LU 4 (1)
Domain Names and Infringement of Trade Marks on the Internet
7.1 The Domain Name System
7.1.1 Introduction
Computers communicate through global networks using Internet Protocol (IP) addresses.
Each connected computer (host) has a unique numerical IP address for identification.
IP addresses consist of four sets of numbers (integers) separated by dots; each number ranges from 0 to 255.
Example: 163.200.147.172 is an IPv4 address.
Internet Protocol version 4 (IPv4) is running out of available addresses.
Internet Protocol version 6 (IPv6) was introduced to handle future expansion.
IPv4 supports over 4 billion unique addresses, while IPv6 supports over 340 trillion trillion trillion.
Domain Name System (DNS) was developed to improve the assignment process and manage site names on the Internet, as IP addresses are not user-friendly.
Originally, the ARPANET development team managed a list of host names and addresses in a file called HOSTS.TXT.
HOSTS.TXT required manual updates and distribution to all connecting parties.
The Network Information Center (NIC) of the Stanford Research Institute (SRI) maintained HOSTS.TXT.
Changes were submitted to the NIC and compiled into a new HOSTS.TXT once or twice a week.
Problems with HOSTS.TXT arose as the number of hosts grew, increasing network traffic and processor load on the SRI and NIC.
In November 1983, RFC 882, published by Paul Mockapetris, laid the groundwork for the design of the DNS architecture.
In 1991, the US government transferred responsibility for the non-military component of ARPANET to the National Science Foundation (NSF).
The NSF retained the Internet Assigned Numbers Authority, managed by Jon Postel, to allocate IP addresses.
In 1998, the management of domain names was privatized and internationalized, taken over by the Internet Corporation for Assigned Names and Numbers (ICANN).
ICANN coordinates DNS management, facilitates competition in domain name allocation, and maintains a directory linking domain names with IP numbers and the authoritative database of Internet registrations.
The DNS maps numerical addresses to domain names, ensuring effective routing of traffic on the net.
Domain names are mnemonic and easy to remember and may indicate website content.
Example: unisa.ac.za is easier to remember than 163.200.147.172.
The full address "http://www.newcars.co.za" is a Universal Resource Locator (URL).
The URL identifies the communication protocol (http) and the IP address of the server site.
7.1.2 Analogy to other names or numbers
Domain names are analogous to real-space designators like geographic names or telephone numbers.
Domain names operate like telephone dialling codes in reverse.
Example: www.newcars.co.za: "newcars" is the specific site, "co" is the broad category, and "za" is the country code.
Telephone dialling code example: +27 12 123 4567 (27 is South Africa, 12 is Pretoria, 123 4567 is the telephone number).
Trademark law can be applied to domain names to the extent that it recognizes real-space designators.
Trading names, personal names, and company names can be registered as domain names; however, a domain name remains a separate designation even if it incorporates a trademark or company name.
Website owners use generic top-level domains (gTLDs) or country-code top-level domains (ccTLDs).
Popular gTLDs: .com (commercial), .org (non-profit), .net (computer network).
Anyone can register a domain name under these generic top-level domains.
gTLDs are short forms for the field of activity:
".com" (commercial)
".net" (Internet services)
".org" (nonprofit organizations)
".edu" (institutions of higher learning)
".gov" (governmental agencies).
Registration in .com, .net, and .org is not restricted to appropriate fields in practice.
ICANN has historically controlled the creation of new gTLDs.
In June 2008, ICANN's Board approved the most comprehensive expansion of gTLDs.
By August 2021, ICANN had received 1930 applications for new gTLDs, with 1239 already registered.
This new gTLD program significantly changes the domain name system.
The .Africa gTLD allows Africa to play a significant role in the DNS.
The .Africa gTLD launch offers advantages to African governments and traders, protecting commercial, cultural, linguistic, religious, and personal rights.
African trademark proprietors and rights holders are protected by innovative rights-protection mechanisms.
Example: unisa.ac.za refers to Unisa's website, registered in the academic (.ac) domain in South Africa (.za).
.za is the country-code top-level domain (ccTLD), and .ac (academic) is the second-level domain (SLD).
The complete URL for Unisa is http://www.unisa.ac.za.
Domain names are allocated by domain-name registries on a first-come, first-served basis.
Registries do not verify applicants' rights to choose names or examine conflicts with others' rights.
A company may find its trademark already registered by another user.
Companies prefer registering in generic top-level domains (gTLDs) over country-code top-level domains (ccTLDs).
Domain names provide the basic connection between the physical and virtual worlds.
Setting up a business on the Web requires a domain name.
Registering a domain name involves a contractual agreement with a domain-name provider, defining obligations and rights.
Domain names are more user-friendly than a series of numbers.
Example: commerce.gov is easier to remember than 98.37.241.30.
Electronic commerce relies on the stable and effective functioning of the Internet.
The Domain Name System facilitates this stability by tying domain names to IP addresses for correct message routing.
Domain names often include trademarks (e.g., disney.com).
These names serve as online source indicators, distinguishing competitors' offerings.
7.2 Relationship between domain names and trade marks
7.2.1 Introduction
Domain names have become a standard mechanism for communication with customers, providing a global presence.
Intellectual-property rights are publicly administered on a territorial basis.
A domain name does not function as a trade mark if used purely as an address.
A domain name may assume a role similar to that of a trade mark if it identifies the origin of a business and its goods and services.
A domain name may be registrable as a trade mark if it is distinctive and used in commerce.
Domain names often consist of generic or descriptive words selected to enhance their ranking.
Example: cheapcomputer.com may attract online buyers but it will not be registrable as a trade mark for computer equipment.
Increased competition in registration of prominent domain names has arisen due to the commercialization of the Internet.
The relationship between domain names and trademarks is a consistent thread in the discussions concerning the management of the DNS.
The use of trademarks on the Internet has highlighted two areas of potential conflict between domain names and trademarks.
A trademark is registered for certain goods or services only; therefore, multiple companies may own identical trademarks for different goods or services.
A trademark is territorial by nature, conferring exclusive rights in the country of registration only.
An identical trademark may be owned by multiple companies if registered in different countries.
The Internet is global, allowing access to virtually every country.
A domain name is unique; only one company can own a particular domain name.
Of all companies that may own an identical trademark, only one may own the corresponding domain name.
Most domain-name registries adopt a passive attitude and will only deregister a domain name or transfer it to the true owner based on a court order or decision from a recognized alternative dispute-resolution service provider.
A trademark proprietor who finds that her or his well-known trade mark has already been allocated to another Internet user is faced with three courses of action: civil litigation for trade-mark infringement; alternative dispute-resolution or outright purchasing it from the current owner.
The World Intellectual Property Organization (WIPO) has addressed the relationship between domain names and trademarks.
WIPO suggests avoiding two autonomous systems operating in isolation: the DNS in cyberspace and the intellectual property system.
With open gTLDs, users have a simple, fast, and inexpensive domain name registration process on a first-come-first-served basis.
Applicants do not need to justify the use of a particular name, no verification process for any contact details, no provision for the settling of disputes, and no requirement that any payment be tendered and confirmed before the domain-name holder starts using the name.
These practices have led to registrations that may be considered abusive.
The advantage of these practices is the establishment of low entry barriers, encouraging the rapid growth of the Internet and new commercial uses of websites.
Attempts to resolve disjunction between the DNS and existing intellectual-property rights must not unduly prejudice the efficient DNS system.
7.3 Protection of well-known marks
7.3.1 International protection of well-known marks
Proprietors of well-known unregistered marks can rely on the protection provided for in article 6 of the Paris Convention for the Protection of Industrial Property.
Article 6(1) states that countries of the Union undertake to refuse or cancel the registration and prohibit the use of a trademark that is a reproduction, imitation, or translation of a mark considered well-known.
Four features of the protection should be noted.
Protection extends to famous and well-known marks against the registration and use of a trademark that is a reproduction, imitation, or translation that is liable to create confusion.
Article 6 applies only to trademarks used in respect of goods, not service marks.
The Trademark Law Treaty (TLT) extends Paris Convention provisions to service marks.
Neither the Paris Convention nor the TRIPS Agreement defines what a well-known mark is.
Determination of whether a mark is well-known is left to national registries and courts.
The principle of "speciality" applies: protection extends to registration or use of the offending mark in respect of identical or similar goods or services.
The protection in article 6 is limited and extends only to registration and use of the offending mark in relation to identical or similar goods or services.
After a survey of the international protection of famous and well-known marks, WIPO's Report notes conceptual difficulties.
The Paris Convention and TRIPS Agreement protect famous or well-known marks against the registration or use of infringing marks.
Domain names are often not used to identify goods and services with their producer or seller.
Protection extends only to countries where competent authorities consider a mark famous or well-known.
The problem is to identify the relevant territory in the case of a gTLD.
There is no established treaty definition of what constitutes a well-known mark.
Interpretation is left to national legislation.
Protection of well-known marks often exists only for confusingly similar marks relating to the same goods or services.
Anyone may register a .com domain without commercial activity or a .net name while undertaking commercial activity unrelated to Internet services.
7.3.2 The Anticybersquatting Consumer Protection Act
In November 1999, the US Congress passed the Anticybersquatting Consumer Protection Act (ACPA), introducing a new federal cause of action and remedies against cybersquatting.
The ACPA creates a cause of action against anyone who, with bad-faith intent to profit from the goodwill of another's trademark or service mark, registers, traffics in, or uses a domain name that is identical or confusingly similar to, or dilutive of, such a mark.
15 USC § 1125 (d) (1) (A) is intended to apply to domain names, particularly concerning cybersquatting.
Elements of this cause of action created by 15 USC § 1125(d) (1) (A):
Ownership of a protectable mark
Defendant's bad-faith intent to profit from the mark
Registration, trafficking in, or use of a domain name that infringes the mark or dilutes a famous mark
The fact that the defendant is the domain-name registrant or the registrant's licensee.
The ACPA lists nine factors to guide a court's determination of whether a domain was registered with bad faith:
The person's intent to divert consumers from the mark owner's website
The person's offer to transfer the domain name to the mark owner or a third party
The person's providing false contract information when applying for registration
The person's registration of multiple domain names with knowledge that the names are confusingly similar to the marks of others
The extent to which the mark used in the domain name is distinctive or famous.
The ACPA amends sections 34(a) and 35(a) of the Lanham Act to allow courts to grant injunctive and monetary relief and statutory damages for cybersquatting.
The court may order forfeiture or cancellation of the domain name or transfer it to the mark owner.
To address difficulties in locating domain-name registrants, the Act allows a plaintiff to file an in rem action against a domain name itself when in personam jurisdiction cannot be obtained or the owner cannot be located.
The plaintiff must attempt to publish notification of intent to bring a suit by postal and electronic mail at the address the registrant provided to the registrar.
The ACPA also creates a new cause of action for domain registrations of individuals' names, subject to a good-faith exception.
Prior to the ACPA, domain name disputes were resolved through federal trademark infringement and anti-dilution statutes.
The ACPA is effective in dealing with domain name disputes.
In Virtual Works, Inc. v Volkswagen of America Inc., the disputed domain name was registered with a bad-faith intent to profit from the trademark "Volkswagen".
In Shields v Zuccarini, the court granted relief for typosquatting.
Leaffer notes that while the ACPA provides remedies for cyber-piracy but it does not address two significant problems:
The ACPA does not address the problem that occurs when two persons with legitimate rights in a mark wish to register the same domain name or when two persons unaware of each other's rights register a domain name.
Trademark law accommodates the use and registration of the same mark by two different parties when there is no likelihood of confusion, while each domain name must be unique to a single owner for its Internet function to work.
Domain names have both a purely technical function and a trademark function.
Secondly, the ACPA does not deal with the problem of the "warehousing" of domain names.
The most desirable and well-known gTLDs are still affected by this warehousing.
7.4 Protection of well-known marks in South Africa
Well-known marks are protected against the registration of a trade mark that constitutes a reproduction, imitation or translation of that well-known mark, in relation to identical or similar goods or services, which reproduction, imitation or translation is liable to create deception or confusion.
Section 35 prohibits the unauthorised use of an unregistered mark, which is well-known in South Africa, in relation to goods or services for which the mark is well-known that is liable to create deception or confusion.
This protection is extended to well-known marks irrespective of whether the marks are used in South Africa or not.
Trade-mark infringement traditionally occurs when unauthorised use is made in the course of trade of a mark which is identical or confusingly similar to a registered mark and in relation to goods or services that are the same as or similar to those to which the registered trade mark relates.
Section 34(1)(c) of the Trade Marks Act offers trade-mark proprietors additional protection when their mark is also well known.
It is an infringement to make unauthorised use of a well-known mark in the course of trade in any goods or services, if such use is likely to take unfair advantage of or be detrimental to the distinctive character or reputation of the well-known mark.
A trade-mark proprietor who wishes to rely on trade-mark dilution as a cause of action faces the following challenges in terms of section 34(1)(c) of the Trade Marks Act.
He or she has to prove that the trade mark qualifies as a well-known mark, that the allegedly infringing mark has been used in the course of trade, albeit in relation to any goods or services, and that such use is likely to dilute the distinctive character of the registered trade mark.
When all these elements are present, trade-mark dilution is deemed to have taken place.
7.4.1 When is a mark well known?
The phrase "well known" is not defined in the Trade Marks Act.
In McDonald's Corporation v Joburgers Drive-Inn Restaurant (Pty) Ltd and Another; McDonald's Corporation v Dax Prop CC and Another; McDonald's Corporation v Joburgers Drive-Inn Restaurant (Pty) Ltd and Dax Prop CC the court held, in the context of section 35 of the Act, that the degree of knowledge required for a trade mark to be well known is similar to that in a passing-off action.
It is sufficient, therefore, for the trade mark to have acquired a reputation in South Africa among a substantial proportion of the public or persons interested in the goods or services in question.
In terms of the presumption that the same expression in every part of a statute bears the same meaning, courts may well give the same meaning to the phrase "well known" in the dilution provisions.
This approach was followed in Triomed (Pty) Ltd v Beecham Group plc.
In Safari Surf Shop CC v Heavywater and Others the court held that, when trade-marked goods are available in only one part of South Africa, it is sufficient, for the purposes of section 34(1)(c) of the Trade Marks Act, that the trade mark is well known in that part of South Africa.
In such a case, knowledge of the trade mark need not pervade the whole country.
But the court refrained from giving any guidelines on the degree of public awareness of the trade mark that is required.
In this case the trade mark "SPIDER" was held to be well known in relation to surf boards in the coastal area.
7.4.2 Use in the course of trade
The phrase "use in the course of trade" in the context of the dilution provisions should be interpreted widely.
Use in the course of any trade should suffice.
Moreover, non-trade mark use can also suffice.
Both American and British courts have given a liberal interpretation to the "use in commerce" requirement for trade-mark dilution.
They have held that it is not necessary to "sell" or "trade" in any goods or services to clear the "use in commerce" or "use in the course of trade" hurdle: any trade will do.
Three American cases are of particular note.
In Planned Parenthood Federation of America Inc v Bucci the defendant was a political activist who solicited funds for his activities. The court found that his use of the plaintiff's trade mark as a domain name ("plannedparenthood.com") and use of the mark on his web page constituted use in commerce.
The court advanced three reasons for its finding: first, the defendant's website promoted the sale of a book; secondly, he was a political activist who solicited funds for his activities; and, thirdly, his actions were designed to harm the plaintiff commercially by preventing it from promoting its reproductive-health-care services on the Internet.
In Jews for Jesus v Brodsky the owners of the trade marks "Jews for Jesus" and "Jews fr Jesus" brought an action for trade-mark infringement against the domain-name registration jewsforjesus.org, claiming that the domain name diluted the trade mark.
The court held that, because the defendant's site made disparaging statements about the plaintiff's organisation and contained links to other sites containing information critical of and contrary to the plaintiff's teachings, the conduct amounted to "blurring" and "tarnishment". On the question of the commercial use of the mark the court conceded that the defendant's site was not soliciting funds, as did that of the defendant in the Planned Parenthood case, but held that the mere fact that a hyperlink on the website linking it to other commercial websites can by itself constitute use in commerce. The court found the defendant's site to be a conduit to a commercial site, the Outreach Judaism Organisation.
The ambit of commercial use was also analysed in People for Ethical Treatment of Animals Inc v Doughney. In this case a trade-mark-infringement action arose from the registration of the domain name Peta.org, the website of which was set up by a group called People Eating Tasty Animals as a parody of the organisation People for the Ethical Treatment of Animals (PETA). The court held that, under the Lanham Act proof of use of the offending PETA mark in connection with the offering for sale, distributing or advertising of goods and services does not require showing that the defendant actually placed goods or services into the stream of commerce.
The court held that the term "services" could include the dissemination of information, including purely ideological information. The use of the domain name was held to be use of the PETA trade mark in connection with goods or services because it was used in connection with the distribution of services. The reasons for the court's conclusion were that the defendant's use of the domain name might prevent users of PETA's services from reaching its Internet website and that Peta.org had over thirty links to commercial operations offering goods and services. Most importantly, the court held that even one such link is sufficient to establish the commercial-use requirement under the Lanham Act.
7.4.3 Dilution
The most common form of dilution is dilution by blurring - the gradual disassociation in consumers' minds of the trade mark from the proprietor's product.
Blurring takes place when the offending use, which is in relation to non-competing goods, dilutes the uniqueness and distinctiveness of the mark.
Although prospective customers are not confused as to source, the offending use dilutes the uniqueness and distinctive ability of the trade mark to identify and distinguish one source.
Dilution may also occur by what is known as tarnishment.
This occurs when the well-known trade mark is used in relation to inferior products, or in a degrading or offensive context which leads to an unfavourable association in the public's mind.
Thus, the trade mark is diluted not only by the erosion of its distinctive character but also by the tarnishing of its positive reputation and good name when it is parodied or used in an offensive or negative context. In other words, detriment can entail either making the mark less attractive (tarnishing) or less distinctive (blurring).
7.4.3.1 Tarnishment
Tarnishment has also been described as a loss of positive associational value.
One of the famous cases on tarnishment involved perfume and a service to remove human waste.
The German Federal Supreme Court prohibited the use of the mark "4711" on the side of a van of a sewage company. The court held that even though the numbers represented the telephone number of the company, their use was offensive in that it tarnished the well-known mark “4711" in respect of perfume.
In Triomed (Pty) Ltd v Beecham Group plc tarnishment was described as an unfavourable association between the well-known registered mark and the mark of a defendant. The court noted that tarnishment is an impairment of the well-known mark's capacity to stimulate the desire to buy.
Well-known examples of tarnishment include the parody of the trade mark "Cabbage Patch Kids" by "Garbage Pail Kids", and "Enjoy Cocaine" in the famous "Coca-Cola" script.
Furthermore, a trade mark was held to have been tarnished when a well-known American beer manufacturer's slogan, "Where there is life… there's Bud", was adapted to "Where there is life… there's bugs".
In a case in the United Kingdom, Premier Brands UK Ltd v Typhoon Europe Ltd, a well-known registered trade mark for tea, "Ty.Hoo", was alleged to have been tarnished by the trade mark "Typhoon" which was used in relation to kitchen ware. The court rejected the plaintiff's claim that the "Ty.Hoo" trade mark would be tarnished by the "Typhoon" sign because of the latter's association with the destructive power of tropical cyclones. The court held that neither the trade-mark statute nor case-law in the United Kingdom suggests that it is unlawful to play on a mark to comic effect.
7.4.4 Freedom of expression: Parody and social comment
There are many examples where courts have upheld parodies of trade marks.
For example, in the American case Hormel Goods Corp v Jim Henson Productions the use of the trade mark "Spam" (a registered trade mark for spiced ham (luncheon meat)) for the name of a wild-boar character "Spa'am" in the Muppets Treasure Island film was at issue.
The court held that this use did not to dilute the mark. The court held that there was no blurring: on the contrary, the joke magnified the mark and increased its fame. The court also held that the mark was not tarnished as the character was likeable and positive.
The question arose in South Africa whether the unauthorised use of someone else's registered trade mark in the registration of a "protest" domain name (with appropriate indications of disassociation, as in "telkomsucks.co.za" and "fuck-telkom.co.za) could constitute trade-mark infringement.
This issue was addressed in SAB International t/a Sabmark International v Laugh It Off Promotions in which the court ruled on a dispute central to freedom of expression and the tarnishment of trade marks. This case, together with Laugh It Off Promotions CC v SAB International (Finance) BV, is central to the debate about the relationship between freedom of expression and trade-mark protection. Two considerations may assist in the quest to determine where the thin line between freedom of expression, on the one hand, and statutory protection of trade marks, on the other, may be found: (a) what constitutes "commercial use" or "use in the course of trade in relation to goods or services" as far as websites are concerned and (b) when does protected freedom of expression cross the line to amount to infringing dilution - more specifically, to tarnishment?
7.4.4.1 SAB v Laugh It Off
In SAB v Laugh It Off Promotions the applicant (SAB) applied for an interdict restraining the respondent from infringing its registered trade mark "Carling Black Label".
The respondent sold T-shirts bearing marks which were similar to the applicant's trade mark. The T-shirt design in question depicted the words "Black Labour" (parodic replacements for "Black Label") together with the slogan “Africa's lusty, lively exploitation since 1652" (parodying the SAB mark's "America's lusty, lively beer"), as well as "White" and "Guilt" (replacements for respectively "Carling" and "Beer").
SAB claimed that, in terms of section 34(1)(c) of the Trade Marks Act 194 of 1993, such use of their well-known trade mark was likely to take unfair advantage of or be detrimental to the distinctive character or repute of the mark, even in the absence of confusion or deception.
The respondent submitted that its use of the trade marks was lawful as it merely made social commentary in the form of lampooning or satire, which it is entitled to do by virtue of the Constitution of the Republic of South Africa, 1996 which guarantees freedom of speech.
Indeed, section 16(1) of the Bill of Rights in the Constitution guarantees everyone the right to freedom of expression, which includes freedom of the press and media, freedom to receive or impart information or ideas, and the freedom of artistic creativity, academic freedom and of scientific research. However, freedom of expression is not absolute and is limited by laws of general application, such as intellectual-property laws. A person's right to freedom of expression may thus be limited if it is in conflict with another person's right to a trade mark.
In SAB v Laugh It Off Promotions the court held that particulars had to be furnished of how the use of the mark would be likely to take unfair advantage of, or be detrimental to, the distinctive character or repute of the appellant's trade mark. The court concluded that marks will be likely to give offence to any class of persons if such marks ex facie offend because of their content. It held further that the fundamental right of freedom of expression should allow unauthorised use of a trade mark for the purposes of parody and social comment.
Referring to Tommy Hilfiger Licensing Inc v Nature Labs the court added that parody and social comment may not be offensive to the point where it exceeds a harmless clean pun and tarnishes a mark's reputation.
The court rejected the respondent's argument that the latter's use of the applicant's marks was justified because such use was an expression of the respondent's right to freedom of artistic activity. The court held that such use exceeds the limits of freedom of speech and expression afforded the applicant by the Constitution. The dividing line between the freedom of speech and the statutory protection afforded the applicant is a thin one.
The court decided that the respondent's lampooning or parodying was not a "harmless clean pun" merely parodying or poking fun at the applicant's marks but went further by introducing the race factor, something which our Constitution and our new democracy are at pains to avoid. While the respondent's use of the marks might not have amounted to hate speech as contemplated in section 16(2) (c) of the Constitution, it could be said to border on hate speech. The court also referred to the provisions of the Promotion of Equality and Prevention of Unfair Discrimination Act (PEPUDA) in terms of which it viewed the respondent's use of the applicant's mark as intentionally hurtful or harmful to the applicant in as much as such actions were based on race, ethnic or social origin, and colour.
The court said that the line between freedom of expression and the infringement of laws of general application is a thin one, one that had been transgressed by the respondent.
The court held that the respondent had been deliberately exploiting the applicant's mark for commercial gain and that the respondent could not sell its products without using the mark. The court consequently upheld the applicant's claim that the trade mark had been infringed. The respondent appealed against the decision.
The much-anticipated appeal judgment was delivered by the Supreme Court of Appeal in Laugh It Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International. The issues central to this case were once again the interaction between trade-mark protection and freedom of expression. The court referred to the general concern regarding the pervasiveness of trade marks and noted that intellectual-property rights have no special status. In the court's view, it was venturing into the "virgin territory" of the impact of freedom of expression on intellectual-property rights.
The court noted that section 34(1)(c) of the Trade Marks Act should be interpreted in the light of the Constitution so as not to restrict unduly freedom of expression. This requires a weighing-up of the right to freedom of expression against a trade mark owner's rights of property, and freedom of trade, occupation and profession. The court noted that since neither trade-mark rights nor freedom of expression is absolute, a balance between them should be attained. The court found the appellant's interpretation of the message it sought to convey, namely a criticism of the methods used by the respondent to market its beer, strained, and upheld the respondent's contention that the message conveyed by the T-shirts would be likely to create a particularly unwholesome, unsavoury and degrading association with Sabmark's (SAB's) marks and that anyone who has seen the appellant's T-shirts would not thereafter be able to disassociate it from Sabmark's trade marks.
The court then turned to the justification of freedom of expression. It held that it is important to note what section 34(1)(c) does not forbid. A caricature of a mark may be used in the course of trade but not in relation to goods or services, or it may be used on goods or services but not in the course of trade. The court noted that, while a T-shirt is a powerful medium of communication in the same class as one-liners, sound bites and SMS messages, it is primarily a marketable commodity.
It noted further that, in general, sex- and drug-related parodies are frowned upon by courts, even if the parodies are clever or funny, simply because the prejudice to the trade-mark owner tends to outweigh the freedom of expression. Similarly, unfair or unjustified racial slurs will in general not be countenanced. Pure derisory parody of a mark should not be entitled to protection. The message a parodied mark conveys is important, as pure mockery or scorn do not fall within the realm covered by the freedom of expression. As far as the fair use of a copyright work for the purpose of criticism or comment is concerned, the court noted that parody needs to mimic an original work to make its point, needs to use some elements of a prior author's composition to create a new one, as it comments on that author's work. However, for parody to be fair, relevant factors need to be taken into account, such as the purpose and character of such use.
The court noted that the use of a parodied copyright work to advertise a product is treated with less indulgence than the sale of the parody itself and held that, as is the case with copyright infringement, parody cannot per se be a defence against trade-mark infringement. It is simply a factor to be used in determining whether the appellant's use of the respondent's mark is constitutionally protected.
The court referred to Greenpeace France v Esso in which Greenpeace used the mark “EO was used for polemic purposes and not to promote the products or services of Greenpeace; its use was thus regarded as non-commercial parody within the limits of the exception. The court also referred to the German legal protection against dilution "without due course" and concluded that the appellant's reliance on parody as a defence was misconceived. The court held that Laugh It Off's use of the SAB mark in relation to T-shirts was detrimental to the reputation of the mark, and concluded that no justification existed for the unfair use of the mark. The court found that the appellant had not exercised its freedom of expression: it abused it. The appeal was accordingly dismissed. The appellant then appealed to the Constitutional Court.
7.4.4.2 The Constitutional Court: Questions about the medium, the message and the manner
In the Constitutional Court decision Laugh It Off Promotions CC v SAB International (Finance) BV Moseneke J held that it is trite that in our constitutional democracy the requirements of section 34(1)(c) of the Trade Marks Act ought to be understood through the prism of the Constitution and specifically that of the free-expression guarantee.
The Constitutional Court criticised the Supreme Court of Appeal's two-stage approach in terms of which one first finds an infringement of the section and only thereafter determine whether the infringement is excused by an assertion of