Tuesday, 13 December 2011

RSA: Adidas v Pepkor - four stripes do not infringe

decorative or a trade mark?
IP livewire from Cluver Markotter, Jeremy Speres, has kindly provided Afro-IP with a summary of the very recent Adidas v Pepkor judgement handed down earlier this month in the Western Cape. Afro Leo feels that this is another High Court IP case which is ripe for appeal, but what do you think?

"In a judgement that is somewhat challenging to read at times, the Court touched on issues that have been quite topical in the local IP industry recently, including use as a trade mark as opposed to mere decorative use, the doctrine of acquiescence, survey evidence and, interestingly, the argument that where the complainant’s mark is well-known, likelihood of confusion is diminished.

Here the respondent, Pepkor Retail Limited, the operator of popular local retailers Pep Stores and Ackermans, had been selling various shoes bearing either 2 or 4 parallel stripes contrasting in colour to the material upon which they are placed.

Adidas sought interdictory relief against Pepkor on the strength of its various registered trade marks consisting of three, equally wide, equally spaced, parallel stripes contrasting in colour to the material upon which they are placed, as well as on the ground of passing off.

It was common cause that the only differences in question between Adidas’s marks and Pepkor’s shoes were the number of stripes and the device and label of origin used (Pepkor used various other marks on their shoes beside the stripes).

One of Pepkor’s defences was that the stripes on its products are used purely decoratively and that they do not function as a trade mark.  The court accepted that it was open to Pepkor to make this argument (at para 43) although ultimately the court appeared to decide the matter on the basis that Pepkor’s marks were not confusingly similar to Adidas’s.  In accepting that Pepkor could raise decorative use as a defence, the court relied on the remarks of Judge Harms in Puma v Rampar Trading (discussed by Afro-ip here) at para 27:

One also cannot use a trade mark and then argue that it was used as ornamentation. It could be different if one is dealing with changes to the mark, for instance, if the registered mark consists of three stripes it would be a question of fact whether the use of two or four stripes would be perceived as decorative or as trade mark use but one could not, I would think, use the same argument in relation to the use of three stripes.

Unfortunately, the court did not consider the judgement of the European Court of Justice in Adidas AG v Marca Mode CV (Case C-102/07) where it was found that generally, the public’s perception that a mark is used decoratively cannot limit the registered proprietor’s protection where that mark is so similar to the registered mark that the public is likely to be confused.

Pepkor also sought to argue that Adidas had acquiesced in the use by others of branding consisting of two and four parallel stripes.

It is to be noted that some have forcefully argued that the doctrine of acquiescence does not form part of our law, most notably Adv. Alasdair Sholto-Douglas SC in New Media Publishing (Pty) Ltd v Eating Out Web Services CC 2005 (5) SA 388 (C) where the question was not ultimately decided. In this case however, the court seemed to accept that the doctrine is applicable (at paras 44 and 114) but found that it had insufficient evidence before it to show that Adidas had in fact acquiesced.

Regarding survey evidence, Adidas commissioned a market survey which seemed to find that consumers form a general impression of Adidas’s marks and that quite a few participants gave “stripes” as opposed to “three stripes” as their answer for identifying an Adidas product (at para 38).

Highlighting the difficulties involved in survey design and the great weight given to proof of actual confusion, the court gave the survey short shrift, finding that Adidas could have attempted to show actual confusion by showing the survey participants Pepkor’s shoes, which was not done.

Finally, and most interestingly, the court appeared to accept an argument that has generally not found favour in the courts (see Webster and Page at para 6.6.7), providing a rare example of the renown of a complainant’s mark actually counting against the complainant’s case!  

Pepkor argued (see pg 35 and para 80) that the renown of Adidas’s three stripes excludes the possibility of less or more than three stripes causing confusion, i.e., where a mark is renowned, likelihood of confusion is diminished.

Here the court appeared to accept this argument (at paras 116-119) in combination with the doctrine of imperfect recollection.  The reasoning of the court appeared to be that Adidas could not rely on the imperfect recollection of consumers (i.e. consumers failing to recollect that the Adidas mark consists of three stripes as opposed to two or four) given that Adidas’s three stripes are so well-known.  

One gets the sense though that this finding was informed more by the fact that potential decorative use was involved and the “requirement of availability” (in the words of the ECJ in Marca Mode)."

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Afro Leo's two cents worth:

* This is another judgement that fails to appreciate that markings on shoes (other than word marks) are more valuable than word marks when it comes to protecting a brand and are very strong source identifiers. Copycats should clearly use their marks decoratively if they want to escape infringement.
* It is interesting that Adidas did not rely on the unfair advantage or detriment provisions when pleading trade mark infringement but did do so under the heading of passing off.
* Afro Leo feels that these types of cases are better suited to arguments that well known brands are diluted under the infringement provisions, interested that passing off is considered wide enough to include dilution at common law and wonders why the Judge did not appear to address the passing off dilution arguments in more detail.
* The Judge, on the other hand, has been very bold to fly in the face of local decisions using arguments that generally mean that less protection is given to reputable marks because they are known, and that the South African public is less likely to be confused in the post economic sanction period!
* As far as acquiescence is concerned, Afro Leo had the privilege of listening to Adv Burt Bester try to persuade Judge Harms in the KG footwear SCA matter that it formed part of RSA law, to no avail.

1 comment:

CalmTiger said...

This is an interesting outcome, very close to the ECJ ruling in Adidas/Marca Moda on the three stripes. Some good case law being built up on the subject now, and I find the part of the decision that discusses and dismisses the 'embellishment' argument particularly refreshing.

Kenya's Trade Marks Act says the following amounts to infringement at Section 7(1): "...that right (exclusive trade mark right) is infringed by any person who, not being the proprietor of the trade mark or a registered user thereof using by way of permitted use, uses a mark identical with or so nearly resembling it as to be likely to deceive or cause confusion in the course of trade or in connection with the provision of any services in respect of which it is registered, and in such manner as to render the use of the mark likely to
(a) be taken either as being used as a trade mark;
(b) be taken in a case in which the use is upon the goods or in physical relation thereto or in an advertising circular or other advertisement issued to the public, as importing a reference to some person having the right either as proprietor or as registered user to use the trade mark or goods with which such a person is connected in the course of trade;
...
(d) cause injury or prejudice to the proprietor or registered user of the trade mark.

I do not think Kenyan courts would agree that use as an embellishment would amount to infringement, based on Section 7(1) (a), though such use is, arguably, likely to cause injury as provided in 7(1)(d) or may even be seen to import a reference to some person with a right to use the trade mark as in 7(1)(b).