Brief Summary

Trade mark — Infringement and passing off — Appellants, owners of well-known three stripe trademarks, alleged that respondent's use of two and four stripes on footwear infringed their trademarks and constituted passing off — High Court dismissed application — On appeal, held that respondent's use of stripes constituted trademark infringement and passing off, as it was likely to deceive or cause confusion among consumers — Appeal upheld, interdict granted against respondent's use of infringing marks.

Comprehensive Summary

Summary of Judgment

Introduction

The proceedings were an appeal to the Supreme Court of Appeal against a judgment of the Western Cape High Court, Cape Town, in application proceedings concerning trade mark infringement and passing off in relation to sporting footwear.

The appellants were Adidas AG (the proprietor of four registered three-stripe trade marks) and Adidas International Marketing BV (which held rights in the get-up of certain Adidas footwear relied upon for the passing-off claims). The respondent was Pepkor Retail Limited, which conducted retail business through divisions including Ackermans and Pep Stores.

In the High Court, Adidas brought an application seeking interdictory and ancillary relief, alleging that Pepkor’s sale of shoes bearing two and four parallel stripes infringed Adidas’s registered trade marks and amounted to passing off. Pepkor opposed the application and brought a counter-application seeking the entry of disclaimers under section 15 of the Trade Marks Act 194 of 1993, aimed at limiting Adidas’s exclusivity in respect of parallel stripes. The High Court (Allie J) dismissed Adidas’s application and also dismissed Pepkor’s counter-application. Adidas appealed with the leave of the High Court. Pepkor did not cross-appeal against the dismissal of the counter-application.

The general subject matter of the dispute was whether Pepkor’s stripe motifs on certain trainers and a soccer boot constituted unauthorised trade mark use likely to cause deception or confusion under the Trade Marks Act, and whether the overall get-up of certain Pepkor products would likely mislead consumers into believing an association with Adidas (passing off).

Material Facts

It was undisputed that Adidas’s business and its three-stripe branding were long-established and highly reputable internationally and in South Africa, and that the three-stripe mark was used prominently as a badge of origin. It was also not in dispute that Adidas’s three-stripe mark had been used on footwear since 1949, was emphasised in Adidas’s marketing, and had become highly distinctive and well-known.

It was common cause that Pepkor is a major South African retailer operating, inter alia, Ackermans and Pep Stores, serving mass-market and lower-to-middle market consumers and selling clothing and footwear at comparatively low prices. It was also accepted that, in the South African market, consumers are exposed to sporting footwear from various manufacturers bearing stripe motifs of differing numbers and configurations.

Adidas was the registered proprietor of four trade marks, each consisting of three parallel stripes (in defined configurations and placements, generally contrasting with the shoe material) registered in Class 25 for, broadly, footwear and clothing including footwear (with two registrations specifically for “sporting footwear of all kinds”). Adidas discovered around October 2007 that Pepkor’s divisions were selling trainers and soccer boots with prominent two-stripe and four-stripe motifs. Adidas demanded that Pepkor desist; Pepkor refused, denying infringement and passing off and indicating it would continue unless restrained.

Pepkor initially alleged it was no longer selling the goods by the time proceedings were instituted and contended that interdictory relief should not be granted. After Adidas showed the contention to be factually unfounded, Pepkor did not persist with the point. The court accepted that Pepkor’s stance that it saw nothing wrong in the conduct provided a basis for Adidas to apprehend continuation.

The infringement claim concerned Pepkor’s use of stripes on six items of footwear. The court ultimately differentiated between the items for purposes of likelihood of confusion. On the infringement analysis, the court found that the four-stripe marks on two particular shoes—identified in the judgment by reference to annexures TB8 (the “LDS Sports shoe”) and TB9 (the “Mens’ ATH Leisure shoe”)—created the relevant similarity for infringement. The court did not find infringement in relation to the other contested items, including certain shoes/boots with four stripes and those with two stripes, because they were found not sufficiently similar to the registered marks in the manner required.

For passing off, the court assessed the overall get-ups and concluded that Pepkor’s get-up incorporating four stripes in relation to certain products (including those depicted in annexures TB9, TB10, and TB11) was likely to mislead the notional purchaser, whereas the two-stripe products (associated with annexures TB12 and TB13) were not.

Legal Issues

The central legal questions were whether Pepkor’s use of two and four parallel stripes on sporting footwear constituted:

A likelihood of deception or confusion amounting to trade mark infringement under section 34(1)(a) of the Trade Marks Act 194 of 1993, requiring comparison of the registered marks with the allegedly offending marks as used in the course of trade on goods for which the marks were registered.

Passing off, requiring proof that Adidas’s get-up (including but not limited to striping) had become distinctive of Adidas’s goods and that Pepkor’s adoption of similar get-up involved an implied misrepresentation likely to deceive or confuse a substantial portion of the public.

A preliminary and materially important issue on infringement was whether Pepkor’s stripe motifs were used as trade marks (i.e., as source indicators), or merely as decoration/embellishment. This was treated as a factual question assessed objectively by consumer perception.

The dispute primarily concerned the application of legal standards to facts: the evaluation of resemblance, the global appreciation of likely consumer impressions, and whether confusion or deception was likely. It also involved evaluative judgment (for example, assessing the impact of Adidas’s reputation on confusion, and the effect of market circumstances such as pricing and retail channels).

Court’s Reasoning

Trade mark infringement: governing principles and “trade mark use”

The court approached infringement through the wording of section 34(1)(a), emphasising that the protection extends beyond identical marks to those “so nearly resembling” the registered mark as to be likely to deceive or cause confusion. It accepted that principles developed under the predecessor provision, section 44(1)(a) of the Trade Marks Act 62 of 1963, remained applicable.

On Pepkor’s contention that the stripes were mere embellishment and not trade mark use, the court treated the question as one of fact, determined objectively by how consumers would perceive the mark. It considered that, in the context of sporting footwear, stripes are commonly used by manufacturers as identifiers, and that it would be difficult to persuade a court that ornamentation placed on such goods is not used for distinguishing purposes. The court endorsed the principle that use of another brand name on the product does not preclude the stripe motif from also functioning as a trade mark, drawing support from authority recognising that multiple trade marks can appear on the same goods.

Scope of rights and the “impermissible extension” argument

Pepkor argued that Adidas was attempting to expand its monopoly beyond three stripes and to claim generic features. The court rejected the characterisation, reasoning that the statutory enquiry under section 34(1)(a) is whether the allegedly offending mark nearly resembles the registered mark to the extent that deception or confusion is likely. The court stressed that it is the registered mark as it appears on the register that is protected, and each allegedly infringing mark must be compared with the registered marks as recorded. The attempt to limit protection by informal argument (rather than via mechanisms in the Act) was not accepted as affecting the infringement enquiry, particularly given that Pepkor’s disclaimer counter-application had failed and was not pursued on appeal.

The comparison test and the relevance of reputation

The court applied the established comparison methodology, emphasising that the likelihood of deception or confusion is assessed by considering the overall impression in the marketplace, from the perspective of a notional purchaser of average intelligence with proper eyesight buying with ordinary caution. It reiterated that the comparison is not a meticulous side-by-side exercise, and allowance must be made for imperfect recollection and real-world consumer circumstances. It highlighted that confusion need not extend to all consumers; it suffices if a substantial number would probably be confused as to origin or a material connection.

A significant point of reasoning concerned Pepkor’s argument that the fame of Adidas’s three-stripe mark made confusion unlikely because consumers would immediately detect the difference between three stripes and two or four. The court rejected this, reasoning that greater distinctiveness and reputation generally increase, rather than diminish, the risk that a similar sign on competing goods will be taken as indicating a connection with the trade mark owner, particularly given imperfect perception and recollection.

Application to the particular footwear: infringement findings

The court accepted that Pepkor’s use was unauthorised, in the course of trade, and on goods within the relevant registration scope. The decisive enquiry became resemblance and likely confusion.

In applying the comparison, the court considered it permissible to refer to how the Adidas trade marks were applied to Adidas footwear to appreciate the impression produced. It concluded that several of Pepkor’s contested products did not create sufficient similarity for infringement. However, the four-stripe configuration on the products depicted in annexures TB8 and TB9 was found to share the essential configuration and general impression of the registered marks: grouped parallel stripes running from fastening to sole, slanting toward the heel, equal width, equidistant spacing, and contrasting colour/material. The court considered that the difference in number of stripes did not, in those instances, avoid the likelihood of deception or confusion, particularly when allowance was made for imperfect recollection. In reaching this conclusion, the court regarded the reasoning in earlier litigation involving Adidas and a four-stripe mark as still applicable to the present configuration-based comparison.

The court also addressed Pepkor’s reliance on the absence of evidence of actual confusion, stating that deception or confusion is for the court to decide and that little weight should be attached to the absence of such evidence given evidentiary difficulties. It similarly rejected the argument that different retail markets and price points eliminated confusion, reasoning that the evidence did not establish watertight separation of consumer markets; consumers may shop across outlets, and at least momentary confusion at the point of selection from displayed goods remained plausible.

Passing off: principles and application to get-up

Turning to passing off, the court set out the established requirements for an implied misrepresentation: Adidas had to show that its get-up (or relevant features) had become distinctive of its goods, and that Pepkor’s use of a similar get-up would likely deceive or confuse a substantial section of the public into thinking Pepkor’s goods were Adidas’s or connected with Adidas.

The court accepted that the distinctiveness and reputation of Adidas’s trade marks were undisputed, and that the distinctiveness of the broader get-ups relied upon could be inferred from the manner and scale of use. In assessing deception, the court used the notional average purchaser standard, taking account of marketplace realities such as imperfect recall, lack of side-by-side comparison, and the fact that some consumers may be unable to read simple words. It also reiterated that passing off does not grant a monopoly in a successful get-up, but copying creates risk and the copier must make it perfectly clear that the goods are its own to avoid deception.

Applying these principles, the court rejected passing off in respect of the two-stripe shoes compared to Adidas’s Superstar shoe, emphasising that the two widely spaced stripes were clearly different and that Pepkor’s shoes prominently bore other identifying trade marks (such as “Hang Ten” and “actif”) on visible locations (heel, tongue, insole), reducing the likelihood of deception.

For other products, the court found passing off established. In particular, for the men’s leisure shoe compared with Adidas’s Adi-Racer/Tuscany style, the court emphasised the strong resemblance in the prominent stripe presentation (four bold serrated black stripes on white), similar black-and-white colouring, a distinctive black heel, identical stitching patterns, and the absence of distinctive exterior branding on Pepkor’s shoe. It concluded that the notional purchaser would likely be confused, at least momentarily, as to connection with Adidas.

For the soccer boot and boys’ shoe compared with Adidas’s Predator boots, the court accepted that the Adidas products did not display the classic registered stripe configuration, but nevertheless found that the overall get-ups of Pepkor’s products were sufficiently misleading, given the prominence and distinctiveness of Adidas’s footwear and the absence of clear external distinguishing marks on Pepkor’s competing items (beyond an insole mark). In the court’s assessment, these similarities were likely to cause consumers to think Pepkor’s products were or were connected with Adidas.

Outcome and Relief

The Supreme Court of Appeal upheld the appeal and set aside the High Court’s dismissal of Adidas’s application. It substituted the High Court’s order with an order granting interdictory and ancillary relief.

On trade mark infringement, Pepkor was interdicted and restrained from infringing Adidas AG’s rights in registered trade marks 1957/01959, 1995/12283, 1980/06446 and 2000/18582 by using a four-parallel-stripe mark of contrasting colour/material on the outside uppers of footwear, as represented in annexures TB8 and TB9, or any mark so nearly resembling the registered marks as to be likely to deceive or cause confusion under section 34(1)(a).

Pepkor was directed to remove the infringing marks from its footwear, and where removal was not possible, to deliver such footwear to Adidas AG as contemplated in section 34(3)(b). The court further directed an enquiry to determine damages or a reasonable royalty under sections 34(3)(c), 34(3)(d), and 34(4), with Pepkor to pay the amount found due.

On passing off, Pepkor was interdicted and restrained from passing off its footwear as Adidas’s or as connected with Adidas by using get-ups depicted in annexures TB9, TB10 and TB11, or any closely resembling get-up likely to deceive or confuse. An enquiry was directed to determine damages arising from the passing off, with procedural directions available from the court if needed.

Pepkor was ordered to pay the costs of the application, including the costs of two counsel. The appeal itself was upheld with costs, including the costs of two counsel.

Cases Cited

Adidas Sportschuhfabriken Adi Dassler KG v Harry Walt & Co (Pty) Ltd 1976 (1) SA 530 (T).

PPI Makelaars and another v Professional Provident Society of South Africa 1998 (1) SA 595 (SCA).

Puma AG Rudolf Dassler Sport v Rampar Trading (Pty) Ltd 2011 (2) SA 463 (SCA).

Verimark (Pty) Ltd v BMW AG; BMW AG v Verimark (Pty) Ltd 2007 (6) SA 263 (SCA).

Puma AG Rudolf Dassler Sport v Global Warming (Pty) Ltd 2010 (6) SA 600 (SCA).

Luster Products Inc v Magic Styles Sale CC 1997 (3) SA 13 (A).

Cointreau et Cie SA v Pagan International [1991] ZASCA 89; 1991 (4) SA 706 (A).

Weltevrede Nursery v Keith Kirstens (Pty) Ltd & another 2004 (4) SA 110 (SCA); [2004] 1 All SA 181 (SCA).

Adidas Aktiengesellschaft and another v Woolworths (Pty) Ltd 1999 BIP 433 (C).

International Power Marketing (Pty) Ltd v Searles Industrials (Pty) Ltd 1983 (4) SA 163 (T).

Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (A).

Bata Ltd v Face Fashions CC 2001 (1) SA 844 (SCA).

Laboratoire Lachartre SA v Armour-Dial Inc. 1976 (2) SA 744 (T).

John Craig (Pty) Ltd v Dupa Clothing Industries (Pty) Ltd 1977 (3) SA 144 (T).

Reckitt & Colman SA (Pty) Ltd v SC Johnson & Son SA (Pty) Ltd 1993 (2) SA 307 (A).

Brian Boswell Circus (Pty) Ltd & another v Boswell-Wilkie Circus (Pty) Ltd 1985 (4) SA 466 (A).

Williams t/a Jenifer Williams & Associates & another v Life Line Southern Transvaal [1996] ZASCA 46; 1996 (3) SA 408 (A).

Pasquali Cigarette Co. Ltd v Diaconicolas & Capsopolus 1905 TS 472.

Capital Estate and General Agencies (Pty) Ltd & others v Holliday Inns Inc. & others 1977 (2) SA 916 (A).

Blue Lion Manufacturing (Pty) Ltd v National Brands Ltd 2001 (3) SA 884 (SCA).

Hollywood Curl (Pty) Ltd v Twins Products (Pty) Ltd 1989 (1) SA 236 (A).

Cambridge Plan A G & another v Moore & others 1987 (4) SA 821 (D).

Specsavers International Healthcare Ltd & others v Asda Stores Ltd [2012] EWCA Civ 24.

Sabel B V v Puma A G, Rudolf Dassler Sport [1998] RPC 199.

Canon Kabushiki Kaisha v Metro-Goldwyn-Meyer Inc [1998] EUECJ C-39/97; [1998] ECR I-5507.

Marca Mode CV v adidas AG and adidas Benelux BV (European Court of Justice (Sixth Chamber), delivered 22 June 2000).

adidas-Salomon AG v Sketchers USA Deutschland GmbH (Hamburg District Court, delivered 11 July 2003).

Legislation Cited

Trade Marks Act 194 of 1993.

Trade Marks Act 62 of 1963.

Counterfeit Goods Act 37 of 1997.

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The Supreme Court of Appeal held that Pepkor’s use of a four-stripe mark on the footwear depicted in annexures TB8 and TB9 constituted trade mark infringement of Adidas AG’s registered three-stripe marks under section 34(1)(a) of the Trade Marks Act 194 of 1993, because the four-stripe configuration, viewed globally and with allowance for imperfect recollection, was sufficiently similar to be likely to deceive or cause confusion.

The court further held that Pepkor’s use of certain get-ups incorporating stripe motifs amounted to passing off, particularly in relation to the products depicted in annexures TB9, TB10, and TB11, because the overall presentation was likely to mislead consumers into believing that Pepkor’s footwear was Adidas’s or connected with Adidas. Passing off was not established for the two-stripe shoes compared with the Adidas Superstar shoe, where the stripes and prominent alternative branding were found to distinguish the products sufficiently.

The appeal was upheld with costs, and the High Court’s dismissal of Adidas’s application was replaced with orders granting interdicts, removal/delivery-up relief, and enquiries into damages or royalty.

LEGAL PRINCIPLES

The judgment applied the principle that trade mark infringement under section 34(1)(a) of the Trade Marks Act 194 of 1993 is established where there is unauthorised use, in the course of trade, in relation to goods for which the mark is registered, of a mark that is identical or so nearly resembling the registered mark as to be likely to deceive or cause confusion. The likelihood of deception or confusion is assessed from the perspective of a notional average purchaser, with proper eyesight and ordinary caution, in marketplace conditions and with allowance for imperfect recollection, based on the overall impression produced by the marks.

The judgment reaffirmed that whether a sign is used as a trade mark (as opposed to mere decoration) is a factual question determined objectively by consumer perception, and that the presence of additional branding on the product does not exclude the possibility that another sign on the same product functions as a trade mark.

It applied the evaluative proposition that the greater the distinctiveness or reputation of a registered mark, the greater the likelihood that the use of a similar mark on competing products will cause deception or confusion, rather than eliminating that risk.

For passing off, the judgment applied the orthodox two-stage enquiry: the claimant must establish that the relevant name, mark, or get-up has become distinctive of its goods through reputation, and must further establish that the defendant’s use of a similar name, mark, or get-up amounts to a misrepresentation likely to deceive or confuse a substantial segment of the public. The comparison for passing off is between the get-ups of the competing goods as encountered in the market, and not limited to registered trade marks alone. The judgment reiterated that passing off does not confer a monopoly over a successful get-up, but that copying places a trader at risk, and liability is avoided only if the trader makes it perfectly clear that the goods are its own so that deception is unlikely.

Adidas AG and Another v Pepkor Retail Ltd (187/12) [2013] ZASCA 3 (28 February 2013)