South Africa: Intellectual Property – A South African Perspective

Last Updated: 30 November 1999

November 1999

Intellectual property is the generic name given to certain types of intangible property, namely: patents, trade marks, registered designs and copyright, each produced by the application of one's intellect, hence the name. Business has come to realise that such intangible property may have a value far in excess of the value of more traditional property types. Often, it is the intangible property which forms the core of a business, giving it the cutting edge.

Our intellectual property laws in South Africa are in line with those of most developed countries. The Internet, however, has raised the question of whether our traditional laws are adequate to protect established intellectual property rights.

There are various forms of intellectual property namely:

  • A trade mark is a mark which is "capable of distinguishing" one person's goods or services from those of its competitors. A "mark" can be any sign capable of being represented graphically. Essentially, it identifies one's goods or services. A trade mark is protected by registration in one or more of the 42 classes of goods and services in the register.
  • Copyright is the right to protect certain types of work as defined in the Copyright Act from, amongst other things, unauthorised reproduction, publication and adaptation.
  • Patents are granted to inventions with a functional purpose and which are novel and not obvious, in the sense that they do not form part of the existing "state of the art" anywhere in the world. The owner acquires a limited monopoly for 20 years, after which the patented invention may be exploited.
  • A registered design is granted to protect either the aesthetic or functional features of a design. Again, it is a limited monopoly for 15 and 10 years respectively.
  • A company or close corporation name registration is the name under which an enterprise is incorporated. It will be granted provided that the name is not already registered as such. In practice, no cross-check is made with the trade mark register.
  • A domain name is an alphanumeric address represented in lower case, coupled with certain permitted signs eg hyphens. It is simply registered in the domain space, provided that the identical name has not already been registered in that space. No reference is made to local or foreign trade mark or companies registers. Registration is granted on a first-come, first-serve basis. There is no classification of the domain name register. The ad hoc system of allocating domain names has led to conflict with established trade mark rules. A domain name comprises several components:
  • generic top level domains ("gTLD"), which are based on the nature of the organisation, for example:
  • .co - commercial use;
  • .com - commercial use;
  • top level domain ("TLD"), which indicate the country of origin, such as:
  • .au – Australia
  • .za – South Africa
  • second level domain ("SLD")- the name of the owner of the registration or one of its trade marks. It is this part of the domain name registration which is commonly referred to as the domain name. It is the most important part from our perspective and requires protection from unauthorised use. Our domain name is, for example: "wwb.co.za".

Internet users are likely to search for a particular web site by using the name or trade marks of the entity whose site they are seeking. Thus, a domain name functions in much the same way as a trade mark by serving as an identifier. Indeed, a domain name may also qualify as a trade mark and thus be capable of registration if it is capable of distinguishing.

Unauthorised use of trade marks in domain name registrations can be divided into instances of:

1. HIJACKING/CYBERSQUATTING

There have been many incidences of unauthorised third parties obtaining domain name registrations incorporating "well-known" trade marks or company names. This phenomenon, known as "hijacking" or "cybersquatting", is generally speculative with the sole purpose being to extort money from or harass the name or trade mark owner. For example, McDonald's Corporation found that its name and trade mark MCDONALDS had been registered as a domain name, "McDonalds.com". Mr Quittner of Wired Magazine had registered its name to illustrate that many large corporations were unaware of the importance of protecting their names and trade marks on the Internet. This case settled out of court by McDonalds agreeing to donate $350 000 to put a New York city school on the Internet.

2. TO CAUSE CONFUSION

Confusion as to the true owner of a web site was experienced by Kaplan when its name, "Kaplan.com", was registered as a domain name by its competitor, Princeton Review. The site included a comparison of programs offered by Princeton Review and Kaplan in which Princeton Review's fared more favourably. The ruling assumed that domain names can serve as trademarks. This combined with the fact that the registration was made just to irritate Kaplan, was the basis on which Princeton Review had to relinquish the registration.

3. GENUINE USE OF TRADE MARKS IN DOMAIN NAMES

Different parties may own the same trade mark but for different goods or services. Our trade mark laws would enable trade mark registrations for the same mark to co-exist in different classes provided there is no likelihood of confusion. Although all parties would have a legitimate claim to the name, only one would be able to obtain a domain name registration including it. Generally the first party to register the name as a domain name has been entitled to it.

Domain names versus trade marks - can trade mark laws assist the trade mark owner?

1. STATUTORY ACTIONS BASED ON INFRINGEMENT

The proprietor of a registered trade mark is protected from unauthorised use of its mark in the course of trade. Section 34(1)(a) of the Trade Marks Act, 1993 protects a trade mark owner from the unauthorised use in the course of trade in relation to the goods or services for which the mark is registered, of an identical mark or of a mark so nearly resembling it as to be likely to deceive or cause confusion. Section 34(1)(b) provides protection against unauthorised use of the mark in relation to similar goods or services if there is a likelihood of confusion. Section 34(1)(c) provides that unauthorised use of a mark which is identical or similar to registered trade mark which is also "well-known" in South Africa will amount to an infringement, if such use is likely to take unfair advantage of, or be unfairly prejudicial to its distinctive character or repute, it is not necessary to prove deception or confusion. This is known as "dilution" in the sense that this kind of unauthorised use diminishes the ability of the mark to distinguish. Section 35 protects well-known marks which are not registered and have no goodwill in South Africa but which may have been registered elsewhere. A mark is "well-known" if it is well-known to the persons interested in the goods or services to which it relates.

In deciding an action brought in terms of any of these sections, our courts may take cognisance of any foreign decisions based on similar laws. What is emerging from foreign case law is a recognition that a domain name, in addition to being a personal address, has acquired a secondary role of serving as a memorable way for people to find a particular web site.

Although not tried by our courts, it is submitted that a trade mark owner may be able to rely on our Trade Mark laws to protect its rights should it find that its name has been incorporated into a domain name registration by a third party.

2. INFRINGEMENT BASED ACTIONS

A US court in 1997 in Card Service International, Inc v McGee found that McGee's web site located at "cardservice.com" providing credit and debit card services, infringed Card Service's registered trade mark CARDSERVICE INTERNATIONAL for identical services since it was likely to cause confusion. It was ordered that the name be de-registered.

3. DILUTION BASED ACTIONS

In the US, where a likelihood of confusion cannot be substantiated, successful actions have been based on anti-dilution laws which protect famous trademarks from unauthorised use which erodes their distinctiveness or tarnishes or disparages the mark. Hasbro, the owner of the famous children's game trademark CANDY LAND successfully relied on such laws to stop Internet Entertainment Group's use of "Candyland.com" for an adult entertainment web site. These laws have also been used to stop attempts to extract money for the transfer of domain names. Panavision and Intermatic, owners of the famous marks PANAVISION and INTERMATIC, respectively, obtained judgments stating that registration of a domain name incorporating their famous marks, coupled with some type of economic activity, such as attempting to sell the domain name back to them, was dilution.

4. PASSING OFF BASED ACTIONS

A common law action based on passing off will succeed if (i) the name has goodwill, ie a reputation in the public's mind as distinguishing the proprietor's goods or services, (ii) there has been a misrepresentation which is or is likely to cause confusion, (iii) damage is or is likely to be suffered.

In 1997, in the landmark case, Marks & Spencer PLC v One In a Million Limited and Others, the English High Court gave a final judgment finding that domain names registrations including the names or trade marks of a variety of enterprises, without authority, and subsequent offers to sell them at inflated prices to these enterprises amounted to trade mark infringement and passing off, even though the defendants, who were dealers in domain names, had not used the domain names as web sites or e-mail addresses.Although the defendants argued that mere registration of a domain did not amount to use in the course of trade, the Court found there was an infringement based on a similar provision to our section 34(1)(c), because the offer to sell amounted to use in the course of trade as professional domain name dealers.

The Judge acknowledged that registration of domain names by the defendant without use was insufficient to establish passing off. By threatening to sell the registrations to others for use, however, the court felt that there was a threatened misrepresentation. The other element of passing off, namely goodwill was proved, and damage was presumed likely.

PRACTICAL STEPS TO AVOID CONFLICT

An enterprise wishing to avoid dispute should:

  • Undertake a review of its name, trade marks and trading style and ensure that it has obtained registration of them as trade marks.
  • Ensure that it has obtained domain name registrations in the appropriate sub-domain eg ".co.za", for its name, trade marks and trading styles before someone else, perhaps also with a legitimate claim to the name, does. Consideration should also be given to registering commonly used variables of these as a registration will only block the use of the identical domain name on the same domain name space.
  • Prior to applying for either a trade mark or domain name registration, have a search conducted in the register of trade marks as well as the relevant domain name registers to ensure that it is available.
  • Monitor the main sites where South African domain names are published. This will disclose identical and confusingly similar domain names to which objections could be raised.

The Internet is no different from any other form of communication media; the bottom line is that in order to fully protect one's rights, one should register them, where possible.

Lesley Fitton

For further information, please contact us.

WEBBER WENTZEL BOWENS

The material contained in this article is provided for general information purposes only and does not constitute legal or other professional advice. We accept no responsibility for any loss or damage, which may arise from reliance on information contained in this article.

© Copyright Webber Wentzel Bowens 1999. All Rights reserved.

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