Raise a glass to geographical trade marks
 “Swartland” therefore has a dual function. It is both the name of a designated Wine of Origin district, and functions as the trade mark of Swartland Winery. It was perhaps this role as a “double agent” which led to the present dispute between Group LFE, a Dutch importer of South African Wines to the EU, which used “Swartland” both as a mark and as a geographical indication on wines, and trade mark owner, Swartland Winery. Judgment in Groupe LFE (SA) (Pty) Limited v Swartland Winery Limited (467/2009) was handed down by Harms DP for the Supreme Court of Appeal on 4 March 2011, and represents a culmination of cases regarding both “trade mark use” and marks consisting of geographical indications. Swartland Winery had been successful in the court à quo in proving infringement of its trade mark registration no. 2004/22804 SWARTLAND in class 33 for goods inclusive of wine against Group LFE, and Group LFE took the matter on appeal on three main grounds. The first of these was its counter-application for cancellation of the SWARTLAND registration in terms of s10(2)(a) of the Trade Marks Act 194 of 1993 (“the Act”) on the basis that it consisted exclusively of a geographical indication for wine. The second ground was a technicality under of the Liquor Products Act no. 60 of 1989 (“the Liquor Products Act”) in terms of which Group LFE contended that use of the SWARTLAND trade mark was contrary to law, and fell to be cancelled in terms of section 10(12) of the Act on this alternative basis. Lastly, in the event that the validity of the SWARTLAND mark was upheld, Groupe LFE argued that its use of “Swartland” was exempt from infringement in terms of section 34(2)(b) of the Act, as it amounted to a bona fide description of the geographical origin of its goods. Harms DP acknowledges in the introduction that “Swartland” constitutes a recognised “district” in terms of the Wine of Origin (“WO”) Scheme under the Liquor Products Act. The WO Scheme demarcates wine producing areas into larger geographical units, and in turn increasingly small regions, districts and wards, based on common characteristics such as soil type and climate, including wind and rainfall patterns that impact on the characteristics of wines produced in these areas. In essence, “Swartland” is a term describing the characteristics of wines produced in a designated area by virtue of their geographical origin. One would have thought such a scenario would spell disaster for the longevity of the SWARTLAND registration – but perhaps not? Harms DP’s judgment follows the same pattern as that in previous locus classicus on trade marks consisting of geographical indications, Century City Property Services CC v Century City Property Owners’ Association (57/09), addressing the issue of infringement prior to determining the validity of the SWARTLAND registration. Followers of Harms DP’s decisions on trade mark matters over the last few years will recall that the question as to whether use of a mark ought to be use of a particular kind was first decided in Verimark (Pty) Ltd v BMW AG (250/06) following an allusion to this issue in footnote 15 of Die Bergkelder Bpk v Vredendal Koop Wynmakery (105/05) with reference to English law. It was held in the Verimark case that as the purpose of a trade mark is to act as a “source identifier”, guaranteeing the origin of goods or services, for unauthorised use to amount to infringement, it must mimic the true function of a trade mark, and must itself purport to be a “badge of origin”. Mere incidental or background use was found not to refer to the source of the goods in question, and not amount to trade mark use - and by extension, infringement. Non-trade mark use, otherwise referred to as “descriptive use”, which amounts to a bona fide description of characteristics of goods or services (inclusive of their geographical origin), which is consistent with fair practise, is exempt from infringement under section 34(2)(b) of the Act. Groupe LFE’s case was that its use of “Swartland” fell within this exception. It argued that its wines were “no-name brands” sold under a description of their geographical origin. This argument was rejected on the facts. “Swartland” appeared prominently on the neck of Groupe LFE’s bottle, and was repeated in large script on the main label along with the phrase “Swartland Private Bin Wines”. In addition, the bottle featured a gold medallion sticker indicating that the wine was “Wine of Origin Swartland”. There was also a second variation of Groupe LFE’s wine bottle with minor variations. It was found on balance that the labelling conveyed that “Swartland” was both the trade mark and production area, and that Groupe LFE was not only using the place name “Swartland” in a bona fide manner as an indication of geographical origin. Although not reiterated in this judgement, Harms ADP (as he then was) held in the case of Commercial Auto Glass (Pty) Ltd v BMW (331/06) that to successfully invoke the section 34(2)(c) exemption (an extension of section 34(2)(a) relating particularly to spare parts), one must make it “unequivocally clear” that one’s use of a mark is descriptive use, rather than use as a source identifier. Any unauthorised use of a mark in a descriptive sense lacking this degree of clarity was found to take unfair advantage of the trade mark, and to fall short of “truthful commercial speech”. With respect, it is clear that in this instance, Groupe LFE’s use of “Swartland” could not have been dismissed as descriptive use. In the circumstances, it was found that Groupe LFE had infringed the SWARTLAND registration, assuming the registration remained valid. As indicated above, Groupe LFE sought to cancel the SWARTLAND registration on two alternate grounds. The first of these was based on section 10(2)(b) of the Act which states that marks which are not registerable as trade marks, or marks, if registered, which are liable to removal from the register include those, “[which consist] exclusively of a sign or an indication which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin or other characteristics of the goods or services, or the mode or time of production of the goods or of rendering of the services [my emphasis]”. The test as to whether a trade mark which is also a place name falls within the ambit of section 10(2)(b) was stated in Century City to be whether the geographical area was known for the production of the goods or rendering of the services in question. Thus no individual proprietor would be entitled to exclusivity for the mark LONDON for gin, gin having been produced in London for centuries. BLOEMFONTEIN for gin would, however, be a permissible registration. On the other hand, GORDON’S LONDON GIN (which does not consist exclusively of an indication of geographical origin) would not be hit by section 10(2)(b). In this context it is clear (as is acknowledged in the judgment) that the mark SWARTLAND for wine would be a classic example of a registration liable to be removed from register in terms of section 10(2)(b). However, there is a proviso to section 10 of the Act. Marks liable to be removed from register in terms of section 10 may be exempt from this provision if at the date of application for removal, they have become “capable of distinguishing within the meaning of section 9 as a result of use made of the mark”. The Western Cape High Court, per Bozalek J, found that SWARTLAND was exempt from cancellation under this proviso. The Supreme Court of Appeal upheld this decision, stating that, for decades, Swartland Winery had sold wines under the trade mark SWARTLAND (in sizable quantities), and that no other wine had been sold under such mark. “SWARTLAND” as a trade mark was accordingly found to be distinctive of the wines of Swartland Winery, and its validity was confirmed. Groupe LFE’s final argument for cancellation was based on an allegation that Swartland Winery did not comply with section 11(3)(a) of the Liquor Products Act. It alleged that Swartland Winery did not have the necessary permission to use the designation “Swartland”, and for this reason, use of its trade mark was contrary to law, and the SWARTLAND registration fell to be removed in terms of section 10(12) of the Act. In context, it was found that Swartland Winery’s use of its mark did not fall foul of the Liquor Products Act, and this contention stood to be dismissed. The appeal was dismissed with costs. The judgement clarifies some topical issues in trade mark law. The first of these is that the selfsame term may be used on the one hand as a “badge of origin” or “source identifier” (amounting to trade mark use), and simultaneously, purely descriptively. Only trade mark use may infringe and, as a corollary, only purely descriptive use may be exempt from infringement in terms of section 34(2) of the Act. Whilst it was previously thought that use of a registered mark in a descriptive sense over a period of time would render the mark generic and therefore non-distinctive, this is apparently no longer so. This judgment illustrates that it is possible for descriptive use and trade mark use to run in parallel without impacting on each other. Although this may seem like mental acrobatics, it appears that this shall be a critical distinction for practitioners to make when advising clients on registerability and infringement of descriptive marks. Contact person: Jessica Axelson Senior Associate jessica-a@adamsadams.co.za Suzaan Laing Partner sl@adamsadams.co.za |
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| 3/06/2012 | Posted in: Intellectual Property | ||
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