Page 9 – CIP – The Anton Mostert Chair of Intellectual Property

Section 2 of the Constitution of the Republic of South Africa, 1996, provides that it is the supreme law of the country and that any law inconsistent with it is invalid. This provision creates the necessity to interpret the Copyright Act in a manner consistent with the Constitution at the risk of the Act, or particular provisions of it, being declared to be invalid. On the other hand, section 36 provides that the rights in the Bill of Rights (Chapter 2 of the Constitution, comprising sections 7-38, which detail the fundamental human rights) may be limited in terms of law of general application to the extent that the limitation is reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom, taking into account all relevant factors. Specific factors to be taken into account are enunciated and these include the nature of the right, the importance of the limitation, its nature and extent, the relation between the limitation and its purpose, and any possible less restrictive means of achieving that purpose.

It is submitted that the fact that intellectual property is protected on a world-wide basis and had been comprehensively protected in South Africa for around a century prior to the adoption of the Constitution, and that South Africa is a member of, and is bound by, certain international conventions dealing with intellectual property which oblige it to grant protection comprising certain minimum standards, are relevant factors as contemplated in Section 36. This provision is supplemented by section 39(1) in terms of which, when interpreting the Bill of Rights, a court must consider international law and may consider foreign law.

In the result it is necessary that a balance must be achieved between the tenets of intellectual property law and the Bill of Rights which allows intellectual property law to be interpreted in accordance with the accepted principles of this branch of the law, as applied internationally, in a manner consistent with the Bill of Rights.

IP AS A CONSTITUTIONAL RIGHT

The fundamental human rights comprised in the Bill of Rights include the following rights which may be considered to play some role in applying intellectual property law: privacy (section 14); freedom of expression (section 16); property (section 25); and access to information (section 33)

The question arises whether intellectual property, and in particular copyright, enjoys protection under the South African Constitution as a fundamental human right or otherwise. Is intellectual property, or the right to hold it, a fundamental human right? If not, is intellectual property protected in some other way in the Bill of Rights. How does the Bill of Rights impact on the Copyright Act?

Article 27(2) of the Universal Declaration of Human Rights states: ‘Everyone has a right to the protection of the moral and material interest resulting from any scientific, literary or artistic production of which he is the author.’ The Universal Declaration was a resolution of the General Assembly of the United Nations passed in 1948 and had no binding force on member countries in the sense that it did not create enforceable obligations on adherence to the declaration. It, however, gave rise to an international covenant, namely the International Covenant on Economic, Social and Cultural Rights, 1966, which is an international treaty binding on its members. The aforementioned article of the Universal Declaration is echoed in Article 15 of the International Covenant. Given the wide acceptance of the Universal Declaration and the International Covenant (together in addition with the International Covenant on Civil and Political Rights, 1966) as being the embodiment of fundamental human rights it can be argued that the right to hold intellectual property rights, and more particularly copyright, is a universally accepted fundamental right. While South Africa did not support the Universal Declaration, it is a party to the International Covenant.

When called upon to adjudicate upon the validity of the South African Constitution as part of the process of its adoption, and in particular upon the question of whether it provided for all universally acceptable fundamental rights, freedoms and civil liberties in the Bill of Rights (as it was mandated to do), the Constitutional Court – in the Certification case – held that the right to hold intellectual property was not universally accepted as a fundamental right and therefore did not require to be recognised in the Bill of Rights.[1] The soundness of this decision is open to serious question.[2] The court sought to justify its decision by explaining that intellectual property is a form of “property” which is covered by section 25 of the Constitution and it was therefore not necessary for it to be dealt with separately in the Bill of Rights.

IP AS PROPERTY UNDER THE CONSTITUTION

For the present purposes, the relevant part of section 25 of the Constitution reads as follows;

“(1) No one may be deprived of property except in terms of a law of general application, and no law may permit arbitrary deprivation of property.

(2) Property may be expropriated in terms of law of general application

(a) for a public purpose or in the public interest;and

(b) subject to compensation, the amount of which and the time and manner

of payment of which have either been agreed to by those affected or

decided or approved by the court.

(3) ………

(4) For the purposes of this section-

(a) the public interest includes the nation’s commitment to land reform, and

to reforms to bring about equitable access to all South Africa’s natural

resources; and

(b) property is not limited to land”

It is apparent from a reading of the section that its primary focus is on immovable property (land) and more particularly the deprivation or expropriation of such property. The inclusion of sub-section (4)(b) appears to have been something of an afterthought as a catchall to include property in general within its ambit. No doubt the Constitutional Court had this provision in mind when it said that section 25 covered intellectual property. On this premise, the protection granted to intellectual property by the section is of a very limited ambit and is confined essentially to preventing the taking away of existing property. It places no obligation on the state to continue facilitating the creation of intellectual property in the future. The scope of the protection, such as it is, is rather unsatisfactory. Be that as it may, a basis was created for the argument to be advanced that intellectual property enjoys (a measure) of protection in the Bill of Rights and is constitutionally enshrined

**THE LAUGH IT OFF CASE**

In Laugh it Off Promotions CC v The South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) [3] the Constitutional Court held that the right to freedom of expression (enshrined in section 16(1) of the Constitution) and intellectual property rights (more especially trade mark rights, which were the subject matter of the case) enjoyed equal status under the Constitution. It is now generally recognised (against the background of the view expressed by the court in the Certification case) that intellectual property falls within the concept of “property” as used in section 25 of the Constitution. In support of this acceptance it must be pointed out that the case in the Constitutional Court was an appeal from a decision of the Supreme Court of Appeal and that that court had held that

“[t]rade marks are property, albeit intangible or incorporeal. The fact that property is intangible does not make it of a lower order. Our law has always recognised incorporeals as a class of things in spite of theoretical objections thereto,,,,,” [4]

The Constitutional Court did not challenge this dictum and must be taken to have approved it. Judicial recognition was thus extended to the proposition that trade marks and other intellectual property rights, including copyright, constitute property for the purposes of section 25 of the Constitution. This principle has given rise to a claim that the statutory prohibition of the use of a registered trade mark would amount to depriving the proprietor of that registered trade mark of an item of property as contemplated in section 25 of the Constitution and that the legislation in question would be invalid. [5]

**THE GIDANI CASE**

The contention that the principles regarding the constitutional status of trade marks as property under the Constitution espoused by the Constitutional Court in the Laugh if Off case apply equally to copyright has recently been endorsed by the High Court in National Soccer League v Gidani (Pty) Ltd. [6]

In the Gidani case it was argued by the defendant that its unauthorised use of the copyright works that were the subject matter of the case (soccer fixture lists) was excused by reliance on the right of “freedom to receive or impart information or ideas” provided for in section 16(1)(b) of the Bill of Rights. The court followed the approach of both the Supreme Court of Appeal and the Constitutional Court in the Laugh it Off case that the relevant provisions of the Copyright Act must be construed in the light of the Constitution and in a manner that does not unduly trample on the defendant’s right of freedom of expression; and that its right of freedom of expression must be weighed up against the copyright owner’s right to intellectual property. The Copyright Act must be interpreted in such a way that it is least destructive of free-expression rights. The Constitutional Court, in the Laugh it Off case, expressed this principle by saying that the Trade Marks Act should be viewed and understood “through the prism of the Constitution”. [7]

In dismissing the defendant’s constitutional defence, the court in the Gidani case found that

“…..the defendant’s conduct is not a form of freedom of speech or expression identified for protection by the Constitution. On the contrary all indications or pointers point or lead to the appropriation on an intellectual property asset belonging to the plaintiff, not for purposes of parody or lampooning or for other social purposes, but instead for no other purpose other than to generate commercial gain for itself. Section 16(1)(a) or (b) of the Constitution on any construction does not permit commercial exploitation of another’s intellectual property under the guise of supposedly informing the public.” [8]

CONSTITUTIONAL DEFENCE

In the Laugh it Off case the Supreme Court of Appeal approached the Appellant’s freedom of expression defence on the following basis: it made a prima facie finding of trade mark infringement on standard trade mark principles. Having done so, it then examined whether the appellant’s constitutional right of freedom of expression provided a defence. It held that such a defence did not avail the appellant and held that trade mark infringement had taken place. The Constitutional Court criticised this approach and said that the right of freedom of speech was not a defence which excused infringement but was rather a consideration that should be taken into account when determining whether infringement had occurred at all. In adopting this approach it interpreted section 34(1)(c) of the Trade Marks Act in a Constitution friendly manner (through the prism of the constitution) and reached the conclusion that no infringement had been perpetrated.

It is submitted that this approach was all well and good in the case of trade mark infringement in terms of section 34(1)(c), which requires the court to decide whether conduct was unfair, and, thus, provided an opportunity for equitable considerations to be taken into account and a value judgment to be made. What, however, is the position where the criterion for infringement of a right is a purely logical deduction and does not inherently provide an opportunity for a weighing up of contrary interests (for instance, in the context of trade mark infringement, the unauthorised use of a mark identical to a registered mark in relation to the goods for which that mark is registered)? How should such a provision be interpreted so that it is consistent with the Constitution?

In this instance it seems that the only alternative would be to view a counterbalancing constitutional right as a defence to a prima facie finding of infringement – the very approach which the Constitutional Court condemned. However, in the light of the pronouncement of the Constitutional Court in the Laugh it Off case, it would appear that a copyright infringer can get no solace from the Bill of Rights unless there is the possibility of interpreting the relevant provisions of the Copyright Act pertaining to the claim in a Constitution friendly manner that enables a reliance on a constitutional defence to be advanced. A constitutional defence cannot simply be mounted, as it were, out of the blue if there is no peg in the text of the Copyright Act on which it can be hung.

A defensive argument which is not foreshadowed in the text of the Act cannot be raised. The court cannot, for instance, read into section 12 of the Copyright Act (dealing with exemptions form copyright infringement) a provision to the effect that the defendant is excused from infringement when relying on his constitutional right of freedom of expression, when no such provision exists. The defendant’s only other recourse would be to launch a constitutional challenge to the Copyright Act, or the relevant provisions of it, on the grounds of non-compliance the Constitution.

It is likely that constitutional issues, particularly by way of counter arguments or defences to copyright infringement claims, are going to be increasingly raised in copyright litigation in the future. Jurists, litigants and the court will have to become adept at viewing and interpreting the Copyright Act through the prism of the Constitution.

Owen Dean

[1] In re Certification of the Constitution of the RSA 1996 1996 (4) SA 744 (CC) at p 799.

[2] See OH Dean ‘The case for Recognition of Intellectual Property in the Bill of Rights’ 1997 (60) THRHR 105. In Laugh It Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International and Freedom of Expression Institute 2006 (1) SA 144 (CC), a case dealing with trade mark infringement by dilution, the Constitutional Court in effect gave equal status to a statutory trade mark right and the right of freedom of expression in terms of the fundamental rights under the Constitution. In this regard see OH Dean ‘Trade Mark Dilution Laughed Off’ 2005 (October) De Rebus 18.

[3] 2006 (1) SA 144 (CC). For a discussion of this case, see OH Dean “Trade Mark Dilution Laughed Off” (2005) October De Rebus 18.

[4] Laugh it Off Promotions CC v The South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2005 (2) SA 46(SCA) paras [10]-[11].

[5] See OH Dean “Deprivation of Trade Marks through State Interference in their Usage” South African Intellectual Property Law Journal (2013) 1.

[6] 2014 JDR 0523 (GSJ) para [96].

[7] Laugh it Off Promotions CC v The South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC) para [43].

[8] National Soccer League v Gidani para [108].

You wait ages for a reported judgment concerning “needletime” royalties pursuant to section 9A of the Copyright Act, and then two come along at approximately the same time. There were two reported decisions, one, an enquiry by the Copyright Tribunal, and, the other, a judgment by the Supreme Court of Appeal following an appeal from the Copyright Tribunal. Needletime royalties are the amounts charged for copyright licences for the playing of sound recordings which are audible to the members of the public. Besides the courts’ consideration of the methods used for calculating the royalties in the respective matters, issues concerning the procedure to be followed by the South African Music Performance Rights Association (“SAMPRA”), and the Copyright Tribunal, in determining the needletime royalties were also clarified. Furthermore, there were also findings concerning the powers of SAMPRA and the Copyright Tribunal.

SAMPRA is the only accredited collecting society pursuant to the Collecting Society Regulations (promulgated on 1 June 2006 under GN 517 in GG 28894), in terms of section 9A of the Act and in terms of section 56(1)(b) of the Performers’ Protection Act 11 of 1967, for the Recording Industry of South Africa (RISA).

In Foschini Retail Group (Pty) (Ltd) & Others v South African Music Performance Rights Association [2013] ZAGPPHC 304 (the Foschini case) a group of retailers (the “retailers”) who played background music in their stores referred their dispute concerning the royalty charged by SAMPRA to the Copyright Tribunal. The case of National Association of Broadcasters v South African Music Performance Rights Association [2014] ZASCA 10 (the NAB case), on the other hand, was an appeal from a determination of the Copyright Tribunal to the Supreme of Appeal (the SCA) concerning the royalty charged by SAMPRA to broadcasters for the playing of sound recordings administered by it on behalf of their copyright owners.

Power of SAMPRA to determine needletime royalties

In the Foschini case, the court held that pursuant to section 9A(1)(b) of the Copyright Act, and regulation 7(3) of the Collecting Society Regulations, SAMPRA is obliged to negotiate, and agree, the royalty with relevant users. In the absence of an agreement between SAMPRA and a relevant user, SAMPRA does not have the power to unilaterally determine the applicable royalty. If the parties fail to reach agreement, the royalty must be determined by the Copyright Tribunal established in terms of s 29(1) of the Copyright Act or by way arbitration in terms of the Arbitration Act. A royalty unilaterally determined by SAMPRA is invalid.

Power of the Copyright Tribunal and procedure to determine needletime royalties

As the Collecting Society Regulations do not prescribe the procedure for the adjudication of a royalty rate, the licensing scheme provisions in Chapter 3 of the Copyright Act, subject to any necessary changes required by the context, should apply to disputes concerning the determination of the applicable royalty by the Copyright Tribunal pursuant to section 9A of the Copyright Act. Thus, in the absence of an agreement between SAMPRA, as the collecting society, and a user concerning the amount of the royalty pursuant to section 9A, section 31(5) not only gives the Copyright Tribunal the authority to determine the royalty payable but it also goes further and imposes an obligation on the Copyright Tribunal to determine the relevant royalty rate.

The Supreme Court of Appeal held that the Copyright Tribunal is competent to determine its own jurisdiction, that is, whether it has the statutory power to deal with a particular issue. If the Copyright Tribunal makes a mistake in determining its jurisdiction, its decision could be challenged on appeal. Having said that, the Copyright Tribunal’s powers are narrowly defined, and, for example, it does not have the power to make a determination concerning the date from when the relevant royalties as determined by it would be due. The court also held that if the Copyright Tribunal’s royalty determination was based on incorrect facts, and, if it ignored relevant factors, its determination could be overturned and substituted.

Method for determining needletime royalties

The correct basis for determining needletime royalties appears to be to set them at a level which appropriately remunerates the copyright owners, while considering the interests of the users of their works, so as to maximise public welfare. Public welfare appears to be an express policy consideration as the Supreme Court of Appeal reduced the royalty rate to be paid by broadcasters determined by the Copyright Tribunal because of its negative financial implications for the country as a whole: as the majority of the copyright owners tended to be foreigners, the greater portion of the royalty payments were remitted abroad. Thus, it would be inappropriate to simply set the royalty with reference to international practice, or by comparison with that used in another jurisdiction, without considering its domestic effects. Furthermore, there appears to be a recognition of the fact that the public playing of sound recordings for which needletime royalties would be payable benefit the copyright owners of such recordings as they serve to promote the sales of such works, and, that it is not simply the users of such records who seek to derive a benefit from such use. Given the emphasis on the balancing of the various interests, and the mutual benefit from the use of the sound recordings, a market-based approach is considered to be inappropriate to determine the royalty; a royalty on the basis of some sort of benchmarking should rather be used.

The consideration of factors such as the country’s balance of payments seems to be questionable. A collecting society such SAMPRA will also license a significant amount of local content, which means that these local copyright owners are maybe receiving lower royalties than would be the case if such a factor was not included in the determination of royalties. Interestingly, from an international perspective, sound recordings are expressly excluded from the principle of national treatment (a country which is a member of a multilateral treaty embracing copyright is required to grant to foreign works the same measure of protection bestowed on domestic works), instead, the principle of reciprocity applies. Accordingly, if a particular jurisdiction discriminates against South African copyright owners of sound recordings by stipulating lower royalty rates on such works than those paid to its own copyright owners, we could similarly discriminate and allow for lower royalty rates for copyright owners from such territory than that paid to local owners. However, in the absence of such a situation, it appears that our local copyright owners of sound recordings would continue receiving lower royalties. There was, however, no suggestion that SAMPRA, which is, effectively, a monopolist was abusing its dominant position.

There appears to be a distinct preference for calculating the royalty with reference to simple criteria, rather than with reference to a factor which may be difficult to quantify. Thus, in the Foschini case, the Copyright Tribunal agreed with SAMPRA that the royalty should simply be determined with reference to the total area of a retail store (and not simply the area to which customers had access). It rejected factors such as the economic value which the background music added to retailers’ businesses when played in their stores, or the number of consumers attending the retailers’ stores, for calculating the royalty. The Supreme Court of Appeal in the NAB case, in a similar vein, rejected the notion that, in the context of radio broadcasting, audience-reach should be used to determine the royalty, or that royalty rates should differ for the different times of the day, because of the difficulties of valuation. It held that the royalty should be determined at a flat rate, based on a broadcaster’s actual revenue and its fraction of editorial content, rather than on notional revenue.

In both cases, the royalty initially determined by SAMPRA was, arguably, significantly reduced. In the Foschini case, the royalty was reduced to about a third of what had been initially stipulated for the various sizes of premises. Even more significant, the Copyright Tribunal capped the royalty for retail stores with an area greater than 1500m². Thus, while SAMPRA’s royalty for a store with an area of 10,000m² would have been an amount of R11,000 per annum, the substituted royalty would only be R1,220 per annum. In the NAB case, SAMPRA had initially stipulated a maximum royalty rate of ten percent of revenue, which was reduced to seven percent by the Copyright Tribunal, then further reduced to three percent of revenue by the Supreme Court of Appeal.

It is possible that we may not have wait too long for some further case law in relation to needletime royalties as the retailers are apparently appealing the determination by the Copyright Tribunal in the Foschini case.

Sadulla Karjiker

Prof Frederick Mostert, extraordinary Professor of IP Law and member of the Chair of Intellectual Property Law at Stellenbosch University, is one of the five 2015 inductees to the IP Hall of Fame. Prof Mostert is past president of the International Trademark Association (INTA) and former chief intellectual property counsel of luxury group Richemont. He is also a research fellow at St Peter’s College, University of Oxford, and guest professor at Peking University.

Prof Mostert joins a list of the most eminent IP scholars and practitioners in the world, including Nicola Tesla, Prof Paul Goldstein and fellow IP blogger Jeremy Philips.

Many congratulations to Prof Mostert and all of the 2015 inductees!

Get up, stand up. For Music

–

This is the theme of World IP Day 2015, celebrated worldwide on 26 April under the auspices of the World Intellectual Property Organization (WIPO). This year the focus is on the protection and promotion of musical works and performing artists. As WIPO explains:

“When Bob Marley and the Wailers laid down the opening track on Burnin’ in a Kingston recording studio some four decades ago, they likely had little idea how far their simple, straightforward tune would resonate, becoming an enduring international anthem for human rights.

Such is the power of music. Since the earliest rhythms emerged and evolved into this most universal of creative expressions, music has moved us. From Beijing opera to the Vienna Philharmonic, from Bamako blues to Chicago house, from raga to raï to township to dubstep, music transcends borders and connects with some primal beat within all of us. Even when we are not listening, music is often playing over in our minds – a soundtrack to our thoughts.

The music we enjoy today comes from the inspiration and hard work of thousands of creative people around the world – singers and songwriters; musicians and publishers; producers, arrangers, engineers and many others. Its breadth and variety results from an unprecedented accessibility to musical genres and styles – all at the tap of a screen – that brings us new hybrid forms almost daily. And the technologies through which we access music change almost as quickly – as do the business models that support them. Downloading or streaming, purchase or subscription, direct sale from creator to consumer – all options are on the table.

What is the future of our relationship with music? How will it be created and disseminated? How will we listen to it? And how will we ensure that all those involved in bringing us this universal pleasure can make a living from their craft?” (http://www.wipo.int/ip-outreach/en/ipday/)

At Stellenbosch University we will celebrate World IP Day in proudly South African style focussed on the musical works and sound recordings of South African artists. Specifically the well-known Mbube/Lion Sleeps Tonight songs which became famous as part of the soundtrack of the Disney film “The Lion King” and gave rise to the landmark copyright case led by Prof Owen Dean.

The InnovUS company, in collaboration with the Chair of Intellectual Property Law, hereby invites you to attend the commemoration of World Intellectual Property (IP) day to be held on the 17th April 2015 at the Pulp Cinema, Neelsie, Stellenbosch.

On 20 March 2015 the Department of Science and Technology published the first draft of the Protection, Promotion, Development and Management of Indigenous Knowledge Systems Bill, 2014 (the “IKS Bill) and called for comments.

The Chair of IP Law has responded to this call and delivered extensive representations on the IKS Bill authored by two of its members, Prof Karjiker and Dr Kleyn.

The full text of Prof Sadulla Karjiker’s comments is available here.

The full text of Dr Madelein Kleyn’s comments is available here.

Below follows an overview of the IKS Bill in its current form.

Following the Intellectual Property Laws Amendment Act, 2013 (the “IPLA Act”), the IKS Bill is the second attempt to introduce legislation seeking to introduce protection for indigenous (or traditional) knowledge. However, the IKS Bill differs fundamentally from the approach taken in the IPLA Act.

The IKS Bill seeks to provide special (sui generis) protection for indigenous knowledge, rather than seeking to provide for such protection in terms of the existing types of intellectual property law by Procrustean means, as is sought to be done by the IPLA Act. While the IKS Bill is by no means without its problems, it proceeds from the correct starting point, namely, that nature of indigenous knowledge is fundamentally different to that protected by current intellectual property law. The reason we consider it appropriate to protect intellectual property, such as copyright and patents, is that it incentivises individuals and firms to create the kinds of products protected by such rights, and thereby society benefits. Without such protection much of such creativity may not take place. A very important aspect of such protection is that it is for a limited period; after the period of protection such works are available for use by any person. In other words, such works are said to form part of the public domain after an initial period of protection. Thus, the purpose of intellectual property law, generally, and rather paradoxically, is to increase the size of the public domain.

In contrast, the motivation for seeking the protection of indigenous knowledge is entirely different. Such protection does not, and cannot, serve as an incentive for the creation of such knowledge because, by their very nature, the types of work (or knowledge) which are sought to be protected already exist. From a social perspective, it is important to note that, not only does the subject matter sought to be protected already exist, at present it is in the public domain, as is available for anyone to use (on the assumption, of course, that such works are not protected by existing intellectual property laws). What the protection of indigenous knowledge seeks to achieve is the perceived immoral, or unethical, misappropriation of such information. This perception necessarily involves a value judgement, which invariably involves political considerations. However, what is not open to questioning is that by protecting such subject matter is that it seeks to impose a permanent cost will be imposed on society as it will reduce the size of the public domain.

It is because of this potential cost on society that every effort must be made to clearly define what will be protected as indigenous knowledge, so as to ensure that we do not permanently exclude subject matter which should ideally be available to all. We should also seek to avoid such legislation being applicable to works or knowledge produced in the future, and to works which are currently protected by intellectual property law. It should be expressly recognised that the protection for indigenous knowledge sought to be introduced is an exceptional dispensation: protection of indigenous knowledge is considered necessary because of a perception that certain types existing knowledge or expression are deserving of special protection. In other words, there should be no good reason for the need to protect future indigenous works, that is, indigenous works which do not currently exist. Future creative endeavours should solely be protected by existing intellectual property law, if they satisfy the requirements for such protection. The only types of works or knowledge that should be protectable under legislation for the protection of indigenous knowledge, if any, are those which currently exist, and which are not currently protected by intellectual property law.

What should be happening simultaneously with the enactment of the TKS Bill is that a concerted effort should be made to educate all South Africans, through a public education initiative, about the existing types of intellectual property. It is only by embracing intellectual property protection – rather than by seeking to continuously provide for “special cases,” as is being sought to be done with indigenous knowledge – that we will spur on the required intellectual activity that is an integral part of the economic growth which we should all be seeking to encourage.

In any event, the IKS Bill needs much refinement for it to achieve its objective, which is understandable. South Africa is one of the few countries which has sought to enact legislation concerning indigenous knowledge in the absence of an international consensus on the topic. The lack of international consensus is in no small part due to the difficulty in defining what should be protectable as indigenous knowledge. Therefore, we would be best served to proceed with caution and properly consider every aspect of the proposed legislation. It will almost certainly be the case that our legislation will be closely scrutinised by the international community. We can either take this opportunity to showcase our capabilities, or embarrass ourselves by passing legislation which is ill-considered, and would do more harm to the idea of protecting indigenous knowledge. If what we produce is well-considered and can stand up to scrutiny, it may become the standard for protecting indigenous knowledge. The reason why it is important that an international consensus should emerge is that national legislation can only seek to protect indigenous knowledge within the particular territory. For example, in our case, if legislation protecting indigenous knowledge is introduced, it would mean that persons in South African would be prevented from freely using indigenous works, but persons elsewhere may do so. By introducing such legislation in the absence of an international consensus, we would only have succeeded in imposing restrictions on person in South Africa, and which will discourage the use of such works. For example, there is already a concern among publishers about producing works concerning South African folklore, which may be considered to be indigenous knowledge. If there are not sufficient exemptions, this may lead to an unfortunate decline in such material in educational material due to the costs which would now have to be incurred in gaining the necessary permissions for the inclusion of such material. It may thus be the case that in the future foreigners have more access to, and knowledge, about our folklore than our children, as they are not affected by any legislation which we seek to introduce, in absence of international consensus.

If the IKS Bill is to be effective in protecting indigenous knowledge, let alone becoming the standard for such protection, it still needs considerable work. Apart from the aforementioned principles, there are still a number of technical problems which should be addressed through a more rigorous drafting process. For example, the IKS Bill should provide for a clear registration system for the protection of indigenous knowledge, and definitive criteria for eligible subject matter. There also needs to be clarity about ownership, and how competing claims are to be resolved. Given the fact that some claims for indigenous knowledge may be said to originate decades or centuries ago, a well-defined dispute resolution system has to be provided for, which should allow for periods of opposition before any rights are granted. As the protection of indigenous knowledge imposes a cost on society, great care should be taken to ensure that such costs are minimised by there being sufficient exceptions for so-called fair dealing, such as research or education.

Having said all the above, it is worth repeating that the fact that the IKS Bill seeks to provide special protection for indigenous knowledge, rather than trying to view it as a kind of existing intellectual property, makes it infinitely more appropriate, and commendable, than the Intellectual Property Laws Amendment Act, 2013 (the “IPLA Act”).

Sadulla Karjiker

[box] Editor: Among the various pillars of the intellectual property law, perhaps the most esoteric is that of plant breeders’ rights. Despite its significant scientific and economic role, this peculiar and highly specialised field is unfamiliar to most outside the field of IP law. It is therefore with pleasure that the Chair of IP Law reproduce here a post on the Plant Breeders Rights Bill of 2015, which first appeared here on the website of Spoor & Fisher. Most appropriately, this insightful review of the Bill is written by David Cochrane, author of the chapter on plant breeders’ rights in the new textbook on South African IP law Dean & Dyer Introduction to Intellectual Property Law. Students of both specialised IP Law programmes at Stellenbosch University also have the benefit of instruction on this field of law directly from David in his capacity as fellow lecturer of the module on Patents, Registered Designs, Technology Transfer and Plant Breeders’ Rights. [/box]

The Plant Breeders’ Rights Bill was published in 2013. The public was given an opportunity to comment on the 2013 Bill, and the Department of Agriculture held workshops with interested parties.

On 23 January 2015, the Minister of Agriculture, Forestry & Fisheries gave notice that he intends to introduce the Plant Breeders’ Rights Bill, 2015 in the National Assembly shortly. A copy of the 2015 Bill can be found here.

According to the Notice, the 2015 Bill seeks the amendment of the current Plant Breeders’ Rights Act of 1976, in order to provide for: extension of protection to all genre and species; administrative matters including documentation requirements to secure a filing date, realistic periods for submission of plant material for testing and trials, provision for what constitutes confidential information; revised conditions for issuing of compulsory licences, empowering the Minister to make regulations on application and limits of farmers privilege, and fines to be determined in terms of the adjustments of Fines Act.

Infringement, Offences and Penalties

The PBR Bill intends to make the infringement of a Plant Breeder’s Right a criminal offence. Section 50(1) of the 2013 Bill provided that any person convicted for the infringement of a Plant Breeders’ Right is liable to a fine not exceeding 5 million rand or to imprisonment for a period not exceeding 10 years, or both. In the 2015 Bill, the reference to the fine not exceeding 5 million rand has been removed, but the liability for a fine or imprisonment for a period not exceeding 10 years remains.

The infringement of a Plant Breeder’s Right should not be a criminal offence. A Plant Breeder’s Right is a private right, and enforcement should be through civil procedures and not through the criminal prosecution system.

The major flaw in the criminalisation of a Plant Breeder’s Right is that the validity of a Plant Breeder’s Right is not absolute. A Plant Breeder’s Right is granted on the basis of information available to the Registrar when the Right is applied for and granted. If there is information that the Registrar is not aware of (for example a prior sale of the variety) or the Registrar makes a mistake, then the right although granted could actually be invalid. If an infringer does not have this information or the financial resources or ability to attack the validity of a Plant Breeder’s Right, it is possible for a person to be convicted of a criminal offence on the basis of a right that is invalid.

It is recognised that there is a need to have serious consequences for the infringement of a Plant Breeders’ Right, but this could be done in other ways, for example making a provision for penalty damages in the event of wilful infringement of a Plant Breeder’s Right.

The criminal offence for the infringement of a Plant Breeder’s Right must be removed from the 2015 Bill.

A new Section 52 dealing with innocent infringement has been included in the 20115 Bill. In terms of this Section, a court may refuse to award damages against a person in the action of the infringement of a Plant Breeder’s Right in the court is satisfied that at the time of the infringement, the person was not aware of and had no reasonable grounds of suspecting the existence of the right. This Section does not assist with the problem of criminal liability because it deals only with civil liability.

Section 51 of the 2015 Bill provides that the Magistrates Court has jurisdiction to impose any penalty prescribed by the Act. An action for infringement of a Plant Breeder’s Right will usually include a counterclaim for the revocation of the right. Given the complexity, these matters would best be heard in the High Court.

Section 31(c) of the 2013 Bill, which sought to make breach of a licence granted under a Plant Breeder’s Rights Bill an act of infringement, has been deleted in the 2015 Bill. This amendment is welcome.

Compulsory Licences

An application for a compulsory licence will be heard by the Registrar of Plant Breeders’ Rights. There will be guidelines for the granting of compulsory licences.

A new Section 34(1)(b) in the 2015 Bill provides that a compulsory licence may only be issued by the Registrar in the event that the Registrar is of the opinion that the granting is in the public interest. This complements Section 35(7)(a)(ii) that in order for a compulsory licence to be issued it must be established that the reasonable requirements of the public with regard to the variety in question are not being satisfied.

State may take over a Plant Breeder’s Right

Section 31 of the current Plant Breeders’ Rights Act of 1976 which provides that the State may take over a Plant Breeder’s Right, with payment of compensation to the rights holder, has been omitted from the Bill. The 2015 Bill should include a section that provides for this when it is in public interest, and in particular food security.

Access to Information

It is good to note that Section 5 of the 2015 Bill has been amended to remove the requirement that an application in terms of the Promotion of Access to Information Act 2000 is required to inspect documents submitted in connection with an application for a Plant Breeder’s Right. This is amendment is in the public interest because the documentation relating to a Plant Breeders Right must be made available to the public so that the public can know what is protected and be able to challenge the information and thus the right if necessary. Plant Breeders’ Rights applicants are still able to request that limited information, which relates to the breeding program used for developing the new variety, remains secret.

Restoration of a Plant Breeders’ Right

The 2015 Bill does not have any provision for the restoration of a Plant Breeders’ Right in the event that an annual renewal fee was not paid. It is possible for a renewal fee not to be paid unintentionally, and restoration provisions need to be included.

David Cochrane

INTRODUCTION

The Supreme Court of Appeal has been blessed for the past few decades by having in its ranks judges who have experience and expertise in the field of Intellectual Property Law. One thinks of Judges like Chris Plewman and Louis Harms who had a wealth of experience in handling IP cases while practising as advocates at the bar and in hearing such cases both in Provincial Divisions as well in the Supreme Court of Appeal. This factor contributed substantially to the quality of IP judgments emanating from the Supreme Court of Appeal generally being of a high standard. The development of IP law in South Africa benefitted from this situation. Alas, with the recent retirement of Louis Harms, the bench at the Supreme Court of Appeal has been denuded of judges who can be regarded as IP experts. The paucity of IP experience on the bench is regrettably beginning to show.

In recent times the Supreme Court of Appeal has given three IP judgments in trade mark cases which, it is respectfully submitted, have been wrongly decided and are not in harmony with the principles of trade mark law and practice.

THE PIONEER CASE

In Pioneer Foods (Pty) Limited v Bothaville Milling (Pty) Limited [2014] ZASCA 6 (12 March 2014) the court was faced with a passing off case. The dispute related to the get-up of the packaging of maize meel products. Pioneer’s product was the market leader and the label of the product was a particular combination of the word STAR, the device of a star, other wording and a certain colour combination. The court was satisfied that the label enjoyed the requisite repute to support a claim of passing off. Bothaville’s corresponding label was a similar combination of the words WHITE STAR, the device of a star, other wording and the same colour combination. At first blush the labels and general get-ups of the two products were substantially similar (if not virtually indistinguishable without a careful study and analysis). The evidence showed that the details of the features of Pioneer’s label were not unique to its product and that each of such features, when standing alone, was arguably non-distinctive. This, together with the differences in the details of the features of Bothaville’s label as compared to the Pioneer label, caused the court to conclude that the two products would not be confused with each other by virtue of their similarities of get-up. The court went to some lengths to demonstrate that there were differences between the two labels and in particular that the two star devices had differences in their appearances and shapes while the presence of the word WHITE in the Bothaville word mark served to distinguish it from the word STAR per se.

There is a plethora of case law which affirms that in these circumstances one is concerned primarily with the overall effect and impression of labels and that differences in detail are less important. The courts have been at pains to state that it is not correct to dissect and analyse labels, concentrating on their differences, particularly when must take into account the imperfect perception and/or recollection of the average consumer who might have seen the one product and thereafter some time later sees the other product; he may not have the benefit of seeing them side by side and have the opportunity to compare the labels meticulously. In comparing the two labels the court must also have regard to the fact that the average consumer may realise that the one product is not the other product, but may think that because of their similarities, the two products may emanate from the same producer or trade source; in other words that the two products are so to say “horses from the same stable”. That form of confusion on the part of the consumer is sufficient to constitute passing off. Could the WHITE STAR maize meel be part of the same product range as the STAR maize meel?

It is submitted that if the court had correctly applied the principles outlined above it would have found that the use of Bothaville’s label on its product constituted passing off of Pioneer’s label.

THE ZONQUASDRIF CASE

In Mettenheimer and Another v. Zonquasdrif Vineyards CC and Other 2014(2) SA 204 (SCA) the court was called upon to decide whether wines and grapes for wine making are similar goods for trade mark infringement in terms of Section 34(1)(b) of the Trade Marks Act. The court considered whether, in the light of Mettenheimer’s registered trade mark ZONQUASDRIFT in respect of wine, the use by Vineyards of the trade mark ZONQUASDRIF in relation to grapes was use of a similar or identical mark in relation goods that are so similar to wine that confusion or deception was likely to result. As the two marks in question were for all practical purposes identical, the crisp issue for decision was whether wine and wine grapes are “similar goods” in the relevant context. It is fair to say that it is common knowledge that the principal ingredient of wine is the juice from wine grapes.

In answering this question the court had regard to the British decision in British Sugar plc v Robertsons & Sons Ltd 1996 RPC 281. In this case the court had to determine whether toppings for desserts and a sweet spread were similar goods. In reaching its decision the court considered the following factors: (a) the uses of the respective goods, (b) the users of the respective goods, (c) the physical nature of the respective goods, (d) the respective trade channels through which the goods reach the market, (e) in the case of self service, whether they were likely to be found on the same shelves, and (f) the extent to which the goods are competitive. The goods in question were consumer food products sold primarily through supermarkets to the same customers, and applying these criteria, the court, perhaps rather surprisingly, decided that they were not similar goods. Whatever the court’s decision on the likelihood of confusion may have been, the criteria used to arrive at this decision were sensible and correct, given the nature of the respective goods.

These criteria may be apposite in deciding whether consumer foodstuffs, which, while having some common characteristics, are similar to the extent that the use of similar marks in relation to them is likely to cause confusion. However, it is submitted that they are wholly unsuited to determining whether one product which is the discernible principal ingredient and the source of the character of another product is similar to that other product for the present purposes. This must be viewed against the background that many, if not most, wine producers use their own grapes in producing their wine. The finished product versus principal identifiable ingredient is a wholly different issue compared to two foodstuff products which have characteristics in common. It is submitted that where one product is a beneficiation of another and has the other as its most prominent component, there is a strong likelihood that the use of virtually the identical trade marks on the respective products will be likely to cause confusion. Put simply, a person who is aware of the existence of ZONQUASDRIFT wine and comes across ZONQUASDRIF wine grapes is likely to think that the two commodities come from the same source or have a trade link. The British Sugar criteria can play no role in this thought process and cannot have any application as the circumstances of the respective comparisons are vastly divergent and different considerations arise. To test the proposition, surely a person who comes across LOUIS VUITTON leather supplied to clothing or luggage producers for use in manufacturing their products is likely to make a connection with LOUIS VUITTON luggage or clothing! Yet this comparison will hopelessly fail the tests set forth in the British Sugar case. This illustrates the point that the British Sugar criteria are not universal in their application and are inapposite for the finished product/component situation. They should not have been applied in the ZONQUASDRIF case and the court should, it is submitted, have found that wine and wine grapes are similar goods for the purposes of Section 34(1)(b) of the Trade Marks Act, and that the use by Vineyards constituted infringement of the registered trade mark ZONQUASDRIFT.

It was argued by Zonquasdrif that wine grapes are purchased by wine makers and not by the public, whereas wine is bought by consumers in general, thus negating the likelihood of confusion. This may be true but wine makers can include amateurs who may asses the quality of ZONQUASDRIF grapes by reference to ZONQUASDRIF wine. Moreover, if Mettenheimer used his mark in conjunction with a statement that his wine is made from his own grapes, as he would be entitled to do in terms of the principle of notional use of his registered trade mark, this would make the existence of ZONQUASDRIF grapes coming from a different source all the more likely to cause confusion.

As a question of trade mark policy, Section 34(1)(b) of the Trade Marks Act replaced and substituted the system of defensive registrations provided for in Section 53 of the Trade Marks Act, 1963. In terms of Section 53 a trade mark proprietor could register his trade mark defensively in relation to goods for which he had no intention of using the mark where the use of that mark (or a similar mark) on those goods would be “likely to be taken as indicating a connection in the course of trade between (those goods) and the proprietor of the registered trade mark”. Wine marks could, and in practice were, registered defensively in respect of grapes, and with justification. The same principle applies to wine and wine grapes under Section 34(1)(b) of the current 1993 Act. They are similar goods as contemplated by the section.

In the premises the court ought to have held that the use by Zonquasdrift of the trade mark ZONQUASDRIFT in relation to wine grapes infringed the registered trade mark ZONQUASDRIF in respect of wine.

THE NESTLE CASE

Societe Des Produits Nestle SA and Another v International Foodstuffs Co and Others [2014] ZASCA 187 (27 November 2014) dealt, inter alia, with a claim of trade mark infringement in respect of the “shape” of the well-known KIT KAT chocolate product (registered trade marks entailing two or four vertically tapering “fingers” of confectionary conjoined by a base). The registrations upon which reliance was placed were representations, in relief, of the shape of the KIT KAT product as sold to the public (in wrappers). The marks were said to be two dimensional representations of three dimensional objects. International sold chocolate products having the same shape depicted in the registrations, under the trade mark BREAK. The court held that the registered trade marks were valid and that the use of the controversial shape by International for its product constituted trade mark infringement. The registered marks were attacked on the basis that the shape of the goods in question was functional and that they were thus invalid. This counter-claim was refused. The latter decision of the court is arguable (in other international jurisdictions the corresponding marks were found to be invalid on account of being functional) but, on the premise that the marks were valid, the infringement decision is supported.

There was a further basis on which International attacked the registered trade marks. It dealt with an amendment of the trade marks on which the infringement case was founded. The applications to register the marks were filed in 1999. The subject matter of the applications were simply illustrations in relief of the four and two finger, respectively, products unaccompanied by any written elucidation of the nature of the marks. They were filed in respect of a wide range of goods falling into class 30, the confectionary class. These goods included items such as cocoa which, being a powder, could not possibly have the shape depicted in the applications. It was and is the practice before the Registrar of Trade Marks that when a mark sought to be registered took the form of stripes on shoes, containers, shapes of goods and the like (i.e unconventional marks) the representation of the mark on the application form would be accompanied by a written description indicating the essential nature of the mark. This is a sensible, indeed an essential, practice, as in the absence of a written description identifying the nature of the mark, it might be thought to be simply a visual or device mark – in other words the picture itself affixed to the application – and not a characteristic or feature illustrated in the picture, such as stripes on shoes. Given the fact that the applications in question were not accompanied by any elucidation of the nature of the mark and that the goods covered by it included items in powder form, the obvious and logical deduction to be made from the application was that the marks were device marks illustrating the product, such as may be found on a label comprised in a wrapper.

Nestle apparently realised that, if they wanted to register the shape of the product as a trade mark, their applications were defective and in 2000 they applied to amend their applications by the insertion of the following written description or elucidation: “The mark consists of the distinctive shape or appearance of the goods.” The Registrar allowed this amendment in terms of his power conferred in Section 16(5) of the Trade Marks Act to permit an application for amendment upon such conditions as he may think fit.

Section 25 of the Trade Marks Act, dealing with registered trade marks, empowers the Registrar to allow an amendment to a trade mark provided it does not substantially affect the identity of the mark. The rationale for this section is that it is not competent or right that retrospective rights are granted in a mark which is then substantially different to the original mark. Although this section does not apply to pending applications, in the writers experience the Registrar has adopted the approach over the years of following the same principle in considering amendments to pending applications. There is good reason for this because a trade mark, when registered, has effect from the date of the application, and by allowing an amendment to an application that substantially affects the identity of the mark, Registrar essentially grants retrospective rights (dating back to the application date) in what is a different mark. There is therefore no difference in effect between allowing a substantial amendment to a pending application and to a registration.

The 1963 Trade Marks Act did not cater for the registration of shape marks. This is illustrated by the fact that an application to register the well-known shape of the WEBER kettle barbeque (a distinctive shape which had already been successfully enforced in a passing off claim) under that Act had been refused by the court on the grounds that it did not qualify as a registrable mark. A device mark illustrating the shape of that product would have been registrable under the 1963 Act, but not a shape mark, because they are totally different types of marks. In refusing to register the shape mark, it was never suggested that the application could proceed as one for a device mark, and correctly so, as the two types of marks were poles apart. They were the proverbial “apples and oranges.”

Shape marks as a form of registrable trade mark were introduced in the 1993 Trade Marks Act. They are a category of mark entirely separate and distinct from device marks. Accordingly, an application to amend a device mark by transforming it into a shape mark substantially affects the identity of the device mark – indeed creates a new and different mark – and ought not to be allowed by the Registrar in terms of Section 25 of the Trade Marks Act.

International applied to review the decision of the Registrar to allow the amendment. This application was refused, wrongly so, it is submitted. The crisp issues in the review application were the nature and effect of the amendment and whether the Registrar was empowered and justified to make it.

The first point to be determined was precisely what was the nature of the marks that were the subjects of the trade mark applications? International argued that they were device marks because they were not stated to be shape marks, as they ought to have been, if that was the type of mark sought to be registered. There was nothing about the applications to suggest that the subject marks were anything but conventional device marks. Nestle, on the other hand, argued that the marks were necessarily shape marks because they portrayed the appearance of the products. The court accepted Nestle’s argument. It was common cause that the nature of the marks should be determined objectively. I have no argument with this, save to say that the determination should be made ex facie the application. It is not competent to rely on evidence pertaining to the market place in making this determination. The average person consulting the register in respect of the marks or seeing them advertised in the Patent Journal (the amendments were only effected to the applications after they had been advertised), including someone who might be based overseas, would probably not be aware of the circumstances or state of the particular market in South Africa, nor would the Registrar when examining the applications in the course of their prosecution. The court, however, relied on evidence provided by market surveys performed some four years after the applications were filed (the evidence was filed in support of a passing off claim comprised in the litigation) in interpreting the nature of the marks, when filed, as being shape marks. It accepted as conclusive of this point that the public, when shown the illustration of Nestle’s product and asked whether it called any product to mind, recognised the KIT KAT product. Apart from any other considerations, this evidence does not support the proposition that, when shown a pending trade mark application illustrating the applicant’s product, a person will necessarily conclude that the application relates to a trade mark that is the shape of the product. The fact that the public may (four years after the filing of the trade mark applications) recognise that a product shown to them is the KIT KAT product, does not mean that it will believe that a trade mark application dating from four years previously, depicting that product, constitutes a shape trade mark application and not an application for a device portraying the product. Relying on evidence of distinctiveness in passing off proceedings in order to decide objectively what the nature is of a trade mark affixed to an application for registration is, with respect, a non sequitur.

Further, the fact that the subject matter of a trade mark application illustrates the appearance of the product in relief does not necessarily mean that the trade mark must be a shape trade mark. There are many product labels used and registered which comprise pictures, even photographs, of the applicant’s product. Such marks are device marks. It is, with respect, equally a non sequitur to say that because a trade mark application comprises a picture of a product in relief it must be a shape trade mark. In addition, it is accepted practice that representations of shape trade marks in applications to register them should show more than one perspective of the goods in order to give a complete and proper picture or impression of the shape of the goods. The contentious applications showed only one perspective of the goods.

In my respectful submission the court erred in finding that the applications as filed were, when objectively viewed, ex facie the documents, shape trade marks and should have found that they were device trade marks in the absence of any indication that they purported to be unconventional shape trade marks. The fact that Nestle elected subsequently at a later stage to incorporate in the applications a written explanation that the marks purported to be shape trade marks is significant.

In the premises, the application to amend the trade mark applications had the effect of converting them from applications for device trade marks to applications for shape trade marks. As discussed above, such a change of identity of a trade mark is very substantial and in effect amounts to the creation of a new trade mark sought to be registered.

The court held that section 25, which inhibits the Registrar from allowing amendments which substantially change the identity of a trade mark, does not apply to pending applications but only to registered trade marks. This is correct on the wording of the section, but as discussed above the ratio for applying the principle to registered trade marks applies equally to pending applications. The court said that the Registrar’s discretion to amend pending applications is unfettered. The court did, nevertheless, concede that the Registrar should exercise caution when exercising his discretion in allowing a substantial amendment to a pending mark and that if injury or prejudice will result to another party, or to the public, it should not be allowed. This is perhaps an indirect way at arriving at the principle enshrined in Section 25. The court found, however, that no substantial amendment had been allowed. Unfortunately, the premise on which the court based its finding that no substantial amendment had been made is, as discussed above, faulty.

In arriving at its decision the court made the statement that the making of the endorsement to indicate that the marks were shape marks “constituted a limitation in that the marks were limited to a three dimensional shape.” This is, with respect, a startling proposition. It suggests a fundamental lack of understanding of the relationship between a conventional device mark and an unconventional shape mark. As previously discussed, a device mark and a shape mark are two entirely separate and different species of trade marks. There are indeed provisions in the Trade Marks Act which apply to shape marks and not to device marks or other conventional trade marks and to this extent shape marks are sui generis as compared to device marks. To contend that by belatedly describing a pending trade mark as a shape mark amounts to introducing a limitation into the scope of the trade mark suggests that a shape mark is comprised within some other trade mark of broader scope (a device or label?) and that by designating it as a shape trade mark one then reduces or concentrates the ambit of the trade mark. This is clearly not so. If the court was implying that by converting a device mark (or some other unspecified species of trade mark) to a shape mark one is simply narrowing the scope of what could otherwise have been obtained by registering that trade mark, it was clearly employing faulty reasoning. The flawed reasoning makes the court’s decision that the amendment was not substantial all the more open to criticism. A shape mark is not a species of the genus device mark or any other type of trade mark. It is a separate and distinct type of trade mark on a par with the other types of trade marks such as word marks and device marks. A shape trade mark cannot be extracted from another broader trade mark.

To some up, it is submitted that on a proper construction of this matter Nestle’s, wittingly or unwittingly, filed applications that when objectively interpreted were device marks. When they sought to amend the applications to claim shape marks, those amendments would have the effect of substantially altering the identity of the marks. In a proper exercise of his discretion (guided by the principle enshrined in Section 25) the Registrar ought to have refused the amendment and perhaps have suggested to Nestle that, if it wished to register shape marks, it must file fresh trade mark applications. The court ought to have decided that the Registrar did not apply his mind correctly in allowing the amendment, and should have set it aside. This would have meant that the subject marks on which the infringement claim was based were device marks and the court should have refused the infringement claim since it is unlikely that the shape of International’s product would be confused with Nestle’s device mark.

CONCLUSION

The straying from the straight and narrow of trade mark law principles by the Supreme Court of Appeal in the cases discussed above is a cause for concern and it does not bode well for the future development of this area of the law.

Owen Dean

Speech delivered by Judge Mabel Jansen at the book launch of Dean & Dyer Introduction to Intellectual Property Law

“In our court building, when one wanders in the judges’ corridors, the photographs of all judges who served on the Bench, adorn the walls. One looks at the photographs of judges Galgut, Holmes, Hoexter and many others whom one did not even know existed, and it is with sadness that one realises what a font of knowledge died with each of them. What is also striking is how soon most of the judges died after being appointed: appointed 1971: died 1976; appointed 2002: died 2008; appointed 1998: died 2007 – a fact which clearly does not augur well for my future.

But those who write or create live forever. Their imaginations and thoughts have been bottled. I have always maintained that it is mandatory for everyone to keep a diary. We only have to think of Anne Frank, Samuel Pepys and Benvenuto Cellini – who not only wrote an autobiography but also a highly interesting book entitled the Treatises Of Benvenuto Cellinini on Goldsmithing and Sculpture which gives one a fascinating insight into the manner in which jewels and sculptures were made in Florence in the sixteenth century and how various coloured tints were prepared. Cellini’s autobiography has been called one of the most colourful biographies ever written as it describes his many peccadilloes with mistresses, his enormous sense of self-satisfaction and illustrates how lawsuits regarding trade marks, trade secrets and copyright proliferated in sixteenth century Florence as technology blossomed. Cellini had his own style of dealing with lawsuits and wrote that: “When certain decisions of the court were sent me by those lawyers, and I perceived that my cause had been unjustly lost, I had recourse for my defense to a great dagger I carried; for I have always taken pleasure in keeping fine weapons. The first man I attacked was a plaintiff who had sued me; and one evening I wounded him in the legs and arms so severely, taking care, however, not to kill him, that I deprived him of the use of both his legs. Then I sought out the other fellow who had brought the suit, and used him also such wise that he dropped it.” – The Autobiography of Benvenuto Cellini, Ch. XXVIII, as translated by John Addington Symonds, Dolphin Books edition, 1961

Herman Melville said that in order to produce a mighty book, you must choose a mighty theme.

It is with pride that I can today announce the launch of Dr Owen Dean and Ms Alison Dyer’s textbook: An Introduction to Intellectual Property Law by Oxford University Press. The editors and co-authors of the textbook Dr Dean and Alison Dyer do not require any introduction. Editors have to separate the wheat from the chaff. Dr Dean is a leading specialist in the field of intellectual law and a prolific writer who has never baulked at embracing new solutions to new or old problems, presenting novel and innovative solutions or concepts and adopting approaches from other jurisdiction and giving them a South African twist. He embraced Anton Piller orders when it was not fashionable to do so, effectively established combatting ambush marketing in South African Law, was a trail blazer in the protection of traditional knowledge and is constantly researching new facets of intellectual property law. Whilst running a very busy practice he somehow managed, in between, to write his locus classicus Handbook of South African Copyright Law which he also, somehow, managed to update annually.

As head of Spoor and Fisher he steered a dedicated team of lawyers and taught them to be innovative. No wonder that Spoor and Fisher fought for shapes, such as that of the Weber Steven braai, to be recognized as trade marks even before the amendment of the Trade Marks Act. He firmly entrenched the use of market surveys and how they should be conducted in the protracted McDonald’s litigation in the face harsh and unwarranted criticism which he handled with his usual equanimity. One of the grounds of complaint was, inter alia, that he briefed me although I was pregnant at the time. (I am tempted to add the word “sic” as I would in an ex tempore judgment.) However, to adopt one of judge Erasmus’s malapropisms, the criticism was duck’s water off his back. That is another endearing and not well known characteristic of Dr Dean. He never had any qualms about briefing or employing women or black advocates when it was still frowned upon to do so. What also struck me is that he valued my input, even when I was a baby junior, as he was completely open-minded. Ultimately we were vindicated by winning the matter in the Appeal Court and were awarded the ICC’s award for the best appeal team worldwide for that year.

Another example is the Victoria’s Secret Inc v Edgars Stores Ltd. 1994 (3) SA 739 (AD) case, wherein spillover advertising was not regarded as sufficient to establish a reputation in South Africa without a trading presence. Nicholas JA still held in his judgment, and I quote “…it does not help to plunder the libraries of the world, this court is not persuaded.”

However, clearly the research that was put into the heads of argument paid off because very soon thereafter Harms JA held in the matter of Caterham Car Sales and Coachworks Ltd. V Birkin Cars (Pty) Ltd. and Another 1998 (3) SA 938 (SCA) that spillover advertising indeed could be taken into account. Indefatigable as usual, Dr Dean is currently the incumbent of the Anton Mostert Chair of Intellectual Property Law at Stellenbosch University.

Ms Alison Dyer has close on forty years’ domestic and international patent and design experience in the chemical, pharmaceutical and biochemical fields and related litigation. Both Dr Dean and Alison Dyer are past presidents of the South African Institute of Intellectual Property Law and, in addition to running very busy practices, still found time to lecture. For example, Ms Dyer lectured candidate attorneys in patent litigation and students at both the the University of the Witwatersrand and the University of Stellenbosch which happens to be Dr Dean’s alma mater.

It is their practical experience in the evolvement of intellectual property for a period of close on four decades and their academic input which render this textbook invaluable, as well as the input of various Spoor and Fisher lawyers who share their work ethos and who were mentored by them. I often wondered why certain judges would always refer back to much older authorities and only later realised that it was because they were actively involved in those cases and lived and breathed them. Many practitioners get stuck in a rut. Only the exceptionally gifted rise above that. Both Dr Dean and Alison Dyer have that ability.

I was honoured when I was requested to give input to Dr Owen Dean and Ms Allison Dyer’s new textbook, and to write the foreword. This was particularly so in that Spoor and Fisher helped me mould my practice and granted me a plethora of opportunities as an advocate. But for the firm Spoor and Fisher, I would not be standing here today and would probably only have survived six months at the Bar as my father predicted.

Socrates, millennia ago, stated that the secret of change is to focus all of one’s energy not on fighting the old but on building the new. However, I am mindful of the fact that he was sentenced to death by hemlock by a jury consisting of his peers for his long orations – a factor which I shall keep in mind.

Changes to intellectual property are rapid, radical and perpetual due to ever changing technology. In the South Gauteng Association 2013 High Court matter of Ketler Investment CC v Internet Service Providers the role of internet service providers was considered as well as spamming, websites and hyperlinks. Courts seem to be become increasingly more comfortable in dealing with modern technology. In this case, it is also stated that e-mails and the like form part and parcel of everyday life. (One should contrast this with what his Lordship Mr Justice Schutz wrote in a judgment many years ago, namely that there is an irrebutable presumption that everybody over the age of fifty is computer illiterate). It is with amusement that I recall judge Schutz stating that he could understand that a computer is a machine humming away, but that he frankly did not understand how a computer program was inserted into it or what the role thereof was. Our computer programmer clients were not amused to put it mildly.

What is interesting to note from this judgment, however, is the allegation that in the case of a commercial enterprise, defamation under the actio iniuriarum arises from loss of business reputation or status, and unlike a claim under the actio legis Aquilia, actual pecuniary loss is not a requirement. I pause to state that it is difficult to reconcile this dictum with the Constitutional Court’s statement in the Laugh It Off matter to the effect that substantial harm and actual damages have to be proved in cases of trade mark dilution. It is thus clear that courts are considering issues in isolation and not understanding how a judgment in an unrelated field of law actually impacts on intellectual property law cases and vice versa. As judges, who have to deal with all fields of law, the interplay between such fields of law soon becomes apparent. Practitioners need to be alert to this fact. Perhaps the most ominous of these changes in other fields of law are the inroads which modern technology can make into the rights of intellectual property owners. Such rights holders have every right to believe that a perpetual sword of Damocles is hanging over their heads, hanging on a thread which ancient sources state to have been either the hair of a horse or a spider’s thread. (En passant, one can mention that it is remarkable that thousands of years ago, the tensile strength of both the hair of a horse and a spider’s thread was known and put to practical use).

The timing of this textbook is perfect. The onslaughts on intellectual property law have been numerous and seen to multiply daily. The Draft National Policy on Intellectual Property of 2013 is one such onslaught. It is vague and difficult to understand and has to be read in the context of an article published in 2013 by the United Nations Development Programme. The vigilance of intellectual property practitioners therefore has to be constant and their endeavours to strike the right balance between the public’s rights to utilise certain works and the entitlement of rights holders to remuneration for their intellectual endeavours has to be constantly innovative. There are so many threats. Other Acts also have to be taken into consideration such as the Consumer Protection Act, the Counterfeit Goods Act and many more. Our courts are also tackling new subject matters such as the SCA’s pronouncement on needle time and the very recent Google Adwords case. However, the Adwords matter raises alarm bells. In denying that “aanleuning” forms part of the South African common law and in stating that the Adwords platform is acceptable as no deception and confusion arise, the question may legitimately be posed: does this mark the end of the road not only for section 34(1)(c) infringement in terms of the Trade Marks Act but also for protection in terms of the common law? Only time will tell. Laugh it Off already seemed to be an ominous nail in the coffin.

Threats also came from unexpected sources such as the South African Investment Promotion and Protection Bill of 2013, which, notwithstanding its non-threatening title, entitles the state to expropriate property without remuneration. Dr Dean and Ms Dyer explain clearly in this textbook that intellectual property is property as envisaged by the property clause in the Constitution. In this regard, one should keep in mind that the tendency is to allow such forms of expropriation by the state and has been given the stamp of approval by the Constitutional Court. As regards real property and mineral rights the Constitutional Court held in the recent case of Agri South Africa v Minster for Minerals and Energy 2013 (4) SA 1 (CC), a judgment delivered on 18 April 2013, that there was no expropriation of rights when the State is granted the right to give licences to third parties to exploit the mineral rights on the property of a proprietor as the proprietor of the property still holds the ownership of the property and the ownership of the minerals in the property. Hence, it was concluded that the State was entitled to grant parties other than the proprietors the right to exploit the mineral rights in their property without remuneration, and thus sidestepped the constitutional requirement of remuneration by calling it a deprivation and not an expropriation of property. That bare dominium is cold comfort to a property holder was of no concern to the Constitutional Court.

The case is indicative of the frame of mind of the Constitutional Court judges. The argument that the diminishment of value of a right because another can exploit it, negates the existence of the right and the right of ownership thereof was resoundingly rejected by the Constitutional Court. The Constitutional Court held that there was no expropriation but merely deprivation. It should be kept in mind that section 25, the property clause of the Constitution, pertinently states that property is not limited to land.

Intellectual property students, practitioners and academics will therefore have to be particularly vigilant and well-informed. However, history has taught us that there is a reason for the existence of intellectual property laws. Fed up with trade marks, supermarkets commenced selling their own brandless products. In French they were referred to as “produits blancs” – or white products because they bore no trade marks. In an ironic twist these products became so popular that a supermarket sought to register the word “produits blancs” as a trade mark – to no avail – not surprisingly.

Mark Twain once said: Only one thing is impossible for God: To find any sense in any copyright law on the planet. This book greatly assists in deciphering the inexpicable. The insufficient time available to students and practitioners alike, render this textbook invaluable as it is pitched at precisely the correct level – it is neither too complex nor too rudimentary. Things will be clear and “the right way up” – unlike Matisse’s painting Le Bateau which hung upside down for 46 days in 1961 in New York’s Museum of Modern Art, without anybody noticing.

This book provides a sound foundational level of information addressing core points which give students, practitioners and judges and even clients a grasp of fundamental principles and enough insight to do further research should it be required. It is rare to encounter a textbook which deals with all aspects of such a diverse and difficult field of law such as intellectual property. It is even rarer to find such a textbook which has been distilled from decades of practical experiences and the intellectual endeavours of two such remarkable individuals as the authors Dr Dean and Ms Dyer. This book is written and edited by people who have lived, breathed and agonized over a manuscript, over which many students and professionals will too, albeit to appear in court, to draft heads of argument or to prepare for a final exam. We are all indeed beholden to them.

In fact the textbook, as an object, per se, represents the fruits of past monopolies that were granted. The invention of the press, fonts, the design of the cover and the contents thereof as expressed would not have been possible but for the protection of intellectual property.

Intellectual property will always leave room for the unexpected. As I have stated, it can be hard to define, yet its effects cannot be denied. As long ago as in 1932, MGM produced a film called Rasputin and the Empress. MGM studiously avoided legal action by Prince Yusupov, hence they changed his name in the film to Prince Chegodieff. Surprisingly, Prince Yusupov took umbrage at not being credited with the murder of Rasputin. He won an expensive court case against MGM which was forced to pay a substantisal sum in damages. To everbody’s surprise, a real Prince Chegodieff crawled from the woodwork and also sued the studio for the libellous use of his name and MGM was forced to pay him additional damages. The film’s inaccurate portrayal of Prince Felix and Irina Yusupov as Prince Chegodieff and Princess Natasha caused a historically significant lawsuit against MGM and gave rise to the “all persons fictitious disclaimer,” which has since become standard in Hollywood works of fiction and which, to this day, appears at the end of films.

A three year old asked his mother why she gave art classes to adults. He wanted to know whether they had forgotten how to draw. The mother answered in the negative stating that they had simply lost their creativity and curiosity. Dr Dean and Ms Dyer never lost their drive nor their curiosity. That, in itself, is remarkable. Many people become jaded. Sometimes one needs somebody to tilt at windmills – which turn out to be very real. This is what this textbook does. Most importantly, it makes us think.

It is a good book which is opened with expectation and closed with profit. In fact, as R D Cumming stated, a good book has no ending.

The books that help you most are those which make you think the most. The hardest way of learning is that of easy reading; but a great book that comes from great thinkers is a ship of thought, deep freighted with truth and beauty.

And with this sentiment by Pablo Neruda, I urge you to purchase this book immediately, thereby giving the authors their justified remuneration, and thereby to prosper in your own endeavours.”

Judge Mabel Jansen

Gauteng High Court

Click here for more information on the book Dean & Dyer: Introduction to Intellectual Property Law.

“It is their practical experience in the evolvement of intellectual property for a period of close on four decades and their academic input which renders this textbook invaluable.”

With these words, Judge Mabel Jansen of the Gauteng High court introduced the new book jointly authored by the Chair of Intellectual Property Law and Spoor & Fisher, specialist intellectual property practitioners. (Click here to read the rest of Judge Jansen’s speech delivered on 13 November at the book launch in Pretoria.)

The new book, Dean & Dyer: Introduction to Intellectual Property Law, provides a thorough and accessible review of the full, broad spectrum of intellectual property law in South Africa including the fields of copyright, trade marks, unlawful competition, counterfeit goods, patents, plant breeders’ rights and designs.

It is also the first publication of its kind that addresses the contemporary challenges faced by IP law and practice, such as the commercial considerations for transactions involving intellectual property, traditional knowledge, IP in the digital environment and the constitutional protection of IP rights.

The work was conceived by Prof Owen Dean, incumbent of the Chair of Intellectual Property Law at the Faculty of Law, Stellenbosch University and is jointly edited by Alison Dyer.

With contributions from 15 authors the book is a collaboration between the University of Stellenbosch’s Chair of IP Law and the specialist practitioners at Spoor & Fisher and brings together the value of practical expertise and academic research and analysis to deliver a dynamic and indispensable reference. As such, the digest is an essential resource for legal practitioners and is essential reading for all IP rights holders.

The book was specifically designed as the core course material for IP law students and contains the full spectrum of IP law issues, case law and comparative legal analysis. As such, the book represents the primary reference work for all students in all of the Faculty’s pioneering IP law programmes and courses including the LLB modules in IP and IT law, the Post-Graduate Diploma and the LLM in IP Law. It is also supported by additional academic resources for IP law lecturers and academics, including slideshow presentations and template examination questions prepared by each of the authors to reflect the structure and fundamental issues of each area of IP law.

The book is available from all leading academic booksellers, including Van Schaik and Protea Bookstores, or online from Oxford University Press (South Africa) (UK) or Amazon. An electronic (e-book) version of the title is also available.

The editors and authors of Dean & Dyer: Introduction to Intellectual Property Law

A few days after the first South African case to consider the issue of Internet keyword advertising (Cochrane Steel Products (Pty) Ltd v M-Systems Group (Pty) Ltd & Another Case 39605/13, 29 October 2014), we had the next instalment – from the English Court of Appeal – in the dispute between Interflora and Marks & Spencer (Interflora Inc & Another v Marks & Spencer plc [2014] EWCA Civ 1403). Yes, it is, indeed, not just any dispute concerning keyword advertising. It appears that these two litigants have taken it upon themselves to definitively settle the law relating to keyword advertising, through the various judgments (available here on IPKat) their dispute is yielding.

This article focuses on two areas on which the court has shone some light, and which may be of assistance to our courts when next seized with a matter concerning keyword advertising: the test of the average consumer in determining trademark issues and the use of the doctrine of initial interest confusion; and, the issue of negative matching.

Internet search engines, most notably Google, with its AdWords service, offer advertisers the right to have advertisements (or “sponsored links”) displayed in response to specified search terms (also known as “keywords”) which Internet users are likely to use. Advertisers can select keywords which Internet users are likely to use in their searches, and this ensures that their sponsored links to their websites are displayed if an Internet user’s search includes one or more of the advertiser’s selected keywords. These sponsored links are, generally, distinguishable from, and displayed separately from, the so-called “natural” (or “organic”) results to search queries.

What has made the practice of keyword advertising so contentious is that Internet search companies, such as Google, allow advertisers the right to select third parties’ trademarks, invariably those of their competitors, as keywords. The ranking of the sponsored links is primarily determined with reference to the price advertisers are willing to pay. The advertiser who is prepared to pay the highest price per click (i.e. when an Internet user clicks on the sponsored link and goes to the advertiser’s website (a “click-through”)) for a particular keyword will have its sponsored link listed at the top of the sponsored links. Marks & Spencer (“M&S”) paid Google for sponsored links in response to searches for “interflora” or minor variants of it.

Google also offers various refinements, or sensitivity triggers, as to when a sponsored link appears. One of these is “negative matching”; an advertiser can request that its sponsored link should not be displayed even though the Internet user’s search contains a related search term.

The court repeated the legal position in relation to keyword advertising as developed by the European Court of Justice (“ECJ”). Given the essential function of a trademark, the crucial issue that had to be determined in the case was whether the average consumer was able, without difficulty, to ascertain the origin of the relevant goods or services. However, it is important to note that there can be infringement of a trademark owner’s exclusive rights by a third party’s use of the trademark if such use has adversely affected any of the functions of the trade mark.

When assessing a particular trademark issue, such as whether the origin function was affected, it had to assessed from the perspective of the average consumer, who, in the context of keyword advertising, is the reasonably well-informed and reasonably observant internet user. The average consumer test involves a qualitative assessment, not a statistical test, unlike the notion of a “substantial proportion” of the actual public. The court must exercise its own judgment, in accordance with the principle of proportionality and the principles laid down by the ECJ, to determine the perceptions of the average consumer in any given case in light of all the relevant circumstances. In a case concerning ordinary goods or services, the court can exercise its own judgement (based on common sense and experience of the world) in assessing the matter from the perspective of the average consumer.

Ultimately, the court must give a binary answer to the particular question before it. The court does not require evidence from consumers, expert evidence or consumer surveys.

The doctrine of initial interest confusion refers to confusion on the part of the public, as to the trade origin of the goods or services in relation to which the impugned sign has been used, particularly in promotional or advertising materials, prior to – but not at the time of – purchase of those goods or services. The court held that the US doctrine of initial interest confusion should not be used in EU trade mark law, particularly not in relation to keyword advertising because it could result in the incorrect outcome. It did not elaborate on how the application of initial interest confusion could result in a misleading analysis, but said that the doctrine of initial interest confusion did not incorporate the appropriate checks and balances to determine whether the average consumer was able to ascertain the origin of the advertised goods or services and so make an informed decision.

Despite the peculiar facts of the specific situation – Interflora had an extensive flower-delivery network, of which M&S was not a member, and was well-known in the United Kingdom – the court held that M&S was not required to use negative matching on generic flower-related keywords it purchased. It would only be required to do so if it was shown that the sponsored links resulted in the average consumer being unable to ascertain the origin of the goods or services. The court emphasised that the purpose of trademark law is not to protect the trademark proprietor against fair competition. The aim of Internet advertising using keywords corresponding to trademarks is, in general, to offer to Internet users alternatives to the goods or services of those trademark proprietors, and so is not inherently, or inevitably, objectionable from a trademark perspective.

The case was referred back to the trial court to determine the question of whether there was trademark infringement by M&S of Interflora’s trademark in light of the legal principles clarified by the Court of Appeal.

Sadulla Karjiker