South Africa: Donald Trump And Bad Faith

Last Updated: 16 May 2019
Article by Rowan Forster

Most Read Contributor in South Africa, July 2019

Donald Trump comes up in our articles from time to time, as does the issue of bad faith. Both come up in this one.

In a recent case in the UK, a company called Trump International, which is owned by a German by the name of Michael Gleissner, filed applications to register the trade mark Trump TV in the communications and entertainment categories (classes 38 and 41). The US President, via a rights management company, opposed these applications. There were various grounds of opposition, but the most important one was the claim that the applications had been filed in bad faith.

The UK Registry, UKIPO, upheld the opposition. The hearing officer said that the intention behind the filings had clearly been to profit from Donald Trump's notoriety. The hearing officer further noted that the applicant had a history of abusive applications. The case went on appeal and the High Court upheld the hearing officer's decision. The judge felt that the bad faith was obvious. The judge said that a very clear explanation was required as to why these trade marks had been filed. The judge further said that the hearing officer had been within his rights to consider the company's past conduct.

The issue of bad faith doesn't come up often but it is important. The South African Trade Marks Act, 1993 says that in order to file a trade mark application, you must have a bona fide (good faith) claim to ownership of that trade mark. It also says that a trade mark cannot be registered if the application is made mala fide (in bad faith).

In South Africa, the issue of bad faith has become closely linked with the principle of territoriality. The territoriality principle says that trade marks are territorial in nature, which means that a company is perfectly entitled to adopt, in South Africa, a trade mark that has already been used abroad. The most famous South African decision on the point is Victoria's Secret Inc v Edgars Stores Ltd. In this case, a US company took a South African company to court for "stealing" its trade mark. The Supreme Court of Appeal ("SCA") held that a South African company is perfectly entitled to adopt a trade mark that has been used abroad but not in South Africa, provided that there isn't "something more". Something more means bad faith, something that might be evidenced by a prior commercial relationship between the companies, or some other form of sharp practice.

In more recent cases, the SCA has suggested that the territoriality principle has become outmoded in the light of the fact that South African trade mark law now gives specific protection to "well-known marks" – trade marks that are well-known in South Africa despite the fact that they haven't been used in the country. But, it has also said that it doesn't have the power to change it. In the 2018 case of Truworths Ltd v Primark Holdings it said this: "Territorial isolation is a vanishing phenomenon... [but] if the principle of territoriality in relation to trade marks is to be revisited in the light of the changing social milieu, this will require an internationally concerted political effort and considerable political will... these are matters beyond the province of this court."

So, for now the territoriality principle applies, but that doesn't necessarily mean that bad faith can't be applied to other cases where there might be no relationship between the parties. So, would the Trump case have been decided the same way in South Africa? We can perhaps get some guidance from the decision of Reynolds Presto Products Inc v P.R.S Mediterranean Limited and the Registrar of Trade Marks.

Although was a commercial relationship between the parties in this case there – a former licensee had registered the trade mark of its former licensor – the judge discussed the issues of good and bad faith in very broad terms, using concepts of ethics and morality. He spoke of "an ethical value judgment", a "moral claim to ownership", and conduct "that falls short of the ethical standards of acceptable commercial behaviour." Applying concepts like this it is, we think, possible that in South Africa, bad faith could be successfully raised in a case similar to the Trump case.

There is, perhaps, some irony in the fact that Donald Trump has successfully raised bad faith in a trade mark case. As we've seen in previous articles, the US President appears to have a somewhat erratic approach to IP. On the one hand, he seems to value IP highly – he and his family have managed to get a number trade marks registered in China, and he has of course cited IP violations by China as a justification for trade sanctions. On the other hand, we've seen how in Canada, Trump managed to escape personal liability in a case where his trade mark holding company licensed a Canadian company to use Trump trade marks for a property development – seemingly on the back of representations that Trump-branded properties get very good rentals – only to be sued for misrepresentation when things didn't go as well as anticipated. More recently, we've seen him get into trouble with famous musicians for unauthorised use of their songs at rallies. It's never straightforward with Donald Trump!

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