By way of short background, Laugh it Off had sold T-shirts bearing an illustration of the “Carling Black Label” trade mark but had replaced the words “Black Label” with “Black Labour” and “Carling Beer” was “White Guilt”.  In addition, the phrase “America’s Lusty Lively Beer” had been replaced with “Africa’s Lusty Lively “since 1652” and the words “brewed in South Africa with no regard given world wide”. Trade mark infringement proceedings were brought about by SAB against Laugh it Off on the basis that Laugh it Off’s use amounted to an infringement of the “Carling Black Label” mark.

SAB relied on section 34(1)(c) of the South African Trade Marks Act 194 of 1933 (“the Act“) which contains the so-called anti-dilution provisions and provides that a registered trade mark shall be infringed by the “unauthorised use in the course of trade in relation to any goods or services of a mark which is identical or similar to a trade mark registered, if such mark is well-known in the Republic and the use of the said mark will be likely to take unfair advantage of or be detrimental to the distinctive character or repute of the registered mark, notwithstanding the absence of confusion or deception“.

Although not recognised as a statutory defence, Laugh it Off argued that its use was not infringing and that it was entitled to use the “Carling Black Label” mark on the basis that it sought only to pass social commentary on the mark through parody.  This, it was alleged, it was entitled to do in terms of section 16 of the South African Constitution which guarantees freedom of speech, including freedom of artistic creativity. In US jurisprudence the law on parody is well developed, but it is little known yet in South African law, with most parody matters heard in the ASA Tribunal, and the ASA giving little credence to the parody defence.

The Cape High Court found Laugh it Off’s use to have diluted the “Carling Black Label” trade mark through the tarnishment thereof and, therefore, to have infringed the mark.  In the Cape High Court’s opinion, Laugh it Off’s use bordered on “hate speech” and exceeded the limitation of freedom of speech provided for under the Constitution.  The court considered that “[T]he dividing line between the freedom of speech and the statutory protection afforded the applicant is a thin one, but is nonetheless one which has been transgressed by the respondent.” 

On appeal, the South African Supreme Court of Appeal concurred with the decision of the Cape High Court, holding that Laugh if Off’s use of the “Carling Black Label” mark had indeed diluted (and, therefore, infringed) the mark by tarnishing it. In its judgment, the Supreme Court held that Laugh it Off’s use of the mark had created “an unwholesome, unsavoury and degrading association” in the minds of consumers.  This, the court found, was likely to be detrimental to the distinctive character and repute of the mark.  As a result, SAB’s right to protection of its registered mark outweighed Laugh it Off’s right to freedom of expression.  Leave to appeal to the Constitutional Court was, accordingly, sought.

Before the Constitutional Court, the critical matter in dispute was whether SAB had proven that Laugh it Off’s use of its “Carling Black Label” trade mark was indeed likely to be detrimental to the distinctive character or repute of the mark. In the judgment of the Constitutional Court, it was held that detriment to a mark’s distinctive character or repute, as required in terms of section 34(1)(c), could not be “flimsy or negligible” but had to be “substantial in the sense that it is likely to cause substantial harm to the uniqueness and repute of the mark“.  Accordingly, in order to succeed with a claim of trade mark dilution and, therefore, infringement in terms of section 34(1)(c), a trade mark proprietor was required to “demonstrat[e] likelihood of substantial harm or detriment which … amounts to unfairness“.

It was argued by Laugh it Off that SAB had not adduced evidence to show that its use of the “Carling Black Label” mark was “likely to be hurtful, in the economic and trade sense, to the repute of the mark“.  SAB, however, contended that the likelihood of its suffering harm, and in particular economic harm, was, “as a consequence of the offending mark“, self evident as “no right thinking South African would wish to be associated with the racially insensitive message conveyed by [Laugh It Off] on the T-shirt.  The racial slur … is likely to erode the exclusiveness of the mark, discourage people from purchasing the respondent’s Black Label beer and adversely could curtail SAB’s opportunities to sponsor domestic sport“.

The Constitutional Court dismissed these submissions on the basis of the likelihood of detriment to the mark had to be determined “in the light of established facts and not bald allegations“.  The findings of the lower courts were, accordingly, overturned as the probability of an “unwholesome, unsavoury and degrading association” arising amongst members of the public could not simply be inferred from the message on the T-shirt’s but had to be inferred from facts consistent with the making of such an inference.  No such facts had been pleaded and, accordingly, no such inference could be made.

SAB had produced no facts evidencing an actual probability of trade or commercial harm occurring as a result of Laugh It Off’s use of its Black Label mark, neither had it ever been shown that “from the time the T-shirts saw the light of day to the day the interdict proceedings were launched, there had been a real possibility of a reduction of [SAB’s] market dominance or [of] compromised beer sales.  Nor [was] there evidence of the likelihood of future commercial detriment“. Even accepting that the racial slur could be considered unsavoury, no evidence had been put forward by SAB that such unsavoury connotations had tarnished or were likely to reduce the selling power of its “Carling Black Label” mark.

As SAB had shown no likelihood of economic prejudice in the form of economic harm to its trade mark, a finding on parody was deemed unnecessary.  The Constitutional Court, therefore, granted Laugh It Off’s application for leave to appeal and set aside the judgments of the Supreme Court of Appeal and the Cape High Court. What precisely would constitute sufficient evidence for purposes of proving a probability of trade or commercial harm was left undecided and no guidance was given by the Constitutional Court in this regard.

Conclusion

The decisions of both the South African Constitutional Court and the United States Supreme Court (in the case of Victoria’s Secret) clearly indicate that merely inferring that dilution has occurred on the basis of unsubstantiated allegations will not suffice for purposes of succeeding with a claim of trade mark infringement through dilution.  Nor will adducing evidence which does not actually show any “lessening of the capacity” of the trade mark to distinguish or any substantial harm or detriment to the reputation of the mark through negative connotations or a reduction in market share or sales.  What is required is actual proof of the probability of, in most cases, economic harm to the trade mark proprietor as a result of the alleged infringement/dilution of his well-known mark. It is doubtful that this sort of evidence will ever be available because, although often alleged, classic dilution just does not seem to happen. The two most “diluted” marks in the world, ROLLS ROYCE and TIFFANY’S, both widely used to denote quality by wholly unrelated traders, have shown no signs of a lessened capacity to distinguish when used by their owners and the US courts remain as divided on the issue as they have always been because a good proportion of judges just do not see that there is any wrong being perpetrated by non-confusing use. It is difficult to disagree with them.

Ron Wheeldon