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[2007] ZASCA 53
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Verimark (Pty) Ltd v Bayerische Motoren Werke AktienGesellschaft ; Bayerische Motoren Werke AktienGesellschaft v Verimark (Pty) Ltd (250/06) [2007] ZASCA 53; 2007 (6) SA 263 (SCA); 2007 BIP 213 (SCA) (17 May 2007)
Links to summary
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
Case No: 250/06
In
the matter between:
VERIMARK
(PTY) LTD
..........................
Appellant
and
BAYERISCHE
MOTOREN WERKE
AKTIENGESELLSCHAFT
..........................
Respondent
and in the matter of
a cross-appeal between:
BAYERISCHE
MOTOREN WERKE
AKTIENGESELLSCHAFT
..........................
Appellant
and
VERIMARK (PTY)
LTD
..........................
Respondent
Coram :
Harms ADP, Streicher, Cloete,
Ponnan and Combrinck JJA
Heard :
2 MAY 2007
Delivered :
17
MAY 2007
Summary:
Trade
mark infringement – use as a trade mark – unfair
advantage of a well-known trade mark.
Neutral Citation:
This
judgment may be referred to as
Verimark
(Pty) Ltd v BMW AG
[2007]
SCA 53 (RSA)
JUDGMENT
HARMS ADP
[1] This case is
about trade mark infringement. The well-known BMW logo
1
is registered in
different classes and those in contention are registered (a) in class
3 for, amongst others, cleaning and polishing
preparations and
vehicle polishes (the polish mark, TM 1987/05127); and (b) in class
12 for vehicles, automobiles and the like (the
car mark, TM
1956/00818/1).
The owner of the
mark, the present respondent (Bayerische Motoren Werke AG, in short
BMW) applied in the high court under the provisions
of
s 34(1)
of the
Trade Marks Act 194 of 1993
2
for an interdict
restraining the respondent (the present appellant, Verimark (Pty)
Ltd) from infringing these two trade marks. The
court (per de Vos J)
found in favour of BMW in relation to its claim based on the polish
mark (a) but dismissed the application in
relation to its car mark
(b).
3
This gave rise to an
appeal and cross-appeal with the leave of that court.
[2] Verimark is the
market leader in the field of direct response television marketing in
which demonstrative television commercials
are used. Two of its many
products are its Diamond Guard car care kit and Diamond Guard car
polish. These have been widely advertised
and sold since 1996.
Throughout this period Verimark used vehicles of different makes, but
more particularly BMW cars, to demonstrate
the wonders of these
products. In one particular television flight a BMW car is first
treated with Diamond Guard and then an inflammable
liquid is poured
onto the hood of the car and set alight without causing any damage to
the car’s paintwork. In another instance
an older and cheaper
car is treated with Diamond Guard and it then metamorphoses into a
shining BMW. The complaint of BMW is that
its logo on the BMW car is
clearly visible and because of this its case is that Verimark is
infringing its trade mark registrations.
The same complaint is
directed at the use of a clip from the first flight as background on
its packaging material and in its internet
advertisement. A
representation of the packaging material is annexed to this judgment.
[3] BMW relies on
the provisions of
s 34(1)(a)
for its allegation that its class 3
trade mark for polishes has been infringed. This paragraph provides
(to the extent relevant)
that the rights acquired by registration of
a trade mark are infringed by the unauthorized use of an identical
mark in the course
of trade in relation to goods in respect of which
the trade mark is registered. The argument is simply that the BMW
logo appears
on the packaging material and in the advertisements; the
logo is identical to the registered trade mark; the use by Verimark
is not
authorised; and it is use in the course of trade in relation
to polishes. Therefore there is infringement.
[4] Verimark, on the
other hand, argues that ‘use’ in this context must be
‘trade mark use’ meaning
‘
use of
a registered trade mark for its proper purpose (that is, identifying
and guaranteeing the trade origin of the goods to which
it is
applied) rather than for some other purpose’
4
and that its use of
the BMW logo does not amount to trade mark use because it is not used
as and cannot be perceived to be a badge
of origin. It argues that
the product is clearly identified as Diamond Guard and nothing else
and that the BMW logo identifies the
car on which the product is
being used and not the polish. In this regard Verimark relies on
recent developments in the European
Court of Justice (the ECJ) and
the English courts
5
and on a dictum of
this Court in
Bergkelder
.
6
Against this are two
high court judgments
7
that were based on a
literal interpretation of the provision and on the reasoning in
British
Sugar plc v James Robertson & Sons Ltd
[1996]
RPC 281
(Ch), which has since been overruled in this regard.
[5] It is trite that
a trade mark serves as a badge of origin and that trade mark law does
not give copyright-like protection.
Section 34(1)(a)
, which deals
with primary infringement and gives in a sense absolute protection,
can, therefore, not be interpreted to give greater
protection than
that which is necessary for attaining the purpose of a trade mark
registration, namely protecting the mark as a badge
of origin. In
Anheuser-Busch
8
the ECJ was asked to
determine the conditions under which
the
proprietor of a trade mark has an exclusive right to prevent a third
party from using his trade mark without his consent under
a primary
infringement provision. The ECJ affirmed (at para 59) that
‘
the
exclusive right conferred by a trade mark was intended to enable the
trade mark proprietor to protect his specific interests as
proprietor, that is, to ensure that the trade mark can fulfill its
functions and that, therefore, the exercise of that right must
be
reserved to cases in which a third party’s use of the sign
affects or is liable to affect the functions of the trade mark,
in
particular its essential function of guaranteeing to consumers the
origin of the goods.’
That
is the case, the ECJ said (at para 60), where the use of the mark is
such that it creates the impression that there is a ‘
material
link
in
trade between the third party’s goods and the undertaking from
which those goods originate’. There can only be primary
trade
mark infringement if it is established that consumers are likely to
interpret the mark,
as
it is used by the third party
,
as designating or tending to designate the undertaking from which the
third party’s goods originate.
[6] As far as
English courts are concerned, I do not intend to trawl through the
development of the law
9
but shall limit
myself by referring to some of the observations of the House of Lords
in
Johnstone
.
10
Lord Nicholls of
Birkenhead stated (at para 13):
‘
But
the essence of a trade mark has always been that it is a badge of
origin. It indicates trade source: a connection in the course
of
trade between the goods and the proprietor of the mark. That is its
function. Hence the exclusive rights granted to the proprietor
of a
registered trade mark are limited to use of a mark likely to be taken
as an indication of trade origin. Use of this character
is an
essential prerequisite to infringement. Use of a mark in a manner not
indicative of trade origin of goods or services does
not encroach
upon the proprietor's monopoly rights.’
Taking his cue from
the ECJ jurisprudence, Lord Walker said (at para 84):
‘
The
[ECJ]
11
has
excluded use of a trade mark for "purely descriptive purposes"
(and the word "purely" is important) because
such use does
not affect the interests which the trade mark proprietor is entitled
to protect. But there will be infringement if
the sign is used,
without authority, "to create the impression that there is a
material link in the course of trade between
the goods concerned and
the trade mark proprietor" . . .’
[7] This approach
appears to me to be eminently sensible. It gives effect to the
purpose of the Act and attains an appropriate balance
between the
rights of the trade mark owner and those of competitors and the
public. What is, accordingly, required is an interpretation
of the
mark through the eyes of the consumer as used by the alleged
infringer. If the use creates an impression of a material link
between the product and the owner of the mark there is infringement;
otherwise there is not. The use of a mark for purely descriptive
purposes will not create that impression but it is also clear that
this is not necessarily the definitive test.
[8] Turning then to
the facts of this case, I am satisfied that any customer would regard
the presence of the logo on the picture
of the BMW car as identifying
the car and being part and parcel of the car. It is use of the car to
illustrate Diamond Guard’s
properties rather than use of the
trade mark.
12
No-one, in my
judgment, would perceive that there exists a material link between
BMW and Diamond Guard or that the logo on the car
performs any
guarantee of origin function in relation to Diamond Guard.
[9] Counsel for BMW
sought to escape this conclusion by relying on dicta in
Adidas
13
where
AS Botha J
dealt
with the distinction between trade mark infringement and passing-off
and where he mentioned that in the former instance one
simply has to
compare the two marks as registered without reference to the get-up
whereas in the latter case one has to have regard
to the whole get-up
when determining whether or not there is a probability of confusion
or deception. This dictum is, in context,
correct although it has
from time to time been used to blur the distinction between added
matter extrinsic to a defendant’s
mark and added matter that is
intrinsic thereto.
14
In any event, the
dictum dealt with the issue of determining identity or the likelihood
of confusion or deception and not with the
determination of the
public’s perception of what the defendant’s mark is.
15
Here the issue is
whether the public would perceive the BMW logo to perform the
function of a source identifier and for that purpose
one cannot
simply isolate the logo on the bonnet of the car and ignore the
context of use.
[10] The effect of
this is that BMW’s claim based on
s 34(1)(a)
was misconceived
and that the high court erred in granting an interdict in relation to
the polish mark. Verimark’s appeal must
therefore be upheld.
[11] This brings me
to BMW’s case based on
s 34(1)(c)
– the anti-dilution
provision – which provides (to the extent relevant) that the
unauthorized use in the course of trade
in relation to any goods of a
mark identical to a registered trade mark, if the latter is well
known in the Republic and the use
of the mark would be likely to take
unfair advantage of, or be detrimental to, the distinctive character
or the repute of the registered
trade mark amounts to trade mark
infringement, notwithstanding the absence of confusion or deception.
[12] It is common
cause that the BMW logo is well known
16
and that the issue
is whether Verimark’s use as described is likely to take
‘unfair advantage’ of the distinctive
character or the
repute of the BMW mark, in other words, whether there is the
likelihood of dilution through an unfair blurring of
BMW’s
logo, it being accepted that Verimark’s use is not detrimental
to nor does it tarnish BMW’s logo.
[13] Contrary to
rather wide dicta in
Johnstone
(at para 17)
17
stating the
opposite, the position in our law is that this provision does not
require trade mark use in the sense discussed as a pre-condition
for
liability. In other words, the provision ‘aims at more than
safeguarding a product’s “badge of origin”
or its
“source-denoting function”.’
18
It also protects the
reputation, advertising value or selling power of a well known mark.
19
But that does not
mean that the fact that the mark has been used in a non trade mark
sense is irrelevant; to the contrary, it may
be very relevant to
determine whether unfair advantage has been taken of or whether the
use was detrimental to the mark.
[14] The following
points made by Lord Menzies with reference to a number of authorities
are in this context apposite:
20
the
provision is not intended to enable the proprietor of a well-known
registered mark to object as a matter of course to the use
of a sign
which may remind people of his mark; there is a general reluctance to
apply this provision too widely;
not
only
must the advantage be unfair, but it must be of a sufficiently
significant degree to warrant restraining of what is,
ex
hypothesi
,
non-confusing use; and that the unfair advantage or the detriment
must be properly substantiated or established to the satisfaction
of
the court: the court must be satisfied by evidence of actual
detriment, or of unfair advantage.
21
[15] The high court
found that although Verimark may be taking advantage of the
reputation of the BMW logo, this is not done in a
manner that is
unfair. It mentioned that Verimark’s emphasis is on the
effectiveness of its own product sold under established
trade marks
and found that one cannot expect Verimark to advertise car polish
without using any make of car and it would be contrived
to expect of
Verimark to avoid showing vehicles in such a way that their logos are
hidden or are removed. I agree. As before, the
question has to be
answered with reference to the consumer’s perception about
Verimark’s use of the logo. Once again,
in my judgment a
consumer will consider the presence of the logo as incidental and
part of the car and will accept that the choice
of car was
fortuitous. In short, I fail to see how the use of the logo can
affect the advertising value of the logo detrimentally.
A mental
association does not necessarily lead either to blurring or
tarnishing.
22
[16] This means that
the high court was correct in its dismissal of the claim for an
interdict in relation to the car mark and that
the cross-appeal
stands to be dismissed. The resultant order is the following:
(a) The appeal is
upheld and the cross-appeal dismissed with costs, such costs to
include the costs of two counsel.
(b) The order of the
court below is amended to read:
‘
The
application is dismissed with costs.’
___________________________
L T C HARMS
ACTING DEPUTY
PRESIDENT
AGREE:
STREICHER
JA
CLOETE
JA
PONNAN
JA
COMBRINCK
JA
1
The
representation of the logo below is of a better quality than the one
on the registration certificate.
2
It
reads as follows:
‘
34(1) The
rights acquired by registration of a trade mark shall be infringed
by—
(a)
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;
(b)
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;
(c)
the unauthorized use in the course of trade in relation to any goods
or services of a mark which is identical or similar to
a trade mark
registered, if such trade mark is well known in the Republic and the
use of the said mark 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 confusion or
deception: Provided that the provisions of this paragraph shall not
apply to a trade mark referred
to in
section 70
(2).’
3
">
3
Two
other marks were also in contention but they did not figure during
argument on appeal and, in any event, the outcome of this
appeal
makes it unnecessary to consider them separately. BMW’s
reliance on passing-off was abandoned during the appeal hearing.
4
R
v Johnstone
[2003]
UKHL 28
,
[2003] 3 All ER 884
,
[2004] ETMR 2
,
[2003] 1 WLR 1736
,
[2003] FSR 42
, [2003] 2 Cr App R 33 at para 76.
5
Especially
R v Johnstone
.
As for Scotland:
Procurator
Fiscal v. Gallacher
[2006]
ScotSC 40.
6
Bergkelder
Beperk v Vredendal Koöp Wynmakery
[2006] ZASCA 5
;
2006
(4) SA 275
(SCA),
[2006] 4 All SA 215
(SCA) footnote 15.
7
Abbott
Laboratories v UAP Crop Care (Pty) Ltd
1999
(3) SA 624
(C) 632B-C and
Abdulhay
M Mayet Group(Pty) Ltd v Renasa Insurance Co Ltd
1999
(4) SA 1039
(T) 1045I-J
8
Anheuser-Busch
Inc. v Budĕjovický Budvar, národní podnik
Case C-245/02 of 16
November 2004.
9
See
Arsenal
Football Club Plc v Reed
[2003]
EWCA Civ 696 (21 May 2003)
.
There are many cases under this name.
10
R
v Johnstone
[2003]
UKHL 28.
Although delivered at approximately the same time the House
was apparently unaware of the proceedings in the Court of Appeal
mentioned
in the preceding footnote, and vice versa.
11
In
Arsenal
Football Club plc v Reed
[2003]
RPC 144
;
[2002]
EUECJ C-206/01
(12 November 2002).
12
Cf
Jeremy Phillips
Trade
Mark Law
(2003) para
8.52-8.55.
13
Adidas
Sportschuhfabriken Adi Dassler KG v Harry Walt & Co (Pty)
Ltd
1976 (1)
SA 530
(T) 535E-536A
14
For
an explanation of the difference see:
Standard
Bank of SA Ltd v United Bank Ltd
1991
(4) SA 780
(T);
Bata
Ltd v Face Fashions CC
2001
(1) SA 844
(SCA) para 6;
Reed
Executive plc v Reed Business Information Ltd
[2004] EWCA
Civ159
,
[2004] RPC 40
;
Compass
Publishing BV v Compass Logistics
[2004]
EWHC 520
,
[2004] RPC 41
(Ch).
15
Cf
Miele et Cie & Co
v Euro Electrical (Pty) Ltd
1988
(2) SA 583
(A) 596F-I;
Apple
Corps Ltd v Apple Computer Inc
[2006]
EWHC 996
(Ch).
16
Whether
the logo is well known in relation to polishes has not been
established but this fact has no bearing on the outcome of the
case.
17
These
appear to require trade mark use for the anti-dilution provision
also. The dicta are explicable because the case dealt with
counterfeiting and counterfeiting is concerned with primary
infringement and does not concern dilution.
18
Laugh
It Off Promotions CC v SAB International (Finance) BV t/a Sabmark
International
[2005] ZACC 7
;
2006
(1) SA 144
(CC) para 40.
19
Laugh
It Off Promotions CC v SAB International (Finance) BV t/a Sabmark
International
2005
(2) SA 46
(SCA) para 13.
20
Pebble
Beach Company v Lombard Brands
[2002]
ScotCS 265.
21
Depending
on the primary facts these may be self-evident. On the requirement
of proof of actual detriment see
Laugh
It Off Promotions CC v SAB International (Finance) BV t/a Sabmark
International
[2005] ZACC 7
;
2006
(1) SA 144
(CC) para 49.
22
Cf
Moseley v V Secret
Catalogue
[2003] USSC 1847
;
537 US 418
(2003), 4 Mar 2003 per Stevens J: ‘We do agree, however, with
that court’s conclusion that, at least where the marks
at
issue are not identical, the mere fact that consumers mentally
associate the junior user’s mark with a famous mark is
not
sufficient to establish actionable dilution. As the facts of that
case demonstrate, such mental association will not necessarily
reduce the capacity of the famous mark to identify the goods of its
owner, the statutory requirement for dilution under the FTDA.
For
even though Utah drivers may be reminded of the circus when they see
a license plate referring to the “greatest
snow
on earth,” it by no means
follows that they will associate “the greatest show on earth”
with skiing or snow sports,
or associate it less strongly or
exclusively with the circus. “Blurring” is not a
necessary consequence of mental association.
(Nor, for that matter,
is “tarnishing.”)’