Wednesday, April 11, 2007

Many entrepreneurs will have become used to being advised in intellectual property matters that a remedy in terms of passing off or of infringement in terms of statutory law (by way of the Trade Marks Act 194 of 1993), will be available in one scenario but not in the other. It might be of interest to consider the differences between these two grounds of legal protection so as to obtain a better understanding of the interaction that might take place, and how these differences can impact on a decision whether or not to initiate litigation. The remedy of passing off has been found in one form or another for centuries. It is part of the common or so-called unwritten law. In contrast, the system of statutory protection of trade marks by way of the registration thereof, has, relatively speaking, not been in existence that long. The law relating to passing off was thus, put differently, made by judges, and the law relating to trade mark infringement was created by the relevant legislative bodies. The latter origin does not necessarily indicate a greater degree of rigidity insofar as the application of legislative instruments is concerned. The courts obviously interpret the legislation continuously, and in a sense the words of the statute form only a broad framework within which the judiciary functions, and "finds" the law.
From the above follows the distinction between the acquisition of rights in terms of the two systems. Rights relating to passing off are established "gradually", with use, and the central question would be when it can be said that a reputation has been acquired insofar as a specific mark is concerned. The establishment of a reputation is dependent on a number of factors, including the nature of a mark, that is, the degree of distinctiveness, sales figures, promotional expenditure on the marketing of products bearing the mark or get-up, and the period of use. Protection in terms of the Act is available immediately, on registration, and is not, in the short term, dependent on use of the mark. Although the obtainment of statutory rights would seem, from this perspective, to be a more expedient way in which to obtain rights, such an observation is not borne out by reality. This is on account of the fact that the time frame within which an application will proceed to registration can be a matter of up to three or four years at this stage. This factual consideration does however not change the theoretical position.
A further difference is that in cases of alleged passing off, it is said that it is the goodwill built up through the use of a mark that is protected, whilst in instances of trade mark infringement, it is the right to the mark itself that is being protected. Flowing from this fact is a practical difference between the two remedies, namely that passing off involves a comparison of the two marks and the get-up of the products in relation to which they are used. In other words, the mere fact that a mark, whether registered or not, is used by A, does not automatically imply that he would be liable towards B for passing off. Colours and shapes or the addition of other distinctive material can thus be considered by the court to determine whether or not there is a likelihood of confusion. On the other hand, in the instance of trade mark infringement, the comparison is solely between the two marks themselves, and extraneous matter cannot be taken into consideration. In a manner of speaking, a holistic approach is adopted in passing off cases. Trade mark infringement is concerned only with the mark that has been registered, and if that mark is used by the respondent along with other distinctive material, the addition of the latter is disregarded. In line with the above, in infringement cases there is a prohibition on the use of the mark in issue, but the wording of an interdict in passing off cases rather relates to steps to be taken to distinguish the products concerned.
Passing off does not require the establishment of the use of a mark in relation to the same or similar goods. This is a requirement in terms of sections 34(1)(a) and (b) of the Act, but not section 34(1)(c), which relates to the use of a famous mark in relation to any goods. Passing off does require the establishment of a likelihood of confusion. In contrast, in instances where a registered mark is used in relation to the same goods for which registration has been obtained, it is only the similarity between the marks that must be proven (section 34(1)(a)). It is not necessary to establish that confusion will result, as there is, in a certain sense, an irrebuttable presumption to this effect. Similarly, in the case of the infringement of a famous mark, in instances of dilution, it is not required to prove the likelihood of confusion. A central issue in passing off cases is whether the use concerned is likely to affect, adversely, the goodwill of the business. The right to goodwill does not feature in infringement cases.
Lastly, it is important to bear in mind that the remedy of passing off relates to a particular geographical area in which a reputation can be said to exist. In other words, where a mark is used in Brackenfell, it will not necessarily be possible to prevent the use of the mark in Brakpan. In the case of a registered mark, the registration will in principle be enforceable in the whole country. In summary, it appears that there are a number of instances where relief in terms of passing off will achieve the rights holder’s objective of the protection of his intellectual property, whilst in other instances relief in terms of the Trade Marks Act will be more appropriate.