IP ENSight | 5 December 2018

A judgment without sugar-coating

by Gerard du Toit

A straight-talking South African court judgment highlights how it can sometimes be useful to add a claim of copyright infringement to a claim of trade mark infringement. This judgment should please foreign companies that do business in South Africa, because it suggests that South African courts will take a dim view of local companies that make off with the intellectual property of their foreign principals.

The case is The Sugarless Company (Pty) Ltd v Quad Africa Energy (Pty) Ltd. It involved an application by an Australian company for urgent relief against a South African company that had been its authorised distributor. The Australian company manufactures products aimed at those who like their confectionery sugar free. The company has operations in 13 countries, and for a while it sold its products in South Africa through a local distributor. When the relationship came to an end, the ex-distributor, in the words of the judge, started competing “cheek by jowl on retail shelves.”

The product offered by the Australian company is sold in packaging that comprises a large letter S in a circle above the word Sugarless (in capitals), which appears in white on a black background and in a somewhat triangular shape. When the relationship ended and the South African company started selling its own competing product, it used packaging that was similar, albeit with a few twists. The letter S was inverted and it no longer appeared in a circle, the word Sugarless was replaced with Sugarlean (also in capitals), still with the same white-on-black colour combination and triangular shape.

The Australian company sued. It claimed, inter alia, infringement of a South African trade mark registration for its label, passing off and infringement of copyright in the “packaging architecture". The South African company denied the validity of the trade mark registration, arguing that there should be a disclaimer against the word “sugarless”, and denied copyright ownership. The judge found for the Australian company.

Trade mark infringement

The judge said that in this case, the visual similarities were striking – Sugarless or Sugarlean in stark white lettering against a black background the “close grammatical affinity between ‘sugarless’ and ‘sugarlean’, the prominent S (despite inversion in respondent’s), the S as the pinnacle of the triangle, and the capped Sugarless and Sugarlean.” Not only were the marks visually similar, but they were aurally similar too. The judge said this: “An inquisitive first time buyer may spot the difference... but the busy shopper on the lookout for the S Sugarless product is not likely to spot the difference.”

Dealing with the South African company’s argument that the word “sugarless” is descriptive and therefore non-distinctive, the judge said that the test is “a factual one for the court to reach, expert evidence is inadmissible.” Yet, although the word “sugarless” does appear in dictionaries, this did not make the trade mark non-distinctive because there’s more to it than the word. 

According to the judge, the “correct enquiry is not whether sugarless could ever be more than descriptive, but whether the mark viewed as an integrated whole, with its adjective included, is inherently capable of distinguishing the applicant’s products.” The mark as a whole is capable of “performing the function of identifier of origin of the product, in addition to qualifier of ‘confectionery’.”

Passing off 

The judge found that there was passing off. The similarities were evident and the intention was obvious: “It is a matter for comment that the respondent does not make it clear why it is essential for its business to continue to rely so heavily on the likeness with the applicant’s packaging... the inference is unavoidable that the respondent still now seeks the lift of the springboard.”

Copyright 

The judge ruled that the label was an artistic work, being both utilitarian and sensory: “It seems fair to conclude that utility and flair inspired the creation of the packaging artwork.” 

The work had not been copied from elsewhere, it had involved independent original effort, judgment and labour, it had been created by an employee of an Australian design agency for the Australian company, so it enjoyed copyright protection in South Africa by virtue of international arrangements. There had been an infringement of the copyright through the reproduction of a substantial part. As the judge said, there was a “transformation of the original work in such a manner that the original or substantial features of the original work remain recognisable.” 

Counterfeit goods

The judge said that the Australian company was entitled to an order in relation to delivery-up of “counterfeit goods” under the Counterfeit Goods Act, 1997. 

Disapproval 

The judge registered general disapproval of the South African company’s conduct: “The respondent’s conduct has been surreptitious and in flagrant disregard of the applicant’s rights... the bland denials... coupled with his assertions of innocence are unconvincing... the undertakings that were given but breached show the slip.”

Intellectual property purists may not like everything about this judgment, but the result is probably correct. What it certainly does is highlight the merit of adding copyright infringement to the mix where possible. A trade mark infringement case can trip up on issues such as non-distinctiveness, descriptive use or lack of confusion. These issues will not necessarily affect a copyright infringement claim. 

Reviewed by Ilse du Plessis, a director in ENSafrica's IP department.

 

Gerard du Toit

IP | senior associate
gedutoit@ENSafrica.com
cell: +27 82 885 3337

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