Online Lottery Services (Pty) Ltd and Others v National Lotteries Board and Others

• Jurisdiction: South Africa
• Judge: Harms DP, Brand JA, Heher JA, Ponnan JA and Tshiqi AJA
• Judgment Date: 07 September 2009
• Citation: 2010 (5) SA 349 (SCA)
• Docket Number: 536/2008
• Hearing Date: 17 August 2009
• Counsel: P Ginsburg SC (with O Salmon) for the appellants. L Bowman SC (with B du Plessis) for the first and second respondents. No appearance for the third respondent (the Registrar of Trade Marks).
• Court: Supreme Court of Appeal

Online Lottery Services (Pty) Ltd and Others v National Lotteries Board and Others
2010 (5) SA 349 (SCA)

2010 (5) SA p349

Citation	2010 (5) SA 349 (SCA)
Case No	536/2008
Court	Supreme Court of Appeal
Judge	Harms DP, Brand JA, Heher JA, Ponnan JA and Tshiqi AJA
Heard	August 17, 2009
Judgment	September 7, 2009
Counsel	P Ginsburg SC (with O Salmon) for the appellants.; L Bowman SC (with B du Plessis) for the first and second respondents.; No appearance for the third respondent (the Registrar of Trade Marks).

B

Flynote : Sleutelwoorde

Intellectual property — Trademark — Registrability of mark — Whether mark capable of distinguishing — Word 'lotto' — Word already in general circulation and possessing ascertainable generic and descriptive meaning — C Should be open to use by all competitive undertakings in gaming industry — Registering party unable to enhance inherent absence of power to distinguish by creating a game to which it chose to apply generic description 'lotto' — Mark 'LOTTO' not registrable and expunged from register — Trade Marks Act 194 of 1993, s 9.

Trade and competition — Passing-off — Reasonable likelihood of confusion — D Factors excluding — Passing-off by use of descriptive term — If term denoting name of item itself, it cannot simultaneously denote any particular trade source — Even if claimant able to prove that prima facie descriptive term having acquired degree of secondary meaning, scope of protection for mark is narrower than for wholly arbitrary term. E

Headnote : Kopnota

The first and second respondents (the registered proprietor of the LOTTO trademark and authorised operator of the South African national lottery, respectively) contended in the North Gauteng High Court that the appellant (On-Line) was infringing the LOTTO trademark by advertising its F online business as 'LottoFun', and, what was more, unfairly competing with them by passing off its online 'LottoFun' business (which was to facilitate the purchase of national lottery tickets) as that of the respondents. In response On-Line sought (by way of counter-application) the expungement of the second respondent's LOTTO trademark on the ground of lack of distinctiveness. The High Court held in favour of the respondents, granting their application for various interdicts against On-Line, while G denying the On-Line's counter-application. On the trademark issue the respondents had argued (1) that the word 'lotto' had, by the peculiar use to which they had put it since its registration in 1991, become distinctive; and (2) that the word had in any event been registrable even prior to such use because it had in 1991 lacked any common or cohesive meaning in the public mind sufficient to preclude the right of registration. On the unlawful H competition issue the respondents had argued that On-Line's use of the name 'LottoFun' had created deception and confusion in the mind of the public between its services and those offered by the first and second respondents. On-Line appealed to the SCA.

On the trademark issue the SCA held as follows in finding in favour of On-Line that first respondent's LOTTO mark had to be expunged from the Register I of Trade Marks:

In order to be registrable as intended in s 9 of the Trade Marks Act 194 of 1993, a trademark must be capable of distinguishing the origin of the goods or services to which it applies from that of other (usually competitive) goods and services. Use does not, however, equal distinctiveness: common words are naturally capable of use in relation to the goods or services of any trader J

2010 (5) SA p350

A no matter how extensively such common words have been used by any individual trader of goods or services of that class. (Paragraphs [13] and [15] at 354B and 354F - H.) By adopting the word 'lotto' simpliciter as a trademark the first respondent had appropriated a word already in general circulation (with an ascertainable generic and descriptive meaning) over which it could have no monopoly and which should have been open to use B by all competitive undertakings in the gaming industry. The word contributed nothing to identifying the source of the service which it promoted. Moreover, the first respondent could not have enhanced the inherent absence of power to distinguish by creating a game to which they chose to apply the generic description 'lotto'. (Paragraph [32] at 357E - G.) Another problem for the respondents was that the breadth of the registration, by C essentially embracing all forms of lotteries, covered also types of gambling bearing no relationship to the original 'lotto' concept. (Paragraph [34] at 358G - H.)

The SCA then made the following general points in relation to the passing-off issue before finding in favour of On-Line, that there was, on a conspectus of the evidence, no reason for any member of the public to believe that its D LottoFun business was connected with the national lottery or the respondents:

Passing-off protects a trader against deception arising from a misrepresentation by a rival concerning the trade source or business connection of the rival's goods or services. A court will not easily find that a descriptive name has become distinctive of the business or products of the person using them, and will not E give what amounts to a monopoly in such words to one trader at the expense of others. If a term is descriptive in the sense that it is the name of the goods themselves, it cannot simultaneously denote any particular trade source, and therefore a party cannot be prevented from unambiguously using a descriptive term in its original descriptive sense unless it has wholly lost that descriptive sense and become wholly distinctive of the claimant. Even if the F claimant succeeds in proving that a prima facie descriptive term has acquired some degree of secondary meaning, the scope of protection for the mark is narrower than for a wholly arbitrary term. Relatively minor differences will suffice to distinguish the defendant's goods or business when both use a mark which is descriptive of the goods or services they provide. This applies even though the defendant is using the closely similar term in a trademark sense. G (Paragraphs [37] - [39] at 359F - 360C.)

Cases Considered

Annotations

Reported cases

Southern Africa

Appalsamy v Appalsamy and Another 1977 (3) SA 1082 (D): referred to

Burnkloof Caterers (Pty) Ltd v Horseshoe Caterers (Green Point) (Pty) Ltd 1976 (2) SA 930 (A): referred to H

Cadbury (Pty) Ltd v Beacon Sweets & Chocolates (Pty) Ltd and Another 2000 (2) SA 771 (SCA): dictum at 779C - D applied

Caterham Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd and Another 1998 (3) SA 938 (SCA) ([1998] 3 All SA 175): dictum in para [29] applied

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

Hollywood Curl (Pty) Ltd and Another v Twins Products (Pty) Ltd (1) 1989 (1) SA 236 (A): dictum at 249J applied

Reckitt & Colman SA (Pty) Ltd v SC Johnson & Son SA (Pty) Ltd 1993 (2) SA 307 (A): dictum at 315B applied J

2010 (5) SA p351

Sea Harvest Corporation (Pty) Ltd v Irvin & Johnson Ltd 1985 (2) SA 355 (C): A dictum at 360B - D applied

Selected Products Ltd v Enterprise Bakeries (Pty) Ltd 1963 (1) SA 237 (C): referred to

Truck and Car Co Ltd v Kar-N-Truk Auctions 1954 (4) SA 552 (A): referred to.

England B

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

Re Registered Trade Mark 'Jeryl Lynn' [1999] FSR 491 (Ch) at 497: dictum in para [11] applied

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

Statutes Considered

Statutes

The Trade Marks Act 194 of 1993, s 9: see Juta's Statutes of South Africa 2009/10 vol 2 at 2-216. D

Case Information

Appeal from a decision in the North Gauteng High Court, Pretoria. The facts appear from the judgment of Heher JA.

P Ginsburg SC (with O Salmon) for the appellants.

L Bowman SC (with B du Plessis) for the first and second respondents.

No appearance for the third respondent (the Registrar of Trade Marks). E

Judgment

Heher JA (Harms DP, Brand JA, Ponnan JA and Tshiqi AJA concurring):

[1] This appeal depends in the main on the answers to three questions: F Should the registered trademark 'LOTTO' be removed from the trademark register because it was wrongly entered and wrongly remains on the register as envisaged by s 24(1) of the Trade Marks Act 194 of 1993? Did the appellant in conducting its business pass that business off as that of the National Lotteries Board or as connected in the course of trade with the Board? Did the business carried on by the appellant involve the selling of tickets for the National Lottery which resulted in contraventions G of ss 56 and 57 of the Lotteries Act 57 of 1997?

[2] The Board is the first respondent in the appeal. It was established in terms of s 2 of the Lotteries Act. It is the registered proprietor under the provisions of the Trade Marks Act (the Act) of the trademark LOTTO, H which is registered without disclaimer in class 36 in respect of 'services for and in connection with financial transactions', and in class 41 in respect of 'services for and in connection with lotteries', the respective registration numbers being 1991/02702/1 and 1991/02702, and the date of registration in each case being 17 April 1991. [1] The second respondent in the appeal, Uthingo Management (Pty) Ltd (Uthingo), became the I

2010 (5) SA p352

Heher JA

A proprietor of the class 36 trademark by assignment from the previous owner with effect from 9 September 1999 and on 11 February 2000 assigned its interest to the Board, becoming at the same time, by a written agreement, a permitted user of the trademark. Thereafter lottery services...