WHO WILL LAUGH LAST? – BY WIM ALBERTS

Tuesday, August 31, 2004
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It is ironic that a humble clothing item such as a t-shirt can form the subject of major litigation, such as that in which Laugh It Off (LIO), a small t-shirt manufacturer, and the multinational SA Breweries (SAB) is involved.  Members of the public seem to sympathize with the former against the latter.  But the matter is not to be decided in the court of public opinion.  Instead, in the first week of September, the Supreme Court of Appeal in Bloemfontein will hear argument on the legal principles involved.  The facts are simple, namely that LIO sells t-shirts with a reproduction of the label of SAB’s Black Label beer.  Some amendments were made to the wording, so as to read “Black labour, white guilt, Africa’s lusty lively exploitation since 1652”.  The Cape High Court ruled in favour of SAB, and LIO appealed.
The ruling is significant in that it was the first time that the so-called dilution provisions of the Trade Marks Act were analyzed in detail.  Normally, a trade mark registration gives protection only against the use of a confusingly similar mark on the same or related goods, for instance clothing and cosmetics.  Dilution provisions grant protection for well-known marks, in relation to any goods or services, even in the absence of confusion.  The condition however is that the use must be likely to take unfair advantage of, or be detrimental to, the distinctive character or repute of the well-known mark.  The court specifically also recognized the distinction between the blurring or tarnishing of a trade mark.  The former occurs when, for instance, ALFA-ROMEO vodka is placed on the market, which would dilute the distinctiveness of the mark in relation to vehicles.  Tarnishing takes place when a negative association is made with a mark, eroding the mark’s capacity to stimulate the desire to buy the goods concerned.  SAB argued amongst others that the t-shirts suggested that it was guilty of racial exploitation and discrimination.  Having weighed all the relevant factors, the court did decide that the conduct of LIO amounted to dilution.  The ruling is significant as it recognizes that a mark well-known for beer can be protected in relation to an essentially unrelated product, being clothing.  This is an approach vastly different from that under the old legislation, leaving aside defensive marks.
The decision is clearly a watershed insofar as the Constitution was invoked, and for the first time in a trade mark case it constituted a central defence.  LIO specifically relied on the Constitution’s guarantee of freedom of speech.  The court however held that the conduct of LIO exceeded the protection afforded to it by the Constitution, and that although the dividing line in this regard was a thin one, it was nevertheless transgressed by LIO.  In coming to this conclusion the court had regard to the fact that LIO was deliberately exploiting SAB’s marks for commercial gain, it could not sell its products without using their marks, and its lampooning or parodying of the marks were not a harmless clean pun which pokes fun at the marks.  Instead, it introduced the race factor, which is an issue that the new democratic system is at pains to avoid.  It was also said that the wording of the t-shirt borders on hate speech.  The court had regard to legislation relating to the prevention of unfair discrimination, that prohibited the use of words that are hurtful or harmful if they are based on race or ethnic origin.  These factors were found to be present.  For these reasons, the court rejected the constitutional defence.
The Supreme Court of Appeal has of course heard countless trade mark infringement cases over decades.  It will now be faced with the situation where the relatively new Constitution will be applied to an area of law that is not an obvious target, in contrast to subjects such as human rights, patient’s rights, accused’ rights, and so on.  Traditionally, trade mark law had a neutral political content, with the exception perhaps of the McDonald’s case, which was perceived to be, by some observers, to be a “political” situation, with the government being placed under pressure by the United States to protect American companies, amongst others, those who have not conducted business in South Africa during the currency of apartheid sanctions.  Arguably, public interest is higher in this instance than in the McDonald’s case.
In countries such as the United States there has been many decisions on this issue, and the court is likely to look for guidance in that system.  Some decisions, such as the Anheuscher Busch case, will favour SAB.  Here the defendant published a mock advertisement linking the proprietor’s beer to oil pollution.  The court ruled in favour of the proprietor.  In contrast, in the LL Bean case, a parody of a mail order catalogue in a pornographic magazine was held to be protected by the American Constitution.  And then there is the case where Tommy Hilfiger did not succeed in preventing the use of Timmy Holedigger for pet spray.  To say where the line should be drawn, and who will laugh last, could amount to digging a hole for oneself.