Monthly Archives: June 2015

Five things to consider when entering into an agreement

DMK-a3BWhen you consider the role that agreements play in governing contracting relationships in business, it is apparent how important it is to ensure that the agreement adequately deals with the different eventualities that may arise. The following are examples of matters that should be considered when entering into an agreement.

Duration and Termination

Often parties neglect to stipulate the length of the agreement, whether it is for a fixed term or for an indefinite period, and to provide for the different ways in which it may be terminated.

An agreement may be terminated because the agreed time period for which it was to endure has come to an end, because one of the parties has failed to perform one or more of its obligations, because one of the parties has breached one or more of the terms of the agreement, or for convenience.

Additionally, an agreement should provide for the rights and obligations of the parties upon termination of the agreement; specifically whether any rights and obligations are to survive the termination of the agreement and whether any compensation or redundancy fees are payable.

Performance Criteria

When setting out the duties of the contracting parties, it is worthwhile to consider whether provision should be made for minimum standards for performance. To do so would bring certainty, as the expectations of the parties would be made express upfront, and this would make for a more harmonious contracting relationship.

Performance criteria can go hand-in-hand with termination, by allowing a party to exit the agreement if the other fails to meet the minimum standards, or they may set in motion remedial measures that need to be taken in order to ensure that goals are reached.

Should You Provide for Arbitration to Resolve Disputes?

In the event that your agreement contains an arbitration clause, this would oblige you to refer any disputes to arbitration. In such a case, if a party wishes to resist the referral of a dispute to arbitration, that party must show special circumstances why the parties’ choice of arbitration as a dispute resolution mechanism should not be respected.

The benefit of arbitration is that there may be a time saving in arbitration proceedings when compared to court proceedings, as the parties don’t have to adhere to court time periods or wait for long periods of time for the case to be heard. However, arbitration is more costly than court action, as the parties are required to pay for the venue for the hearing as well as the arbitrator’s fees.

Who Owns the Intellectual Property?

Intellectual property, or the creations of the mind, includes discoveries, inventions, product names and images associated with products, business knowledge and information.

Most transactions involve the use and/or creation of intellectual property, and as there is value therein, agreements should provide for the ownership of such intellectual property and if necessary, the transfer thereof. In the absence of agreement, the default position with regards to the ownership of intellectual property may not favour the parties.

Should you seek Legal advice?

The particular facts and circumstances surrounding transactions influence the terms of agreements, which is why there is no such thing as a generic, one-size-fits all agreement. It is therefore worthwhile to seek legal advice as to whether the terms of an agreement are suited to the circumstances and whether provision has been made for all reasonably foreseeable issues that may arise.

For more information please contact:

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.

Managing your Intellectual Property: Why Trade Marks should always be on the Board Meeting Agenda

DMK-a1BOne of the most valuable assets in any business is its Intellectual Property but it is often the most neglected. Intellectual Property manifests itself in various forms from trade marks, copyrights, patents, design and domain names, through to licenses, franchises, exclusive distributorship rights and know how and technology. In order to maximise the value of a company’s intellectual property, it needs to be well managed and regularly audited. A formal intellectual property policy should be in place to ensure there are the procedures to protect, enforce and maintain intellectual property effectively. This article provides an overview of managing trade marks within an organization.

The Trade Mark Portfolio

A trade mark portfolio is made up of registered trade marks and unregistered trade marks in use. Trade mark rights may also be derived from licenses, franchises, co-branding and other contracts. Managing these rights is equally important as managing company owned assets.

Additionally, domain names should form an integral part of trade mark management, as a domain name will often incorporate word marks or trade names associated with a business. Domain names can afford a company an exclusive advantage in the online space. By incorporating trade marks in domain names associated with a business, the company can reach consumers and grow its reputation and goodwill in cyberspace.

How to manage your Trade Mark Portfolio

Underpinning a good management system is an Intellectual Property or Trade Mark Management Policy. This should identify who within the organization is responsible for and authorized to develop new trade marks and the proper procedures to follow when new brand names are developed, or existing brands updated. You may want to engage your Trade Mark attorneys to assist in the drafting of the policy.

Generally, the party that files first will have will have priority over a later Applicant so timing is key. Trade marks are also territorial rights, so due consideration must be given to where you plan to use the mark and ensuring its availability. Advanced consideration of important jurisdictions to obtain upfront protection is a good strategy, instead of trying to obtain protection after a product launch.

Trade marks also need to be renewed every 10 years. In conducting an annual audit, marks due for renewal can be identified. Updating of logo trade marks to reflect current usage is important as this may impact on your ability to enforce rights. A minor change may only require the trade mark to be amended whilst a completely updated look will usually means that the mark needs to be re-filed. Trade marks which are not in use may become vulnerable to cancellation, and by conducting annual audits, these risk areas can be effectively identified and managed.

Protecting your assets

Whilst protecting your trade mark rights commences with securing protection, it is equally important to enforce these rights against infringers and counterfeiters. Steps to be taken in achieving effective enforcement of trade mark rights include, monitoring competitor activities, market place surveillance, monitoring trade mark gazettes, journals and company name registrations. When conflicting trade marks are encountered, a proactive strategy should be adopted to address the offending party. It is also important to monitor the internet to check for online trade mark infringement or cyber squatting.

As part of the auditing process, a company should also ensure its trade marks are used properly, and not allowed to become generic. Examples of trade marks that have been become generic due to the manner in which they were used include escalator, aspirin, catseye, thermos and trampoline to name but a few. An internal guideline on trade mark usage through a corporate identity or brand identity manual is recommended. Registered trade marks should always be marked with a symbol whilst unregistered trade marks can be denoted by the use of the ™ symbol. Marking and labelling requirements may vary from country to country so due consideration should be given to this if locally manufactured and packaged goods are to be exported. If you encounter any generic or improper usage of your trade marks, it is recommended to nip this in the bud by taking appropriate action and monitoring the market to ensure this does not continue.

To conclude, part of good corporate governance and the duties of directors is to ensure company assets are protected and maintained – does your company tick this box when it comes to its intellectual property?

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

Author: Nola Bond

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.

Top tips for prospective patentees

DMK-a2BOnce a new invention has come to life, the protection of the invention may often be a daunting task, especially to novice inventors and entrepreneurs. The following simple steps will assist with the protection of a new invention, and also the realisation thereof into a viable commercial tool capable of generating returns to the inventor and other interested parties:

  1. Keep it secret!
    To qualify for patent protection, an invention needs to be novel, inventive and capable of application in trade or industry. Novelty means that the invention must not have been published in any way or form, including written, oral, electronic or any other disclosure, by any person before a patent application has been filed in respect thereof. Any disclosure of an invention before the filing of a patent application will destroy the novelty of the invention, which will detrimentally affect the possibility of obtaining a valid and enforceable patent. If you do need to disclose your invention to obtain funding or to manufacture a prototype, ensure that you have a proper non-disclosure agreement (NDA) in place.
  1. Research your idea
    Do an internet search for your invention before approaching a patent attorney. This will assist in determining whether or not your idea has been anticipated by someone else before you, and will also assist you in determining the closest prior art to your invention. In doing so, you will be able you to fine tune your invention, which will significantly increase your chances of obtaining an enforceable patent with the widest possible scope of protection for your invention, and will also potentially decrease the time that your patent attorney will have to spend to draft the patent specification.
  1. Be thorough
    Accumulate and log as much information as possible on how you came up with the invention, what problems you are aiming to address or improve on by way of the invention, who may have contributed to the invention, what other inventions are available that are close to but different to your invention, etc. This will assist your patent attorney to adequately describe your invention when drafting the patent specification, and also to overcome prior art that may be similar to your invention. By keeping a comprehensive account of your research into the invention, you will also be able to prove ownership of any patents in respect of the invention if a dispute to the ownership thereof arises.
  1. Don’t delay
    Ensure that a patent application in respect of your invention is filed as soon as possible. The longer you wait, the more the chances become of your invention being disclosed or even independently invented, and possibly patented, by another person.
  1. Surround yourself with the correct partners
    The costs of obtaining a South African patent for your invention is relatively low, but once you pursue international protection, the costs escalate significantly, mainly due to the vulnerability of the Rand against the currencies of the major economic territories. If you do not have the necessary funds, it is imperative that you partner with the correct business associates and investors. It is further crucial that you partner with a firm of intellectual property attorneys that you can trust will realise the value that the invention has to you, and to treat and respect you and the invention accordingly. This includes guiding you towards the best protection strategy in respect of your invention, and by further assisting you to elect the most appropriate countries and/or regions to file patent applications in to obtain the maximum monetary return on your ingenuity and financial investment.
  1. Plan a commercialisation strategy
    A patent provides the patentee with a monopoly for a set period during which the patentee can ensure maximum benefit accruing from an invention to the exclusion of others. A patent is therefore of little value commercially if not accompanied by a well defined and structured commercialisation strategy. A commercialisation strategy is not necessarily limited to the manufacturing and marketing of the invention protected under a patent, but could also includes other strategies such as selling the patent, registering the patent in the name of a company and selling shares in the company, licensing the patent to competitors, or various other possibilities.
  1. Develop a branding strategy
    A proper branding strategy is imperative to ensure that the invention protected under the patent is associated with a strong brand. A strong and well thought out trade mark will lure potential investors, will create goodwill in the market towards the invention, and will further ensure the longevity of the invention in the market place, long after the patents registered in respect of the invention have lapsed.  A solid brand could also lead to other possibilities such as franchising, which further ads to the value of the invention to potential investors, business partners and most importantly, the patentee.

DM Kisch Inc is a full service intellectual property firm that is able to assist in ensuring that the maximum benefit from innovation and ingenuity is obtained. This includes the registration of a patent to protect the invention, the commercialisation of the invention, and the registration and realisation of a solid and profitable brand.

For more information, please contact:

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

Author: Jaco Theunissen

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.

“There is more to that tune stuck in your head.”

A device, a name, a signature, a word, a letter, a numeral, a shape, a configuration, a pattern, an ornament, a colour, a container for goods or any combination of the aforementioned, are all trade marks, capable of being represented graphically, used or proposed to be used in relation to one trader’s goods or services for the purpose of distinguishing them from similar goods or services of another.

When we think of trade mark, we tend to only think of words and logos. What if we started thinking outside the box and beyond what one can see? What about what we hear or even smell on a daily basis? Have you ever thought of that? Have you ever thought of that tune stuck in your head and whether there was more to it than just a tune?

Most people find it easier to remember a melody, jingle or even song as opposed to words that are sometimes complicated to pronounce or misspelled or in another language solely to make it sound romantic and different.
Trade marks are important in our society not only for consumers but also trade mark owners. They enable us not only to identify a product/service from another but also to protect us from being misled into buying the wrong product and finally they protect trade mark owners against injury to their reputation, against dilution and any form of unlawful infringements.

In terms of our law, a mark needs to be capable of being represented graphically as well as capable of distinguishing the goods/services of one trader from those of another.

Which leads to the following question; what about smells, colours, sounds and other type of trade marks? Are they capable of being validly registered in our country since sounds cannot be visually reproduced?

Countries such as the US, Hong Kong, Singapore, Taiwan, India, France, New Zealand, Australia and even Canada have amended their trade mark law and are now accepting application for the registration of sound trade marks. The Federal Court of Canada’s approval of the MGM sound trade mark consisting of a lion’s roar, filed almost 20 years ago shows the importance of non traditional trade marks and more particularly sound trade marks.

In the US for example, a sound mark needs to be described clearly in order to be understood by the average everyday person and accompanied by an audio or video reproduction. The description should clearly define all the details which constitute the trade mark. The US trade mark register is filed up with such type of description: “ The trade mark is a sound mark which comprises the sound of three steps taken by a horse on a pavement, followed by the sound of a cow mooing ( clop,clop,clop, Moo Moo) as rendered in the CD accompanied this application”.

In the United Kingdom on the other hand, the sound mark needs to be graphically represented in the form of musical notes to ensure that the mark is clear and precise.

What if South African law was outdated? With the evolution of technology, our trade mark laws and trade mark offices need to also evolve in order to meet people’s need as to enable people to file their sound trade mark on line and accompany it with a digital file of the sound. Graphic representation could also be achieved by using adapted computer programs that could be able to read and reproduce sonograms, spectrogram etc…

People are now more and more moving away from traditional trade marks and relying on non traditional trade marks such as sounds, scents, holograms, motion marks which appeals differently to our five senses.

Everybody wants their products to stand out from their competitors. Companies spend billions on marketing their trade mark so that they acquire a reputation and goodwill so that the consumer remembers their product. If one wants to have a viable brand, one needs to think of a trade mark that will have an impact on consumers and will be everlasting. This can easily be achievable by using a trade mark that incorporates the five senses. Due to technologies and globalization, those companies strive to create the best brand and for that, they spend time and money in creating non conventional/ traditional marks.

Auditory memory is one of the strongest human memory based on the fact that it enables a person to recall pictures, specific events or moments and even emotions.  When a person hears the Nokia ringtone, they don’t have to see the phone but they know it’s a Nokia phone. There is more to a sound, a jingle or music, these are powerful tools that can be used as trade marks and influence consumer’s decision making.

Our legal system needs to meets today’s needs, and for that, it needs to be in pace with technological advances.  According to section 2(2) of the trade mark Act;

“References in this Act to the use of a mark shall be construed as references to-

  • The use of a visual representation of the mark;
  • In the use of a container, the use of such container; and
  • In the case of a mark which is capable of being audibly reproduced, the use of an audible reproduction of the mark.”

Although section 2(2) does not clearly exclude a sound as a trademark, it should be amended to expressly include it as part of the definition of a mark and therefore, a trade mark.

For more information, please contact:

RACHEL HABIB
Attorney
Department: Trade Mark
Tel: +27 11 324 3096
Email: rachelh@dmkisch.com

Author: Rachel Habib

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.

Do we know what we eat?

DMK-a5BSouth Africa to date has been behind when it comes to correct and transparent food labelling.  What you may see on a food label is not always what you get. A conscious movement by government to try and catch up with international trends to ensure that what you see is what you get, and so that consumers can make healthier and more informed choices, is underway.

The current R146 Regulations on this topic are soon to be replaced with more stringent regulations (R429) that may change how; for example, FMCG marketers conceptualise and adopt or alter literary and pictorial content, and trade marks, to be placed on their brand labels. How actively adherence to the proposed new food labelling regulations will be policed/enforced is uncertain (particularly where no major cases have transpired under the current regulations).  However, for FMCG marketers, one thing is for sure; your competitors will no doubt pounce on any opportunity to object to your non-adherence. Certain law firms, including DM Kisch Inc, handle competitor disputes that arise on the basis of labelling issues, and are of the view that such complaints will be on the rise when the new regulations come into force. These complaints are an alternative means, for example, (or may even be an additional cause of action in some instances) to potential competitor complaints based on the ASA (Advertising Standards Authority) Code and/or the CPA (Consumer Protection Act).

FMCG marketers need to take stock now, and evaluate whether their brands comply with the current regulations, and the proposed new regulations by re-thinking brand names or trade marks including slogans and catch phrases (that for example include potential health claims such as “BE-WELL” or “NUTRI-SHAKE”[1] in relation to perhaps processed and sugar loaded products), as well as pictorial and literary content including ingredients listings and food origin references, for example. The realistic difficulties they face are that often certain goodwill inheres in big brand names that have gained repute over time and have a loyal and established customer base, so big changes may not be welcome or easy to implement. However, an attempt to maintain brand equity whilst being compliant with new food labelling regulations is key. Like the introduction of plain packaging of tobacco products, brand owners are/will not be pleased, but realistically steps need to be taken to start converting (or at least start thinking about converting) well known brand names to ones that are likely to be compliant, and particularly where public health interests are at stake.

Just for informative purposes, the draft R429 Regulations have been unveiled with a large set of guidelines to assist with interpretation of the Regulations.  The legal nature and potential for enforceability of content in those guidelines has been questioned, and is currently under scrutiny.  Hopefully we will have clarity on the major areas of concern (such as the regulations and guidelines that relate to marketing of foods to children, religious certifications, changing well known trade marks, etc) in the not too distant future, so that clear steps for compliance can be taken by key role players.

Some movements have been seen in the FMCG industry in recent years in the food labelling arena. Legislative issues around brine treatment of poultry, for example, have been vigorously addressed at national level, and producers have been taking proactive steps to comply with regulatory controls.  Retailers have to ensure that their suppliers comply with such controls to avoid recalls of product off their shelves by DOH (Department of Health) Inspectorates. Meat products need to include vital information on their labels such as country of origin and expiry dates.  Mislabelling of meat products can also be problematic in situations where a product contains mixed meat, such as pork, and is not correctly labelled. This may have health and religious consequences especially where Muslim consumers are forbidden to eat pork.

Large retailers may be guilty of still being too relaxed when it comes to correct food labelling. Recently Pick ‘n Pay made a recent blunder and placed a “halaal” certification stamp on a packaged “Russian and Chips” that stated on the label that it contained 49% pork (which in fact it transpired that it did not).

There has also been some litigation recently where an application was made by The National Coalition of Christian Groups and Individuals for Practical Equality and Protection of Constitutional Rights whom objected to the use of ‘halaal’ certifications on foods which they alleged was contrary to the constitutional right of freedom of choice. The draft R429 Regulations currently makes provision for religious certifications but state that if products that carry these certifications are for sale, suppliers must also ensure that the same/similar products that are not so certified are available for sale, so customers can make informed choices on the products they can opt for. Whether adherence to this regulation is viable or not for suppliers/retailers operating in this space, remains to be seen.

Woolworths tries to implement a practical and transparent approach in relation to its food labelling initiatives. For example, it often states that it strives to reduce the number of products it sells that contain ingredients from GM crop sources.  It alleges that it checks all ingredients back to source, but in some instances where it cannot guarantee that the ingredient was not derived from a GM source it will label the products as “May be Genetically Modified”.  It also encourages its customers to read food labels to ensure they are making the right and informed choice.  This modus operandi applies to the kilojoule, carbohydrate, fat, protein and fibre counts it includes on its labels which it trusts and encourages its customers to take cognisance of.

Many of the large South African retailers have been alleged to be guilty of not labelling genetically modified food.  Due to consumer pressure, many large retailers have started labelling products with a GMO identifier where the main ingredients are genetically modified. We still have a long way to go, however, in relation to correct labelling of GMO foods. Many of the large retailers are simply waiting for clarity from government on effectively putting more food safety measures and clear controls in place.

Big organisations, such as Woolworths, cannot always get it right, as is highlighted by the controversy surrounding its former use of the claim “rBST free”[2] on its milk products. The Department of Agriculture states that this claim is not to be used as there is no way of verifying if the claim is factually correct. Woolworths did not initially adhere to the Department’s warning and continued to use the claim despite steps being taken by the likes of Pick ‘ Pay and other large retailers to remove such controversial claims. After hue and cry it agreed to amend its labels despite asserting that it audited its suppliers to ensure that no rBST hormones were being administered to their dairy herds.

The food labelling landscape is a minefield.  FMCG marketers need to keep abreast of the impending Regulatory changes, and start ensuring that the information and brand specific material included on one’s labels are likely to be compliant with the Regulations that are relevant to them.  This will also be aligned with the trend in growing consumer pro-activeness when it comes to making informed food related choices.

[1] Hypothetical examples.

[2]BST is a naturally occurring protein hormone produced by dairy cows to regulate their milk production whereas rBST is when BST is artificially manufactured and administered to dairy cows to increase such milk production.

References

  1. Regulations Relating to the Advertising and Labelling of Foodstuffs No. 429 (R429) – 29 May 2014
  1. http://www.foodstuffsa.co.za/news-stuff/latest-sa-news/3606-comment-a-view-on-r429-s-guidelines-implications-in-sa-s-new-draft-food-labelling-regulations Extracted as at 24 May 2015.
  1. https://pmg.org.za/committee-meeting/16958/ Extracted as at 24 May 2015
  1. http://ewn.co.za/2015/05/20/Pick-n-Pay-apologises-to-customers-for-incorrect-food-labelling Extracted as at 23 May 2015
  1. http://www.iol.co.za/news/crime-courts/food-labelling-christians-turn-to-court-1.1841327#.VWAzeyYaLIU Extracted as at 23 May 2015
  1. http://www.woolworths.co.za/store/fragments/corporate/corporate-index.jsp?content=corporate-content&contentId=cmp202258 Extracted as at 23 May 2015
  1. http://www.foodstuffsa.co.za/news-stuff/latest-sa-news/3448-woolworths-agrees-to-amend-its-rbst-milk-labelling Extracted as at 24 May 2015
  1. http://greenaudits.co.za/gmo-foods-what-is-the-role-of-our-supermarkets/ Extracted as at 24 May 2015

For more information please contact:

Karen 1KAREN KITCHEN
Director
Department: Trade Mark
Tel: +27 (0)11 324 3057
Email: karenk@dmkisch.com

Author: Karen Kitchen

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.