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02 Feb 2021
BY Gerard du Toit

Elon sends a signal: trade marks matter

It’s not easy keeping track of Elon Musk – the one week he’s the richest man on the planet, the next week he’s a mere second, it really would be nice if he could keep his eye on the ball a bit, we South Africans don’t get many opportunities to claim a number one!

We’ve long known that Elon is very good at making money. But what we didn’t know was that he can also make others very rich too… all he needs to do is drop the odd word. A few weeks back, Elon tweeted the words “Use Signal and this had a most remarkable impact – within the space of two days, the shares of a small US health care technology company called Signal Advance soared from 60 US cents to USD7.19, and the company’s market cap rose from USD55-million to USD660-million.  

This massive boost in value was, however, an unintended consequence – investors had the wrong company. What Elon was in fact suggesting was that people use the Signal messaging app. A non-profit company that has an interesting advertising message, one that is clearly related to the current privacy concerns surrounding its much bigger rival, WhatsApp: “We don’t care about you… your pets… the gossip… your love life… All we care about is to make Signal more private, secure and fast with new features… We really don’t have time to listen to your conversations.”

So, what has any of this to do with IP? Well it does, of course, bring us on to an issue that is close to our hearts – confusion between names or trade marks. The main difference being that in our world, the confusion tends to involve consumers (consumers buying the goods or services of one company in the mistaken belief that they are those of another) rather than investors.

So, how do you avoid trade mark confusion? It’s a very odd thing but most entrepreneurs are convinced that the best kind of trade mark is one that describes what the product is, or perhaps describes what the product does, how good it is, where it comes from. They seem to believe that if a product has a name like that it becomes an easier sell, with the consumer already having a certain degree of information.

But trade marks like these have serious drawbacks. They don’t distinguish, they don’t stand out from the crowd, they are easily confused with similar competing brands, and they are difficult if not impossible to register. What you need is a standout trade mark.

But what makes a standout trade mark? Ask any trade mark attorney and they’ll tell you that your best bet is a coined word, a word with no meaning. Portmanteau words (combinations), they’ll say, can also be good. Even a word with a meaning can work if it is used for goods or services for which it has no relevance. Any of these categories of trade marks can generally be registered and they can be enforced.

We have, of course, looked at these issues in previous articles. We’ve discussed the 2017 South African Court of Appeal (“SCA”) judgment in the Twist case, where the issue was whether the trade mark Twist was distinctive (and therefore registrable) for soft drinks. The SCA decided that it was. The court made the point that a trade mark does not always need to be coined or fanciful, but that arbitrary (out-of-context) usage of a known word might also work.

The court said this: “Like a made-up word a common word which is arbitrary when applied to a particular product is the exemplar of a mark inherently capable of distinguishing.” It went on to say that even if the word has a meaning in relation to the particular product it might still be registrable if it is allusive or metaphorical: “If ‘twist’ has any meaning as applied to soft drinks, it is ‘allusive or metaphorical.’”

We have also discussed a more recent judgment in the USA, one that may have surprised some. The issue there was whether booking.com., a trade mark used and registered for hotel booking services, was a valid trade mark. The late Justice Ruth Bader Ginsburg held that the trade mark was in fact distinctive. In her view, much rode on the fact that the mark was used on the internet: “Only one entity can occupy a particular Internet domain name at a time... a consumer who is familiar with that aspect of the domain-name system can infer that Booking.com refers to some specific entity.”

Another relevant factor, said the judge, was the survey evidence, which proved that in fact consumers believe that booking.com is the trade mark of a particular company: “Whether any given ‘generic.com’ term is generic, we hold, depends on whether consumers in fact perceive that term as the name of a class or, instead, as a term capable of distinguishing among members of the class.”

Trade mark creation should not be taken lightly. If you need help, you can call us…or send a signal.

Reviewed by Ilse du Plessis, an Executive in ENSafrica’s IP department.

Gerard du Toit

IP | Trade Mark Attorney | Senior Associate

gedutoit@ENSafrica.com

+27 82 885 3337