South Africa: A Clearvu On Endorsements

Last Updated: 8 February 2018
Article by Gaelyn Scott

Most Read Contributor in South Africa, September 2018

Every now and then, a dispute comes along that adds an extraordinary amount to the law. One such dispute is the Clearvu trade mark case.

We have  reported on the case of Cochrane Steel Products (Pty) Ltd v M-Systems Group (Pty) Ltd on a number of occasions. This was the case in which a South African court had to consider whether or not it is unlawful for a company to bid on the trade mark of a competitor as a keyword/search term. The point of doing this is, of course, to ensure that when internet users search the trade mark (or variations of it), they get to see the sponsored links/pop-up adverts of the company that has bid on the trade mark or purchased the trade mark as a keyword. 

This issue has come up in many countries in cases involving trade marks such as Lush,  Marks & Spencer and  Nakedbus (a New Zealand case), and the courts have tended to find against the trade mark owner. The courts have rationalised this by saying that most people are sufficiently internet savvy not to be confused by pop-up adverts or sponsored links. In the foreign cases, the trade mark owner has always had a trade mark registration to rely on, and the cases have therefore been based on trade mark law principles. In the South African case, in which M-Systems had bid on the Clearvu trade mark of Cochrane, Cochrane did not yet have a trade mark registration, and the company had to rely on common law principles of unlawful competition in the form of passing off. 

The South African Supreme Court of Appeal ("SCA") found against Cochrane, holding that there was no unlawful competition. In fact, the SCA felt that, far from constituting unlawful competition, sponsored links "provide the consumer with alternatives, thereby fostering competition". The court made some interesting observations. It held that South African consumers are savvy enough to know what sponsored links/pop-up adverts are, and they fully expect to see them when they do searches for brand names. It held that consumers don't get confused by sponsored links or pop-up adverts because they are able to "separate the wheat from the chaff". It said that conduct of this nature will only be unlawful if the company that bids for the trade mark deliberately confuses the public into believing that its goods or services are connected with the trade mark owner. 

In a separate development, Cochrane took the issue to the Advertising Standards Authority ("ASA"). The company failed here too, with the ASA Directorate ruling that it didn't have jurisdiction to hear the matter. It justified its decision on the basis that the ASA can deal with advertisements only, and an AdWord is not an advertisement: "the Adword is not regarded as the advertisement itself, but rather as a trigger that ensures that one's advertisement is displayed."

That, however, wasn't the end of the Clearvu matter. Although Cochrane didn't have a trade mark registration to rely on, it did have a pending application for Clearvu for security fencing, an application that M-Systems had opposed on the basis of descriptiveness and non-distinctiveness. Visibility is, of course, an important feature with security fencing, and the word "clear" is quite commonly used. The issue was, therefore, what disclaimers or other endorsements should be imposed before the application could be accepted.

The SCA has now also handed down its judgment on this issue. The court conducted a rare examination of disclaimers and endorsements, such as the "admission" that is common in South Africa. In particular, the SCA looked at the Oude Meester decision, the case of Distillers Corporation (SA) Ltd v S.A. Breweries Ltd & another; and Oude Meester Groep Bpk. & another v S.A. Breweries Ltd

The SCA considered the fact that the trade mark Clearvu is the phonetic equivalent of the non-distinctive term "clear view". It said this: "The phonetic equivalent of a non-distinctive word is itself non-distinctive and it would seem to follow that if the word is itself one that ought to be disclaimed then its phonetic equivalent should also be disclaimed."

The SCA therefore concluded that the following disclaimer and admission would be appropriate:

"The registration of this mark shall give no right to the exclusive use of the words 'clear' and 'view' separately and apart from the mark ... .The trademark registrant admits that the registration of this mark shall not debar others from the bona fide descriptive use in the course of trade of the words 'clear view' and 'view'."

It's safe to say that the trade mark Clearvu will be long remembered in South African trade mark law. 

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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