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[2015] ZAGPPHC 119
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Basic Trade Mark S.A. v Karelia Tobacco Company Inc (39311/2014) [2015] ZAGPPHC 119 (17 February 2015)
IN THE HIGH
COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
Case No:
39311/2014
Date: 17
February 2015
Not reportable
Not of interest
to other judges
In the matter of
trade mark application No 2008/17826
KAPPA in Class
34 between:
BASIC TRADE
MARK S.A.
…...............................................................................................
Applicant
(Opponent)
and
KARELIA
TOBACCO COMPANY INC.
…......................................................................
Respondent
(Trade Mark
Applicant)
JUDGMENT
D S FOURIE,
J:
[1] This is an
application opposing the registration of a trade mark made in terms
of
section 21
of the
Trade Marks Act, 194 of 1993
read with
Regulation 19
promulgated thereunder. Basic Trade Mark SA
(Opponent) is opposing trade mark application No. 2008/17826 KAPPA in
Class 34
filed in the name of Karelia Tobacco Company Inc (Trade Mark
Applicant) in terms of
sections 10(3)
,
10
(6),
10
(7),
10
(12),
10
(13),
10
(14) and
10
(17) of the
Trade Marks Act.
THE
PARTIES
[2] The Opponent
is a company incorporated under the laws of Luxembourg, an
international leader in the design and manufacturing
of sports and
leisure wear products and apparel. It is the registered
proprietor of trade marks internationally and in South
Africa of
trade marks containing the word KAPPA in relation to a wide range of
goods and services. It is alleged that its
product range is
extensive and it has become particularly well-known in South Africa
(and worldwide) in relation to sports and
leisure wear.
According to the founding affidavit it sponsored various local soccer
teams as well as European soccer clubs.
[3] The Trade
Mark Applicant is a Greek company and a leading worldwide cigarette
manufacturer. According to the answering
affidavit it has
worldwide sales in approximately 70 countries. Its main brand
is Karelia Slims which, due to its wide appeal
and success, has also
been listed and sold in many prominent airport duty-free outlets
around the world. It is also the proprietor
of other Karelia
brands including Karelia Lights, Karelia Blue and Karelia Royals.
The name of the Trade Mark Applicant,
the family name of its
directors and the vast majority of its brands begin with the letter
“K”, which is “KAPPA”
in Greek. The
Trade Mark Applicant has filed numerous applications and has obtained
registrations in various jurisdictions
around the world for the KAPPA
trade mark.
[4] The Opponent
has registered its marks in classes relating to clothing, metals and
alloys, paper and stationary, leather articles
and spectacles.
The word “KAPPA”, without any accompanying words or
pictorial devices, is only registered by
the Opponent in respect of
spectacles, clothing, leather and games. The Trade Mark
Applicant seeks registration in Class
34, which relates to tobacco,
smokers’ articles and matches. The Opponent holds no
registration in Class 34 and according
to the founding affidavit it
can be inferred that it will never seek to use its trade mark in
connection with tobacco products.
GROUNDS OF
OPPOSITION
[5] The Opponent
relies on seven grounds of opposition which are all contained in
section 10
of the Act. The relevant provisions read as follows:
"10.
Unregistrable trade marks
. – 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:
…
(3)
a mark in relation to which the applicant for registration has no
bona fide claim to proprietorship;
...
(6)
subject to the provisions of
section 36(2)
, a mark which, on the date
of application for registration thereof, or, where appropriate, of
the priority claimed in respect of
the application for registration
thereof, constitutes, or the essential part of which constitutes,
a reproduction, imitation or translation of a trade mark which
is
entitled to protection under the Paris Convention as a well-known
trade mark within the meaning of
section 35(1)
of this Act and which
is used for goods or services identical or similar to the goods or
services in respect of which the trade
mark is well-known and where
such use is likely to cause deception or confusion;
(7)
a mark the application for registration of which was made mala fide;
...
(12)
a mark which is inherently deceptive or the use of which would be
likely to deceive or cause confusion, be contrary to law,
be contra
bonos mores, or be likely to give offence to any class of persons;
(13)
a mark which, as a result of the manner in which it has been used,
would be likely to cause deception or confusion;
(14)
subject to the provisions of
section 14
, a mark which is identical to
a registered trade mark belonging to a different proprietor or so
similar thereto that the use thereof
in relation to goods or services
in respect of which it is sought to be registered and which are the
same as or similar to the
goods or services in respect of which such
trade mark is registered, would be likely to deceive or cause
confusion, unless the
proprietor of such trade mark consents to the
registration of such mark;
...
(17)
a mark which is identical or similar to a trade mark which is already
registered and which is well-known in the Republic, if
the use of the
mark sought to be registered would be likely to take unfair advantage
of, or be detrimental to, the distinctive
character or the repute of
the registered trade mark, notwithstanding the absence of deception
or confusion, unless the proprietor
of such trade mark consents to
the registration of such mark;
...”.
[6] These
grounds of opposition have been conveniently grouped together under
three headings in the founding affidavit, i.e. bad
faith, confusing
similarity and tarnishment of the KAPPA trade mark. The grounds
of opposition will be dealt with in these
groupings and in the same
order.
BAD FAITH
[7] It is
alleged by the Opponent that in view of its worldwide use and long
established reputation in the KAPPA trade mark at the
time, it is
very likely that the Trade Mark Applicant would have been aware of
the Opponent’s KAPPA trade mark when it adopted
the KAPPA trade
mark and subsequently filed its application for KAPPA in Class 34.
It further contends that the trade mark
application in Class 34
offends against the provisions of
section 10(3)
and
section
10(7)
of the Act in that the Trade Mark Applicant has no bona fide
claim to proprietorship of the KAPPA trade mark and appears to have
made the application mala fide.
[8] It was
argued on behalf of the Trade Mark Applicant that even if it were to
be assumed that the Opponent’s KAPPA mark
is unique and
inherently distinctive and it is also accepted that the Trade Mark
Applicant was aware of the Opponent’s KAPPA
registration at the
time it applied to register the KAPPA mark, then it does not follow
from these premises that the application
for registration of the
KAPPA mark was not bona fide.
[9] The evidence
for the Trade Mark Applicant is that it adopted the KAPPA mark in
good faith in Greece in a manner that was both
natural and
justified. It is the leading cigarette manufacturer in Greece
with worldwide sales in about 70 countries.
It applied for the
registration of the KAPPA mark in about 100 jurisdictions worldwide,
including now in South Africa. It
appears that these
allegations are not per se denied. There is also no suggestion
by the Opponent that the Trade Mark Applicant
did not originate the
KAPPA mark in the sense of independently deciding to use this mark in
relation to its goods.
[10] In Wm. Penn
Oils Limited v Oils International (Pty) Ltd
1966 (1) SA 311
(A) at
317 F-G Holmes JA considered the situation where an objector claims
that it is the owner of a mark and, on that ground,
that an applicant
cannot claim to be the proprietor of the same mark. It was held
that “proprietor” is not used
in relation to a common law
right of property, but merely requires the applicant to claim to have
originated or acquired the trade
mark and having independently and
bona fide conceived the idea of using the trade mark. To put it
differently, a Trade Mark
Applicant can claim to be the bona fide
proprietor provided it can show that it originated the mark in the
sense referred to above.
[11] Having
regard to the Trade Mark Applicant’s undisputed evidence in
this regard, it should be accepted that the Trade
Mark Applicant
adopted the KAPPA mark and applied for its registration in South
Africa, proposing to use it. There is also no evidence
that the Trade
Mark Applicant did not originate the KAPPA mark in the sense of
independently deciding to use this mark in relation
to its goods.
Having regard to all the evidence, I am unable to find that the Trade
Mark Applicant has no bona fide claim
to proprietorship or that the
application was made mala fide. The objection on the grounds of
sections 10(3)
and
10
(7) accordingly falls to be dismissed.
CONFUSING
SIMILARITY
[12] The
opposition brought under
sections 10(6)
, (12), (13) and (14) turns on
the same question, i.e. whether or not the opposed mark is so similar
to the Opponent’s trade
mark that it is likely to deceive or
cause confusion. Deception or confusion is a necessary element
of all these subsections.
The onus rests upon an applicant for
the registration of a trade mark to establish that the proposed trade
mark qualifies for registration
(The Upjohn Company v Merck &
Another
1987 (3) SA 221
(T) at 224C). In the present context it
means that the onus of proving that there is no likelihood of
deception or confusion
rests upon the Trade Mark Applicant.
[13] It is
alleged in the founding affidavit that the Opponent’s KAPPA
trade mark is an invented, unusual word with no conceptual
link or
suggestive value and is unique to the Opponent. The use and
registration of an identical word or a trade mark that
is confusingly
similar to the Opponent’s KAPPA device in relation to any
product is therefore likely to cause confusion or
deception in the
marketplace. It is also pointed out that the KAPPA trade mark
in South Africa is used in relation to a wide
range of goods and
services. These include clothing, footwear and related
accessories, bags, eye wear, jewellery, sporting
equipment and body
care products.
[14] In New
Media Publishing (Pty) Ltd v Eating Out Web Services CC
[2005] ZAWCHC 20
;
2005 (5) SA
388
(CPD) the applicant launched an application for an order in terms
of
section 34(1)(b)
of the Act restraining the Trade Mark Applicant
from infringing the applicant’s registered trade mark. It
is also a
requirement of that section “that in such use there
exists the likelihood of deception or confusion”.
Thring J
observed as follows in this regard at 394 D-F:
"There
is, it seems to me, an interdependence between the two legs of the
inquiry: the less the similarity between the
respective good or
services of the parties, the greater will be the degree of
resemblance required between their respective marks
before it can be
said that there is a likelihood of deception or confusion in the use
of the allegedly offending mark, and vice
versa. Of course, if
the respective goods or services of the parties are so dissimilar to
each other that there is no likelihood
of deception or confusion, the
use by the respondent even of a mark which is identical to the
applicant’s registered mark
will not constitute an
infringement; also, if the two marks are sufficiently
dissimilar to each other no amount of similarity
between the
respective goods or services of the parties will suffice to bring
about an infringement.”
[15] This dictum
was approved by the Supreme Court of Appeal in Mettenheimer v
Zonquasdrif Vineyards CC
[2014] 1 All SA 645
(SCA) at 650, par 11.
In that case the appeal also turned on the application of
section
34(1)(b)
of the Act. A comparison of the two marks satisfied
the Court that they were virtually identical. However, the
issue
to be decided was whether the similarity between the goods in
respect of which the appellants’ mark was registered (wine)
and
the goods in which the Trade Mark Applicant was trading (wine
grapes), was such that confusion or deception would be the probable
result. In considering this issue and with reference to other
decided cases, the Court took into account considerations such
as the
uses of the respective goods, the users of the respective goods, the
physical nature of the goods, and the respective trade
channels
through which the goods reach the market (par 13). The Court
concluded that there was no substance in the appellants’
contention that they had established a likelihood of confusion with
regard to the origin of their wine and the Trade Mark Applicant’s
grapes.
[16] It is clear
that the learned Judge of Appeal did not intend to lay out an
exhaustive list of factors. However, these
considerations,
albeit in the context of
section 34(1)(b)
, are equally applicable in
relation to the registration of competing marks. With regard to
similar or related goods, the
Opponent maintains that the goods for
which the Trade Mark Applicant seeks registration may be viewed as
complementary to those
provided by the Opponent, thereby creating a
likelihood of deception or confusion in the marketplace.
[17] This is not
only denied, but it is also alleged by the Trade Mark Applicant that
goods falling within Class 34 are entirely
different in nature,
intended purpose, method of use, users and trade channels from the
goods in respect of which the Opponent
has sought registration for
its “KAPPA” trade marks. It is further alleged that
such goods are not sold in competition
with, nor are they
complimentary to, the goods in respect of which the Opponent’s
trade marks are registered. According
to the evidence for the
Trade Mark Applicant these goods have very different trade channels
and would not be sold in proximity
to one another.
[18] Sports and
leisurewear products on the one hand and tobacco, smoker’s
articles and matches on the other, being goods
accommodated in
different classes on the Register, are indeed goods of a widely
divergent nature. Furthermore, according
to the evidence for
the Trade Mark Applicant (which has not been seriously challenged in
the replying affidavit) the uses and users
of the respective goods as
well as the respective trade channels are entirely different. I
have no reason to doubt these
allegations. Having regard to
this evidence and the nature of the goods there is, in my view, no
likelihood of deception
or confusion.
TARNISHMENT
[19] In terms of
section 10(17)
of the Act, a mark shall not be registered where it is
identical or similar to a trade mark which is already registered and
which
is well-known in the Republic, if the use of the mark sought to
be registered would be likely to take unfair advantage of, or be
detrimental to, the distinctive character or the repute of the
registered trade mark, notwithstanding the absence of deception
or
confusion, unless the proprietor of such trade mark consents to the
registration of the mark.
[20] Although
the onus rests upon an applicant for the registration of a trade mark
to establish that the proposed trade mark qualifies
for registration,
certain of the subsections of
section 10
appear to require an
opponent to bear an evidential burden (cf. Webster & Page, South
African Law of Trade Marks, 4th Edition,
par 8.30, n32).
Subsection (17) appears to be one of them. According to the
wording thereof it appears that in the
present context the Opponent
must lead evidence to show that the use of the mark by the Trade Mark
Applicant would prima facie
take unfair advantage of, or be
detrimental to the distinctive character or the repute of the
registered trade mark. In this
regard it is also important to
bear in mind that the Opponent is required to make out the case on
which he relies in the founding
affidavit and not in reply.
[21] The
deponent on behalf of the Opponent is domiciled in Torino, Italy and
acts in his capacity as the officer and “proxy”
of the
Opponent, a company incorporated under the laws of Luxembourg with
its registered business address also in Luxembourg.
It also
appears that this affidavit was executed outside the Republic.
In the paragraph dealing with tarnishment the following
is alleged by
the deponent:
"The
Opponent’s KAPPA brand is undoubtedly associated with a
positive, healthy and active lifestyle mainly, though not
exclusively, among young people and sports fans. The use and
registration of an identical mark in relation to tobacco, cigarettes
and smokers’ requisites places the mark in an unwholesome
context and conflicts with the essence of the Opponent’s
KAPPA
brand. It is therefore submitted that the use and registration of
Trade Mark Application No. 2008/17826 in respect of the
listed goods
in Class 34 would tarnish and cause serious detriment to the
distinctive character and repute of the Opponent’s
KAPPA trade
marks.” (par 8.1)
[22] As far as
the grounds for opposition are concerned, the following is alleged in
this regard:
"Most
notable, I am advised that Trade Mark Application No 2008/17826 KAPPA
offends against the provisions of
section 10(17)
of the Act in that
it is identical and/or confusingly similar to the registered trade
marks of the Opponent, that have also become
well-known in the
Republic, and is likely to take unfair advantage of and be
detrimental to the distinctive character or repute
of the Opponent’s
registered trade marks (notwithstanding the absence of deception or
confusion) by using it in an unwholesome
context in relation to
cigarettes, tobacco and smoker’s articles which strongly
contrasts with the essence and image of the
Opponent’s brand.”
(par 10.5)
[23] I shall
assume (without deciding) that the trade mark which is already
registered is well-known in the Republic. The question
to be decided
is whether the use of the mark sought to be registered would be
likely to take unfair advantage of, or be detrimental
to, the
distinctive character or the repute of the registered trade mark.
[24] In its
answering affidavit the Trade Mark Applicant has denied that the use
of the mark sought to be registered would be likely
to take unfair
advantage of, or be detrimental to, the distinctive character or the
repute of the registered trade mark.
It is also pointed out
that the Opponent has failed to adduce evidence of any likelihood
that it would suffer economic harm and
that the use of the mark
sought to be registered would tarnish and cause serious detriment to
the distinctive character and repute
of the Opponent’s trade
marks.
[25] In Laugh It
Off Promotions CC v SAB International (Finance)
2005 (2) SA 46
(SCA)
the respondent applied in the High Court for an interdict based on
section 34(1)(c)
of the Act preventing the appellant from marketing
T-shirts which it alleged infringed the respondent’s trade
marks.
The respondent alleged that the offending use of the
marks was a caricature of the neck and body labels of beer bottles of
its
brand which used the general layout and colours of the registered
mark but replaced the words “Black Label” with “Black
Labour” and “Carling Beer” with “White
Guild”. The High Court held that the message on the
T-shirts carried a likelihood of material detriment to the
distinctive character or repute of the respondent’s marks and
granted the restraint order sought. In an appeal to the Supreme
Court of Appeal the Court agreed that the message was materially
detrimental to the repute of the respondent’s trade marks (par
28).
[26] The
respondent then approached the Constitutional Court seeking leave to
appeal against the judgment of the Supreme Court of
Appeal. The
leave prayed for was granted and in Laught It Off Promotions CC v SAB
International (Finance) BV
[2005] ZACC 7
;
2006 (1) SA 144
(CC) the Constitutional
Court again considered the wording of
section 34(1)(c)
of the Act.
Although the judgment was in the context of that section and not
section 10(17)
, both sections carry the identical phrase “take
unfair advantage of, or be detrimental to” and it is therefore
accepted
that the interpretation applied by the Constitutional Court
to
section 34(1)(c)
applies equally to
section 10(17).
[27] With regard
to the “likelihood of detriment” Moseneke J observed as
follows (par 54):
"It
is clear that even without reference to the dictates of the
Constitution, our Courts rightly tend to determine a likelihood
of
detriment to the selling appeal of a mark in the light of established
facts and not bald allegations. However, in the
present case,
the SCA dismissed this contention of the applicant out of hand and on
the narrow basis that s 34(1)(c) does not require
prove of actual
loss but only the likelihood of loss. Unlike the position in
the UK, European Union and under the United
States (US) federal law,
it is so that s 34(1)(c) does not require actual loss, but its
likelihood. In other words, it requires
a probability of the
occurrence of material loss. The SCA and the High Court appear
to have approached the likelihood of
detriment on the footing that
the message on the T-shirts would probably create in the minds of
consumers a particularly unwholesome,
unsavoury and degrading
association difficult to detach from the reputation of the
respondent’s marks. But the difficulty
is that ordinarily
probability is a matter of inference to be made from facts
consistence with the inference. No such
facts have been
pleaded.”
[28] It was
contended on behalf of the Opponent that the KAPPA trade mark is
associated with a positive, healthy and active lifestyle
and the use
and registration of an identical mark in relation to tobacco,
cigarettes and smokers’ requisites will place the
mark in an
unwholesome context which will cause serious detriment to the
distinctive character and repute of the Opponent’s
trade mark.
In support of this argument counsel for the Opponent also referred me
to a decision by O Morris for the Registrar,
United Kingdom in the
application for invalidation in respect of the trade mark KAPPA
between the same parties. In that matter
it was concluded that
the use of an identical mark in relation to tobacco would make the
mark less attractive to potential customers
of the Opponent
(applicant in that matter) and this demonstrates that damage “in
a tarnishing sense, flows, together with
the economic consequences”
(par 38).
[29] It should
be pointed out that according to the judgment it appears that
evidence was presented for the applicant by its trade
mark attorney.
It related to a decision and supporting materials from essentially
the same dispute at European level and
in Singapore. Evidence
was also presented by Mr Sindico, the applicant’s “proxy”,
about the effects of
smoking and the restrictions on tobacco
advertising, including an explanation of the steps the applicant has
taken to prevent any
derogatory use of its marks. In his
evidence, Mr Sindico also provided a number of documents published by
the World Health
Organisation relating to the health damaging effects
of tobacco products, that sponsorship/advertising increases smoking
and, also,
the link between sport and tobacco in that tobacco
companies have, in the past, used sporting activities and events for
promotional
purposes with the aim of negating the negative
connotations of tobacco products. It appears that the witness
also referred
to the Framework Convention on Tobacco Control which
came into force during 2005, a convention which the UK is party to.
[30] In the
matter before me counsel for the Trade Mark Applicant pointed out
that the Opponent’s and Trade Mark Applicant’s
target
markets are substantially different and there is no evidence that the
sale of cigarettes under the KAPPA mark will cause
consumers to think
that the Opponent endorses smoking.
[31] The
founding affidavit filed on behalf of the Opponent sets out in some
detail the total annual turnover from the sale of products
bearing
the KAPPA trade marks, both worldwide and in South Africa, prominent
soccer and rugby sponsorships and even endorsements
by certain
well-known sports personalities. Even if one were to accept the
allegation that the Opponent’s KAPPA brand
is associated with a
positive, healthy and active lifestyle, there is no evidence that the
use and registration of an identical
mark in relation to tobacco,
cigarettes and smokers’ requisites will have the likely effect
to tarnish the selling power
of the mark. Furthermore, the bald
allegation that the registration will be detrimental to it because of
the “unwholesome
context” of cigarettes and smoking is
not supported by any evidence, direct or inferential, or in the
context of a likelihood
of loss of sales by virtue of the reduced
commercial magnetism of the mark.
[32] Most
notable, the deponent on behalf of the Opponent who is domiciled in
Torino, Italy does not qualify himself as a person
who is familiar
with consumer perceptions and consumer behaviour in the context of
unfavourable associations that might be created
by the use of tobacco
products in South Africa. This probably also explains why the
deponent, instead of presenting evidence,
“submitted” and
was also “advised” that the use and registration of the
trade mark in respect of the goods
listed in Class 34 would tarnish
and cause serious detriment to the distinctive character and repute
of the Opponent’s KAPPA
trade marks. No particulars were
furnished of the respects in which the use of the mark would be
likely to take unfair advantage
of or be detrimental to the
distinctive character or repute of the Opponent’s trade marks.
Furthermore, the Opponent’s
argument on detriment rests on the
assumption, not supported by evidence, that consumers will probably
draw an unfavourable or
unwholesome association between the two
products. Even if it were to be correct, I don’t think
this is a fact of such
general common knowledge that a court is
entitled to take judicial notice of it.
[33] In the
absence of acceptable evidence I am unable to find that the Opponent
has discharged the evidential burden to indicate
prima facie that use
of the mark sought to be registered would be likely to take unfair
advantage of, or be detrimental to, the
distinctive character or the
repute of the registered trade mark. In the result the
Opponent’s application falls to
be dismissed.
ORDER
I grant the
following order: The Opponent’s application, opposing the
Trade Mark Applicant’s registration, is
dismissed with costs.
_________________________
D S FOURIE
JUDGE OF
THE HIGH COURT
PRETORIA
Date: 17
February 2015