The LOTTO cases

The LOTTO cases : Online Lottery Services (Pty) Limited v National Lotteries Board and Others [2007] 1 All SA 618(T)

Rights in the LOTTO trade mark were the subject of two applications to the Pretoria High Court recently which were heard simultaneously.  The first was by the operators of the LOTTO national lottery, National Lotteries Board, to restrain Online Lottery Services (Pty) Limited ("Online") from trading as LOTTOFUN, and from making use of this trade mark, on the basis of trade mark infringement and passing-off.  The second was by Online to cancel the LOTTO trade mark registration of the National Lotteries Board on the basis that it did not constitute a trade mark.

Online operated a website with the name LOTTOFUN selling LOTTO tickets via the internet and small message services (SMS) provided by cell phone networks.

The interdict (injunction) application was based on Section 34(1)(a) of the Trade Marks Act.  The Court repeated the established requirements to succeed, namely: unauthorised use, in the course of trade, in relation to goods or services in respect of which the mark is registered, of an identical mark or a mark so nearly resembling it as to be likely to deceive or cause confusion.

Online argued that it made clear on its website that it merely purchased and offered LOTTO tickets as an “agent”, and therefore did not sell lottery tickets per se.  The Court held, however, that its use of LOTTOFUN was as a trade mark in relation to services in respect of which LOTTO was registered.  The other infringement requirements having been established, the only issue in dispute was, therefore, whether there was a likelihood of deception or confusion arising through the use of the trade marks LOTTO and LOTTOFUN.

The Court reviewed the general principles of trade mark infringement and referred to the judgement in Bata Limited v Face Fashion CC and another 2001 (1) SA 844 (SCA), where the Supreme Court of Appeal quoted with approval a decision of the European Court of Justice in Sable BV v Puma AG, Rudolph Dassler Sport [1998] RPC 199, and stated :

“Global appreciation of the visual, aural or conceptual similarity of the marks in question, must be based on the overall impression given by the marks, bearing in mind in particular, their distinctive and dominant components”.

The Court went on to examine the well-established principles of passing-off.  It held that a considerable reputation and goodwill vested in the trade mark LOTTO and that it had become distinctive as indicating the origin of the national lottery game.

Despite the fact that Online had statements on its website that “LOTTOFUN is an independent operator” and had “no direct affiliation with the National Lotteries Board”, the Court found that the use of LOTTOFUN by Online was likely to deceive and thus cause confusion or injury, actual or probable, to the goodwill of the National Lotteries Board’s business.  It granted interdicts based on both statutory infringement and passing-off.

In the cancellation application, Online argued that the LOTTO trade mark registration was an entry wrongly remaining on the Register as it did not constitute a trade mark as required by Section 10(1) of the Trade Marks Act.

The Court held that, although the word “lotto” has a dictionary definition of “a game of chance like bingo, but with the numbers drawn by players instead of called”, when the South African lottery was launched in 2000, the word “lotto” was obscure and, to all intents and purposes, meaningless in this country.  The trade mark LOTTO was therefore capable of distinguishing the National Lotteries Board’s lottery from any other and the cancellation application was dismissed.

We understand that these cases will be going on appeal.

15 March 2007