LOTTO Case applications heard by Cape High Court

In Online Lottery Services (Pty) Limited v National Lotteries Board [2007] 1 All SA 618(C), the Cape High Court has heard two simultaneous applications in relation to rights in the LOTTO trademark. The first was by the operator of the LOTTO national lottery, National Lotteries Board, to restrain Online Lottery Services (Pty) Limited (Online) from trading as LOTTOFUN, and from making use of this trademark on the basis of infringement and passing off. The second was by Online to cancel the LOTTO registration of the National Lotteries Board on the basis that it did not constitute a trademark.

Online operated a website under the name Lottofun, selling LOTTO tickets via the Internet and short message services (commonly known as SMS) provided by mobile phone networks.

The interdict (injunction) application was based on Section 34(1)(a) of the Trademarks Act. The court repeated the established requirements to succeed, namely: unauthorized use in the course of trade in relation to goods or services in respect of which the mark is registered of an identical mark or a mark so nearly resembling it as to be likely to deceive or cause confusion.

Online argued that it made clear on its website that it merely purchased and offered LOTTO tickets as an 'agent', and therefore did not sell lottery tickets per se. The court held, however, that its use of LOTTOFUN was as a trademark in relation to services in respect of which LOTTO was registered. The other infringement requirements having been established, the only issue in dispute was, therefore, whether there was a likelihood of deception or confusion arising through the use of the trademarks LOTTO and LOTTOFUN.

The court reviewed the general principles of trademark infringement and referred to the judgment in Bata Limited v Face Fashion CC 2001 (1) SA 844 (SCA), where the Supreme Court of Appeal quoted with approval a decision of the European Court of Justice in Sable BV v Puma AG, Rudolf Dassler Sport [1998] RPC 199, and stated:

"Global appreciation of the visual, aural or conceptual similarity of the marks in question, must be based on the overall impression given by the marks, bearing in mind in particular, their distinctive and dominant components."

The court went on to examine the well-established principles of passing off. It held that a considerable reputation and goodwill vested in the trademark LOTTO and that it had become distinctive as indicating the origin of the national lottery game.

Despite the fact that Online had statements on its website that "Lottofun is an independent operator" and had "no direct affiliation with the National Lotteries Board", the court found that the use of the LOTTOFUN mark by Online was likely to deceive and thus cause confusion or injury, actual or probable, to the goodwill of the National Lotteries Board's business. It granted interdicts based on both statutory infringement and passing off.

In the cancellation application, Online argued that the LOTTO trademark registration was an entry wrongly remaining on the register as it did not constitute a trademark as required by Section 10(1) of the Trademarks Act.

The court held that although the word 'lotto' has a dictionary definition of "a game of chance like bingo, but with the numbers drawn by players instead of called", when the South African lottery was launched in 2000, the word 'lotto' was obscure and, to all intents and purposes, meaningless in that country. The trademark LOTTO was therefore capable of distinguishing the National Lotteries Board's lottery from any other and the cancellation application was dismissed.

It is likely that both cases will go on appeal.

Chris Job and Mandy Gordon, Adams & Adams, Pretoria