The SCA disallowed an appeal against the order of Mayosi AJ in the Western Cape Division of the High Court. An online retailer sought to prevent a competitor from using or ‘passing off’ a trademark similar to the one used by it. The registered mark is a composite of words in common use and the appellant unsuccessfully attempted to secure a monopoly in the word ‘Yuppie’. In terms of s 34(1)(c) of Trade Marks Act the marks were not similar and there was no likelihood of confusion.
Yuppiechef Holdings (Pty) Ltd v Yuppie Gadgets Holdings (Pty) Ltd (1088/2015) [2016] ZASCA 118 (15 September 2016) per Wallis JA (Lewis, Swain and Dambuza JJA and Schoeman AJA concurring).
SCA summary:
Trade mark – online retailer – whether mark used in relation to goods in respect of which mark registered – s 2(3)(a) of Trade Marks Act 194 of 1993 – whether marks confusingly similar or calculated to deceive – registered mark a composite of words in common use – attempt to secure a monopoly in the word ‘Yuppie’ – no likelihood of confusion – marks not similar in terms of s 34(1)(c) of Trade Marks Act – no passing off.
Excerpts
[7] It is appropriate to say something about the nature of an online retail business. These depend on customers accessing the website of the business. If the customer knows the name of the business or has its website address this can be entered into the search box on a search engine (Google, Bing, Yahoo or the like) and that website will be shown as one of the results for the search, although not necessarily the first result, because of the impact of advertisements. Repeat customers may ‘bookmark’ the site, which enables them to go directly to the site without a search.
[8] The concern in this case is largely with potential customers rather than established clientele, although there was some evidence claiming that established customers may be led to believe that there is a connection between the two businesses. Potential customers must first find the website from which the business operates. They can do this in one of two ways. If they are aware of the existence of the business, for example because they have seen an advertisement or been told about it by someone else, they will search specifically for that business. This involves typing into the search box of the search engine as much of the name of the business as they know or can remember and then pressing the search button or ‘enter’ on the keyboard of their device. This generates a number of hits ranked in order of relevance, that is, the likelihood that they are what is being searched for. The algorithms that operate the search engine determine the ranking. By working their way through these possibilities, and perhaps refining the search while doing so, customers will try to find the site they are looking for.
[9] The other route they can follow is to search for sites that sell goods fitting the general description of those that they are looking for. So, a person looking for a mixer or a set of kitchen knives will enter those words as a search term, whether alone or with others that occur to them, and then navigate the sites that the search engine generates to try and find a retailer who can supply what they are looking for. If they are seeking goods of a particular brand it is likely that they will include the brand name in their search.
[10] Alongside the ‘natural’ or ‘organic’ results produced by the search other results appear in the form of ‘sponsored links’ or ‘Ads’. These are advertisements and are a major source of revenue for the operator of the search engine. They appear on the search result page because the search term used by the potential customer is linked to a keyword or keywords that the advertiser has secured by paying a fee to the operator of the search engine. As one would expect the more that is paid by the advertiser to link its website with the keywords, the more prominently is its advertisement displayed. The aim is that the person engaged in the search will click on the advertisement and be taken to the advertiser’s website.[1]
[1] A fuller explanation of the workings of GoogleAds is to be found in Cochrane Steel Products (Pty) Ltd v M-Systems Group (Pty) Ltd and Another [2016] ZASCA 74; [2016] 3 All SA 345 (SCA) para 4, quoting the relevant portion of the judgment of Kitchin LJ in Interflora Inc v Marks and Spencer Plc [2014] EWCA Civ 1403 (CA). Neither of those cases is directly relevant to the present one as they involved the use by a competitor of a registered trade mark as a key word in order to prompt the search engine to show their advertisement on the search result page.