All Bets Off For Lotto
7/09/2009

The Supreme Court of Appeal has handed down judgment in favour of On-Line Lottery Services (Pty) Limited (On-Line), in an appeal by that party against the judgment of Justice Motata in favour of The National Lotteries Board and its (then) sole licensee, Uthingo Management (Pty) Limited (Uthingo).

Adams & Adams represented On-Line in its successful appeal.
Briefly, On-Line trades as Lottofun and essentially provides an agency service that allows its registered members to place orders for lottery tickets in the National Lottery using the internet or a cellular telephone sms service. This avoids the need for people to stand in queues and tickets can conveniently be purchased from home etc in respect of the following lotto draw or draws thereafter. For this service, On-line charges customers a service fee of 15%. Customers are required to register by agreeing to a number of terms and conditions on On-Line's website, www.lottofun.co.za, before use can be made of the service and such terms and conditions clearly define the relationship as one of agency.
The Lotteries Board relied in its application before the court a quo on trade mark registrations for the mark LOTTO in class 36 in respect of "services for and in connection with financial services" and class 41 in respect of “services for and in connection with lotteries". It and Uthingo instituted proceedings against On-Line on the basis of trade mark infringement, passing off, unlawful conduct by contravention of the Lotteries Act (on the basis that On-Line’s activities amount to the sale of tickets for the National Lottery) and unlawful competition. On-Line brought a counter- application for expungement of the trade mark registrations on the basis that the word lotto was not capable of distinguishing, was entirely descriptive and was generic. A further basis for expungement of the word lotto was that the Lotteries Board had not made bona fide use of the word as a trade mark and that it was liable to be removed from the Register on the basis of non-use. The court a quo granted the application in toto and dismissed the counter-application.
On appeal, the SCA held that the mark LOTTO was appropriated by the Lotteries Board as a word already in general circulation which possessed a generic and descriptive meaning over which the Lotteries Board could not have a monopoly and the word should be open to use by all competitive undertakings in the gaming industry. The mark cannot function as a badge of origin as it does not identify the source of the services. Furthermore, the court held that the registration in class 36 had not been used in relation to the relevant services for the five year period applicable. Therefore, in view of all the circumstances, the court found that the trade marks had been wrongly entered and wrongly remained on the Register. It accordingly ordered the expungement of the registrations, which brought an end to the infringement issue.
The court further held that there was no passing off by On-Line and that On-Line was merely facilitating the purchase of tickets through an agency relationship, which did not amount to a contravention of the Lotteries Act (there was no provision of services in respect of “betting, wagering, gambling or any game of risk on the outcome of any lottery").

Lucy Signorelli
Partner
Lucy-S@adamsadams.co.za
7 September 2009