Century City Apartments Property Services CC and Another v Century City Property Owners Association (57/09) [2009] ZASCA 157; 2010 (3) SA 1 (SCA) ; [2010] 2 All SA 409 (SCA) (27 November 2009)

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Century City Apartments Property Services CC and Another v Century City Property Owners Association (57/09) [2009] ZASCA 157; 2010 (3) SA 1 (SCA); [2010] 2 All SA 409 (SCA); 2009 BIP 230 (SCA) (27 November 2009)

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THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case No: 57/09
CENTURY CITY APARTMENTS PROPERTY
SERVICES CC
First
Appellant
THE
REGISTRAR OF COMPANIES AND CLOSE
CORPORATIONS
Second Appellant
and
CENTURY
CITY PROPERTY OWNERS’ ASSOCIATION Respondent
(a
Section 21 Company)
Neutral citation:
Century
City Apartments v Century City Property Owners
(57/09)
[2009] ZASCA 157
(27 NOVEMBER 2009)
Coram:
HARMS DP, LEWIS, MHLANTLA JJA, HURT AND WALLIS AJJA
Heard:
6
NOVEMBER 2009
Delivered:
27 NOVEMBER 2009
Updated:
Summary:
Trade
marks – marks indicating geographical origin of services –
revocation – infringement.
O R D E R
On appeal from:
High
Court of South Africa (CPD):
DAVIS
J sitting as court of first instance:
The
appeal is upheld with costs.
The
order of the court below is substituted with the following order:
The
application is dismissed with costs.
In
respect of the counter-application the following order is made:
The
following trade mark registrations are revoked: 1997/14283 in
class 41; 1997/14281 in class 36; and 1997/14282 in class
42.
Trade
mark registration 1997/14280 in class 35 is rectified by the
deletion of the words ‘management services’.
The applicant, Century City
Property Owners’ Association, is to pay the costs.
______________________________________________________________________
JUDGMENT
HARMS DP (LEWIS, MHLANTLA JJA, HURT
and WALLIS AJJA concurring):
[1] This appeal relates in the main to
trade mark infringement. The present respondent, Century City
Property Owners’ Association,
a section 21 company, is the trade
mark owner. There are also ancillary or alternative issues, namely
passing-off and the question
whether the corporate name of the
appellant, the alleged infringer, is undesirable in terms of the
provisions of
section 20
of the
Close Corporations Act 69 of 1984
.
The court below (Davis J) granted all the relief sought by the
Association and this appeal is with its leave.
[2]
Century
City is a huge commercial and residential ‘development’ on some
300 hectares of land next to the N1, the main road leading
northwards
from Cape Town. It falls within the municipality of the City of Cape
Town and, more particularly, the suburb Montague
Gardens. The
development began in earnest in 1997 and, according to the
Association’s founding affidavit, it was always the intention
that
Century City would be one development, independently functioning and
operating, providing a cross pollination of services and
industries
to the owners and tenants within Century City. The land was in due
course enclosed and a business park, a mid to upper
echelon housing
development and office blocks were erected. A road, called Century
City Boulevard, was constructed which serves as
the main artery to
the development, and a theme park, Ratanga Junction, and the ‘famous’
Canal Walk Shopping Centre were erected.
The trade mark registrations
[3] The Association, a non-profit home
owners’ association, holds a number of trade marks in different
classes, some consisting
of the name ‘Century City’ and others of
devices (more correctly, word-and-device marks) containing this name
mark and interlocking
Cs.
The
Association did not apply for these trade marks – they were
assigned to it by the developer of Century City.
For
a reason that can only be described as baffling the trade mark
registrations on which the Association relied in its notice of
motion
appear for the first time at the end of the papers whereas other
registrations, on which no reliance was placed, were attached
to the
founding papers.
[4] The argument in this court
focused on the infringement of the mark ‘Century City’ registered
under registration number 1997/14283
in class 42 (as it then existed)
for
‘
Retail,
wholesale, marketing, distribution, hiring, leasing, mail order and
merchandising services of all kinds; providing of food
and drink
including bars, bottle stores and restaurants, snack bars,
cafeterias, roadhouses, canteens, fast-food outlets; catering
services, cocktail lounge services; temporary accommodation, hotels,
hotel management; motels, tourists hostels, accommodation bureaux
and
services all for reserving accommodation at hotels, boarding houses
and the like; arranging, hiring and providing facilities
for
expositions, exhibitions and the like; services ancillary to the
aforegoing.
’
[
5] The
remaining name marks that were the subject of the application are
these:
1997/14280 CENTURY CITY in class 35
in respect of
‘
advertising
and business services, including, but not restricted to township and
residential development, management services, organisation
and
consultation, evaluation services, import and export services,
promotion, publicity, business research, planning’;
1997/14281 CENTURY CITY in class 36
in respect of
‘
insurance;
financial affairs; monetary affairs; real estate affairs, including
property, township and residential development, real
estate
appraisal, estate agencies, real estate management, leasing of real
estate’; and
1997/14282 CENTURY CITY in class 41
in respect of
‘
education;
providing of training; entertainment; including but not restricted to
services relating to cinemas, theme parks and casinos
and the
provision of facilities therefor; sporting and cultural activities;
services ancillary to the aforementioned.’
[6] The device marks that were relied
on in the notice of motion are all for the same device. They cover
the same classes and have
the same specifications as the name marks.
The alleged infringing acts
[7] The
Trade Marks Act 194 of 1993
recognizes three types of trade mark infringement. The first is the
unauthorized use in the course of trade in relation to goods
or
services in respect of which the trade mark is registered, of an
identical mark or of a mark so nearly resembling it as to be
likely
to deceive or cause confusion
(s 34(1)(a)).
The second is the
unauthorized use of a mark, which is identical or similar to the
trade mark registered, in the course of trade
in relation to goods or
services which are so similar to the goods or services in respect of
which the trade mark is registered,
that in such use there exists the
likelihood of deception or confusion
(s 34(1)(b)).
The third,
commonly referred to as dilution, does not figure in this case.
[8] The appellant (the respondent in
the court below), Century City Apartments Property Services CC, used
the name ‘Century City
Apartments’ as its ‘brand’ or business
name. This is apparent from its promotional material and, for
instance, its entry in
the telephone directory. Its internet domain
name is centurycityapartments.co.za. The Association’s case was
that the use of the
corporate name, the brand name, and the domain
name infringed all the mentioned name and device marks even though it
did not use
any device mark or anything approximating one.
[9] The judgment of the court below
accepted the submission without distinguishing between the name marks
and the device marks and
without considering the nature of the
appellant’s services. And in spite of counsels’ assumption to the
contrary the court order,
for a reason not explained, incorporated
only the class 42 mark of the name marks mentioned although it
covered all the device marks.
Assessment of trade mark
infringement
[10] The first issue to consider is
the identification of the allegedly infringing mark. It is trite law
(in spite of allegations
to the contrary in the Association’s
affidavits and some submissions in the Association’s heads of
argument) that a person may
use a trade mark otherwise than as a
badge of origin and that the appellant’s use of the name Century
City in a descriptive manner
could not amount to infringement. See
Verimark (Pty) Ltd v BMW AG;
BMW AG v Verimark (Pty) Ltd
2007 (6) SA 263
(SCA), and
Commercial
Auto Glass (Pty) Ltd v BMW AG
2007 (6) SA 637
(SCA);
[2007] 4 All SA 1331
(SCA). The appellant did
use the name Century City in a descriptive manner in its advertising
material but its use of the name as
a brand, corporate or domain name
is nothing but trade mark use and the faint argument to the contrary
stands, accordingly, to be
rejected.
[11] The second issue is whether the
appellant’s use was in the course of trade and, related to that,
whether its services fell
within the said classes as defined. Because
the appellant acted as an accommodation agent for reserving
accommodation in Century
City its activities fell within class 42.
They also fell within class 36 to the extent that this class covered
estate agencies, real
estate management and leasing of real estate,
and class 35 in relation to management services. There was no
evidence that the appellant
used the mark in connection with any
services covered by class 41 as defined above. There was also no
evidence or argument in relation
to the question whether the
appellant’s services were so similar to the services covered by
this class that there was a likelihood
of deception or confusion
during use. This conclusion makes consideration of
s 34(1)(b)
unnecessary.
[12] The next issue is whether the
marks ‘Century City’ and ‘Century City Apartments’ are, in
the wording of
s 34(1)(a)
‘identical’. I think not. As the
European Court of Justice indicated,
‘
[t]he
criterion of identity of the sign and the trade mark must be
interpreted strictly. The very definition of identity implies that
the two elements compared should be the same in all respects
’
.
(
LTJ
Diffusion SA v Sadas Vertbaudet SA
[2003] ETMR 83
(European Trade Mark Reports) para 50.) This is,
however, subject to the proviso that minute and wholly insignificant
differences
are not taken into account (
Reed
Executive Plc & Ors v Reed Business Information Ltd & Ors
[2004] EWCA Civ 159
;
[2004]
RPC 40
para 29). In other words, the
de
minimis
principle applies.
[13] That is not the end of the
inquiry because if the appellant’s brand name were to be
confusingly similar to the registered mark
(‘be likely to deceive
or cause confusion’) it infringes. I am satisfied that the
appellant’s brand name, in spite of the addition
of the word
‘apartments’, is confusingly similar to Century City. The point
is well illustrated by the facts in
Compass
Publishing BV v Compass Logistics Ltd
[2004] EWHC 520
(Ch). The registered mark was the word ‘Compass’
in relation, in simplified terms, to computer and computer related
services.
The defendant traded in the same fields under the name
Compass Logistics. After pointing out that the two marks were not
identical
in the light of
LTJ
Diffusion SA v Sadas Vertbaudet SA
the court proceeded to consider whether they were confusingly
similar. Laddie J said this (paras 24-25):
‘
The
likelihood of confusion must be appreciated globally, taking account
of all relevant factors. It must be judged through the eyes
of the
average consumer of the goods or services in question. That customer
is to be taken to be reasonably well informed and reasonably
circumspect and observant, but he may have to rely upon an imperfect
picture or recollection of the marks. The court should factor
in the
recognition that the average consumer normally perceives a mark as a
whole and does not analyse its various details. The visual,
aural and
conceptual similarities of the marks must be assessed by reference to
the overall impressions created by the marks bearing
in mind their
distinctive and dominant components. Furthermore, if the association
between the marks causes the public to wrongly
believe that the
respective goods come from the same or economically linked
undertakings, there is a likelihood of confusion.
Applying
those considerations to the facts of this case, there can be little
doubt that a likelihood of confusion exists between the
Defendant's
use of the sign or mark “COMPASS LOGISTICS" in relation to its
business consultancy services and the notional
use of the mark
“COMPASS” used in relation to business consultancy services,
including those in relation to which the Defendant
specialises. The
dominant part of the Defendant's mark is the word “compass”. For
many customers, the word "logistics"
would add little of
significance to it. It alludes to the type of area of consultancy in
which the services are carried out.
’
[14] This means
that one has to assume reasonable notional use by a trade mark owner
of the name Century City
for
purposes of providing services for reserving and maintaining
accommodation at apartments. The appellant’s use of Century City
Apartments would to my mind have given rise to the likelihood of
confusion. I therefore conclude that the appellant’s use of its
brand name infringed the mentioned trade mark registration. The same
applies to the use of its domain name. This does not mean that
the
registration remained unimpeachable. I shall revert to this issue.
[15] I do not agree with the high
court that this conclusion applies to the appellant’s corporate
name ‘Century City Apartments
Property Services CC’. It is in my
view materially different from the trade mark Century City. I can do
no better than to refer
to the facts in
10
Royal Berkshire Polo Club Trade Mark
[2001] RPC 643
esp at 653. The question was whether this mark was
confusingly similar to the well-known Polo mark. The court held that
it was not
because it did not capture the distinctiveness of the
trade mark owner’s mark; that the message of the mark came from the
words
in combination; and that the word Polo functioned adjectivally
in the context of the applicant’s mark. Adjectival use may be
distinctive
from the use of a word as a noun. The same considerations
apply too in the present case to exclude the reasonable possibility
of
confusion or deception.
[16] The next consideration is the
question of infringement of the Association’s device marks that
contain the words Century City.
I have already disposed of the marks
registered in class 41, leaving the registrations in classes 35, 36
and 42. The Association’s
argument in this regard was fairly
simple: since the device mark contains the words Century City any use
of the words Century City
would infringe because they are, orally,
confusingly similar.
[17] The answer is not that
straightforward. To determine the likelihood of confusion the matter
must be approached globally. Different
types of trade marks are used
differently, something recognized by the definition of ‘use’ in
the Act
(s 2(2)).
1
anc" HREF="#sdfootnote1sym">
1
A device is by definition a ‘visual representation or illustration
capable of being reproduced upon a surface’
(s 2
‘device’). The
value (and distinctiveness) of such a mark depends heavily (and
sometimes exclusively) on its visual impact.
In this respect it is
not much different from marks that consist of a colour or
ornamentation or are containers. If these marks are
combined with
words or names their oral value may, depending on the circumstances,
come to the fore. The same applies if they can
be referred to
descriptively. It may therefore be that the aural and/or conceptual
dominant component of such a mark neutralises
the visual differences
deriving from its graphic particularities (
Cervecería
Modelo, SA de CV v Office for Harmonisation in the Internal Market
(Trade Marks and Designs) (OHIM)
2005
WL 366940). Jeremy Phillips suggests in a footnote that it depends
very much on the nature of the goods or services (
Trade
Mark Law – A Practical Anatomy
(2003)
OUP paras 10.29-10.33).
The
appellant’s services are provided mainly through advertisements and
internet sites. There is no evidence of oral use of the
device marks
in relation to the services involved. The likelihood of confusion
appears to me in the circumstances of the case to
be negligible and
can be discounted. It follows from this that I am of the view that
the Association has failed to establish infringement
of the remaining
device marks.
[
18] The
appellant, in defence, relied on
s 34(2)(b)
of the Act which in
essence provides that a registered trade mark is not infringed by the
use by any person of any bona fide description
or indication of the
geographical origin of his services.
2
This defence represents the other side of the coin of the requirement
that the infringing use has to be trade mark use. A bona fide
description or indication of the geographical origin of an alleged
infringer’s services amounts to non-trade mark use and whether
one
considers it as part of the trade mark owner’s cause of action or
as a defence does not make much difference. Since I have
already
found that the appellant’s use of its trade or brand name and the
domain name amounted to trade mark use, this defence
has to fail.
The counter-application –
geographical origin
[
19] The
appellant launched a counter-application for the expungement of the
Association’s registrations by relying on
s 10(2)(b)
of the Act. It
provides that a mark may not be registered and a registered trade
mark is liable to be removed from the register if
it consists
exclusively of a sign or an indication which may serve, in trade, to
designate the geographical origin of the services.
3
The factual basis of the argument was that Century City has become a
geographical location that designates the geographical origin
of
services.
[
20] It
is necessary to consider the history of this provision more closely
since both sides relied on judgments in support of their
respective
arguments concerning its interpretation on the supposition that our
law and, for instance, English law on trade marks
have always been
the same, and that general propositions in older trade mark cases are
still applicable under the present legislative
regime.
[
21] The
Patents, Designs and
Trade Marks Act (1883
) 46 & 47 Vict c 57 did
not deal with trade marks with a geographical connotation. It did,
however, list the matters which trade
marks had to consist of or
contain. Trade mark registrations then were limited to names of
individuals or firms represented in ‘some
particular and
distinctive manner’, a signature, a distinctive device and the
like, as well as a ‘fancy word or words not in
common use’
(s
64(1)(c)).
The 1888 amendment added ‘an invented word or words’
to the list and replaced ‘fancy word or words not in common use’
with
‘a word or words having no reference to the character or
quality of the goods, and not being a geographical name.’ The
reasons
for these provisions were said to be that the vocabulary of
the English language is common property which belongs to all and that
no one should be permitted to prevent other members of the community
from using ‘for purposes of description’ a word that has
reference to character or quality of goods and, one assumes,
geographical names (
In
re Eastman Photographic Materials Co Ltd v The Controller-General of
Patents, Designs and Trade-marks
1898
AC 571
(HL) per Lord Herschell). Fry LJ referred to the perpetual
struggle to enclose and appropriate as private property certain
little
strips of the great open common of the English language (
In
re Dunn’s Trade-marks
(1889)
41 ChD 439).
It is apparent from the use of the phrase ‘for
purposes of description’ that the concept of trade mark use had not
yet been understood
fully.
[
22] The
Trade Marks Act of 1905 (5 Edw VII c 15) was not much different
although in regard to geographical names it prohibited the
registration of any name if it was ‘according to its ordinary
signification a geographical name’ (s 9(4)). This was introduced
to
overcome the objection to the registration of geographical names that
were not generally known. Courts nevertheless struggled
with its
application (T A Blanco White and Robin Jacob
Kerly’s
Law of Trade Marks and Trade Names
11 ed (1983) p 83). The Act was amended to create a two-part
register. The law was then consolidated in the Trade Marks Act of
1939
(1 & 2 Geo VI c 22). In relation to a registration in Part A
of the register (s 9(1)), which dealt with inherently distinctive
marks, this Act was identical to the 1905 Act but in relation to
marks that were capable of becoming distinctive, which were
registerable
in Part B, a similar limitation did not exist.
[23] South African
legislation did not in all respects follow suit. The Patents,
Designs, Trade Marks and Copyright Act 9 of 1916
permitted the
registration of ‘a distinctive word or words not reasonably
required for use in the trade’ and ‘any other distinctive
mark’
(s 99). The Act accordingly did not prohibit the registration of
geographical names
per
se
and consequently any such name, which was distinctive and not
reasonably required for use in the trade, could have been registered.
In addition, s 126 provided that a trade mark registration could not
interfere with the bona fide use by a person of his own place
of
business. This Act was replaced by the Trade Marks Act 62 of 1963,
and although it was largely based on the 1939 British Act it
retained
the provisions of s 99 the 1916 Act but limited them to Part A
registrations. In other words, words not reasonably required
for use
in the trade were capable of registration; there was no specific
reference to geographical names; and s 46 was in this regard
in the
same terms as the mentioned s 126.
[
24] The
1963 Act was materially amended by Act 46 of 1971. It provided that
in order to be registrable in part A of the register,
a trade mark
had to contain or consist of a ‘distinctive’ mark (s 10(1)).
‘Distinctive’ was defined in s 12 to mean
‘
adapted,
in relation to the goods or services in respect of which a trade mark
is registered or proposed to be registered, to distinguish
goods or
services with which the proprietor of the trade mark is or may be
connected in the course of trade from goods or services
in the case
of which no such connection subsists…
’
In order to be registrable in part B
of the register, a trade mark had to be capable of becoming
distinctive through use (s 11).
[
25] It
follows from this historical analysis that reliance on English or
Australian (which followed the former’s lead) cases dealing
with
the validity of a trade mark consisting of a word which is according
to its ordinary signification a geographical name are of
little if
any value in interpreting our statutes. In this regard I refer
particularly to judgments such as
Yorkshire
Copper Works Ld’s Application
1953 (70) RPC 1
(CA),
Mid Sydney Pty Ltd v Australian Tourism Co Ltd & Ors
[1998] FCA 1616
and
Re Chancellor, Masters and Scholars of the University of Oxford t/a
Oxford University Press v The Registrar of Trade Marks
[1990] FCA 175.
As I have stated before in the context of laudatory
marks,
‘
Intellectual
property laws and principles are not locked in a time capsule or a
straitjacket and judicial expositions should be read
in context.
’
(
First
National Bank of SA Ltd v Barclays Bank plc
2003 (4) SA 337 (SCA); [2003] 2 All SA 1
(SCA) para 10).
[
26] A
major shift in the approach to trade marks followed the adoption of
the European Union’s directive on trade marks during 1988.
The
United Kingdom was obliged to bring its laws into conformity with the
directive and did so by the passing of the Trademarks Act
of 1994. As
was pointed out in
Inter
Lotto
(UK) Ltd v Camelot Group plc
[2003] EWCA Civ 1132
, the 1994 UK Act is a hybrid with two main
European sources: the Directive, aimed at harmonization of the
national trademarks laws,
and the Regulation, introducing the new
Community trademark. Our country decided to follow this lead and
passed the 1993 Act, which
was based on the bill that led to the
adoption of the UK Act in 1994. Our law is now in many respects the
same as that of the UK
and of the European Community.
[
27] The
effect of the English development was described by Arden LJ in these
terms in
David
West t/a Fastenders v Fuller Smith & Turner plc
[2003]
EWCA Civ 48
at para 69:
‘
To
a much greater degree, this case illustrates the break with our
domestic past brought about by the 1994 Act. The words [Extra Strong]
for which the first two initials [E.S] stand are merely laudatory
words, the mark [E.S.B.] consists purely of initials and the words
[Extra Strong/Special Bitters] connoted by the initials are mere
descriptors. This concatenation of features would have made it
difficult
for this mark to survive the present attack under our
pre-1994 Act domestic law. If King Canute had been a trademark agent,
the waters
of Community law, which Lord Denning depicted as rushing
up our native shores, would surely have overwhelmed him by now.
As
the respondent submits, one has to start by forgetting the
preconceptions of pre-1994 Act trade mark law.
’
[
28] Against
this background I proceed to consider the meaning of s 10(2)(b) and
more particularly the question as to when a mark consists
exclusively
of a sign or an indication which may serve, in trade, to designate
the geographical origin of the services. Its wording
was derived from
art 3 of the European Directive, which also provides that t
rade
marks
'which consist exclusively of signs or
indications which may serve, in trade, to designate the kind,
quality, quantity, intended purpose,
value, geographical origin, or
the time of production of the goods or of rendering of the service,
or other characteristics of the
goods' may not be registered or if
registered are liable to be declared invalid.
It
should be noted that this provision does not deal with what are
called geographical indications such as Champagne which connotes
a
sparkling wine with a particular geographical origin. These are
covered by s 42 under the heading ‘certification trade marks’.
[
29]
Section
10(2)(b) prohibits the registration of geographical names as trade
marks ‘solely where they designate specified geographical
locations
which are already famous, or are known for the category of goods or
services concerned, and which are therefore associated
with those
goods in the mind of the relevant class of persons’. It also
prohibits registration of geographical names that are likely
to be
used by undertakings. They ought to remain available as indications
of the geographical origin of the category of relevant
goods or
services (
Peek
& Cloppenburg KG's Application
[2006] ETMR 33
para 34).
[
30] Section
10(2)(b) must be read in context. It also deals on the same basis
with marks that may designate the kind, quality, quantity,
intended
purpose, value, or other characteristics of the goods or services. It
is not concerned with distinctiveness or its loss.
That is dealt with
in s 10(2)(a),
4
which in turn is the counterpart of s 9
5
to which it refers. The prohibition is not directed at protecting
trade mark use only but goes wider: it is sufficient if the name
may
‘designate’ the geographical origin of the goods or services.
[31] It
has been said that the provision serves a public interest permitting
all to use such descriptive signs freely by preventing
them from
being reserved to one undertaking alone because they have been
registered as trade marks (
Peek
& Cloppenburg
para
32)
.
In addition
‘
it
is in the public interest that they [the geographical names] remain
available, not least because they may be an indication of the
quality
and other characteristics of the categories of goods concerned, and
may also, in various ways, influence consumer tastes
by, for
instance, associating the goods with a place that may give rise to a
favourable response.
’
(
Windsurfing
Chiemsee Produktions- und Vertriebs GmbH v Boots- und Segelzubehör
Walter Huber and Franz Attenberger
[1999] ETMR 585
para 26.)
[32] Counsel debated the meaning of
‘exclusively’
in the context of the provision but there can be little doubt that it
means that the prohibition is directed at
a mark that consists of a
geographical name without more. A device that includes a geographical
name would not be hit nor would a
name mark consisting of a
geographical name with something more be covered. I shall revert to
this issue. (Compare the reasoning
in
Cambridge
Plan AG v Moore
1987 (4) SA 821 (D) 844D-H.) What this means is
that Gordon’s London Gin would be a permissible trade mark
but not
‘London’ in respect of gin.
[
33] This
leads to another aspect and that concerns the nature of the goods or
services. London has at least since the 18th Century
had an
association with gin. But Bloemfontein does not have one and there
appears to be no reason why the name Bloemfontein
per
se
cannot be used as a trade mark for gin in the same way as Windhoek, a
well-known trade mark and the capital of Namibia, is used as
a trade
mark for beer. The explanation is to be found in
Bellagio
LLC’s Application
[2006]
ETMR
79.
The applicant sought to register the trade mark ‘Bellagio’ in
four different classes namely class 25 for clothing; class 35 for
retail services; class 41 for entertainment services; and class 42
for hotels and the like. The application was granted in respect
of
the first two classes but refused in relation to the last two. The
reasons, in summary, were these: Bellagio is a village on Lake
Como
in Northern Italy; it is a noted lakeside resort; the travelling
public would associate the name of the village with entertainment
and
hotels; and therefore the mark could not be registered in connection
with these services. However, the public would not necessarily
associate the village with clothing or retail services and in
connection with those services the prohibition did not apply.
[
34] In
Peek &
Cloppenburg
the applicant
sought to register the name Cloppenburg in respect of retail
services. Cloppenburg is a small town in Germany and the
application
for registration was refused in the first instance on the ground that
the applicant’s services would have been supplied
from that town,
and to that end users would have perceived the town name as an
indication of geographical origin. The court upheld
the appeal,
holding that a sign's descriptiveness cannot be assessed other than
by reference to the goods or services concerned,
on the one hand, and
by reference to the understanding which the relevant persons have of
it, on the other (para 38). It said:
‘
In
making that assessment the [trade mark] Office is bound to establish
that the geographical name is known to the relevant class
of persons
as the designation of a place. What is more, the name in question
must suggest a current association, in the mind of the
relevant class
of persons, with the category of goods or services in question, or
else it must be reasonable to assume that such
a name may, in the
view of those persons, designate the geographical origin of that
category of goods or services.
’
The Century City marks
[35] With this in mind it is now
necessary to consider the facts that are relevant to the appellant’s
contention that ‘Century
City’
consists
exclusively of a sign or an indication which may serve, in trade, to
designate the geographical origin of the services covered
by the
Association’s registrations. The device marks can immediately be
discounted from consideration on this aspect because, as
said, they
do not consist ‘exclusively’ of what the appellant contends is a
geographical location, namely Century City. However,
the name marks
have to be considered in due course.
[
36] The
main contention of the appellant was that although when the trade
mark applications were made the name Century City had no
geographical
significance – and that the trade marks were accordingly properly
registered – the name at the date of the counter-application
had
become a place name and was therefore liable to be removed from the
register under s 10(2)(b).
[
37] I
have at the outset referred to Century City as a huge commercial and
residential ‘development’ falling within the municipality
of the
City of Cape Town and, more particularly, the suburb Montague
Gardens. I have also mentioned that it was always the intention
that
Century City would be one development, independently functioning and
operating, providing a cross pollination of services and
industries
to the owners and tenants within Century City. It would be, it was
said in the founding affidavit, a city within a city,
presenting a
high value investment opportunity to the owners of property within
the development providing commercial, business, retail,
residential
and leisure opportunities.
[
38] To
give some indication of the extent of the development, promotional
material pre-dating 2008 indicates that Canal Walk, when
opened in
2000, was the largest shopping centre in Africa with 125 000 sq m
retail and 9 600 sq m office space; and that in Century
City more
than 156 000 sq m office space had been sold, that more than 2 000
homes had been completed, and that by 2010 more than
60 000 persons
would be working and living in Century City. It is unnecessary to
provide any further detail save to say that Century
City has become
an important landmark.
[39] As stated earlier, t
he
Association is a non-profit home owners’ association. Its main
activity is to promote, advance and protect the communal interests
of
all the owners, lessees, occupiers and visitors to Century City, and
to manage the common property. All owners and all new owners
are
obliged to become members of the association. It collects levies from
its members and performs functions similar to those of
a body
corporate of a sectional title development. Its services are, in the
main, to supply access control, security, traffic and
parking
control, provision of public transport within the development,
approval of special events staged within Century City, development
control through the setting of design requirements and approval
mechanisms, and landscaping. Finally, it is said that the Association
controls the use of the trade marks by other entities. Many of these
functions are entrusted to contractors.
[
40] The
Association itself describes Century City – maybe hyperbolically –
as a city or a city within a city, and as a commercial
hub,
complementary to Cape Town’s central business district, and as a
place. There is a post office under the name Century City
and public
road signs direct the public to Century City. The public, no doubt,
refers to it as a place or location. The businesses
that conduct
their business there describe it as such. A person who intends to
dine at Steers or Spur or whatever restaurant at Century
City will
describe the restaurant with reference to its location; and the
restaurateur would do the same. Further examples abound
in the
papers. Most telling is Century City Service Station – a petrol
station.
[
41] The
Association had two arguments which were supposed to dispose of the
effect of these facts. The first, which was more a statement
than an
argument, was that s 10(2)(b) applies to historical place names only.
No reason was proffered why such a limitation should
be read into the
provision and I cannot conceive of any, especially where s 10
presupposed that the prohibition under s 10(2)(b)
may kick in after
the date of registration of the trade mark. The second was that,
since Century City was both a place name and the
name of a
development, the provision could not be applicable. Davis J accepted
this argument and held that because the meaning of
Century City
flowed directly from the development of a piece of land located in
Montague Gardens it was inextricably linked to the
particular
development; that the trade mark right emerged from the nature of the
development rather than from ‘a dictionary meaning’
or a
geographical location; and since the name did not have an
‘exclusively geographical meaning’ it was not hit by the
provision.
[42] I find it
difficult to accept these propositions.
The
difference between a geographical location and a development is more
apparent than real. In the present context the term refers
to ‘an
area of land with new buildings on it’ (
Concise
Oxford English Dictionary
10
ed 2002 sv ‘development’). More particularly, Century City is a
geographical area, fenced and gated and secured, like many
a township
in this country, with a multitude of individual owners. It differs
from a suburb or village in that roads and the like
do not belong to
a local authority but to an owners’ association and that the
Association provides some, but not all, of the services
that local
authorities usually supply. Whether it is a suburb in the dictionary
sense of the word matters not.
[
43] Edinburgh,
for example, is inextricably linked to its burgh and was nothing but
part of the development around the castle. The
fact that the town
‘emerged’ from the castle does not mean that Edinburgh is not a
place. Most cities and towns in this country
are inextricably linked
and to have emerged from farm property, a mine or river but that does
not mean that they are not geographical
locations.
[
44] As
to the final point, the section does not require that the place name
should have an ‘exclusively geographical meaning’.
Some
geographical names are, for instance, also surnames – as was the
case in
Peek &
Cloppenburg
– but that
does not exclude the operation of the prohibition. As I have sought
to explain earlier, the word ‘exclusively’ in
s 10(2)(b) ensures
that a geographical name, which is part of a ‘complex’ trade mark
does not fall within its purview (
Nordmilch
eG v Office for Harmonisation in the Internal Market (Trade Marks and
Designs) (OHIM)
[2004] ETMR
70
paras 45 and 55) and not that the name may not have any other
significance.
[
45] Having
concluded that Century City has become the name of a geographical
location the next matter to determine is whether it is
a sign or an
indication which may serve, in trade, to designate the geographical
origin of the services covered by the registrations.
There is nothing
in the evidence to suggest that in relation to some of the services
covered by the class 35 registration, for instance
business
services relating to township and residential development and
management services, it may serve this purpose. On the other
end of
the spectrum the evidence clearly establishes that the public
perceives it and businesses regard it as a place where entertainment
is offered by way at least of cinemas and a theme park. This means
that the class 41 registration
may
serve, in trade, to designate the geographical origin of the services
listed.
[
46] Considering
that there are probably hundreds of commercial enterprises that offer
the services mentioned on the class 42 registration
like
retail
merchandising services and providing of food and drink, Century City
may serve,
in trade, to designate the geographical origin of these services. As
to class 36, it includes also services that are hit
by s 10(2)(b),
more particularly, estate agencies, real estate management, and
letting of real estate. There are many property owners
in Century
City who wish or may in future wish to market their properties or
have them managed and may wish to engage estate agents
for this
purpose. They might wish to use Century City as the name of the
location with which they have a business connection in the
sense that
that is where the origin of their services is located. The same would
apply to ‘management services’ in class 35.
In fact, the
Association alleged that
‘through
its licensees and permitted users it has an extensive reputation in
the Century City trade marks in the field of residential
and business
developments, selling and letting of real estate, and the provision
of related services’, which indicates that the
name is required to
indicate the geographical origin of these services.
Blameworthy conduct
[
47] I
therefore conclude that the name marks in classes 35, 36, 41 and 42
were hit by the prohibition in s 10(2)(b). But that is not
the end of
the matter. The Association relied on the principle derived from
GE
Trade Mark
[1973]
RPC 297
(HL);
General
Electric Co v The General Electric Co Ltd
[1972]
2 All ER 507
(HL)
as
adopted by this court in
Luster
Products Inc v Magic Style Sales CC
[1996] ZASCA 146
;
1997 (3) SA 13
(A);
[1997] 1 All SA 327
(A)
,
namely that a trade mark can lose its distinctiveness only through
the ‘blameworthy’ conduct of the trade mark owner. Since
this
court declined to define ‘blameworthy’ in Luster (at 26B-E) it is
necessary to revert to
GE
as a point of departure.
GE
was
decided under the 1938 UK Act and
Luster
was decided under the comparable provision in our 1963 Act. The main
issue to decide was whether a trade mark that was distinctive
at the
time of its registration could be removed from the register because
of a subsequent loss of distinctiveness. This depended
on an
interpretation of the 1938 Act, more particularly the meaning of the
phrase ‘
any entry
wrongly remaining on the register’,
and the House of Lords held in the affirmative.
6
The same problem does not arise under s 10 of our current Act – the
wording is clear. The subsidiary question was: when would a
court
exercise its discretion against the trade mark owner? The House in
effect held on an interpretation of the Act that if a trade
mark
became confusing the trade mark owner would become disentitled to the
protection of the law if there had been blameworthy conduct
on its
part.
7
The minority in the High Court of Australia adopted this reasoning in
New South Wales Dairy
Corporation v Murray Goulburn Co-operative Co Ltd
1991 RPC 144
,
and this court quoted one of the minority judgments with approval. It
is not without interest to note that
Hi-Bred
Corn Company v Hy-Line Chicks Pty Ltd
[1978] 2 NZLR 50
(CA) at 52 did not adopt the reasoning in
GE
in relation to its comparable identical provision.
[
48] The
1994 UK Act differs in this regard materially from its predecessor
and from our 1993 Act. There is also no counterpart of
s 16(1) of our
1963 Act. Section 3(1)(c) of the UK Act prohibits the registration of
trade marks in the same terms as our s 10(2)(b)
but in contrast it
does not deal simultaneously with marks already on the register. They
are dealt with in s 46(1)(d) which provides
that the registration of
a trade mark may be revoked if ‘in consequence of the use made by
the proprietor or with his consent’
it is liable to mislead the
public ‘particularly as to the nature, quality or geographical
origin’ of the goods or services.
This appears to mean that
‘blameworthiness’ of the trade mark owner in the sense described
has become a statutory requirement
in the UK.
GE
accordingly no longer represents law under this Act (D Kitchen et al
Kerly’s
Law of Trade Marks and Trade Names
14 ed (2005) para 10-119). Jeremy Phillips (op cit) does not even
refer to the
GE
case
in this context and neither work refers to the Australian judgment.
[49] Nothing in our
statute is to the same effect as s 46(1)(d), and there is nothing
permitting a court to rewrite s 10(2)(b) to
state that a mark that
consists exclusively of a sign or an indication which may,
as
a result of the blameworthy [or deliberate] conduct of the trade mark
owner
,
serve, in trade, to designate the geographical origin of the
services’ becomes subject to revocation. But that does not mean
that
a party can rely on the infringement, especially its own, to
establish that a trade mark has lost its efficacy under this
provision.
Wrongful acts by third parties cannot in general destroy
rights. This truism also applies to trade mark rights. In was in that
context
that
Luster
adopted the
GE
test. And in
South
African Football Association v Stanton Woodrush (Pty) Ltd t/a Stan
Smidt & Sons
2003 (3)
SA 313
(SCA);
[2003] 1 All SA 274
(SCA) para 16 the ‘rule’ was
applied to dispose of an argument that subsequent trade mark
applications could destroy an existing
mark or reputation.
[50] On the facts of this case it
cannot be doubted that the Association was responsible for the fact
that Century City became a geographical
location and place name. It
was the necessary consequence of the nature of the development. It
follows that the four registrations
stand to be revoked. I have
considered the possibility to excise some of the services instead of
revoking the registrations but on
the information before us it is
only possible in relation to class 35 by deleting the words
‘management services’. Whether the
Association may be able to
apply to have the name registered in some of the classes if the
relevant services are more appropriately
defined does not have to be
decided.
The undesirability of the CC name
of the appellant
[51] The
Close Corporations Act
provides
that any
interested person may within a period of two years after the
registration of a founding statement apply to Court for an
order
directing the corporation to change its name on the ground of
undesirability or that such name is calculated to cause damage
to the
applicant, and the court may on such application make such order as
it deems fit
(s 20).
The Association sought and obtained relief under
this provision.
[52] The basis of its case was that
the appellant’s name contained its registered trade marks and that
consequently its name was
undesirable. The court below accepted the
submission and held that since the Association had by virtue of its
registration a vested
right in the name Century City the presence of
that name in the appellant’s name was undesirable. In view of my
earlier finding
that the Association did not have such a right, the
basis of the Association’s case floundered.
[53] In any event, the names of the
two corporations describe their differences: the one is a property
owners’ association and the
other is an apartment property services
close corporation. The only similarity is that both are linked to
Century City. That in itself
is insufficient to justify a conclusion
that the business of the one is connected with the business of the
other. I therefore conclude
that the court below erred in granting
this relief.
Passing-off
[54] The Association’s case based on
passing-off fails on the same basis. The thrust of the Association’s
complaint related to
the appellant’s descriptive use of Century
City, namely identifying the location of the properties in which it
dealt by reference
to Century City. The court below accepted this
submission on the basis of its finding that Century City is not a
geographical location
but a valid trade mark – findings that I have
rejected earlier. The objections that apply to the appropriation of a
geographical
location as a trade mark apply here too. It is difficult
to conceive of a protectable reputation based purely on the name of a
geographical
location that is inherently descriptive of the origin of
the particular service.
Costs
[55] Lord Esher once said this about
patent cases:
‘
It
seems to me that there is something catching in a patent case, which
is that it makes everybody argue, and ask questions to an
interminable extent—a patent case with no more difficult question
to try than any other case instead of lasting six hours is invariably
made to last at least six days, if not twelve.
Well,
then, the moment there is a patent case one can see it before the
case is opened, or called in the list. How can we see it?
We can see
it by a pile of books as high as this [holding up the papers]
invariably . . . Now, what is the result of all this? Why,
that a man
had better have his patent infringed, or have anything happen to him
in this world, short of losing all his family by
influenza, than have
a dispute about a patent. His patent is swallowed up, and he is
ruined. Whose fault is it? It is really not
the fault of the law; it
is the fault of the mode of conducting the law in a patent case.’
(
Ungar
v Sugg
[1892]
RPC 113
at 116–1.)
[56] More than a century later trade
mark cases have also been infected by the virus. Schutz JA once
began a judgment with these
words:
‘
A
record of 720 pages and heads of argument totalling 57 pages have
been placed before us in order to allow us to decide whether the
wrapping of its coconut biscuits used by one manufacturer passes
itself off as the wrapping of another manufacturer of similar
biscuits.’
(
Blue
Lion Manufacturing (Pty) Ltd v National Brands Ltd
[2001] 4 All SA 235
(SCA) para 1.) Not to be outshone the parties in
this case presented us with a record of 1557 pages. Trade mark cases
have developed into paper wars
in the apparent belief that the weight of the papers of the
respective parties determines the merits
or that the threat of cost
orders would force the one or other party to capitulate. This case is
yet another example of this unacceptable
practice. Courts of first
instance should act firmly and disallow costs, especially between
attorney and client. The Association
began the war of attrition by
attaching volumes of irrelevant paper. The appellant complained but
responded in kind. On appeal the
Association, ironically, felt
aggrieved that the appellant did not omit the unnecessary papers
originally filed by it.
[57] I was sorely tempted to make a
special costs order but since both parties are equally guilty, as
well as in not reducing the
record on appeal, I have decided against
it. Practitioners apparently also believe that the more they burden
this court with paper
the better for them. Perhaps they hope that the
court will locate a winning fact that they have missed. Practitioners
are paid to
determine what their case is about and to make a value
judgment about what is required and what not; and not only to
photocopy documents.
This should serve as a final warning, also for
counsel who tell us to read unnecessary paper.
Order
[58] In the result the following order
is made:
The appeal is upheld with costs.
The
order of the court below is substituted with the following order:
The
application is dismissed with costs.
In
respect of the counter-application the following order is made:
The following trade mark
registrations are revoked: 1997/14283 in class 41; 1997/14281 in
class 36; and 1997/14282 in class
42.
Trade mark registration 1997/14280
in class 35 is rectified by the deletion of the words ‘management
services’.
The applicant, Century City
Property Owners’ Association, is to pay the costs.
__________________________
L T C HARMS
DEPUTY PRESIDENT
For Appellant: R W TAINTON followed by
S LAING (attorney)
Instructed by: ADAMS & ADAMS
CAPE TOWN
McINTYRE & VAN DER POST
BLOEMFONTEIN
For Respondent: R W F MacWILLIAM SC
I JOUBERT
Instructed by: SPAMER TRIEBEL INC
CAPE TOWN
NAUDES ATTORNEYS
BLOEMFONTEIN
1
Section 2(2):
‘References in this Act to the use
of a mark shall be construed as references to—
(a) the use of a visual
representation of the mark;
(b) in the case of a container, the
use of such container; and
(c) in the case of a mark which is
capable of being audibly reproduced, the use of an audible
reproduction of the mark.’
2
Section 34(2):
‘A registered trade mark is not
infringed by—
(b) the use by any person of any
bona
fide
description or indication of the kind, quality, quantity,
intended purpose, value, geographical origin or other
characteristics
of his goods or services, or the mode or time of
production of the goods or the rendering of the services.’
3
The full text reads:
‘The following marks shall not be
registered as trade marks or, if registered, shall, subject to the
provisions of sections 3
and 70, be liable to be removed from the
register:
(1) . . . ;
(2) a mark which—
(a) . . .;
(b) consists exclusively of a sign or
an indication which may serve, in trade, to designate the kind,
quality, quantity, intended
purpose, value, geographical origin or
other characteristics of the goods or services, or the mode or time
of production of the
goods or of rendering of the services; . . .’
The proviso reads:
‘Provided that a mark shall not be
refused registration by virtue of the provisions of paragraph (2)
or, if registered, shall
not be liable to be removed from the
register by virtue of the said provisions if at the date of the
application for registration
or at the date of an application for
removal from the register, as the case may be, it has in fact become
capable of distinguishing
within the meaning of section 9 as a
result of use made of the mark.’
4
Section 10(2)(a):
‘The following marks shall not be
registered as trade marks or, if registered, shall, subject to the
provisions of sections 3
and 70, be liable to be removed from the
register:
(1) . . .;
(2) a mark which—
(a) is not capable of distinguishing
within the meaning of section 9.’
5
Section 9:
‘(1)  In order to be
registrable, a trade mark shall be capable of distinguishing the
goods or services of a person
in respect of which it is registered
or proposed to be registered from the goods or services of another
person either generally
or, where the trade mark is registered or
proposed to be registered subject to limitations, in relation to use
within those limitations.
(2)  A mark shall be
considered to be capable of distinguishing within the meaning of
subsection (1) if, at the date of
application for registration, it
is inherently capable of so distinguishing or it is capable of
distinguishing by reason of prior
use thereof.’
6
Section 33(1)  of the 1963 Act was the local counterpart:
‘Any person aggrieved by the
non-insertion in or omission from the register of any entry, or by
any entry made in the register
without sufficient cause or by any
entry wrongly remaining on the register, or by any error or defect
in any entry in the register,
may apply to the court or, at the
option of the applicant and subject to the provisions of section
sixty-nine, on payment of the
fees prescribed in the prescribed
manner, to the registrar, for the desired relief and thereupon the
court or the registrar, as
the case may be, may make such order for
making, expunging or varying the entry as to it or him may seem
fit.’
7
The comparable provision is s 16(1) of the 1963 Act:
‘It shall not be lawful to register
as a trade mark or part of a trade mark any matter the use of which
would be likely to deceive
or cause confusion or would be contrary
to law or morality or would be likely to give offence or cause
annoyance to any person
or class of persons or would otherwise be
disentitled to protection in a court of law.’