make trade secret protection a priority[5].

It is important to note that confidential information not classified as a trade secret may be used by an employee for his own benefit or for the benefit of others after the termination of his employment to the extent that it was not copied and/ or deliberately memorized for use after   of the employment contract[6]. In this case[7], the applicant sought to interdict an ex-employee from joining a competitor on the basis that the respondent would unlawfully make use of the applicant’s trade secrets. The court held that the applicant had failed to prove that any of the information was confidential. It was decided that the audio and lighting production of the IDOLS TV show required little originality input since all the relevant information was already in the public domain.

In the event that it becomes apparent that trade secrets have been exposed, the trade secret owner can approach the courts to claim against the infringer on the basis of breach of contract which allows the wronged party could claim for damages from the infringer for breaching confidentiality agreements or based on unlawful competition which allows the wronged party to claim for an interdict in order to refrain the infringer from continuing the unlawful act. Furthermore the wronged party can claim for damages they have incurred due to the act of the infringer and claim costs they have incurred in instituting proceedings. Proof of damages and causation is imperative to succeed with an action under unlawful competition.

Proving damages can prove to be quite difficult. Below are different options that can be exercised in quantifying the economic harm in misappropriated trade secrets[8].

  1. Lost Profits and unjust enrichment calculations[9] – this involves determining how much more increased sales the company would have made had the trade secrets not been revealed;
  2. Reasonable royalty[10] – this remedy is suitable where it would be difficult to prove the extent of the patrimonial loss. This is determined by recovering the reasonable royalty that would have been paid by a licensee ; and
  3. Transaction specific Reasonable Royalty[11]– relates to the royalty that would have been paid for a specific product or service.

Trade secrets are an important form of intellectual property just like trade marks, patents, copyright and designs. It is imperative that any business takes the initial steps in identifying the trade secrets of the business and thereafter, incorporate protection mechanisms within the business such as ensuring that documents are stored securely and in places where there is limited access. Furthermore agreements with employees should be in place as well as education about what constitutes confidential information as well as the consequences of revealing the confidential information.

 by Maureen Makoko | Associate


[1] Meter Systems Holdings Limited v Venter and Another 1993 (1) SA 409

[2] Agreement on Trade-Related Aspects of Intellectual Property Rights

[3] Idem

[4] Idem

[5] WIPO MAGAZINE Eight steps to secure trade secrets (2016) http://www.wipo.int/wipo_magazine/en/2016/01/article_0006.html

[6] Strike productions (Pty) Ltd v Bon View Trading (Pty) Ltd & Others (10/21704) [2011] ZAGPJHC 1

[7] Idem

[8] Hoffman J, Ewing B and Thompson M.A.  How Much Are Your Trade Secrets Worth? Here’s how To Figure it Out 2014 https://eiexchange.com/content/30-how-much-are-your-trade-secrets-worth-heres-how-to-figure-it-out

[9] Idem

[10] Idem

[11] Idem

 

MAUREEN MAKOKO

Associate
Trade Mark Attorney

Email Maureen

DARREN OLIVIER

Partner
Trade Mark Attorney

View Profile

BRANDS & SOCIAL MEDIA INFLUENCERS | ARE YOU AT RISK?

Although Andy Warhol proclaimed in 1968 that, in the future, everyone would be world-famous for fifteen minutes, it is unlikely that he could possibly have imagined today’s social media crazed world and the multiple platforms that exist to enable anyone, anywhere, to become a celebrity. In today’s world, being “famous for being famous” can be a full-time occupation and “Youtuber” would appear to be an acceptable career choice for many millennials.

One ramification of this has been the rise of the “social media influencer”. A social media influencer is someone with credibility in a particular industry and a wide reach, usually in the form of a large following on social media. Brands engage with an influencer who has reach in their particular industry, that person promotes the brand to his or her followers and the brand enjoys the benefit of what is effectively a personal endorsement to hundreds, thousands or even millions of persons directly in its target market. The social media influencer is, of course, generally paid to promote the product, either in money or in kind. It is not uncommon, for example, for clothing brands to gift free items to celebrities or established fashion bloggers with the expectation that they will then post photographs on social media of themselves wearing the items on Instagram or other social media, with an appropriate mention of the brand.

The use of social media influencers is but one form of what has been termed “native advertising” which is paid media that matches the form and function of the platform upon which it appears. The issue, as one might imagine, is that these endorsements, which constitute paid-for advertising, often appear among hundreds of other organic social media posts and may not be perceived as sponsored content by those who view them. Therein lies their very appeal to advertisers, especially in the modern consumer landscape that craves authenticity and personal connections. But, similarly, therein lies the potential to deceive consumers and fall foul of the law.

The USA’s Federal Trade Commission, which is tasked with tackling unfair business practices and consumer deception in the USA, is very clear on this issue. It has published detailed guidelines which spell out that any material connection between an advertiser and endorser must be disclosed in a clear and conspicuous manner. While wording such as “company x gave me this product for free” in a review would be ideal, it seems that using a hashtag such as “#sponsored” or even “#advertisement” might be sufficient for the FTC’s purposes. The FTC has even said that, given that a tweet is a mere 140 characters, commencing it with “#AD:” could get the message across.

An example from Kim Kardashian West’s Instagram Page. It is questionable whether merely thanking the brand would be considered a sufficient disclosure. This particular post was “liked” by over 1.4 million people.

An example from Kim Kardashian West’s Instagram Page. It is questionable whether merely thanking the brand would be considered a sufficient disclosure. This particular post was “liked” by over 1.4 million people.


Winner of South Africa’s Masterchef Season 2 competition, Kamini Pather, has attracted an Instagram following of over 26 000 people and has seemingly cashed in on the social media influencer scene, pairing up with various different brands. This post uses the hashtags “#sponsored” and “#ambassador” to disclose her relationship with the make-up brand MUD.

Winner of South Africa’s Masterchef Season 2 competition, Kamini Pather, has attracted an Instagram following of over 26 000 people and has seemingly cashed in on the social media influencer scene, pairing up with various different brands. This post uses the hashtags “#sponsored” and “#ambassador” to disclose her relationship with the make-up brand MUD.

But how will this issue be dealt with in South Africa where our regulators have yet to turn their attention to specific rules governing this form of advertising? The answer is likely to be found in the Consumer Protection Act 68 of 2008 (the “CPA”) and the Advertising Standards Authority’s Code of Advertising Practice (“ASA Code”) both of which set general standards relating to the advertising of products and/or services to ensure the public is not being misled.

Both the CPA and ASA Code provide very broad definitions of “advertising” and “advertisement” and these would likely apply to advertising by way of social media. When bloggers or influencers post on social media in relation to an advertiser’s products or services, those posts could also be regarded as advertisements, because they are intended to market, promote, advertise or publicise the advertiser or the relevant goods or services. Accordingly, this would also require compliance with the CPA and the ASA Code.

The CPA requires that advertising must take place in a fair and reasonable manner and that no misrepresentations be made. Goods or services must not be marketed in a manner that is likely to reasonably imply a false or misleading representation concerning those goods or services. Similarly, the ASA Code requires truthfulness and honesty in advertising. Could an argument be made that a paid-for advertisement which is not clearly labelled as one is misleading? Probably. After all, a consumer is far more likely to be induced to purchase a product that has been given a rave review by someone he or she knows or admires.

Although the CPA and ASA Code do not specifically deal with situations where influencers post content on social media in order to market or promote a brand or its goods/services, the ASA Code also requires that “advertisements should be clearly distinguishable as such whatever their form and whatever the medium used”.

The ASA Code also states that, in electronic media, particular care should be taken to distinguish clearly between programme content and advertising. Where there is a possibility of confusion, advertising should be identified in a “manner acceptable to the ASA”. While the ASA seems yet to have received any complaints regarding unidentified social media influencer endorsements, it seems likely that it will also insist on similar disclosures to those required by the FTC and that wording, whether in the form of a hashtag or something more substantial, will be needed to clearly identify a post as advertising content.

This being the current state of play, it is advisable that brands and social media influencers (both could be liable in the event of a breach) ensure that all posts contain an indication to the effect that the relevant posts are advertisements. This must be clear enough to avoid any misrepresentations or misleading of the public. One could insert the following at the end of the post: “(Sponsored ad)”. One could also consider using “#sponsored_ad”. Other wording may also be considered acceptable and ultimately, in the event of a challenge, it would be up to the advertiser to show that consumers in South Africa clearly understand that the wording used reflects the nature of the relationship between the brand and the influencer.

It is also important to bear in mind that any form of compensation or inducement, whether in monetary terms or some other form such as a discount, tickets to an event or free products, will likely trigger the need to disclose the relationship with the advertiser. Accordingly, in all of these circumstances, it is recommended that a clear message be inserted at the end of the post to the effect that the post is a sponsored advertisement.

The bottom line is that consumers have a right to know when something is a paid-for testimonial, rather than the personal and unbiased view of the endorser. And it is brands and social media influencers who bear the responsibility of making that disclosure clearly.

Kelly Thompson | Partner (Adams & Adams)

 

KELLY THOMPSON

Partner
Trade Mark Attorney

View Profile