THE RELEVANCE OF PASSING OFF PRINCIPLES IN TRADE MARK OPPOSITIONS

Monday, April 16, 2007
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THE RELEVANCE OF PASSING OFF PRINCIPLES IN TRADE MARK OPPOSITIONSBy Wim Alberts
1 Introduction
In practise, passing off and opposition proceedings seldom overlap. The former relates to a High Court matter, dealing with an application for an interdict, to prevent use. The latter involves the opposition to a trade mark application before the Registrar of Trade Marks, to prevent registration. There is thus a distinct ideological divide between the two types of conflict. The interesting question that arises is whether passing off criteria may perhaps feature in opposition proceedings, more in particular as far as the scope of comparison of marks is involved. This issue has not featured In an opposition based on an earlier registered mark. However, somehow, in an opposition based on the prior use of a mark, it has. This aspect is discussed below from the point of view of British law, where the question featured in a number of cases.
2 Passing off
In passing off proceedings, in particular those relating to services, there will often be a particular word or words that form the subject of the enquiry. In other instances a specific logo or drawing can be involved. In the case of goods, it is usually the use of a combination of visual elements that will feature. This may include a particular word, a logo or picture, a colour, shape, appurtenance, or the size of a product that are juxtaposed in a distinctive manner. This is of course referred to as the get-up of the product. The emphasis is on appearance, according to Weber-Stephens Products Co v Alrite Engineering 1992 (2) SA 489 (AD) 495 B, a decision that dealt with the shape of a a well-known sphere-like braai product. In passing off proceedings the comparison is between the whole get-up of the applicant and that of the respondent – see Stellenbosch Farmers’ Winery v Stellenvale Winery 1957 (4) SA 234 (CPD) 240D. There does not appear to be much controversy regarding this test.
3 Prior use oppositions under the 1938 British Trade Marks Act

Section 11 of the 1938 British Trade Marks Act determined that a mark shallnot be registered, inter alia, if the use thereof would, by reason of its being likely to deceive or cause confusion or otherwise, be disentitled to protection in a court of justice, or would be contrary to law or morality. In Bali Trade Mark [1969] RPC 472, Lord Morris referred (page 490 line 42) to the case of Transfermatic Trade Mark [1966] RPC 568 where the approach was followed that an opponent to registration can rely on section 11 if, on the ground of the likelihood of confusion, the applicant could be restrained in a court of justice. However, if all the opponent could show was that a number of persons might entertain a reasonable doubt as to whether the goods bearing the two marks come from the same source, falling short of the grounds for relief against passing off, further argument would be required.
In regard to the approach adopted in the latter judgment, Lord Morris stated (page 491 line 10) that the views of that court should not be taken as saying that potential success in a passing off action is always a test in applying section 11, or that the evidence must always be sufficient to ensure success in a passing off case. If this was the meaning of the decision it would not be in accord with the approach followed in other cases, such as that in McDowell’s Application [1927] RPC 335. In the latter case it was said that the matter had been dealt with too much as if it was litigation between the parties and as if it had been a passing off case. Lord Morris also made reference to the case of Hack’s Application [1940] RPC 91 where it was said that the question whether a particular mark is calculated to deceive or cause confusion is not the same as the question whether the use of the mark will lead to passing off. The importance of the judgment of Lord Morris is that it makes it clear that application of section 11 does not require the same factual basis as would be required in a passing off matter. In view of the similarity in wording between the British Act and our legislation, it is submitted that the same principle should apply to our law. Section 10(12) of the South African Trade Marks Act 194 of 1993 namely provides that the following shall not be registered:

"…a mark which is inherently deceptive or the use of which would be likely to deceive or cause confusion, be contrary to law, be contra bonos mores, or be likely to give offence to any class of persons;"
4 Prior use oppositions under the 1994 British Trade Marks Act
In contrast to the above position, section 5(4)(a) of the United Kingdom’s 1994 Trade Marks Act determines that a trade mark application can be opposed if, or to the extent that, its use in the United Kingdom can be prevented by virtue of any rule of law, in particular the law of passing-off. This section implements the optional provisions of article 4(4)(b) of The First Council Directive No. 89/104/EEC of December 21 1988 to approximate the laws of the member states relating to trade marks. This provision reads as follows:

"Any Member State may furthermore provide that a trade mark shall not be registered or, if registered, shall be liable to be declared invalid where, and to the extent that:

rights to a non-registered trade mark or to another sign used in the course of trade were acquired prior to the date of the application for registration of the subsequent trade mark, or to the date of the priority claimed for the application for registration of the subsequent trade mark and that non-registered trade mark or other sign confers on its proprietor the right to prohibit the use of a subsequent trade mark;"
It is clear that section 5(4)(a) differs from section 11 of the 1938 Act, in that it ostensibly does require an opponent to make out a passing off case. The requirements for this remedy would thus, seemingly, be relevant. What is of specific interest here, as stated, is the scope of the comparison that must be made to establish a likelihood of confusion between marks. Is it the mark as used, or as filed, that must be considered? In Wild Child Trade Mark [1998] RPC 455, the appointed person, Mr Geoffrey Hobbs QC, formulated (page 459 line 50 - page 460 line 4 (own emphasis)) the test to be applied in relation to an opposition in terms of section 5(4)(a) as follows:

"The question raised by the grounds of opposition is whether normal and fair use of the designation WILD CHILD for the purpose of distinguishing the goods of interest to the applicant from those of other undertakings … was liable to be prevented at the date of application for registration … by enforcement of rights which the opponent could then have asserted against the application in accordance with the law of passing-off."
The correct approach, also according to Kerly Law of Trade Marks (2001) 258 note 17, is to consider a normal and fair use of the mark, and to gauge whether or not this would amount to passing off. Interestingly, however, he considers this test to be similar to that followed in terms of section 11 of the 1938 Act. Kerly 258 (own emphasis) also states the following, after referring to cases confirming said test to be the postulation of normal and fair use of the mark:

"In this sense the test is different from that involved in a claim for passing off which would normally require a consideration of all the circumstances of the defendant’s trade."
Kerly’s view thus seems to be that extraneous circumstances are not considered. Kitchin and Mellor Trade Marks Act 1994 (1995) 26-33 set out the position as follows:

"There is a further complication arising from the particular formulation of the prohibition. In considering the question of passing off the court must normally consider all the circumstances of the trade of the defendant to determine if deception is in fact occurring or likely. This analysis includes all distinguishing material. Under the prohibition, however, it seems that a notional and fair use of the mark the subject of the application will have to be considered."
The writers appear to accept that the circumstances of use would not be considered in terms of section 5(4)(a). The test to be applied was also stated in Oasis Stores Ltd Application [1998] RPC 631 where A applied for registration of the trade mark Eveready for contraceptives and condoms. The application was opposed by B on the basis of its Ever Ready trade mark which was well known, inter alia, in relation to batteries. B relied, amongst other provisions, on section 5(4)(a). Reference was made (page 642 line 5 and 46), to two leading cases on passing off, being Erven Warnink B.V. v J. Townend & Sons (Hull) Ltd [1980] RPC 31, and Reckitt and Colman Products Limited v Borden [1990] RPC 341, as well as a statement on the legal position, being that it is relevant to consider the manner in which the defendant makes use of the mark, and collateral factors. However, it was then (page 643 line 26 (own emphasis)) stated:

"I accept that the comparison under section 5(4)(a) of the Act is between the applicant’s mark, as applied for, and the opponent’s mark as actually used."
It was thus accepted, in contrast to the position in terms of passing off, that the focus is on the applicant’s mark as filed. The question whether the technical requirements of passing off are relevant was considered in the Corgi Trade Mark [1990] RPC 549 case. Here A obtained registration for the trade mark Corgi in relation to goods within class 25. B was the owner of the trade mark Corgi as used and registered in relation to model vehicles for many years. The appointed person, Mr Geoffrey Hobbs QC, stated (page 557 line 8) that it is not correct for the purposes of section 5 of the Act to assimilate objections based on an "earlier trade mark" (typically a registered mark – section 6(1)(a)) with objections based upon an "earlier right" protected by the law of passing-off. In an action for passing off the likelihood of misrepresentation and the prospect of damage to goodwill must be sufficiently real and substantial to warrant the intervention of the court. Section 5 adopts a different approach to the protection of "earlier trade marks." He then (page 557 line 16 – line 18) stated:

"Those provisions relating to earlier trade marks were plainly not drafted with a view to applying the technical requirements of a common law action for passing off to the protection of "earlier trade marks" under the Directive."
It is submitted that the view of the appointed person that the provisions relating to earlier trade marks were not drafted with a view to applying the technical requirements of a common law action for passing off, should also apply, mutatis mutandis, when section 5(4)(a), dealing with earlier rights, is considered. In other words, there is postulated a fair and normal use of the mark as applied for, and regard is not had to the actual manner of use, an issue that would typically be considered in a passing off scenario.
The issue of exactly what material should be compared was also considered in Saxon Trade Mark [2003] FSR 704. Here former members of a band performing under the name Saxon obtained registration for Saxon. The application was filed after they left the group, and started their own groups, known amongst others as Graham Oliver’s Saxon. The remaining member of the band that continued to perform under the name Saxon, attacked the registration. In formulating the test to be applied, the court stated (page 715 paragraph 31 (own emphasis)) the following:

"As far as s.5(4) of the Act is concerned, the question to be asked is whether any normal use by the proprietors or either of them of the mark as registered for any of the goods or services in respect of which it is registered would be liable to be prevented by passing off proceedings brought by any other person. Since the mark as registered is SAXON, normal use would include use of that word alone by the proprietors in relation to records and live performances."
Later (page 716 paragraph 33 (own emphasis)) in the judgment, this view was re-iterated:

"What counts is whether Mr Dawson could be sued for passing off if he used SAXON alone, not whether Mr Byford could be sued."
It thus seems fair to say that it is the use of the mark as applied for that must be considered, in a notional sense, not the actual circumstances and manner of use, which would involve the consideration of extraneous matter. This should be the position although the latter forms part of normal passing off criteria.
The decision in Reef Trade Mark [2002] FSR 19 is seemingly in conflict with the above cases. Here A, the members of a pop group called Reef, applied for registration of the trade mark Reef in relation to goods within class 25 and class 26. B lodged an opposition on the basis of its earlier trade mark registration for Reef Brazil, as well as its common law rights created by the use of Reef Brazil.
In regard to the issue under discussion, the following (page 400 paragraph 26 (own emphasis)) was stated:

"Where the applicant’s mark is unused, this section presents a number of conceptual questions. Passing off is essentially a question of fact: does the defendant in fact make a false representation as to the origin of his goods by using the mark in suit? The first question is, when the mark is unused, what use is to be considered? The natural response is to say that all normal and fair uses of the mark in respect of all the goods in respect of which the mark is sought to be registered. This is capable of raising a number of factual difficulties which, unless kept within proper bounds, run the risk of turning every opposition in the Registry into a passing-off action with cross-examination and disclosure."
Following the "classical trinity" approach in relation to the elements of a passing-off action, namely that a goodwill or reputation must exist through public identification with the distinctive mark; that a misrepresentation was made, and that one suffers, or is likely to suffer, damage by reason of the erroneous belief engendered by the misrepresentation, the hearing officer found that B had a trading goodwill in relation to the goods concerned, and in particular, a reputation associated with Reef Brazil. It was assumed that Reef Brazil would be abbreviated to Reef, and that there was accordingly a reputation associated with Reef. This finding was accepted by the court (page 401 paragraph 29)). The court referred (page 402 paragraph 33) to a statement of the Hearing Officer, made in the course of coming to his decision that the opponent had not discharged the burden of proving passing off:

"If the relevant public – surfers – are also aware of the band REEF are they more or less likely to be confused as to the origin of the latter’s products? I think less likely. They would be able to make a distinction between T-shirts and the like merchandised by the rock band and sandals known as REEFS."
The court commented (page 402 paragraph 34 (own emphasis)) as follows on this approach:

"In my judgment, this short passage entirely overlooks the fact that while merchandising use of the goods to which the applicant’s mark is applied is the relevant use, the relevant representation is not necessarily that on the front of the T-shirt. It also overlooks the fact that at the date there had been no use of the applicant’s mark."
The court had evidence before it as to the manner in which the applicant’s mark would be used. It is thus accepted that it is difficult to exclude same from a consideration of the matter. However, it can be argued that the positioning of the mark amounts to a consideration of surrounding circumstances that has been held by the above cases and writers not to enter the picture. It must also be pointed out that if the process simply involves a consideration of the notional use of the mark, the fact that the mark has not been used would not have been problematical.
Strong support for a view contrary to what has been proposed thus far is found in Open Country Trade Mark. [2000] RPC 477. The court stated (page 482 line 1 – 7) the following:

"The test laid down in Smith Hayden, adapted in accordance with the speech of Lord Upjohn in BALI, is the test applicable whether the applicant has or has not used his trade mark. However, no court would be astute to believe that the way that an applicant has used his trade mark was not a normal and fair way to use it, unless the applicant submitted that it was not. It does not follow that the way that the applicant has used his trade mark is the only normal and fair manner. However, in many cases actual use by an applicant can be used to make the comparison."
In C.A. Sheimer (M.) Sdn Bhd’S Trade Mark Application, [2000] RPC 484 it was also found (page 505 line 32) by the appointed person, Mr Geoffrey Hobbs Q.C., that the actual use of the applicant can be considered. Lastly, reference can be made to Reed Executive plc v Reed Business Information [2004] EWCA Civ 159, where it was said that the "global assesment" test, which is to be applied in opposition matters, involves many of the factors involved in passing off (paragraph 79). It seems fair to say that the position is not clear, and that it would be necessary to obtain a definitive ruling from a higher court.
5 Comment
The correct approach to the matter is probably formulated best when regard is had to the underlying purpose of trade mark legislation, namely to establish a system for the registration of trade marks, amongst other reasons, to obtain better protection than that available in terms of the common law. It is trite that in passing off matters the whole of the actual get-up of the respondent is compared with that of the plaintiff. Trade mark legislation was designed to follow a different approach, and to introduce a much narrower enquiry, and thus, conversely, to provide broader protection. In this regard reference can be made to the principle firmly established in infringement matters, namely that regard may not be had to extraneous matter in deciding on the likelihood of confusion (Webster and Page South African Law of Trade Marks (1997) 12-17). In the decision in The Upjohn Company v Merck 1987 (3) SA 221 (TPD), an opposition based on a prior registration (the predecessor to section 10(14) of the current South African Act), the court made (page 227 D, (own emphasis)) the following finding:

"…Section [10(14)] requires a comparison of two trade marks having regard to their notional use. A Court is not entitled to have regard to extraneous matters such as the reputation of the respective marks or the get-up under which the marks are in fact used."
The actual manner of use of the applicant is thus irrelevant. Why should the position change merely because the opponent is relying on his prior use? If this is allowed, one would be dealing with a passing off scenario. The whole basis of the system of trade mark registration is based on the trade mark application that was filed. By focussing on the mark in use, the application that was filed really becomes superfluous.
The mere fact that reliance is placed on an earlier registration, and not use by the applicant, should be irrelevant. It is accordingly submitted that in our law the distinction between opposition and passing off proceedings is still valid.