South Africa: The Last Word On ClearVu?

Last Updated: 8 September 2016
Article by Gaelyn Scott

Most Read Contributor in South Africa, September 2016

There's certainly been a great deal of litigation around the trade mark ClearVu in South Africa – passing-off proceedings before the High Court, an appeal from that judgment to the Supreme Court of Appeal, and proceedings before the Advertising Standards Authority ("ASA"). Now there's another judgment, one that deals with an opposition to a trade mark application for ClearVu.

The case of Cochrane Steel Products (Pty) Ltd v M-Systems Group (Pty) Ltd was South Africa's first keywords (AdWords) case. A keywords case is one that deals with the issue of whether or not it's lawful for a company to bid on or buy the trade mark of a competitor as a keyword or search term, in order to ensure that anyone searching the trade mark gets to see the buyer's sponsored links (adverts). Cochrane has used the trade mark ClearVu on fencing for many years and its competitor M-Systems bid on various terms such as "clearvu" to make sure that anyone searching these terms got to see its adverts. Cochrane sued M-Systems for passing-off.

The High Court found against Cochrane. The judge looked at the UK and other European judgments dealing with keywords,such as Google v Louis Vuitton, Interflora v Marks & Spencer and Amazon v Lush. As the judge said, these cases have held that "keyword advertising is not inherently or inevitably objectionable from a trade mark perspective". They have also established that "AdWords are a familiar feature of the internet and consumers are used to distinguishing them from natural search results." The judge noted that the general approach has been to hold that there's no infringement if the advert does not suggest that it is the advert of the company whose trade mark was searched. In other words, the advert must make it clear that it refers to a competitor of the trade mark owner. The judge did not think there would be any confusion here: "In this matter, a consumer who searches for 'ClearVu' is confronted with a multiplicity of suppliers. No reasonable consumer could possibly be under the impression that all of them relate directly to the applicant."

The Supreme Court of Appeal upheld the finding. It considered the same foreign judgments, as well as cases in Canada and New Zealand. It said that consumers are familiar with sponsored links and know how they work. It said this: "Consumers will assume, as all internet users do, that they will have to separate the wheat from the chaff in deciding which hyperlinks appearing as a result of their search should be clicked. That presumably will cause irritation and perhaps even annoyance but it does provide the consumer with alternatives, thereby fostering competition."

Between these two judgments, there was also an ASA judgment. Cochrane had asked the ASA to rule on the legitimacy of M-Systems' purchase of the keywords, but the ASA felt that it had no jurisdiction. It said that the ASA can only deal with advertisements per se, not the purchase of keywords. It said this: "The AdWord is not regarded as the advertisement itself, but rather as a trigger that ensures that one's advertisement is displayed."

The reason Cochrane had sued M-Systems for passing-off rather than trade mark infringement was simple – M-Systems had opposed Cochrane's applications to register ClearVu in class 6 for various goods, including fences, and in class 37, for various services. This opposition was based on the claim that ClearVu is not distinctive, being descriptive of goods that give a clear view. The judgment in this opposition was handed down on 10 August 2016.

The judgment suggests that there's considerable rivalry between the companies. Cochrane seemingly feels that M-Systems' opposition was purely tactical, intended to avoid trade mark infringement proceedings. It's also apparent that there are patent infringement proceedings on the go. What's also clear is that ClearVu is a big product – it's been around since 2004, is sold in 142 countries, and its revenue in South Africa has been in excess of ZAR500-million.

The judge considered various concepts, such as the notion that use does not equal distinctiveness, and the notion that to be distinctive, a trade mark must be incapable of application to the goods by anyone else. The judge noted that the objection to ClearVu applied to fences, but not all the goods covered, such as non-electric cables. The judge concluded that the trade mark ClearVu is capable of distinguishing; alternatively, that it has, in fact, acquired distinctiveness though use. The judge applied this test: If a trade mark has been used to the extent that it has acquired a reputation, then it performs a distinguishing function.

So, the trade mark was entitled to go through to registration. Certain endorsements would, however, be required. First, one that makes it clear that registration gives no right to the exclusive use of the words "clear" and "view" separately and apart from the trade mark. Second, one that makes it clear that registration will not debar others from the genuine descriptive use of the terms "clear view" and "view".

Is this the end of the ClearVu dispute? It's possible, but unlikely, that this latest judgment will be taken on appeal. It's also possible that, having secured a trade mark registration, Cochrane may decide to sue for trade mark infringement to stop the keywords' usage. This, however, seems very unlikely, given that two courts have already found that keywords' usage does not amount to passing-off – the issues in a trade mark infringement case will be very similar. So, this may indeed be the end of the road.

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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