Monthly Archives: July 2014

Fumex: A case of trade mark indifference

A4blThe recent decision in the case of Howden Africa v CFW Industries has attracted considerable interest. In this case a registration for the trade mark Fumex Fans was cancelled for non-use, despite the fact that evidence of use over the relevant five-year period was submitted.

Much of the comment has related to the finding that the use that was shown to have taken place was non-trade mark use, and therefore insufficient – a brochure that had been submitted showed that the trade mark owner sold a whole range of fans which were generally identified by way of descriptive words, including one fan that was identified as follows:

Smoke Venting Fans

(Fumex)

The judge said that it was ‘ambiguous whether the word “Fumex” in brackets below the description of the smoke venting fan conveys to the reader of the brochure the fact that  “Fumex” is in fact a trade mark or merely intended to be descriptive of a particular type of smoke venting machine.’ 

This is obviously an interesting issue, especially as our courts emphasise the fact that a trade mark’s main function is to indicate origin, which means that any use that does not suggest a trade connection between the goods and the owner of the mark is not trade mark use. Although this usually comes up in the context of infringement – for example where a company defends an infringement action by claiming that it is simply using the trade mark in a descriptive way – it has now also come up in the context of non-use cancellation proceedings.

We think that an equally interesting aspect of the Howden case is the fact it suggests considerable indifference on the part of the trade mark owner.  For starters, it shows indifference to branding principles, with very little thought having gone into how the mark Fumex Fans should be used. It’s basic branding practice to put the trade mark in front of the descriptive wording. It’s unheard of to put the trade mark in brackets, which almost suggests that ‘fumex’ is another appropriate descriptive term.  And if you do have a mark that has the potential to be descriptive – Fumex could be seen as a combination of ‘fume’ and ‘extractor’ – you should probably take extra care, for example by using it in a form like this: ‘Fumex brand smoke venting fans’. In the same way that you see use of the expression ‘Kleenex brand tissues’.

Second, the case shows indifference to internal brand differentiation and record-keeping. Apart from the brochure, it seems that the owner of the trade mark filed no other evidence to show use of the trade mark Fumex Fans.  This suggests that the trade mark owner was unable to differentiate between sales of its Fumex Fans product and its other products.  This is a mistake that no company that takes it trade marks seriously would make.

Finally, the case shows considerable indifference to cancellation proceedings. South African courts have, over the years, been surprisingly generous to trade mark owners in non-use cancellation proceedings, bending over backwards to preserve registrations.  There was a case of Kmart, where the court held that proof of advertising in publications that appeared in South Africa as part of a ‘strategy to promote international business’ was sufficient, even though there had been no actual sales.  In the more recent case of The Gap Inc v Salt of the Earth Creations, the Supreme Court of Appeal was satisfied with evidence that there had been serious negotiations over the five-year period between the US company that owned the mark and a South African company that wanted to be appointed as the local distributor of Gap products. The court said this of the US company’s activities in South Africa: ‘It may well have been on a more modest scale relative to its activities elsewhere in the world, but it surpasses the fairly low threshold set by the authorities.’

Yet despite this low threshold, South African courts are also becoming more demanding as regards the nature of the evidence that needs to be submitted.  Cancellation proceedings are odd, because the party seeking cancellation needs to prove a negative – non-use of a trade mark. It is, however, recognised that the party seeking cancellation only needs to make out a basic case, and that the onus then shifts to the trade mark owner to disprove the claim of non-use.  The courts do expect the trade mark owner to take this onus seriously. In the recent case of New Balance v Dajee the Supreme Court of Appeal cancelled a registration despite the fact that evidence of use had been filed, because it found the evidence to be unconvincing – a loosely-worded and ambiguous affidavit, no supporting documentation like invoices, and a few undated photos. The court in this case said that it expects the trade mark owner to be forthcoming on the issue of use because it has ‘comprehensive and peculiar knowledge’ of the matter in issue.

The message is clear – you need to take your trade marks seriously.  You need to use them properly and you need to keep proper records of your use. And if you are ever faced with non-use cancellation proceedings, you need to take those very seriously indeed!

For more information please contact:

Nola BondNOLA BOND
Head of Trade Mark Department and Director
Department: Trade Mark
Tel: +27 11 324 3000
Email: nolab@dmkisch.com

Patents: Misrepresentation and revocation

A2blDoes an amendment made to a patent application cure an earlier false statement that was made by the patentee?  This was the issue that the court had to decide in the 2013 South African case of Gallagher Group Ltd v IO Tech Manufacturing (North Gauteng High Court, Judge Kollapen, still unreported).

The case dealt with section 61(1) (g) of the Patents Act. This section says that a patent can be revoked if the prescribed declaration that the patentee must file ‘contains a false statement or representation which is material and which the patentee knew or ought reasonably to have known was false at the time when the statement or representation was made.’ The prescribed declaration (P3) reads as follows: ‘To the best of my/our knowledge and belief, if a patent is granted on the application, there will be no lawful ground for the revocation of the patent.’

The facts were that a company that had allegedly infringed a patent counterclaimed for revocation of the patent. When the company amended its Particulars of Claim to add – as a further ground for revocation – the claim that the prescribed declaration that the patentee had made contained a false statement or declaration that was material and which it knew to be false (it related to  the identity of the inventor), the patentee objected by way of a legal exception. The patentee’s argument was that the proposed amendment did not set out any cause of action for revocation because – even if it had known that the patent was invalid at the time when it was filed – certain amendments that it had made to its patent application after the signing of the declaration cured the invalidity with retrospective effect.

Not so said Judge Kollapen. He gave two reasons for his finding. The first was that the present (1978) Patents Act differs significantly from the old (1952) Patents Act on the issue of revocation – whereas under the old act a patent could be revoked if the application contained a material misrepresentation, under the present act a patent can be revoked if the declaration contained a false statement that the patentee knew or should reasonably have known was false when it was made. As a result, the judge felt that a number of well-known cases that dealt with amendments to patents filed under the old act were of limited value.*

The judge said that Section 61(1) (g) ‘signalled a significant departure in the approach to material misrepresentation as a ground for revocation…. (it) fixes with inflexible rigidity, the timeline in assessing the falsity of a misrepresentation…the operative words are “at the time when the statement or representation was made”…the legislature, in moving beyond the provisions of the 1952 Act, sought to provide a basis for revocation where: a) The patentee knew or ought reasonably to have known of the falsity, and b) Had such knowledge at the time when the misrepresentation was made.’

The judge said that the change introduced culpability, and drew a clear distinction between innocent and culpable misrepresentations. The effect of the change is that innocent misrepresentations no longer serve as a ground for revocation.   ‘It must therefore follow that the 1978 Act did in fact represent a significant change in approach to false representations in patent declarations, and while on the one hand it narrowed the scope on which a revocation could be launched by excluding innocent representations, on the other hand it created a higher bar in order to successfully invoke a claim for revocation, namely knowledge of falsity.’ It followed therefore that an ex post facto amendment could not solve the problem: ‘Under those circumstances it would be difficult to convincingly argue in view of the deliberate change of stance by the legislature in isolating and dealing with knowingly making a false representation as a basis for the revocation, that simply amending the patent specification can have the effect of removing the basis for revocation.’ 

The judge also felt that there were public policy reasons for such an interpretation: ‘From a public policy perspective ensuring that an amendment does not have the effect of curing an invalidity that was knowingly made would go a long way in ensuring that patentees only file patents for inventions which the patentee honestly believes are valid, thereby protecting the system against abuse by dishonest patentees.’ 

The judge rejected the patentee’s argument that the effect of such a finding would be to remove the right to amend patent applications: ‘The right to amend is left intact… (however) the consequence of such a right can never be to validate a knowing falsity.’ 

It’s a decision that has serious implications for both existing patents and patent applications that are filed in the future. It’s important to realize that the P3 declaration does not need to be filed together with the patent application and can be filed late.  It’s also possible to uplift a P3 that has been filed and replace it with a fresh one. A patentee will, in future, need to consider the filing of the P3 very carefully, taking account of corresponding or international applications that it has filed. For example, although the patentee will need to rectify invalidity that it knows about before it signs the P3, if it signs the P3 before the invalidity comes to light the P3 will be fine, although it will still be necessary to amend the application.  This is, of course, an issue that the patentee must discuss in detail with its attorney.

*Cases such as Dresser Industries Inc v South African Inventions Development Corporation 1982 BP 317 (CP), Bendz Ltd and another v South Africa Lead Works Ltd 1963 (3) 797 (A) and  Rotaque (Pty) Ltd v General Mining and Finance Corporation and Chamber of Mines of South Africa 1986 BP 534 AD.

For more information please contact:

Muhammed_BlogMUHAMMED VALLY
Director
Department: Patent
Tel: +27 (0)11 324 3080
Email: muhammedv@dmkisch.com

Force Majeure

A1blHas your business been affected by the recent Association of Mineworkers and Construction Union (AMCU) or National Union of Metalworkers of South Africa (NUMSA) strike? It was recently reported in the media that the strike action by AMCU was declared a force majeure event by Anglo American Platinum and Impala Platinum, whose employees participated in the strike.

A force majeure event is an event beyond the control of a party which prevents the party from fulfilling its contractual obligations to another party. The effect of a force majeure event is that a party may be temporarily excused for a delay in performing its obligations under a contract or from having to perform its obligations under a contract altogether if the contract provides for this. Force majeure provisions do not operate automatically, but must be invoked by the party seeking to rely thereon by sending a force majeure notice.

A strike can constitute a force majeure event (as was asserted with regards to the AMCU strike), as can lock-outs, industrial action, war, civil commotion, riot, insurrection, government action, fire, explosion, floods, sea transport accidents and acts of God (irresistible forces of nature).

A contract should define force majeure and should provide for the types of events which will be considered force majeure events. Where possible an exhaustive list of force majeure events should be provided, so as to provide certainty for the contracting parties as to what will constitute a force majeure event. In certain instances force majeure events may be industry-specific, for instance volcanic ash which prevents an airline from undertaking air travel.

A force majeure clause should stipulate the effect of a force majeure event on the parties’ rights and obligations, i.e. the period for which performance may be delayed and whether and after what period of time the contract may be terminated as a result of a force majeure event.

The force majeure clause should also place an obligation on a party affected by a force majeure event to notify the other party to a contract of the occurrence of the event.A force majeure notice should clearly set out:

  1. The event giving rise to the assertion of force majeure, with sufficient particularity so as to allow the other party to determine whether the affected party is entitled to invoke the force majeure clause;
  1. To what extent the affected party is not able to meet its obligations as a result of the force majeure event;
  1. The anticipated duration of the force majeure event, should this be capable of determination; and
  1. The steps taken by the affected party to terminate the circumstances giving rise to force majeure.

If force majeure is not provided forin a contract, the party affected by an event beyond its control may rely on a claim of impossibility of performance in terms of Contract Law in order to avoid liability for breach of contract. This will however not allow for the temporary suspension of the party’s obligations, but will result in the obligations and any counter-obligations being extinguished.

It is therefore important that force majeure clauses are given due consideration when contracting, as they can have far reaching consequences.

Please do not hesitate to contact our Commercial Department at Kevind@dmkisch.com or Merciaf@dmkisch.com or 011 324 3025/33 with any queries, or for further information on force majeure, or if you require our assistance in drafting or amending your force majeure clause or to determine whether you require a force majeure clause in your contracts.

Mercia_BlogMercia Fynn
Associate
Department: Commercial
Merciaf@dmkisch.com
011 324 3025/33

Author: Mercia Fynn

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

China: Time to serve SA wine

A3blA recent article in Business Report entitled ‘Charming Chinese wine buyers’ discussed the exciting opportunities that exist for South African winemakers in China. It told how the Chinese wine market is growing at a rapid pace, with the Chinese having overtaken the French as the biggest drinkers of red wine.

It told how South Africa is well poised to prosper in China, despite the fact that business is still quite small at the moment – China is South Africa’s 10th biggest export market for wine, and South Africa has a mere 2% of the Chinese market (compared to the 45% that France has).  One reason for optimism is the new Chinese focus on price and quality rather than status.

Another reason for optimism is the fact that in South Africa the wine industry is closely linked to the buoyant tourism industry, with ‘wine tourism’ being the new big thing.  An industry spokesman is quoted in the article as saying that ‘people are seeing Cape Town as the new San Francisco and Stellenbosch as the new Napa.’ Once again, China looms large – China is now the fourth largest source of tourists to South Africa after the UK, Germany and America.  And how’s this for an anecdote to whet the appetite – a while back a party of 45 Chinese tourists stopped at the La Motte wine estate and blew a cool R1.5 million on wine!

So what does this mean from a trade mark perspective? Well it certainly means that South African winemakers (and indeed South African companies of all descriptions) should be looking at protecting their trade marks in China. Even if export plans are still at an early stage – the registration process can take between 18 and 24 months. And before you file an application for registration you should, of course, do a trade mark search to make sure the trade mark is in fact available.

China has long been regarded as a somewhat difficult country when it comes to trade mark protection. Time was when China had a reputation as a place where the foreign company seeking to do business there would all too often find that its trade mark had been hijacked by a local – sometimes even the company’s local distributor-  but was available for purchase at an exorbitant price. That, mercifully, seems to be in the past. Another issue that the foreign company has to grapple with is the treatment of local adaptations or translations of the trade mark. Does it use and register adaptations? What are the consequences if it doesn’t? It’s an area that needs to be considered carefully and where advice should be sought.

The good news is that China is no longer as daunting as it once was. For starters, the Chinese authorities now take trade marks, and other forms of intellectual property, far more seriously than they once did.  Which is no surprise – more trade mark applications are filed in China than any other country in the world, with the figure being in the order of some 1, 8 million per year. And Chinese companies register huge numbers of patents and trade marks abroad, being actively encouraged to do so by the Chinese government as part of its export drive.

The other big news is that Chinese trade mark law changed quite significantly in May 2014. The most eye-catching change was the new emphasis on good faith, no doubt a response to the negative perceptions that had been created by the hijacking of foreign trade marks. As a result of the change, all trade mark applications must now be filed in good faith. There are remedies in terms of opposition and cancellation procedures where applications are filed in bad faith. There are penalties for trade mark attorneys who act in trade mark applications that are filed in bad faith.  And there is provision for additional damages to be awarded in cases of trade mark infringement where it can be shown that the infringement was not innocent.

Another change is that time limits have been introduced, with authorities now being required to examine trade mark applications within a period of nine months. The Chinese have also followed certain recent developments in the West, for example by specifically allowing for sound marks to be registered.

A very welcome development has been the introduction of multi-class filing.  What this means is that, instead of having to file a separate application for every class of goods or services for which it wants protection, the trade mark owner can cover as many classes of goods or services as it wants in a single trade mark application.  Covering multiple classes in a single application is invariably cheaper than filing separate applications in those classes.

This is particularly important for South African winemakers who, as the Business Report article suggests, are often involved in tourism services too.  Any winemaker who offers accommodation and restaurant services should certainly be protecting their trade mark beyond class 33 (the wine class). Not just in its export markets like China, but at home too!

Readers who want more information on trade mark protection in China can contact:

Lisa

LISA MCILWAINE-HILL
Director
Department: Head of International Trade Mark
Tel: +27 (0)11 324 3066
Email: lisam@dmkisch.com

Traditional Knowledge legislation now in force

The much-debated Intellectual Property Laws Amendment Act 2007 – generally referred to as the Traditional Knowledge (TK) legislation – is now in force.  It’s been controversial to put it mildly. Although few objected to the notion of TK receiving legal protection, many within the intellectual property (IP) community felt that the authorities had gone about it the wrong way. They felt that TK should be seen and protected as a specific or sui generis right, rather than as a form of IP.  This is in fact the approach of the World Intellectual Property Organisation (WIPO), which has for some time been working on a model TK law.

There are various reasons why lawyers feel that TK is not a form of IP. For starters, IP law essentially rewards and stimulates innovation and creativity, by granting those who display it exclusive rights for a limited period of time. Traditional knowledge, on the other hand, grants eternal rights in respect of things that may have existed for centuries.   Another reason is that reciprocity is a fundamental part of IP, which means that a country must give the same rights to foreigners as it does to its own citizens. As we’ll see later, the TK legislation certainly does not do that. One professor of IP law felt so strongly about the issue that he drafted an alternative bill which took TK outside the realm of IP altogether. Although the bill was presented to Parliament by an opposition party, the majority party decided to go with the original bill.  So TK now forms parts of our IP statutes.

The South African government’s insistence on pushing through such controversial legislation can possibly be seen as part and parcel of a fairly strong developing world agenda. In 2013 the South African authorities published an IP Policy Document which made it very clear that they felt that South Africa should align itself with the developing world in the area of IP. The TK legislation can be seen as part of this new agenda.

So just what does the TK legislation do to our IP?  Here’s a brief synopsis.

General

The TK Act introduces the term ‘Indigenous Community’, which is defined to mean any community living in South Africa.   It also creates various bodies, such as a rights-owning body called the National Trust Fund for Traditional Intellectual Property, an advisory body called the National Council for Traditional Intellectual Property, and a collecting society called the National Council for Traditional Performances.  More on these bodies later. It also envisages a rather vaguely-defined database of ‘Traditional Intellectual Property’.

Copyright

The Copyright Act provides protection for various categories of works: literary works; musical works; artistic works; cinematograph films; sound recordings; broadcasts; programme-carrying signals; and published editions.  The TK Act adds a new category, the ‘Traditional Work’. This is defined as ‘a literary work, an artistic work, or a musical work, which is recognised by an indigenous community as having an indigenous origin and a traditional character.’   In order to enjoy copyright these works do not need to be reduced to a material form but simply ‘communicated to the public’.  The ‘author’ of a traditional work will be ‘the indigenous community from which the work originated and acquired its traditional character’, although ownership will belong to the National Trust Fund for Traditional Intellectual Property.

The term of protection will be 50 years, although there are quite detailed provisions on this relating to the date on which the work was first communicated to the public. The copyright owner will have the exclusive right to do various things such as reproduce, perform and broadcast the work, but there are savings provisions to ensure that those who have already acquired rights to such works are not prejudiced.

Performers’ Protection Act

In terms of the Performers’ Protection Act (PPA), it’s unlawful to broadcast or record performances of literary, musical or artistic works without authority. The TK Act brings traditional works within the ambit of the PPA and ensures that it covers expressions of folklore and any ‘Traditional Performance’, which is defined as ‘aperformance which is recognised by an indigenous community as a performance having an indigenous origin and a traditional character.’ The National Council for Traditional Performances is the collecting society for royalties.

Trade Marks

The Trade Marks Act now has something called a ‘Traditional Term or Expression’. This is defined as  ‘a term or expression which is recognised by an indigenous community as a term or expression having an indigenous origin and a traditional character and which is used to designate, describe or refer to goods or services.’ It is now possible to register a traditional term or expression as a trade mark if it is capable of distinguishing the goods of an indigenous community from those of another community. Any application for registration will go to the National Council for Traditional Intellectual Property for advice.

We also now have a‘Geographical Indication’. This is defined as ‘an indication which identifies  goods as originating in the territory of the Republic or in a region or locality in that territory, and where a particular quality, reputation or other characteristic of the goods is essentially attributable to the geographic origin of the goods, including natural and human factors.’ Geographical indications can be registered as certification marks or collective marks.  It’s very likely that the authorities had names like ‘Rooibos’ in mind when they created this.

Registered Designs

In South Africa we have long had two categories of designs that can be registered, Aesthetic Designs and Functional Designs. We now have a third, the ‘Traditional Design’.  This is defined as ‘any design applied to any article, by whatever means it is applied whether for the pattern, shape, configuration or ornamentation thereof…. whether or not it has features which are necessitated by the function which the article to which the design is applied is to perform, which design is recognised by an indigenous community as having an indigenous origin and a traditional character.’ The owner will be the community from which it originated, and it will be possible to get a registration if the design is ‘new and has features which are based on or derived from the designs of an indigenous community and which have a traditional character’.

There are fairly detailed provisions about determining novelty which I won’t go into here.  Applications for registration will be referred to the National Council for Traditional Intellectual Property. The period of protection for Traditional Designs is 15 years (as it is for Aesthetic Designs), and once again there are provisions protecting those with existing rights.

The TK Act clearly makes radical changes to South African IP legislation. Only time will tell how much practical significance these changes really have.

For more information, please contact:

ANDRE VAN DER MERWE
Director
Department: Trade Mark
Tel: +27 11 324 3084
Email: andrev@dmkisch.com

Author: Andre van der Merwe

What’s the difference between ALTO and ALTUS?

Plenty, if you’re a wine maker.

Stellenbosch wine estate, Dombeya, was recently threatened with legal action by Distell Group Limited for using the name ALTUS on the label of one of its red wines.  Distell took exception to the name, based on its ALTO Wine Estate range of wines, and argued that use of the name ALTUS constituted trade mark infringement.

Although Dombeya was of the opinion that it would have been able to successfully defend a trade mark infringement suit, it maintains it made a business decision to rather change the name, from ALTUS to FENIX, as the cost of litigation is extremely high and generally only 40% of costs can be recovered.

What this matter does highlight is the importance of conducting a pre-filing search of the Trade Marks Register, to ascertain whether your proposed trade mark, whether a word mark and/or a device mark, conflicts with other marks in the relevant class of interest (as well as all conflicting or related classes).

For more information, please contact:

ANDREW PAPADOPOULOS
Director
Department: Trade Mark
Tel: +27 11 324 3012
Email: andrewp@dmkisch.com

Author: Andrew Papadopoulos

Character merchandising and product endorsement in South Africa

There have been some interesting decisions in the UK of late on the related, but not identical, issues of character merchandising and product endorsement. The recent case of Betty Boop was one of character merchandising, and the issue there was whether trade mark registrations for the name and image of an old cartoon character known as Betty Boop had been infringed by a company that had used the image of the character without the licence of the trade mark owner.  The court found that there had been infringement, and in the process it rejected a number of defences that had been raised.

What’s particularly important, however, is that the court held that, as a result of significant licensing by the trade mark owner, the name and image had acquired trade mark significance for most people.  In other words, people seeing goods featuring the name and image assumed that they came from a particular source.  The judge said this:  ‘Ihave rejected the idea that all an average consumer today would see, when looking at the t-shirt, would be a 1930s cartoon character. They will see a character with modern currency. This association certainly takes advantage of the claimants’ investment in Betty Boop because many consumers will be moved to buy the t-shirt as a result of the favourable associations conjured up in their mind by Betty Boop, which associations are the creation of the claimants’ extensive work.’

The earlier UK decision of Rihanna v Top Shop involved product endorsement. The issue there was whether Top Shop, who sold t-shirts bearing Rihanna’s image but who had never bothered to get the singer’s consent, was guilty of passing off. Yes said the court, Rihanna is very well known and people will assume that she has endorsed the t-shirts.  The fact that Rihanna had endorsed products in the past, and the fact that she was active in the field of fashion, were clearly seen as relevant considerations.

Both decisions touch on an important question: just what do people think when they see products bearing the name or image of a well-known person or fictional character?  Do they believe that some company has randomly decided to use the name or image, or do they believe that there is some commercial link between the products and the celebrity or the company that holds the rights to the character?  A commercial link in the form of a licence or an endorsement agreement perhaps!

There was a time when the courts took the view that people seeing the names or images of well-known people on goods made no assumptions of a commercial link. This was the approach adopted in a case involving images of Elvis Presley, where the UK authorities were not convinced that anyone would assume that those goods had been endorsed or licensed by the late singer’s estate.  The UK authorities took a similar view in a case involving Princess Diana merchandise. A South African court struggled with the concept of character merchandising in an old case involving the original Dallas TV series.

But things change. In a case involving Formula One racing driver, Eddie Irvine, a UK court found that a radio station that had used his photo in an ad without his consent was guilty of passing off – the court was quite ready to believe that people seeing the ad would assume that he had endorsed the station. And in a South African case involving the 1994 Football World Cup, the court accepted that the public understands the concepts of character merchandising and endorsement. There can be little doubt that today most of us understand that those who are fortunate enough to own famous names and faces often licence their assets to those who provide us with the goods and services we buy, in return for a royalty or fee.

Yes it may depend on the facts!  We may possibly be more inclined to believe that licensing or endorsement has occurred in the case of clothing than in the case of actuarial services. And yes, we may be more inclined to believe that it has occurred where the celebrity is a sportsman rather than a politician – politicians do actually come up in trade mark cases from time to time, there was a spat a while back when a Russian businessman obtained a trade mark registration for the name Yulia’s Icicles, which would be used for lollipops in the shape of the famous braids of former Ukrainian president, Yulia Tymoshenko (a portent of trouble to come perhaps!)

The Betty Boop case dealt with trade mark infringement because there were trade mark registrations. Rihanna presumably did not have trade mark registrations, because she relied on the common law action of passing off, which requires you to prove a reputation or goodwill. Both these options are available in South Africa. But in South Africa there is another option, one which is not available in the UK. I refer here to personality rights, one of which is the right to identity.  Former Miss SA, Basetsana Kumalo, successfully relied on this right when she sued Cycle Lab for the unauthorized use of her photo in an ad, with the court finding that there was a wrongful impression of endorsement. This personality right is not dissimilar to the publicity right recognized in the USA – this right was unsuccessfully raised by the Hebrew University, the heir to the Albert Einstein estate, in a recent case that it brought against a company that used Einstein’s image in an ad, with the court holding that the right had expired because it only lasts for 50 years from the date of death.

Another option that may be available in South Africa is the Code of the Advertising Standards Authority, which provides that a company can’t portray a live celebrity without their consent – there are some vague exceptions, however, for example where it doesn’t interfere with the celebrity’s privacy, and where it doesn’t amount to unjustifiable exploitation.

But there’s no doubt that if you’re a celebrity or the owner of the rights to a character, having a trade mark registration is the best position to be in. That’s because trade mark infringement proceedings are likely to be far easier to run than a passing off case, or proceedings based on personality rights. It’s well accepted that the names and images of celebrities and characters can be registered for any goods or services. All that’s necessary is a genuine intention to use the trade mark for those products, and this intention will be there if a licensing or endorsement deal is contemplated. Some celebrities take this option, but it’s amazing how many don’t. It’s no doubt down to the fact that they simply don’t know that this option is available.

For more information, please contact:

NOLA BOND
Head of Trade Mark Department and Director
Department: Trade Mark
Tel: +27 11 324 3000
Email: nolab@dmkisch.com

Author: Nola Bond

Comments on the South African Draft National Policy on Intellectual Property

The good, the bad and the ugly

South Africa does not (yet) have a formalised policy framework regarding intellectual property (IP) to guide different government departments in their approaches to IP. In a recent attempt to codify a consolidated national approach to IP, Mr Rob Davies, the current Minister of Trade and Industry, published a long-anticipated Draft National Policy on Intellectual Property, 2013 (‘DIPP’) in the South African Government Gazette of 4 September 2013. Public comments on the document were invited to be submitted within 30 days from the date of said publication. The IP fraternity was suddenly sent aflutter, and various efforts were made to comment on the DIPP within the brief time provided. Commentators on the (very polarising) DIPP included, amongst others, individuals, law firms, retired judges, pharmaceutical companies (both innovative and generic) and Non-Governmental Organizations, such as the Treatment Action Campaign, Médecins Sans Frontières and Section 27.

Although the initial aim of the DTI was to present a final IP Policy to Cabinet for approval before the upcoming general elections on 7 May 2014, it has recently come to light that this somewhat optimistic deadline will in all probability not be met. This is an encouraging development, and provides an opportunity for the significant feedback received from industry role-players to be tabled for consideration. The added time available for acceptance will hopefully avoid undue expedition of the DIPP through parliament.  This article touches briefly on the parts of the DIPP that are welcomed, as well as those parts that are (or ought to be) open to discussion.

The ‘Good’

The DIPP cites various admirable objectives such as:

“to develop a legal framework on IP that should empower all strata of the citizens of South Africa” and to “engender confidence and attract investment”.

Although all forms of IP are addressed in achieving these objectives, the main focus of the DIPP seems to be the initiation of patent law reform, in the main directed towards the promotion of access to medicines and the improvement of public health.

According to the policy, the current patent deposit system that is used in South Africa is allowing grant of a number of “weak patents”. The main reason cited for the existence of these “weak patents” is the lack of substantive examination infrastructure in South Africa. According to the DIPP, the formal, non-substantive examination of a patent application by the South African Patent Office is being exploited by those seeking to prolong patent monopolies granted in respect of their inventions.  The DIPP has singled out pharmaceutical inventions as a prime source of concern. It also leaves no doubt in its vociferous support for the inclusion of flexibilities (such as compulsory licensing and parallel imports) which has basis in the Agreement on Trade Related Aspects of Intellectual Property Rights (‘TRIPS’) (of which South Africa is a signatory).  These flexibilities are sought to be included in South African legislation to purportedly prevent patents barring access to health. It is interesting to note that the Patents Act 56 of 1978 (“the Act”) in fact makes provision for compulsory licensing under section 56, and that the Medicines and Related Substances Act 101 of 1965 was specifically (and controversially) amended in 1997 to include section 15C which allows for parallel imports. Neither of these provisions, as far as the authors are aware, have been locally invoked in a pharmaceutical context to date.

An example cited by the DIPP on how the depository patent system is being abused is in the form of the concept of so-called “patent evergreening”, which has emerged from foreign jurisdictions (incidentally where patent examination infrastructure does exist). Parties guilty of patent evergreening, so the argument goes, seek to have several patents, filed in succession and usually close to a preceding patent expiry, granted and which covers the same product, albeit with minor changes to overcome obvious patent invalidity. Another example cited in the DIPP is where pharmaceutical patentees are filing patent applications directed towards second medical indications of known pharmaceutical compounds. According to the DIPP, these actions are frustrating access to generic and more affordable medicines that can be used to combat rampant spread of diseases such as HIV/AIDS, tuberculosis and cancer.  The debate at international level rages on, where the opposite side of the evergreening debate argues that such a concept is impossible, given that any person may utilize the technology disclosed under an expired patent.  Be that as it may, what is clear is that this debate has reached South African shores and is as topical as it is mired in controversy. In South Africa, patent evergreening is not a ground for the revocation of a patent.

The ‘Bad’

One of the main and recurring recommendations of the DIPP towards achieving its objectives is the establishment of a substantive examination system, the introduction of pre- and post- grant patent opposition proceedings, and the prevention of patents for inventions that involve the new use of a known substance that is not “sufficiently inventive”. Currently, lack of inventive step is one of the grounds for launching post-grant patent revocation proceedings under the Act.

The ideals of a substantive examination system and opposition proceedings during the prosecution of a patent application are generally supported by role-players in the industry. However, pragmatic causes for concern include the need to recruit proper expertise, in a sufficient number, of qualified patent examiners to process approximately 10,000 annual patent applications (both foreign and local) filed in South Africa. It is interesting to note that by comparison, South Africa is ranked 26th on the list of the world’s largest populations, geographically is 1/8th the size of the United States, just over 1/3rd the size of the European Union, is twice as big as France and four times as big as Germany.  According to 2013 filing statistics released by WIPO, the USPTO had in the year under review received just over 144 000 PCT national phase entries (not necessarily including local applications), Germany just under 57 000 applications and France just under 28 000 applications.

It is also important to note that patent examiners in foreign patent offices are generally PhD graduates with some level of formal training in patent law. Local cost implications associated with the employment the right number of suitably qualified patent examiners is likely to be a factor holding the prospect of higher official filing fees on the cards (and by implication prosecution fees as a new cost centre). This eventuality could spur on an announcement of substantial increases in patent office official fees, the likely end of which could be placing patent protection beyond the reach of ordinary South Africans, as well as SMME’s and start-up companies.  In relation to medicines, the South African market size generally pales in comparison to US and European markets. Raising the cost of patent entry in the local sphere may well discourage foreign investors from placing South Africa on its list of eventual patent filing destinations.  As patent filings are sometimes viewed as a measure of a company’s trust to compete within the South African territory, any reduction of patent filings locally may well be accompanied by diminished foreign direct investment.

The ‘Ugly’

Unfortunately, the predominantly noble objectives of the DIPP are completely overshadowed by the disorganised, and factually and legally flawed document that it is presented in, bearing in mind the nearly six years taken for its publication. Unsurprisingly, an overwhelming reaction of criticism to the DIPP is not aimed at the stated objectives, but rather at the apparent lack of sufficiency in the understanding of both local and international IP laws, and the seemingly careless drafting errors that the document displays.

Inherent contradictions present in several places, the most obvious one being the negation of the stated objective of

engendering confidence and attracting investment”

as against a background statement that reads

“this IP Policy needs to take into account the fact that South Africa is a developing country with the bare minimum of a technological, economic and social base”

a mere two paragraphs later.  Not only is such a statement not true, it is seen as an admission that the South African government has no confidence in local talent.  This militates against any move to engender confidence in South Africa as a patent filing destination.

Concluding remarks

The objectives of the DIPP towards improving the health of the poorest of the poor are admirable, especially where human rights issues, such as the access to medicines for the treatment of HIV/AIDS and other diseases are prevalent. The implementation of these objectives is however problematic. Honourable Judge LTC Harms (retired Deputy President of the Supreme Court of Appeal) sums up the general feeling of the IP industry in his commentary on the DIPP, where he states

“…the real issue from a legal perspective is not so much the ‘what’; it is the ‘how’… 

The stated objectives could well be achieved in time, but only if the final IP Policy reflects an understanding and consideration of the concerns towards the DIPP raised by various participants and commentators in the industry.  Without substantive industry involvement, the policy will be remembered as a wasted opportunity to develop our law under an avoidable cloud of perceived intransigence. Considering that the DTI spent in excess of six years to formulate the DIPP, it would be beneficial to all interested parties if the DIPP is not rushed from draft format to final format. The importance of the subject justifies a thorough review of feedback received.

For more information, please contact:

JACO THEUNISSEN
Director
Department: Patent
Tel: +27 11 324 3154
Email: jacot@dmkisch.com

MUHAMMED VALLY
Director
Department: Patent
Tel: +27 (0)11 324 3080
Email: muhammedv@dmkisch.com

Author:

PSL v Gidani: Some interesting copyright issues

The recent decision of the Gauteng High Court in the case of Premier Soccer League (PSL) v Gidani, a judgment of Judge Kgomo dated 28 February 2014, is fascinating.  The issue was whether Gidani, the operator of the National Lottery, had infringed the copyright that the PSL has in its football fixture lists – Gidani had, as part of a sports gambling offering,   reproduced the lists on its website and published them at petrol stations and retail outlets, without any licence from the PSL.

Copyright in football fixture lists! This was indeed the first major issue – does an area of law that protects music, art and film also protect fixture lists?  It certainly can. One of the categories of works protected by copyright is the‘literary work’. It’s something of a misnomer, because although this term does indeed cover works of literature, it also covers just about any other written work. The Copyright Act, for example, makes it clear that the expression includes mundane things like tables and compilations of data. And case law tells us that it covers a great deal more.

Back in 1964 a UK court in the case of Ladbroke v William Hill held that there was copyright in football pools coupons. In the South African case ofPayen v Bovic the court held that there was copyright in a numbering system for gaskets, and in the later case of Bosal v Grapnel the court held that there was copyright in a vehicle part numbering code.  Recently a South African court in the case of Board of Healthcare Funders (BHF) v Discovery held that there was copyright in a so-called ‘Practice Code Numbering System (PCNS)’, a compilation of numbers identifying all the medical practitioners in South Africa, and containing information like their addresses and bank details.  In this case BHF led evidence that a great deal of work went in to the creation of this system.

This leads us on to another important aspect of copyright law.  The Copyright Act says that it protects works that are ‘original’. But when is something original for copyright purposes? Must it be something that is clever or interesting, must it go even further and be ground-breaking? The conventional wisdom is that originality requires nothing of the sort, that it simply means that your work must be the result of your own labour and effort and that it must not be copied from another source. So the bar is quite low – it’s graft rather than creativity. Yet it is sometimes also said that copyright shouldn’t protect things that are totally trivial, and that there must be some objective requirement of merit. There seems to be a slight contradiction.

In the PSL case the court seemed to adopt the established ‘sweat of the brow test’. It certainly accepted the PSL’s contention that a great deal of effort went into the creation of the football fixture lists. Two employees of  the organisation had given evidence which showed, inter alia:  that they had a great deal of experience in football administration; that they compiled the lists with the aid of  a computer program; that they had to take into consideration all sorts of issues like blocking out certain dates including Fifa-sanctioned match days and  Cup days;  that they had to consult with various interested parties including  clubs and  broadcasters; that they had to make sure that fixtures weren’t too close to other matches; and  they had to consider things like floodlight availability and rugby fixtures (in cases of shared stadiums).

So the fixture lists enjoyed copyright. And there had been infringement because a substantial part had been reproduced. It appears that Gidani may have raised a defence that it had an implied licence to copy the fixture lists. That defence wasn’t pursued however. No surprise there, because it’s hard to see how it could have succeeded – the judgement shows that Gidani’s predecessor as operator of the lottery, Uthingo, did have a formal licence with the PSL, and that Gidani and the PSL had tried but failed to conclude a deal.  And in the case of BHF v Discovery the implied licence argument was rejected on the basis that it was highly unlikely that an organisation that charged its members a fee to use the PCNS system would allow Discovery, an ex-member which had at one stage been authorised to use the system, the right to continue using use it free of charge.

The second big issue was far more interesting. Gidani raised the defence that what it was doing was permitted in terms of section 16 of the Constitution, the right of freedom of expression. The judge was prepared to accept that constitutional rights can be considered in copyright cases, but he could hardly have done otherwise. In the famous case of SAB v Laugh-It-Off – where a satirist had copied the Black Label beer logo, changing the name to ‘Black Labour’ and adding wording that commented unfavourably on SAB’s labour practices – the Constitutional Court held that  the right of freedom of expression trumped the right of the trade mark owner to object to unauthorised use.  But the judge in the PSL case felt that the balancing of rights – freedom of expression (section 16) and property ownership (section 25) – was very different. Why?  Well, for starters the court in the Black Label case had been influenced by the fact that SAB had not suffered a ‘substantial economic detriment’, something that could not be said about the PSL. Second, this was clearly not a case of parody, social commentary or the imparting by the media of important information, but rather the unauthorized use of intellectual property for commercial purposes.

The judge said this:  ‘The defendant’s conduct is not a form of speech or expression identified for protection by the Constitution. On the contrary all indications or pointers point or lead to the appropriation of an intellectual property asset belonging to the plaintiff, not for purposes of parody or lampooning or for other social purposes, but instead for no purpose other than to generate commercial gain for itself.’  The judge also felt that the fact that the National Lottery benefits ‘good causes’ was of no consequence: ‘Even if its claim was true, there is no basis in law for supposed and/or self-determined “good causes” to serve as a basis to limit copyright recognition or otherwise excuse copyright infringement’.

Copyright owners can be very grateful that the freedom of expression defence did not succeed. Because if it had, it’s hard to see how copyright in literary works would have any future significance in South Africa.

For more information, please contact:

VANESSA FERGUSON
Head of Anti-Counterfeiting Department and Director
Department: Anti-Counterfeiting
Tel: +27 (0)11 324 3069
Email: vanessaf@dmkisch.com

Author:

Is your business POPI compliant?

On 26 November 2013, the Protection of Personal Information Act (“POPI”) was passed into law. The effective date of POPI has not yet been proclaimed. POPI will have a dramatic impact on most businesses, if your business involves or utilises personal information for either internal or commercial purposes.

The Constitution of the Republic of South Africa, 1996, provides that everyone has the right to privacy. The right to privacy includes a right to protection against the unlawful collection, retention, dissemination and use of personal information.

Personal Information is very broadly defined and includes “information about an identifiable, living, natural person, and where it is applicable, an identifiable, existing juristic person, including but not limited to Information relating to the:

race, gender, sex, pregnancy, marital status, national, ethnic or social origin, colour, sexual orientation, age, physical or mental health, well-being, disability, religion, conscience, belief, culture, language and birth of the person; education or the medical, financial, criminal or employment history of the person; any identifying number, symbol, e-mail address, physical address, telephone number, location information, online identifier or other particular assignment to the person; the biometric information of the person; the personal opinions, views or preferences of the person; correspondence sent by the person that is implicitly or explicitly of a private or confidential nature or further correspondence that would reveal the contents of the original correspondence; the views or opinions of another individual about the person; and the name of the person if it appears with other personal information relating to the person or if the disclosure of the name itself would reveal information about the person;

POPI seeks to regulate, in harmony with international standards, the processing of personal information by public and private bodies in a manner that gives effect to the right to privacy subject to justifiable limitations that are aimed at protecting other rights and important interests.

We recommend that you conduct a POPI compliance assessment using the following diagram:

 POPI

Usage:

Is your business using Personal Information and for what purpose?Personal information must be collected for a specific, explicitly defined and lawful purpose related to a function or activity of your business.

Types:

What types of Personal Information is your business currently using for internal and commercial purposes?

Processing:

Is your business processing any Personal Information? Processing includes any operation or activity, whether or not by automatic means, concerning Personal Information, including the collection, receipt, recording, organization, collation, storage, updating or modification, retrieval, alteration, consultation or use; dissemination and erasure or destruction of Personal  Information.

Storage:

Personal Information must be safely and securely stored and may only be accessed or acquired by authorised persons.

Interaction with the Data Subject:

Are you obtaining informed consent from all the persons (“Data Subjects”) whose Personal Information your business is using?The usage of Personal Information must be consented to by Data Subject and must be used only for its specified purpose that has been agreed to.

As a responsible party collecting Personal Information, you must take reasonably practicable steps to ensure that the Data Subject is aware of all the information being collected.

Dissemination & Transfer:

Is your business sharing personal information with other entities? Personal Information must not be distributed in any way which is incompatible with the purpose for which it was collected.

Notification:

Having regard to your business’ use of Personal Information, will you be required to notify either the Data Subject or the Information Protection Regulator?

As the penalties for non compliance with the provisions of POPI are severe, we recommend you assess the impact of POPI on your business and you initiate practical measures to comply with POPI as soon as possible.

Should you need any further assistance in complying with the provisions of the Protection of Personal Information Act, then please contact our Commercial Department info@dmkisch.com or 011 324 3025 or

KEVIN DAM
Director
Department: Commercial
Tel: +27 (0)11 324 3025
Email: KevinD@dmkisch.com

Author: