Update - Trade Mark Dilution Through Tarnishment of the Black Label Trade Mark in South Africa

The appeal to the Constitutional Court in the Laugh It Off Promotions vs South African Breweries case was heard on Tuesday, 8 March 2005. The appellant (Laugh It Off) applied for leave to appeal an earlier judgment of the Supreme Court of Appeal, in which the court had found dilution of the respondent’s (South African Breweries) trade mark through tarnishment.

The Freedom of Expression Institute appeared as amicus curiae (a friend of the court) in this matter. They sided with Laugh It Off, and argued that even though proprietors of trade marks are afforded considerable protection, they should not be able to exercise their rights in a way that stifles social commentary.

The parties in the matter appeared to be in agreement that the issue before the court was essentially the balancing of the right to freedom of expression with the right to protect a trade mark. The Constitutional Court reserved judgment, which is expected to be handed down shortly. We will keep you informed of developments in this matter.

The facts of the case are as follows:

Laugh It Off had produced and sold T-shirts with the general layout and colours of the respondent’s registered marks for a beer label, but with a different message. The trade mark BLACK LABEL had been replaced by BLACK LABOUR while the slogan "America’s lusty, lively beer – brewed in South Africa" had been replaced by "Africa’s lusty, lively exploitation since 1652 – no regard given worldwide".

In the court of first instance, Judge Cleaver made an order against Laugh It Off Promotions on the basis of trade mark infringement in terms of Section 34(1)(c) of the Trade Marks Act 194 of 1993 ("the Act"), which protects well known marks against dilution. However, Laugh It Off Promotions appealed against the order. Therefore, the issue on appeal related to trade mark infringement, and more particularly infringement by way of dilution through tarnishment. Section 34(1)(c) of the Act provides the statutory basis for such a claim and in order to establish infringement, an owner of a trade mark must establish:

the unauthorised use by the defendant of a mark;

in the course of trade;

in relation to any goods or services;

the mark must be identical or similar to a registered trade mark;

the trade mark must be well known in the Republic; and

the use of the defendant’s mark would be likely to take unfair advantage of, or be detrimental to, the distinctive character or the repute of the registered trade mark.

The court was also faced with the related question of whether or not, on the facts of this case, a finding of infringement would impinge on the appellant’s entrenched freedom of expression in terms of Section 16(1) of the Constitution of South Africa.

The court found it was common cause that integers (a)-(e) had been established and all that remained was whether the appellant’s use of BLACK LABOUR together with the slogan "Africa’s lusty, lively exploitation..." on T-shirts was likely to take unfair advantage or be detrimental to the distinctive character or repute of the respondent’s registered marks BLACK LABEL and AMERICA’S LUSTY, LIVELY BEER.

In considering the meaning of the word "detrimental", the court stated that it is inconceivable that any mere detriment could suffice and it is implicit that detriment, in order to be actionable, has to be unfair in the sense that the release may not unfairly or unduly encroach on the rights of others – including the freedom of expression. A further qualification is that the law, as a general proposition, concerns itself with matters of substance only and accordingly insubstantial prejudice to a trade mark owner is not enough. Since neither freedom of expression nor trade mark rights are absolute, the court found it necessary to consider how they should be balanced.

The court considered the interpretation of the message not only through the eyes of the typical purchaser of such T-shirts but also through the eyes of those who are exposed to the purchaser’s attire. The court accepted the trade mark proprietor’s submission that the message conveyed is that since time immemorial it has exploited, and still is exploiting, black labour and that it should have a feeling of guilt, but could not care less. The court found that the message is likely to create in the mind of consumers a particularly unwholesome, unsavoury or degrading association with the registered marks and that anyone who has seen the appellant’s T-shirt would not be able thereafter to disassociate it from the respondent’s trade marks.

The court rejected the appellant’s argument to the effect that there was no detriment because the respondent had not established that there had been a loss of sales of its beers as a result of its T-shirt sales, stressing that Section 34(1)(c) does not require proof of actual loss, but only the likelihood of loss.

The court also stressed that the prohibited use must be "in the course of trade" - in other words, in relation to goods or services. In considering the actual use made by the appellant, the court took into account the predatory intent, stressing that the T-shirts are primarily a marketable commodity and not only a communication medium. Therefore, a significant factor which influenced the court was that Laugh It Off Promotions was in the business of marketing clothing, and using well known marks for the marketing of its goods was the whole basis of their commercial existence.

Consequently, the court found that the message on the T-shirt is materially detrimental to the repute of the registered trade mark and then considered whether freedom of expression constituted justification.

The court took into account the aforementioned predatory intent and noted that while many cases of parody constituting fair comment could be justified, parody per se was not a defence against trade mark infringement, and purely derisory parody of a mark should not be entitled to protection. The court accordingly found that Laugh It Off Promotions’ reliance on the right to freedom of expression was misplaced.

The court accordingly granted an injunction and ordered that the legal costs of the case should be paid by Laugh It Off Promotions.

The effect of this judgment is that the anti-dilution provisions contained in Section 34(1)(c) of the Trade Marks Act were not found to be in conflict with the right to freedom of expression as contained in Section 16(1) of the Constitution. Instead, balancing the right to freedom of expression and trade mark rights needs to be considered on a case by case basis.

Duncan Maguire

Spoor & Fisher

Date published: 2005/03/01
Author: Duncan Maguire

Tags: trade mark dilution black label trade mark