Common Law Trademark Protection

Normally someone registers a Trademark (TM) in order to protect that mark at law and to more easily form the basis for a claim of TM infringement. This does not mean that an unregistered mark will not have any protection. An unregistered mark can offer protection but it is less easy to establish and prove common law TM rights. An action based on the infringement of common law rights in and to a mark will take the form of a claim of unlawful competition or passing off in terms of South African law, as opposed to an action for TM infringement (which is easier to prove). A registered TM is therefore an essential element for being able to bring an application for TM infringement. It is important to make this distinction as the risk associated with the use of a registered TM and the use of a TM protected only at common law will differ based on the ease of successful prosecution.

If the mark in question is not registered an application cannot be brought in terms of TM infringement but must be brought as an action for passing off.

Passing off requires that the following must be proved in order to succeed in an action for passing:
a) An existing goodwill or reputation in the name or mark, sufficient to demonstrate that the name or mark is linked in the minds of the public with the applicant;
b) The respondent using the mark unlawfully has represented itself in association with the mark in a manner which is likely to confuse or deceive the public;
c) The deception has caused or is likely to cause damage to the applicant’s goodwill.

The applicant will therefore have to prove both the existence of goodwill and the likelihood of the public being deceived or confused by the unauthorised use of the common law mark. Further, in the case of infringement of a registered TM, the third party using such registered TM will have to show that they are NOT infringing the mark. In the case of an unregistered mark, as is this case, in order to prevent the use of an unregistered TM by a third party, and to be successful in an unlawful competition or passing-off action, it is necessary for the applicant to prove that, as a result of the use it has made of the trade mark, it has developed a reputation in the mark (this being the goodwill aspect), and that the use of the mark complained of is likely to give rise to confusion in the minds of the public, as a result of the existence of this goodwill or reputation.

Goodwill or reputation is hard to establish and prove and involves collating and adducing substantial evidence of use. I will not at this stage go into detail about how this would need to be proved and how this is generally assessed at law.

Finally, a registered TM will offer protection countrywide in the class registered whereas an unregistered TM will normally only offer regional or geographically limited protection unless it can be established that the goodwill in such mark exists countrywide.

The new Companies Act

The Companies Act was passed into law in 2008. What does this mean for you? And what do you need to do/think about?

Generally speaking, and in very simplistic terms, the Companies Act will change the way you govern your company. The Memorandum and Articles of Association will be replaced by a prescribed Memorandum of Incorporation (MOI) and rules. This must contain certain proscribed information and further more will comprise of alterable and unalterable provisions.

Any Shareholders Agreement and any rule must be consistent with the MOI and the Act itself. Any shareholders agreement, to the extent it alters the MOI must also have such alterable provision altered in the MOI. If the MOI and the Shareholders Agreement conflict, the MOI will prevail. To a great extent the relevance of a Shareholders Agreement is in many instances negated due to the fact that many of the standard provisions of a Shareholders Agreement must now be stated in the MOI anyway.

During the transitional period, a grace period of 2 years from the general effective date will be granted to companies. During that period existing provisions relating to the governance of a company will continue to apply as is. Post the 2 year grace period such provisions will continue to apply but only to the extent that they do not conflict with 2008 Act.

All companies will be deemed to have an MOI which will consist of:

  1. The Memorandum and Articles of Association; and
  2. Any other document by which the company is structured and/or governed.

Where to from here? All companies operating under a “trading as” name should amend their registered name as this will no longer be compliant with the Act. Companies should furthermore review the following documents:

  1. The Memorandum and Articles of Association;
  2. The Shareholders Agreement;
  3. Contracts with Directors; and
  4. Any other document by which the company is structured and/or governed.

Following this review the company should then either make note of or amend the following:

  1. Any conflicts with the unalterable provisions of the MOI or conflicts with the Act should be noted due to the potential voidability thereof and the inability to enforce these provisions;
  2. Any conflicts with alterable provisions of the MOI should be amended and reflected in the same manner in any Shareholders Agreement;
  3. The Shareholders Agreement’s provisions which should be reflected in the MOI must be reflected in the MOI, any provisions which need to be altered should be altered to mirror the MOI.

Rationale for the Protection of Personal Information Bill

Constitutional and common law right to privacy currently exist in South Africa. It’s not an absolute right to privacy but rather one that is balanced against competing interests. The right to be left alone should be balanced with the interest of having an open and accountable society i.e. business can often only fulfil its functions properly if it has access to sufficient personal information. Information protection is an aspect of safeguarding a person’s right to privacy. Current legislative trends worldwide tend towards the drafting and enacting of legislation specifically designed at protecting privacy. This has come about due to concerns around the power and enhanced surveillance ability of computer systems. Thus the question is no longer whether information can be obtained but rather whether it SHOULD be obtained and where it has been obtained how it should be used. The underlying assumption is as follows: if the collection of personal information is allowed by law, then the fairness, integrity and effectiveness of such collection and use should also be protected. When information is provided in one context, it should not be used in another. The principles informing the legislation will be drawn from traditional delictual principles as influenced by the Constitution.

No longer is the issue of privacy a domestic problem. Most international instruments require that trans-border flows of personal information are restricted to countries that do not have a certain level of privacy protection, the “safe harbour” principle so-called (cf. OECD Guidelines Governing the Protection of Privacy and Trans-border Data Flows of Personal Data and the European Union Data Protection Directive). In most instances this requires at a minimum that countries enact legislation specifically intended to protect personal information. This will inter alia govern what is considered an appropriate means and purpose for the collection of personal information. Privacy is thus a critical issue in that it could potentially form a barrier to international trade. Remedying this problem by enacting legislation that complies with International Instruments will however require SA to follow similar stringent tests with regards to other countries with whom we exchange information. This would mean that trade with Africa could be made slightly more difficult in that any trans-border information flows would have to be assessed on a casuistic basis. Nevertheless, and with the intentions of creating a strong African trading block it would be in the interests of Africa to develop appropriate trading regulations and protections.

The enactment of this specific privacy legislation will result in amendments to other pieces of South African legislation, most notable the Promotion of Access to Information Act 2 of 2000, the Electronic Communications and Transactions Act 25 of 2002 and the National Credit Bill all of which contain interim privacy protection measures.

The right to privacy is such that a person should have control of their own personal affairs and be able to conduct their personal life free from unwanted intrusions. Data protection is one aspect of safeguarding the right to privacy. The threat to personality by the data user threatens the personality of the individual in two ways: compilation and distribution of personal information is a direct threat to privacy and disclosure of false or misleading information constitutes an infringement of identity.

Goodgle Adwords and Trademark Term Searches

South Africa:

As it stands the policy with regards to Trademarks’s (TM’s) and Google’s attitude with regard to policing TM’s has varied from region to region. In South Africa, Google only monitors the use of TM’s in ad text and not in the keywords themselves. Instituting a TM complaint procedure in terms of Google Adwords’ Terms and Conditions (we are governed by Ireland’s version) will NOT result in keywords being disabled and they will only investigate words in the ad text.

That sets out Google’s policy on TM’s applicable to South Africa and now most other regions. This is not however the only policy governing TM usage as Google’s Terms and Conditions will always apply and as expected the terms require that the following general obligations be complied with:

a) You cannot engage in an illegal business practice where an ad is made available;
b) You must warrant that you have the necessary rights to publish the ad;
c) You warrant that the use of the ads will not violate any code or any third party’s proprietary Intellectual Property (which would include registered and unregistered TM’s).

Google is not acting as the initial arbiter in determining whether the use of a TM is legal or not but does not (and could never) condone such illegal use. As this has always been the policy in Google Ireland’s terms and conditions, and as South Africa has always subscribed to these terms and conditions, South Africa has never had a right to complain to Google about keywords, only ad text. But it is important to note that all common law or legislated rights and remedies for preventing abuse of a TM remain available for use by the TM owner as a corporate policy does not supersede the law.

Other Jurisdictions:

As you are aware, Google recently announced a shift in the current TM policy contained in both the terms and conditions relating to the US and also to most of Western Europe for their Google Adwords. This change caused quite a stir among the major brand players in the marketplace. Basically, Google decide it no longer wanted to play policeman and as such announced that they will no longer police TM usage. As long as the advertiser actually has the TM on their website and is actually either selling the product or service, or providing unbiased information about the product or service related to the mark in question, the particular advertiser was entitled, in terms of Google’s policy, to use such TM in their ad text, without requiring permission from the owner of the particular TM.

It is important to note that this policy cannot and does not trump the law of the jurisdiction in which the marks are utilised. It merely absolves Google from having to police the issue of TM ownership and permissions. As mentioned previously, South Africa has always fallen under the legal auspices of Google Ireland and we subscribe to those terms. The policing of TM’s was always absent from the Irish terms, Google having the sense to realise that the effort and cost involved in policing multi-jurisdictional legal requirements for TM usage was neither viable nor commercially sensible. Recently, as a result of Google’s changed position with regard to most of Europe, so that it no longer polices the illegal use of TM’s in adverts and keyword searches, has resulted in a flurry of European Court rulings on the matter. This however, whilst possibly carrying persuasive power, is not immediately relevant to how the law operates in South Africa due to it not being binding on South African Courts.

GPL Code and Proprietary Software

You cannot incorporate GPL-covered software in a proprietary system. The goal of the GPL is to grant everyone the freedom to copy, redistribute, understand, and modify a program. If you could incorporate GPL-covered software into a non-free system, it would have the effect of making the GPL-covered software non-free too.
A system incorporating a GPL-covered program is an extended version of that program. The GPL says that any extended version of the program must be released under the GPL if it is released at all. This is for two reasons: to make sure that users who get the software get the freedom they should have, and to encourage people to give back improvements that they make.
However, in many cases you can distribute the GPL-covered software alongside your proprietary system. To do this validly, you must make sure that the free and non-free programs communicate at arms length, that they are not combined in a way that would make them effectively a single program.
The difference between this and “incorporating” the GPL-covered software is partly a matter of substance and partly form. The substantive part is this: if the two programs are combined so that they become effectively two parts of one program, then you can’t treat them as two separate programs. So the GPL has to cover the whole thing.
If the two programs remain well separated, like the compiler and the kernel, or like an editor and a shell, then you can treat them as two separate programs—but you have to do it properly. The issue is simply one of form: how you describe what you are doing. Why do we care about this? Because we want to make sure the users clearly understand the free status of the GPL-covered software in the collection.
If people were to distribute GPL-covered software calling it “part of” a system that users know is partly proprietary, users might be uncertain of their rights regarding the GPL-covered software. But if they know that what they have received is a free program plus another program, side by side, their rights will be clear.