In the Courts - The Trademarked City within a City

“Genericide”( see “What you don’t know about trademarks” in WIPO Magazine 6/2009) is not the only danger lurking for trademarks; they can also lose there distinctiveness by becoming geographical identifiers. This article by Prof. Tana Pistorius, Intellectual Property Law, Department of Mercantile Law, University of South Africa, discusses a landmark case in South Africa. Prof. Pistorius is a senior adjudicator of the South African Institute of Intellectual Property Law’s alternate dispute resolution panel for the .za country code top-level domain. She teaches modules of the UNISA-WIPO Intellectual Property Specialization Program and is also a WIPO Worldwide Academy tutor.

Century City is a well-known South African landmark and the pride of Cape Town. Its developers created an infrastructure that provides a wide variety of services and industries to Century City’s inhabitants. This 250 hectare up-market, mixed-use development includes a business park, upper echelon housing, a theme park, four hotels and a shopping center. The commercial and residential development falls within the municipality of the City of Cape Town. It is a “city within a city.”

Mindful of the importance of IP rights, the developer registered a number of trademarks for "Century City," as well as device marks containing interlocking Cs and the words “Century City” and “Your place. Your space” for services falling within classes 35, 36, 41 and 42 of the Nice trademark classification. The trademarks were assigned to the Century City Property Owners’ Association, a not-for-profit company.

In 2006, Century City Apartments Property Services, an accommodation agent, registered the domain name www.centurycityapartments.co.za, and a year later Century City Apartments Property Services CC was incorporated. The accommodation agent owns various properties in Century City and leases these, and other Century City properties, for short stays to holiday makers under the “Century City Apartments” brand name.

Round one: the Cape High Court

The Century City Property Owners’ Association filed a trademark infringement action against the accommodation agent for using “Century City” in its corporate name, brand name and domain name as such use infringed the Association’s name and device marks.¹ The agent brought a counter-claim seeking cancellation of the Association’s trademarks on the grounds that the marks had lost their distinctiveness since Century City was a place name that had come to designate the geographical origin of a broad range of services.

The Cape High Court held that the accommodation agent had infringed the Association’s trademarks and device marks, and it rejected the counter-application. The court ruled that the Association’s marks were valid and enforceable and, because the significance of the Century City name flowed directly from the development of a piece of land, the name was inextricably linked to that development. The court reasoned that the trademark rights were based on the nature of the development rather than "a dictionary meaning" or geographical location; and, since the name did not have an "exclusively geographical meaning," it was not subject to the provision prohibiting the registration of a geographical location.

The accommodation agent subsequently appealed the Cape High Court’s ruling.

Round Two: Supreme Court of Appeal

In November 2009 Judge Harms, Deputy President (DP) of the South African Supreme Court of Appeal (SCA) handed down the judgment in Century City Apartments Property Services CC v. Century City Property Owners Association.²

The SCA remarked that according to basic trademark law one may use a trademark otherwise than as a badge of origin and that the appellant's use of the name “Century City” in a descriptive manner could not amount to infringement. The appellant relied on section 34(2)(b) of the Trade Marks Act 194 of 1993 which provides, in essence, that a registered trademark is not infringed if the mark is used as a bona fide description or indication of the geographical origin of goods or services. The SCA held that the appellant had used the mark in a descriptive manner in its advertising material but that its use of the mark as a brand, corporate or domain name was trademark use, and it rejected any “faint argument to the contrary.”

Photos: CCPOA

Second, the SCA ruled that the appellant had used the mark in the course of trade and, as an accommodation agent, its activities fell within class 42. They also fell within class 36 – which covers estate agencies, real estate management and leasing of real estate – and class 35 in relation to management services. There was no evidence that the appellant used the mark in connection with services covered by class 41 (education; provision of training; entertainment; sporting or cultural activities).

Were the trademarks "Century City" and "Century City Apartments" identical? The SCA held that the marks were confusingly similar rather than identical.³  In that the appellant’s reasonable, notional use of “Century City Apartments” and centurycityapartments.co.za was likely to give rise to confusion; the SCA found that it infringed the respondent’s trademarks.⁴

Aural features of the device marks

Was the court a quo correct in its decision? The respondent argued that as the words “Century City” appear on the device mark, the use of “Century City” by another entity infringed the device mark because the marks were, orally, confusingly similar. The SCA noted that the value or distinctiveness of a device mark lay in its visual impact. Where a device mark is combined with words or names, the mark’s oral value may be of greater importance. The court also conceded that the aural and/or conceptually dominant component of such a mark may neutralize any visual differences deriving from graphic particularities.

However, in this case the appellant had mainly used the marks in printed and online advertisements. There was no evidence of oral use of the device marks by the respondent, thus the SCA concluded that the likelihood of oral confusion was negligible and could therefore be discounted. The respondent thus failed to establish infringement of the device marks.

Geographical locations: Bloemfontein but not London for gin

In a counter-application, the appellant sought to have the “Century City” marks expunged. Section 10(2)(b) of the Trade Marks Act provides that a registered trademark can be removed from the register if it consists exclusively of a sign or an indication that may serve, in trade, to designate the geographical origin of the services. The argument used was that Century City is a geographical location that designates the geographical origin of services.

Under what circumstances could a mark be said to consist exclusively of a sign or an indication serving, in trade, to denote the geographical origin of services?⁵ Judge Harms cautioned against indiscriminate reliance on previous English or Australian trademark cases as they offered little, if any, bearing on the current South African position on trademark protection of geographical indications, saying “Intellectual property laws and principles should not be locked in a time capsule or a straightjacket, and judicial expositions should be read in context.”

Judge Harms explained that section 10(2)(b) of the South African Trade Marks Act prohibits the registration of geographical names as trademarks solely where they designate geographical locations that are already famous, or known for the category of goods or services concerned, and that are therefore associated with those goods in the minds of consumers or the users of services. Public policy dictates that they remain available as indications of the geographical origin of particular categories of goods or services.

Section 10(2)(b) must be read in context: it protects the use of marks designating the kind, quality or quantity of goods and services as well as names that designate the geographical origin of goods and services. It is not concerned with distinctiveness or the loss thereof, which is addressed in section 10(2)(a) of the Act.⁶  In the court’s view, the prohibition serves the public interest in that geographical names can be associated with the quality or other characteristics of goods or services, thereby influencing consumer choice.⁷

The court noted that two criteria must be met before the “geographical origin prohibition” kicks in. First, the marks must consist “exclusively” or “solely” of a geographical name. This does not refer to an "exclusively geographical meaning," but signifies that the mark must consist of a geographical name and nothing more – such as “London” for gin. A device mark that includes a geographical name would not come under this category as it consists of more than a mere geographical name. The SCA observed that the word "exclusively" in section 10(2)(b) ensures a geographical name that is part of a "complex" trademark does not fall within its purview (for example “George’s London Gin”).

Second, there must be an association in the public mind of the geographical location with the nature of the goods or services. The court referred to Peek & Cloppenburg⁸ where it was held that:

"In making that assessment the trade mark Office is bound to establish that the geographical name is known to the relevant class of persons as the designation of a place. What is more, the name in question must suggest a current association, in the mind of the relevant class of persons, with the category of goods or services in question, or else it must be reasonable to assume that such a name may, in the view of those persons, designate the geographical origin of that category of goods or services.”

While there is such an association between “London” and “gin,” the public does not tend to identify Bloemfontein with gin. Bloemfontein could thus be registrable as a trademark for gin. The court mentioned the fact that Windhoek is both a well-known trademark for beer and the capital of Namibia as a case in point.

When does the name of a development become a place name?

The respondent argued that Century City is a real estate development, rather than a location. If Century City it is considered a place name, the “Century City” trademarks could be expunged from the register, in particular if there is an association in the public mind of the geographical location with the nature of the goods or services for which the marks are registered. Device marks can immediately be discounted from consideration on that count because, as explained earlier, they do not consist "exclusively" of what the appellant contends is a geographical location. The same could not be said of word marks.

The court observed that the respondent described Century City as “a city” or “a city within a city,” as “a commercial hub”, complementary to Cape Town's central business district, and as “a place”. There is a Century City post office, and public road signs lead to Century City. The public has come to refer to it as a place or location. The court concluded that Century City is a geographical area with a multitude of individual owners.

Had Century City become a place name within the meaning of section 10(2)(b), that is a designation of the geographical origin of the services for which the trademarks were registered? The court considered the services covered by each registration and remarked that there were perhaps hundreds of commercial enterprises offering class-42 type services, such as retail merchandising and the provision of food and drink.

The court held that Century City had become the name of a geographical location and had come to designate, in trade, the geographical origin of most of the services for which the trademarks were registered. Accordingly, the “Century City” name marks registered in class 35 (for management services) and classes 36, 41 and 42 were all covered by the prohibition contained in section 10(2)(b) and could therefore be removed from the Register.

Is it necessary to prove blameworthy conduct?

The SCA held that the trademark “Century City” had become a place name as a natural consequence of the kind of development it was. The SCA rejected the respondent’s argument that a trademark can lose its distinctiveness only through the "blameworthy" conduct of the trademark owner. The criterion of blameworthy conduct has become a statutory requirement under section 46(1)(d) of the 1994 U.K. Act, but there is no equivalent provision in the current South African Trade Marks Act.⁹ The court cannot re-write section 10(1)(b) to require blameworthy conduct by the trademark owner.

The SCA stated that the fact that wrongful acts committed by third parties cannot destroy one’s rights also applies to trademark rights. This means that a party cannot, by infringement or subsequent trademark applications, destroy another’s existing mark or reputation.

Accordingly, the appeal was upheld, with costs, in favor of the appellant. The respondent’s trademark registrations for the word mark “Century City” in classes 36, 41 and 42 were revoked, and its trademark registration for the mark “Century City” in class 35 amended to exclude management services.

Conclusion

The Century City saga clarified a few trademark law misperceptions. A mark is “exclusively” a geographical location when it consists of the geographical name and nothing more. Second, the prohibition against registering a geographical location as a trademark is not concerned with distinctiveness or the loss thereof. Third, the prohibition goes further than trademark use to also include designations of the geographical origin of goods or services. And, lastly, the trademark proprietor’s “blameworthiness” is irrelevant in expungement proceedings.

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1 Century City Property Owners’ Association v. Century City Apartments Property Service CC & others: In re Century City Apartments Property Service CC v. Century City Property Owners Association & another [2008] JOL 22813 C; [2008] ZAWCHC 63.
2 [2010] JOL 24646 (SCA).
3 Ibid at par 12. The court followed guidelines the “same in all respects” as those set out in the case of Compass Publishing BV v. Compass Logistics Ltd 2004] EWHC 520 (Ch).
4 Ibid at par 14. The SCA held that the appellant’s business name, “Century City Apartments Property Services CC", was materially different from the trademark "Century City", and found there was no trademark infringement. Adjectival use may be considered distinct from usage as a noun. The same considerations apply in the present case to avoid the reasonable possibility of confusion or deception (ibid at par 15).
5 As noted by Judge Harms in First National Bank of SA Ltd v. Barclays Bank plc 2003 (4) SA 337 (SCA), [2003] 2 All SA 1 (SCA) at par [10]); referred to in the current case at par 26.
6 Ibid at par 31; Contra CE Webster & GE Morley Webster and Page South African Law of Trade Marks, Unlawful Competition, Company Names and Trading Styles (4th ed. LexisNexis: Durban) paras 3-44.
7 The court referred to Peek & Cloppenburg KG's Application [2006] ETMR 33 at par [34].
8 Peek & Cloppenburg KG's Application supra at par 38.
9 Ibid at par 49; Contra Webster & Morley op cit at par 13.13.