On 27 May 2016 the Supreme Court of Appeal handed down a landmark judgment dealing with the lawfulness of bidding on a competitor’s trade mark as a Google Adword. It confirmed that bidding on an unregistered trade mark of a competitor (without more) as a Google Adword does not amount to passing off or unlawful competition.
The Supreme Court of Appeals decision brings South Africa into line with the majority of other jurisdictions (including the United Kingdom, the USA, France, Germany, Spain, Canada, Australia and New Zealand) which have adopted a similar approach to the issue. In most overseas decisions keyword bidding will only be unlawful in certain situations such as where there is a likelihood of confusion or dilution can be shown to exist.
The Court reached its decision in considering a number of factors including giving recognition to the fact that the purpose of the law of passing off is not to create monopolies; and that the necessity to show confusion in passing off cases is important in striking the correct balance between protecting the rights of traders and promoting competition. For this reason court declined to recognise that the use of trade marks as an Adword justified the recognition of a broader unlawful competition remedy which dispensed with this requirement. The Court also held that consumers are used to having to “sort the wheat from the chaff” in internet search results and therefore are not likely to be confused by use of a trade mark as an Adword, provided that the text of the advertisement displayed is not confusing and enables consumers to correctly determine the source of the goods or services on offer.
The decision was handed down in a dispute between Cochrane Steel Products (Pty) Ltd and M-Systems Group (Pty) Ltd, who both provide security fences. For previous commentary on this case, click here
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