Monday, March 05, 2007

By Wim Alberts

Trade mark rights can be derived from either the common or statutory law. In terms of the common law, one requirement for protection is the presence of a reputation, the determination of which is a factual question. This simple principle can be difficult to apply, however. A particular problem is encountered in the case where a mark is used in different geographical areas by different persons. Guidance can however be obtained from case law in the United Kingdom. Brief regard is had thereto, and thereafter the South African position is considered.

That protection will not necessarily be limited to the actual area of use, appears from Brestian v Try [1958] RPC 161. A conducted business as a ladies’ hairdresser in London, Wembley and Brighton. B carried on business in Tunbridge Wells. Evidence established that persons thought that B’s business was associated with that of A. B argued that A had to prove the existence of a reputation in Tunbridge Wells. The court stated that the matter cannot be decided by mere allocation of goodwill by areas, and that whilst distance may reduce or eliminate the likelihood of confusion, the circumstances concerned are decisive. It was found that as Brighton and Tunbridge Wells were only some 30 miles apart, ladies living between the two places might well go to either for the purpose of having their hair attended to.

The protection of goodwill even beyond the actual area of operations, was also recognized in D.C. Thomson & Co. Limited v Kent Messenger Limited and South Eastern Newspapers Limited [1975] RPC 191. A contended that its publication had increasing sales in the area to be circulated by B, and that confusion would result in future potential sales that would be lost. The court confirmed that mere future possibilities can be protected, but held that the evidence as to increasing sales in B’s area was not satisfactory.

A wide application of the above principle occurred in Chelsea Man Menswear Limited v Chelsea Girl Limited [1987] RPC 189. A had shops in Coventry, Leicester and London, operating under the name Chelsea Man. B had a chain of shops retailing ladieswear throughout the country, operating under the name Chelsea Girl, and wanted to use the name Chelsea Man, the mark of A. The court considered it relevant that B intended to open a chain of retail shops not only in isolated parts, but all over the country. The court accepted that a plaintiff who has established passing-off can obtain relief beyond the boundaries of the particular areas in which he has proved the existence of his reputation and goodwill. Of particular relevance was the fact that it was common for people to move about the country. Consumers could thus assume that B’s goods emanate from A. The appeal against the ruling of the court a quo, which granted an injunction unrestricted in its geographical application, was thus rejected.

The decision in Evans v Eradicure Ltd [1972] RPC 808 illustrates the practical difficulties that can be involved in the demarcation of areas of protection. Each party chose virtually identical names independently from each other and operated in different areas. As their businesses expanded, a conflict arose. The court said that it may well be that the answer in such circumstances is that there is a stalemate. The court also referred to the difficulty of a territorial limitation. It raised the point as to how a particular line on the map should be drawn. The court ruled that A was not entitled to interlocutory relief pending the trial.

With regard to South African cases, regard can be had, firstly, to Union Steam Bakery (Pty) Limited v Nichas 1955 (1) SA 25 (T). Here A and B carried on business as bakeries. A conducted business in the town of Middelburg, and B in the town of Bethal, some 80 kilometres away. For many years there was no conflict between the two parties, but at some stage B commenced delivery of his breads to firms in Middelburg. Ruling in favour of A, the court confirmed that a competitor wishing to enter the same field as an existing concern, would be debarred if he entered that field directly as a new business. The court rejected the idea that a competitor that established himself in a different area, could thereafter enter another geographical area under a name likely to cause confusion.

In GPS Restaurant BK v Cantina Tequila (Mexican Connection CC) [1997] 1 All SA 603, A used the trade mark Cantina Tequila for a restaurant in the Johannesburg suburb of Brixton. B operated a restaurant under the same name in Cape Town, and wished to expand to Rosebank. B contended that it also had a reputation in Johannesburg, as holidaymakers from Gauteng frequent the restaurant in Cape Town. Reservations were also made from Johannesburg. The court stated that B could only trade in Rosebank if passing off was unlikely, as it concluded that A’s goodwill extended to Rosebank. The court ruled in favour of A.

In summary of the above, the Brestian case makes it clear that it is not necessary that a reputation should be present in the particular area where the defendant is active. The court indicated that the matter cannot be decided by the mere allocation of goodwill by areas. In this sense the protection given relates to an area wider than that in which actual trade is conducted. The above principle was also applied in the Chelsea decision. The view that a nationwide goodwill must be established was rejected. The court was guided by the issue of the likelihood of confusion. This could for instance ensue if B extended its operations to areas closer to that in which A traded.

Similarly, in the Kent Messenger case, direct reference was made to future potential sales that would be lost. The application of this principle is, however, difficult, as appears, for instance, from the Evans decision, according to which a stalemate could develop. The two South African cases can be summarised by stating that a reputation in an area would not, mero motu, allow a party to commence business in the other party’s area of trade. If reliance is, indeed, placed on a reputation within the other party’s territory, it would have to be of such an extent and nature that no confusion would be likely. When the above position is compared with that in terms of statutory law, the advantage of having a trade mark registration becomes apparent. In the latter situation, a registration will have effect across the country, even though the proprietor might be conducting trade in only one part thereof.