Discovery Holdings Ltd v Sanlam Ltd and Others

• Jurisdiction: South Africa
• Citation: 2015 (1) SA 365 (WCC)

Discovery Holdings Ltd v Sanlam Ltd and Others
2015 (1) SA 365 (WCC)

2015 (1) SA p365

Citation	2015 (1) SA 365 (WCC)
Case No	8995/2012
Court	Western Cape Division, Cape Town
Judge	Goliath J
Heard	July 3, 2014
Judgment	July 3, 2014
Counsel	P Ginsburg SC (with F Southwood) for the applicant.; AR Sholto-Douglas SC (with BJ Vaughan) for the respondents.

Flynote : Sleutelwoorde B

Intellectual property — Trademark — Registrability — Distinctiveness — Mark ESCALATOR FUNDS in financial services industry — Mark descriptive — Non-distinctive — Incapable of serving as badge of origin — No secondary meaning established — Mark removed from register — Trade Marks Act 194 of 1993, s 10(2). C

Intellectual property — Trademark — Infringement — Use of confusingly similar mark — ESCALATING FUND and SANLAM ESCALATING FUND in respect of financial investment products — No likelihood that average consumer of such products will be confused, particularly since usually D sold through skilled intermediaries — Use of dominant SANLAM house mark making confusion even less likely — Trade Marks Act 194 of 1993, s 34(1)(a).

Competition — Unlawful competition — Passing off — Descriptive mark — May be protected by passing-off action, but plaintiff to prove reputation.

Headnote : Kopnota

Section 9(1) of the Trade Marks Act 194 of 1993 provides that, to be registrable, E a trademark must distinguish the owner's goods and services from those of other persons; and s 34(1)(a) that no one may without authorisation use a mark that is identical or confusingly similar to a registered mark.

Discovery had a trademark registration for the mark ESCALATOR FUNDS, an investment product, and Sanlam sold a similar product called SANLAM F ESCALATING FUND. Discovery sued Sanlam for trademark infringement and passing off, and Sanlam in a counterclaim applied for the cancellation of Discovery's mark on the ground that it was descriptive and non-distinctive.

Held: As to the registrability of Discovery's ESCALATOR FUNDS mark: A trademark's strength was determined by its distinctiveness, that is, its ability to signify source. While coined or inventive names were strongly G distinctive, purely descriptive names [*] were conceptually weak and entitled to protection only if they acquired distinctiveness through their association in the minds of consumers with a single source of goods or services. The phrase 'escalator funds' immediately evoked — without conjecture or speculation — an investment that offered a sustained increase in value and protection from loss. It described a function of the product and was therefore purely descriptive and non-distinctive. There was also no proof H that the ESCALATOR FUNDS mark had acquired a reputation worthy of protection. The mark was conceptually and commercially weak, common in trade, and wrongly on the register. (Paragraphs [35] – [39], [44] – [49], [83] and [86] at 378B – 379E, 380E/F – 382H, 392I – 393A and 393J – 394C/D.)

As to the alleged infringement of Discovery's registered ESCALATOR FUNDS I mark by Sanlam's SANLAM ESCALATING FUND mark: There was no trademark infringement because there was no likelihood of consumer confusion. Investment products of this kind were sold by skilled

2015 (1) SA p366

A financial advisors who wouldn't confuse Discovery and Sanlam products. And Sanlam's inclusion of its primary SANLAM mark made confusion even less likely. (Paragraphs [17] and [57] – [66] at 373H – J and 384H – 388C.)

As to Discovery's passing-off claim: Although a descriptive mark could be protected by a passing-off action, Discovery's ESCALATOR FUNDS mark did not distinguish itself from its competitors. Even though it had done considerable business under the name, the public did not regard the ESCALATOR FUNDS mark as synonymous with Discovery's business. Discovery's failure to prove an independent reputation meant it was unable to prove misrepresentation or passing off. (Paragraphs [73] – [76] at 389I – 391D.)

Cases Considered

Annotations C

Case law

Southern Africa

Adcock-Ingram Products Ltd v Beecham SA (Pty) Ltd 1977 (4) SA 434 (W): D referred to

Bata Ltd v Face Fashions CC and Another 2001 (1) SA 844 (SCA): dictum in para [8] applied

Beecham Group plc and Another v Triomed (Pty) Ltd 2003 (3) SA 639 (SCA) ([2002] 4 All SA 193): dictum in para [15] applied

Capital Estate and General Agencies (Pty) Ltd and Others v Holiday Inns Inc and Others E 1977 (2) SA 916 (A): dictum at 929C – D applied

Caterham Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd and Another 1998 (3) SA 938 (SCA) ([1998] 3 All 175): dictum in para [16] applied

Century City Apartments Property Services CC and Another v Century City Property Owners' Association 2010 (3) SA 1 (SCA): dictum in para [31] applied

Converge (Pty) Ltd v Woolworths Ltd 2003 BIP 292 (C): referred to F

Die Bergkelder Bpk v Vredendal Koöp Wynmakery and Others 2006 (4) SA 275 (SCA) ([2006] 4 All SA 215): dictum in para [18] applied

First National Bank of Southern Africa Ltd v Barclays Bank plc and Another 2003 (4) SA 337 (SCA) ([2003] 2 All SA 1): dictum in para [15] applied

John Craig (Pty) Ltd v Dupa Clothing Industries (Pty) Ltd 1977 (3) SA 144 (T): referred to G

Online Lottery Services (Pty) Ltd and Others v National Lotteries Board and Others 2010 (5) SA 349 (SCA): dictum in paras [38] – [39] applied

Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A): dictum at 640I – 641D applied

Premier Trading Co (Pty) Ltd and Another v Sporttopia (Pty) Ltd 2000 (3) SA 259 (SCA): dictum at 266J – 267A applied H

Sea Harvest Corporation (Pty) Ltd v Irvin & Johnson Ltd 1985 (2) SA 355 (C): dictum at 359G applied

Standard Bank of South Africa Ltd v United Bank Ltd and Another 1991 (4) SA 780 (T): referred to

Verimark (Pty) Ltd v BMW AG; BMW AG v Verimark (Pty) Ltd 2007 (6) SA 263 (SCA): applied. I

Australia

Johnson and Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd [1991] FCA 310 ((1991) 30 FCR 326): dictum in paras [63] – [64] J applied

2015 (1) SA p367

The Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd [1963] HCA 66 A ((1963) 109 CLR 407): referred to.

Canada

Christian Dior SA v Dion Neckwear Ltd [2002] 3 FC 405 (CA): referred to

Ciba-Geigy Canada Ltd v Apotex Inc; Ciba-Geigy Canada Ltd v Novopharm Ltd [1992] 3 SCR 120 (95 DLR (4th) 385; 1992 Canlii 33 (SCC)): B referred to

ITV Technologies Inc v WIC Television Ltd [2003] FC 1056 (FCA): referred to

Mitel Corporation v Registrar of Trademarks (1984) 79 CPR (2d) 202: referred to

Polo Ralph Lauren Corp v United States Polo Assn (2000) 9 CPR (4th) 51 (FCA): C dictum in para [3] applied

Wool Bureau of Canada Ltd v Registrar of Trademarks (1978) 40 CPR (2d) 25: referred to.

England

Bach & Bach Flower Remedies Trade Marks [2000] RPC 513 (CA): dictum D at 530 applied

British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281 (Ch): dictum at 286 applied

Dualit Ltd's (Trouser Shapes) Trademark Application [1999] RPC 890 (Ch D): referred to E

Office Cleaning Services v Westminster Window and General Cleaners [1946] 63 RPC 39 (HL): dictum at 43 applied

Reckitt and Colman Products Ltd v Borden Inc and Others [1990] RPC 341 (HL) ([1990] 1 All ER 873): dictum at 880g – h applied

Specsavers International Healthcare Ltd v Asda Stores Ltd [2012] EWCA Civ 24: dictum in para [87] applied F

The Canadian Shredded Wheat Co Ltd v Kellogg Co of Canada Ltd (1938) 55 RPC 125 (PC): dictum at 145 applied

Unilever plc's Trade Marks [1984] RPC 155 (Ch): referred to.

European Union

Anheuser-Busch Inc v Budejovicky Budvar NP [2004] ECR I-10989 (ECJ): G referred to

Lloyd Schuhfabrik Meyer & Co GmbH v Klijsen Handel BV [1999] All ER (D) 652 ([1999] ECR I-3819; [2000] FSR 77): referred to

LTJ Diffusion SA v Sadas Vertbaudet SA [2003] ETMR 83 (ECJ): applied

Sabel BV v Puma AG, Rudolf Dassler Sport [1998] RPC 199 (ECJ): dictum at 224 applied H

Smart Technologies v OHIM [2012] ETMR 49: referred to

Windsurfing Chiemsee Produktions-und Vertriebs GmbH v Boots-und Segelzubehör Huber & Attenberger [1999] ETMR 585: referred to.

United States I

20th Century Wear Inc v Sanmark-Stardust Inc 747 F 2d 81 (224 USPQ 98) (2d Cir 1984): applied

Abercrombie & Fitch Co v Hunting World Inc 537 F 2d 4 (189 USPQ 759) (2nd Cir 1976): referred to

Bose Corp v QSC Audio Products Inc 293 F 3d 1367 (63 USPQ 2d 1303) (Fed Cir 2002): applied J

2015 (1) SA p368

Boston Beer Co Ltd Partnership v Slesar Bros Brewing Co Inc 9 F 3d 175 (28 USPQ 2d 1778) (1st Cir 1993): applied A

Bristol-Meyers Squibb Co v McNeil-PPC Inc 973 F 2d 1033 (24 USPQ 2d 1161) (2nd Cir 1992): referred to

Citigroup Inc v Capital City Bank Group Inc 637 F 3d 1344 (98 USPQ 2d 1253) (Fed Cir 2011): applied

Clipper Cruise Line Inc v Star Clippers Inc 952 F 2d 1046 (8th Cir 1992): referred to B

Envirotech Corp v National Service Industries Inc 197 USPQ 292 (TTAB 1977): referred to

Estate of PD Beckwith Inc v Commissioner of Patents 252 US 538 (1920): referred to

Estee Lauder Inc v The Gap Inc 108 F 3d 1503 (42 USPQ 2d 1228) (2nd Cir 1997): referred to C

Haughton Elevator Co v Seeberger 85 USPQ 80 (Comm Pat 1950): referred to

In re Apparel Ventures Inc 229 USPQ 225 (TTAB 1986): applied

In re Bed & Breakfast Registry 791 F 2d 157 (229 USPQ 818) (Fed Cir 1986): applied D

In re Binion 93 USPQ 2d 1531 (TTAB 2009): referred to

In re Chamber of Commerce 675 F 3d 1297 (102 USPQ 2d 1217) (Fed Cir 2012): referred to

In re Christian Dior SA 225 USPQ 533 (TTAB 1985): applied

In re Cynosure Inc 90 USPQ 2d 1644 (TTAB 2009): referred to E

In re Decombe 9 USPQ 2d 1812 (TTAB 1988): referred to

In re Dixie Restaurants Inc 105 F 3d 1405 (41 USPQ 2d 1531) (Fed Cir 1997): applied

In re Gyulay 820 F 2d 1216 (3 USPQ 2d 1009) (Fed Cir 1987)...