The (copy)cat has been let out of the bag

  • PRIMARK trademark cancelled as it was not in use in South Africa
  • The mark did not qualify for protection as a well-known trademark under South African trademark law
  • Primark’s evidence simply did not show that it had achieved the required level of recognition in South Africa among any relevant sector of the public

The South African Supreme Court of Appeal recently handed down its judgment in a trademark battle concerning Primark, the well-established Irish clothing brand, and Truworths. Truworths successfully cancelled the PRIMARK trademark on the grounds that it was neither use and nor well known to the relevant sector of the South African public.

Owners of established international brands often find themselves in a similar situation to this, where a local retailer in a jurisdiction where it is not actively trading seeks to adopt and register its trademark, which is otherwise well established more or less worldwide.

While Truworths was branded “a copycat imitator of another’s brand or labelbecause it sought to use and register the trademark PRIMARK, the court ultimately concluded that the PRIMARK mark did not qualify for protection as a well-known trademark in terms of South African trademark law. The principles laid down in the judgement provide valuable guideline and clarity for established international brands seeking to enforce their trademarks in South Africa.

Background

In 1976 Primark registered its PRIMARK trademark in South Africa in Class 25 in respect of clothing, boots, shoes and slippers. Truworths, wishing to use and register the PRIMARK trademark in Class 25 in its own name, applied to cancel Primark’s trademark under the non-use cancellation provisions in Sections 27(1)(a) and (b) of the South African Trademarks Act 194/1993.

The basis of this application was twofold. First, Primark never had a bona fide intention to use the PRIMARK trademark in relation to the goods for which it was registered and second, there had been no bona fide use of the mark within a five-year period leading up to the application for cancellation. In terms of the act, any use in the three months preceding the application for cancellation is disregarded.

While Primark contended that there had been bona fide use of the mark during the relevant period, it primarily sought to defend the cancellation by relying on its alleged well-known status in South Africa. If the trademark was shown to be well-known, Truworths would be disentitled from raising the provisions of Section 27(1)(a) or (b) as grounds for cancellation.

The court dealt with the issue of well-known trademarks first, because, if decided in Primark’s favour, the question of bona fide use of the mark would not be in issue.

By way of background, in determining whether a mark qualifies as well-known in South Africa, Section 35(1)(A) of the act states that “due regard shall be given to the knowledge of the trade mark in the relevant sector of the public, including knowledge which has been obtained as a result of the promotion of the trade mark”.

It is trite that knowledge of the mark among the entire South African population is not required for it to qualify as well known, but rather knowledge among a substantial number of persons interested in the goods or services to which the mark relates (ie, in the relevant sector of the public). 

Identifying the relevant sector

Unsurprisingly there was a difference in approach by the parties in identifying the relevant sector of the public.

Truworths, aiming to have the relevant sector of the public defined as widely as possible, argued that it comprised all South Africans interested in clothes and accessories.

Primark, in contrast, argued for the acceptance of a far narrower section of the public, namely those people who are interested and active in the fashion and retail industry, such as retailers of fast fashion clothing and fashion writers, bloggers and their readers. It also contended that knowledge of its mark extended to those who have come across its stores while travelling abroad, or in references in fashion magazines, blogs and internet searches.

Having regard to previous judgements in McDonald’s and Gap, the court accepted that an assessment of possible applicable sectors of the public with reference to the Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks Adopted by the Assembly of the Paris Union for the Protection of Industrial Property and the General Assembly of WIPO (the WIPO recommendations) was the correct approach to follow. In this regard, Article 2(2)(a) of the WIPO recommendations states the following:

Relevant sectors of the public shall include, but shall not necessarily be limited to:

  1. actual and/or potential consumers of the type of goods and/or services to which the mark applies;
  2. persons involved in channels of distribution of the type of goods and/or services to which the mark applies;
  3. business circles dealing with the type of goods and/or services to which the mark applies.

With reference to the WIPO recommendations, the court concluded that:

  • The relevant sector for enforcement purposes is affected by the nature of the goods or services provided by the proprietor of the mark. Therefore, luxury brands aimed at the extremely wealthy would naturally have a small group of consumers comprising the relevant sector. With some speciality goods such as medical appliances provided to doctors, on the other hand, the relevant sector will be limited to the suppliers of such appliances to the doctors, rather than the manufacturers.
  • Provided a party claiming protection under the Paris Convention establishes that its mark is well known in any relevant section of the public, the mark must be taken to be a well-known mark entitled to protection. The fact that it is not well known to other relevant sectors is irrelevant.

In view of the goods involved in this matter (ie, fashionable but relatively inexpensive clothing sold in the retail market to a wide body of consumers), the main question was whether only one possible sector of the public was at play (ie, the majority of potential purchasers of clothing, as Truworths contended) or whether a narrower defined sector, consisting of channels of distribution of clothing in the retail sector along with a small segment of the public, could also be accepted.

The court approached the matter by examining the evidence of use put forward to determine whether the mark was well known to both of the groups identified by the parties. If it was found to be well known to a particular group or both, the question would then be whether the identified group constituted a relevant sector for purposes of Paris Convention protection.

The highlights of Primark’s evidence included the following:

  • the establishment of 270 stores in nine countries between 2006 and 2014;
  • annual turnover of about £16 billion and advertising expenditure in excess of £57 million between 2009 and 2013;
  • two websites with over 40,000 hits on the websites from South African locations;
  • Twitter and Facebook accounts with over 3 million likes and 54,000 followers (including some South Africans) respectively;
  • an Instagram account with nearly 450,000 followers, including some from South Africa;
  • a number of awards and accolades including Multi Market Retailer at the 2010 World Retail Awards where other South African retailers (including Truworths) also won awards;
  • recognition as one of the top 250 retailers and 50 fastest growing retailers by Deloitte in 2010, 2012, 2013 and 2014;
  • affidavits by five buyers who were active in the clothing retail sector in South Africa, including for other large well-known South African retailers; and
  • tax refund receipts issued for South African shoppers visiting the United Kingdom for nearly 3,000 claims on transactions amounting to more than £600,000.

The court accepted that there must have inevitably been a measure of spillover knowledge of the PRIMARK trademark among visitors to the United Kingdom from South Africa but concluded that this made up a minority of South Africans (principally from higher income groups).

Despite holding that the relevant sector of consumers was narrower than Truworths had contended, it ultimately found that Primark’s evidence was inadequate to establish the requisite degree of knowledge among a substantial sector of South African consumers. However, this was not the end of the enquiry.

The question remained as to whether the PRIMARK trademark was well-known to a more limited and narrowly defined sector of the public comprising people involved in the marketing and distribution of the type of goods in which Primark trades and, if so, whether this constitutes a relevant sector of the public for purposes of Section 35(1) of the act.

It was accepted that the PRIMARK trademark was successful and well-established and that it was well known to the portion of the South African public engaged in the design, distribution and retail of inexpensive fashion clothing. However, on the strength of the evidence presented, the court concluded that this was not a ‘relevant sector’ as provided for in the WIPO recommendations.

The court held that an essential requirement for any identified sector of the public to be regarded relevant is that:

the persons constituting the sector in question must know of and be interested in the mark for the reasons that trade marks are given protection, namely their attractive force in the trade in goods and services and their role as a badge of origin of those goods and services.

In short, Primark’s evidence failed to establish this essential requirement among the narrower group it sought to identify as relevant, for the following reasons:

  • there was no evidence to show that South African retailers or other possible distribution channels were seeking to form a relationship with Primark with a view to selling Primark branded clothing in South Africa; and
  • the affidavits presented in support of Primark’s contentions simply attested to businesses that were staying in touch with trends of similar businesses in other countries and not of businesses aspiring to enter into an arrangement with Primark to become a distribution channel for them in South Africa.

The court elaborated on the essential requirement for relevance as follows in Paragraph 59 of the judgment:

Knowledge of a mark may arise in circumstances unrelated to any desire by the people acquiring that knowledge to purchase the goods or services or engage in a business relationship with the proprietor of the mark. Students at a business schools, studying Primark’s rapid and apparently successful expansion as a case study in an MBA programme, would know the mark but not for any commercial purpose. Another retailer, seeking to emulate a successful business operating in the same field but in another country, would also acquire knowledge of the mark, but with a view to enhancing the performance of its own business. That type of knowledge of the mark is unrelated to the proprietor’s use of the mark for the purposes for which trade mark protection is extended.

Bona fide use

Having found that Primark could not rely on well-known status to resist the cancellation of its trademark registration, the court needed to consider whether the evidence of use presented by Primark constituted bona fide use.

The requisite use must be use as a trademark, for the commercial purposes that trademark registration exists to protect. While it can be minimal, it must be use in the course of trade and for the purpose of establishing, creating or promoting trade in the goods to which the mark is attached. The use must be genuine.

In an attempt to prove the requisite use, Primark relied on the following:

  • A single sale of a pair of trousers on a South African website describing itself as an online marketplace. This sale was not authorised by Primark and it occurred one month prior to the start of these proceedings.
  • The results of an eBay search dating back to 13 August 2014 reflecting various Primark-labelled items for sale with prices displayed in South African currency. Again, the court found that these sales were not by or on behalf of Primark, the website was based in the United States, the currency displayed could be the result of a location algorithm and, most importantly, the evidence did not predate the commencement of proceedings.
  • A statement made on a blog by a South African fashion blogger, Ms Harding. Although the blog post was made in the relevant period prior to the commencement of proceedings, it was not by or on behalf of Primark and did not reflect any intention by Primark to sell its clothes in South Africa.

The court described Primark’s evidence of use as being “tenuous in the extreme” and it was unsurprising to see it ultimately dismissed.

Comment

The judgment provides clarification on the essential requirements for any identified sector of the public to qualify as being relevant for the purposes of establishing a well-known reputation or status. It also presents a soundly reasoned assessment of the evidence needed in support.

While Truworths’ reasons for adopting the PRIMARK trademark in South Africa were considered questionable and territorial isolation is gradually diminishing, the judgment shows that the principle of territoriality still finds appropriate application in an interconnected world.

In a short concurring judgment, Justice of Appeal Willis eloquently explained that the osmotic power of ideas and images has intensified immensely in recent decades and the ever-fast and changing influence of television‚ the Internet and mass air travel can easily see an unknown brand or label become embedded and well-known in South Africa “in the twinkling of an eye”.

While the authors fully agree with this assessment and that the changing social environment and rapid expansion of social media raises some interesting questions regarding the relevance of the principle of territoriality, in the end, Primark’s evidence simply did not show that it had achieved the required level of recognition in South Africa among any relevant sector of the public.

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