South Africa: No Name Branding

Last Updated: 15 August 2013
Article by Rachel Sikwane

Most Read Contributor in South Africa, September 2016

Some time back we wrote about what we described as the 'no logo' trend. The article dealt with the fact that certain luxury goods manufacturers felt compelled to sell some of their products without any branding whatsoever, seemingly because Chinese consumers were eschewing luxury branded goods - which they saw as being brash - in favour of unbranded goods made by up-and-coming designers.  We predicted that this trend would not last.

According to a news article, at the 2013 international trade mark conference (INTA), there was an interesting discussion about something a little less extreme: how a number of major international companies seem to be ditching their brand names and simply using their logos to identify and distinguish their products. Starbucks and Twitter were mentioned as examples. You may have noticed how Starbucks has recently dropped the brand name from its logo, whereas in the case of Twitter the bird logo does appear to be playing an increasingly important role.

Why is this happening? It seems likely that, in the same way that fast food and other companies, whose products are enjoyed by children, know that infants recognise logos long before they recognise words, multinationals are realising that many consumers are far more likely to recognise logos than English words. So there's every chance that this trend will continue.

I'm certainly not qualified to comment on the practical problems that this may create, for example how to advertise a product on radio.  But there is one very obvious trade mark problem that arises:  will trade mark registrations for brand names that are being ditched become vulnerable to attack for non-use?

Use is integral to trade mark law and, in order to get a trade mark registration you must have a genuine intention to use the trade mark for the products for which you are seeking protection. Likewise, once you have a trade mark registration you must use the trade mark in order to keep the registration valid.  These requirements are important because they ensure that companies don't register (and hold on to) trade marks that they have no real interest in. A trade mark registration that is unused for a period of time can be removed from the register, and in most countries that period is five years.  In some countries you automatically need to prove use after a certain period of time, whereas in others, like South Africa, you're only obliged to prove use if a third party challenges your registration. This will generally happen when a third party feels threatened by your registration, typically because it wants to use that trade mark itself, or perhaps a similar trade mark.

The law says that the use must be genuine in order to keep the registration alive, but just what does that mean?  Non-use cases come up quite often so the courts have had a number of opportunities to consider the issue. The courts have made it clear that genuine use means ordinary commercial use in the context of the particular company and the particular product area. What it mustn't be is token use, in other words use that serves no real commercial purpose and is simply intended to keep the registration alive.

So must there be actual sales in order for use to be genuine? This question comes up from time to time and there's an old South African K Mart decision, which held that, in some cases, advertising without actual sales might be sufficient where, for example, a foreign company advertises goods in magazines that circulate in South Africa as part of a strategy to start selling its goods in South Africa. In a more recent case involving the trade mark GAP, the US company that owns the brand was able to persuade our appeal court that it had made genuine use of the trade mark in South Africa despite the fact that there had been no sales of GAP merchandise over the relevant five-year period. This was because the US company had held negotiations with Stuttafords over the relevant period, negotiations which were aimed at (and resulted in) Stuttafords being appointed a South African distributor of GAP merchandise in South Africa.

So, actual sales are not always required.  And in some cases actual sales may not be enough. In the Gap case a further issue arose – did the sale of 21 GAP personal care products by another South African company, Clicks, amount to genuine use?  The judge in the lower court had held that this use was so small that he could only conclude that it had been done with the ulterior purpose of keeping the registration alive, which meant that it was token use rather than genuine use. But the appeal court did not have to consider this issue because it had already found that the negotiations with Stuttafords were sufficient to keep the registration alive.

A further point on use - you must have clear evidence of use in order to keep your registration valid. In a recent case involving the company New Balance, the court held that New Balance's evidence of use of the trade mark P-F in South Africa was not good enough because it was vague as to the dates and there was no documentary proof of use, like invoices or delivery notes. So do keep good records!

So how is this likely to affect companies who drop their brand names in favour of their logos?   Well, I find it hard to imagine how a company can actually drop a brand name completely – surely the name must still appear on websites, or as part of email addresses and the like!   But whether this will be regarded as sufficient use is debatable. And surely the consumer will continue using the brand name  - no-one's going to say 'I'm going to have coffee at the green and white weird siren logo' , or 'I'm going to announce this news on the  little bird logo'. But consumer use will probably not be regarded as genuine use by the company. So we may be in for some interesting court cases if the no name trend does in fact continue!

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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