Brief Summary

Trade Mark — Registration — Inherent distinctiveness — Appellant's counter-application for removal of respondent's registered trade mark THE LOOK — Respondent's mark found to lack inherent or acquired distinctiveness — Appeal upheld, and mark ordered to be removed from the register. The appellant, Pepkor Retail (trading as Ackermans), sought to expunge the respondent Truworths Limited's registered trade mark THE LOOK, arguing it was not capable of distinguishing their goods. The Supreme Court of Appeal found that the mark did not possess inherent distinctiveness and had not acquired distinctiveness through use, leading to the cancellation of the mark's registration.

Comprehensive Summary

Summary of Judgment

1. Introduction

This was an appeal to the Supreme Court of Appeal against an order of the Western Cape Division of the High Court, Cape Town. The proceedings arose from trade mark litigation in the fashion retail sector, and centrally concerned the validity and enforceability of a registered word mark.

The appellant, Pepkor Retail (Proprietary) Limited (referred to in the judgment for convenience as Ackermans, a name under which it trades), opposed enforcement proceedings brought by the respondent, Truworths Limited (Truworths), the proprietor of the registered trade mark THE LOOK. Truworths had brought an application for interdictory relief to restrain Ackermans’ use of the phrase THE LOOK FOR LESS and related uses of THE LOOK in its advertising and store signage. Ackermans resisted the interdict and filed a counter-application seeking the removal (expungement) of Truworths’ registered mark from the trade marks register.

In the court of first instance, Mantame J granted Truworths the interdict and dismissed the counter-application for removal of the mark. That court also granted an application to strike out portions of Ackermans’ replying affidavit in the counter-application. Leave to appeal was granted, and the appeal before the SCA was directed at the whole of the order.

On appeal, Truworths disavowed reliance on two bases that had succeeded in the High Court, namely breach of an undertaking and passing off. The appeal therefore ultimately turned on statutory trade mark infringement only, but the SCA held that the dispute would be dispositively resolved if Ackermans succeeded in showing that the trade mark should be removed from the register for want of distinctiveness.

2. Material Facts

Truworths and Ackermans were competitors in the fashion retail industry, both selling clothing, footwear, headgear, and fashion-related goods. Ackermans was described as a “value” retailer aimed at affordability.

Truworths’ mark THE LOOK was registered under the Trade Marks Act 194 of 1993 with effect from 1 April 1998, in classes 16, 25, and 35. It was common cause in substance that there was no evidence of use prior to registration. The judgment records that it was only during 2009 that Truworths commenced “any discernible use” of the mark, including use on labels and swing tags attached to goods, and also in customer mailers, posters, and on its website.

The judgment noted a disputed aspect regarding Truworths’ description of stores said to trade under THE LOOK. In its founding affidavit, Truworths claimed it had several stores “trading under THE LOOK trade mark” (naming five stores opened between 2009 and 2010, with photographs). The SCA described that characterisation as at best a misdescription and at worst disingenuous, because the photographs showed TRUWORTHS as the dominant store name with THE LOOK in much smaller type as an addendum (described as more accurately “TRUWORTHS – THE LOOK” stores). The judgment recorded that a further five TRUWORTHS – THE LOOK stores were opened during 2014.

In 2011, Ackermans embarked on a rebranding exercise that led to the conceptualisation of the phrase THE LOOK FOR LESS. In March 2012, Ackermans commenced use of that phrase in promotional material and in stores. For store signage, the phrase appeared on the back of store entrance signs so that it was generally visible to customers leaving the store, and Ackermans gave more prominence to the words THE LOOK than to FOR LESS. Ackermans also operated a store in the Eikestad Mall in Stellenbosch, where Truworths also had a TRUWORTHS – THE LOOK store presence.

Towards the end of 2013, Truworths objected to Ackermans’ use of the phrase. Negotiations resulted in an agreement dated 5 December 2013 in which Ackermans undertook, in substance, to refrain from using THE LOOK on its own, and to never use THE LOOK FOR LESS or THE LOOK as a store name or as a label or swing tag in relation to clothing, footwear, or headgear.

During the latter part of 2014, Truworths alleged that Ackermans’ signage at the Eikestad Mall store constituted both a breach of the undertaking and infringement of the registered mark. Negotiations failed, and Truworths launched the application for interdictory relief relying on infringement under section 34(1)(a) or section 34(1)(c) of the Act (and, in the High Court, also breach of undertaking and passing off). Ackermans opposed and counter-applied for expungement under section 10(1) and section 10(2)(a), (b), or (c).

A procedural dispute arose because Ackermans included material in its replying affidavit in the counter-application that related to the main application; Truworths brought a strike-out application, which succeeded in the High Court and remained relevant on appeal only to the extent of the costs and correctness of that order.

3. Legal Issues

The central legal questions before the SCA concerned registrability and continued entitlement to registration of the trade mark THE LOOK and, consequently, whether Truworths could rely on it to restrain Ackermans’ use.

In particular, the court had to determine whether THE LOOK was liable to be removed from the register because it was not capable of distinguishing as required by section 9 and rendered unregistrable and removable by section 10, including whether it:

constituted a mark not capable of distinguishing within the meaning of section 9 (section 10(2)(a));

consisted exclusively of a sign or indication that may serve, in trade, to designate characteristics of the goods or services (section 10(2)(b)); and/or

consisted exclusively of a sign or indication that has become customary in the current language or established trade practices (section 10(2)(c)).

The dispute, as approached by the SCA, primarily involved questions of fact and the application of statutory criteria to those facts, notably the factual assessment of inherent distinctiveness and acquired distinctiveness (distinctiveness “as a result of use” under the proviso to section 10(2)). The judgment treated distinctiveness as a fact-sensitive enquiry dependent on the nature of the mark, the relevant goods/services, the industry context, and the perception of average consumers in that market.

Because Truworths abandoned reliance on breach of undertaking and passing off on appeal, the infringement claim under section 34 stood or fell with the continued validity of the registration; accordingly, the counter-application for removal became determinative of the appeal.

4. Court’s Reasoning

The SCA began by restating the accepted function of a trade mark as a “badge of origin”, serving to distinguish one trader’s goods or services from those of another. Citing prior SCA authority, the court linked this function to the statutory requirement in section 9 that a mark must be capable of distinguishing, either because it is inherently capable of doing so at the date of application for registration, or because it is capable by reason of prior use.

Against that framework, the court treated the inquiry into inherent or acquired distinctiveness as fact-specific, to be determined with reference to the relevant circumstances, including how the average consumer in the fashion retail market would perceive the sign. The court adopted the practical question whether the sign would trigger origin-specific or origin-neutral perceptions in the minds of consumers in the relevant trade.

On inherent distinctiveness, the court accepted evidence led by Ackermans (and not disputed in substance) that the words “the look” have a common meaning in English associated with style or fashion, and that the words are used in ordinary language and by the fashion industry to convey that apparel or an outfit is current or fashionable. The court emphasised undisputed evidence of extensive use of “the look” and derivatives such as “get the look” by multiple competitor fashion retailers, with examples from retailers including Woolworths and Edgars. From this, the court drew what it described as an “ineluctable conclusion”: within the fashion retail industry, the term “the look” carries a universal ordinary meaning referring to fashionable or trendy clothes or outfits, and therefore does not function as a distinctive indicator of trade origin for Truworths’ goods.

Having reached that conclusion, the court found that the mark was not inherently capable of distinguishing Truworths’ goods, and thus was liable to removal under section 10(2)(a). The court also held that the mark fell within sections 10(2)(b) and (c) because it consisted exclusively of words with a generic descriptive meaning in general use in the trade, serving to designate the kind of goods or at least a characteristic thereof, and had become customary in the language and established practices of the fashion retail trade. The court stated that Truworths could have no monopoly over such words in the industry context described on the evidence.

The SCA then addressed whether the mark nevertheless survived by virtue of the proviso to section 10(2), namely whether, at the date of the removal application, it had in fact become capable of distinguishing as a result of use. The court approached this as requiring evidence that the mark, through use, had come to be recognised by the average consumer as denoting a particular trader.

On this issue, the court emphasised the absence of market survey evidence or other independent evidence reflecting public perception of the mark in the marketplace. It found the affidavits Truworths produced in reply unhelpful because the deponents were long-time participants in clothing design and manufacture and suppliers to Truworths, and were not positioned to speak for the average consumer; their views were also expressed tentatively. The court further accepted that evidence showing sales turnover and the quantum of use established only that the mark had been used, and reaffirmed the principle (with reference to authority) that use does not equal distinctiveness; the question was whether use resulted in consumer recognition of the mark as origin-denoting.

A further factor reinforcing the absence of acquired distinctiveness was that the mark was used without exception in close conjunction with the well-known marks TRUWORTHS and BASIX, which the court treated as undermining the contention that consumers would perceive THE LOOK independently as an indicator of trade origin. In the result, the SCA was satisfied that the mark did not acquire distinctiveness through use and was therefore liable to removal despite the proviso.

Given the conclusion that the trade mark registration should be cancelled and removed, the court held that Truworths’ interdictory relief based on infringement could not stand and that the appeal against the main application therefore had to succeed. The Registrar of Trade Marks had been cited in the counter-application but played no part in the proceedings. As to the strike-out order, the SCA indicated it rested on a “trite principle” and left it intact. The court considered the employment of two counsel justified both in the SCA and in respect of the main and counter-applications in the High Court.

5. Outcome and Relief

The SCA upheld the appeal with costs, including the costs of two counsel. It set aside the order of the High Court and replaced it with an order dismissing Truworths’ main application and granting Ackermans’ counter-application.

The substituted order dismissed the main interdict application with costs (including two counsel), granted the counter-application by cancelling Truworths’ trade mark registration number 1998/05493-5 in classes 16, 25, and 35, directed the Registrar of Trade Marks to cancel and remove those registrations from the register, and ordered Truworths (as applicant in the counter-application) to pay the costs of that counter-application (including two counsel). The order granting the strike-out application, with costs, was also retained.

Cases Cited

Beecham Group plc & another v Triomed (Pty) Ltd [2002] ZASCA 109; 2003 (3) SA 639 (SCA).

AM Moolla Group Ltd & others v The Gap Inc & others [2005] ZASCA 72; 2005 (6) SA 568 (SCA).

Legislation Cited

Trade Marks Act 194 of 1993, section 9.

Trade Marks Act 194 of 1993, section 10(1), section 10(2)(a), section 10(2)(b), section 10(2)(c), and the proviso to section 10(2).

Trade Marks Act 194 of 1993, section 34(1)(a) and section 34(1)(c).

Trade Marks Act 194 of 1993, sections 3 and 70 (referred to in the text of section 10).

Rules of Court Cited

No specific rule of court was expressly cited in the judgment.

Held

The Supreme Court of Appeal held that the registered trade mark THE LOOK lacked inherent distinctiveness in the fashion retail industry because it bore a generic descriptive meaning associated with fashionable style and was widely used in the trade in an origin-neutral sense.

The court further held that the mark also fell within the statutory exclusions in section 10(2)(b) and section 10(2)(c) because it consisted exclusively of descriptive/customary trade language, and Truworths could not claim a monopoly over those words in that market.

The court held that Truworths failed to establish that the mark had acquired distinctiveness through use under the proviso to section 10(2), particularly in light of the lack of independent evidence of consumer perception and the consistent use of THE LOOK in conjunction with the house marks TRUWORTHS and BASIX.

Accordingly, the court held that the mark was liable to be removed from the register, and that the interdictory relief premised on infringement could not be sustained; the counter-application for expungement succeeded and the main application was dismissed.

LEGAL PRINCIPLES

A trade mark’s fundamental function is to operate as a badge of origin, distinguishing one trader’s goods or services from those of another; this is reflected in the requirement in section 9 of the Trade Marks Act 194 of 1993 that the mark must be capable of distinguishing.

Distinctiveness may be inherent (arising from the nature of the mark at the date of application) or acquired (arising from use). Whether a mark is inherently or acquiredly distinctive is a question of fact, assessed in the context of the relevant goods/services, the relevant industry, and the perception of the average consumer in that market.

A word mark that is descriptive of the goods or their characteristics, or that has become customary in the language and established practices of the trade, is not inherently capable of distinguishing and is liable to removal under section 10(2)(a) and may also fall within sections 10(2)(b) and (c).

For acquired distinctiveness, evidence must show that use of the mark has resulted in consumer recognition of the mark as identifying a particular trader’s origin; use and turnover figures alone do not establish distinctiveness, because use does not equal distinctiveness.

Pepkor Retail (Proprietary) Limited v Truworths Limited (900/2015) [2016] ZASCA 146 (30 September 2016)