South Africa: Apple - Sharing The Fruits Of Success

Last Updated: 23 November 2011
Article by Gaelyn Scott and Wim Alberts

Most Read Contributor in South Africa, September 2016

All things Apple, such as the iPad, iPhone, and iPod, are seen by many in the Western world as 'hip' and glamorous.  Apple's success, however, seems to be bearing unwanted fruit in the East, particularly in China.  Recent news reports tell the story of a "fake" Apple store in a Chinese town, whose interior was said to resemble that of an original Apple iStore.  So much so, that even the employees apparently thought they were working for the American company.  If this form of flattery were to happen in South Africa, how would it be dealt with in terms of our intellectual property laws?

Firstly, it would be relatively simple to deal with the unwanted conduct where the items sold bearing the Apple trade mark do not originate from Apple.  The application to the goods of, for instance, the word Apple, could amount to trade mark infringement.  Similarly, the reproduction of the Apple logo could also amount to copyright infringement.  These forms of infringement would fall within the scope of anti-counterfeit legislation and this implies, in particular, that the authorities would perhaps be entitled to confiscate the infringing goods.

Slightly more involved, secondly, is the situation where the store would, for instance, be called Kunming Apple.  In other words, a trading name or style including the word 'Apple'.  The use of the trade mark would then, of course, not relate to goods, but rather to services, a situation which naturally falls outside the scope of counterfeit legislation and the discontinuance of the use of the Apple trade mark would then require Apple obtaining a court order. 

This leads to the more difficult question, thirdly, of whether the "look and feel" of the authentic Apple store can be protected?

In the South African decision in Spur Steak Ranches Ltd v Saddles Steak Ranch, Spur relied on unlawful competition and alleged that they had used a particular layout and décor in their restaurants for more than three decades.  Nineteen key features were identified including Spanish-style plaster on the walls, totem poles and décor panels with Western motifs including eagles.  The court asked the question that naturally arises being, what are the distinctive design and layout features the Spur claims as its own?  The court referred to the fact that the various features mentioned are not found in all Spur restaurants and subsequently reached the conclusion that the claimed uniqueness was not proven.  It also stated that, as a matter of practicality, it would have been difficult to make an order prohibiting the use of features "substantially similar to Spur Steak Ranches".

A different approach was followed in the American decision in Two Pesos Inc v Taco Cabana.  Here, a restaurant with the following interior featured:

"[A] festive eating atmosphere having interior dining and patio areas decorated with artefacts, bright colors, paintings and murals.  The patio includes interior and exterior areas, with the interior patio capable of being sealed off from the outside patio by overhead garage doors.  The stepped exterior of the building is a festive and vivid color scheme using top border paint and neon stripes.  Bright awnings and umbrellas continue the theme."

The evidence consisted, amongst others, of the following view of a well-known restaurateur:

"[They] are 'shaped the same.'  They look the same.  When you're inside they feel the same.  They have the same project."

Which other bases for protection of the interior of business' premises can be considered in South African law?  One option is a trade mark registration.  A difficult problem one potentially faces here is that a trade mark, in this case the  interior of a building, must be capable of being represented graphically.  This requirement is intended to provide legal certainty regarding the scope of rights brought about by a particular trade mark's registration.  The public must know, from the Register, exactly what the rights granted by the registration entail.  An attempt at doing this was in effect rejected in the Spur case.

In terms of traditional principles of passing-off, an applicant must prove a reputation and the likelihood of confusion.  In proving the existence of a reputation in relation to a trade mark used on goods, for instance, turnover achieved through sales of the product, and advertising exposure and expenditure, are major factors.  In the case of the interior of a business, it would have to be proven that a reputation has been built up through, for example, the number of visitors to the premises.  Even if a reputation can be established,however, it would not necessarily imply that the owner of the business premises would have a remedy.  This is on account of the nature of the comparison made in passing-off cases.  It is therefore necessary, not only to compare the trade marks themselves, but also consider any distinctive material used along with them.

The implication of the above is that a particular business' interior may be distinctive, and have a reputation, and yet the name of the business on the outside could also be distinctive, bearing in mind that one is considering the use of the "look and feel" of a business.  Therefore, when a customer enters the particular business' premises, he will be aware of the identity of the establishment he is visiting and it would then be difficult to prove the likelihood of confusion.  After all, an order in passing-off proceedings will only relate to trading undertaken without taking adequate steps to distinguish a business or goods, and there is no absolute prohibition on the use of a trade mark. 

It would, therefore, seem that the adoption of a distinctive name on the outside of premises could suffice to address any concerns about confusion flowing from similarities regarding the inside of the business premises.  The American decision in the Two Pesos case would then probably not easily be accepted in South Africa.  To adopt this ruling would require a narrow focus on the issue of confusion, where only the respective interiors are compared, and the names of the businesses are then disregarded.  To return to the Apple store example, it would seem that it would be difficult to protect those aspects typical to such a store.  However, the Apple brand image is very strong, and, furthermore, our courts have shown in the recent past that they are prepared to adapt legal principles to cater for new situations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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