South Africa: Knight's Gold

The KZN High Court handed down a really interesting judgment in May 2013 in the case of Distell v KZN Wines & Spirits.  The decision's  interesting  because  it not only looks at the issues that need to be considered in a trade mark infringement claim, but it also highlights the differences between trade mark infringement and  passing off.

The facts were that Distell had trade mark registrations for the marks Knight's Gold  and Knight's both covering whisky  - there was an endorsement against the registration for Knights Gold which said that  Distell disclaimed exclusive right to the use of  ‘Knight's' as a surname. When Distell found out that KZN Wines & Spirits was selling a whisky under the name Black Knight it sued for both trade mark infringement and passing off.

Let's start with trade mark infringement. When it comes to deciding whether or not marks are so similar that there might be confusion, the courts have over the years laid down a number of tests. The court will consider the visual, phonetic and conceptual similarities between the trade marks. The court will consider the issue through the eyes of the ordinary customer, who is a person of average intelligence and proper eyesight, and who exercises reasonable caution. The court will bear in mind that the average consumer doesn't always see the two trade marks side by side, in other words they may see the one product one day, and the other many days later. The court will consider  that the ordinary customer does not have a photographic memory, but rather an imperfect recollection. The ordinary consumer is therefore  likely to remember a trade mark by the general impression or the dominant or striking feature of the trade mark.   Which means that the  the more distinctive the registered trade mark is, the greater the likelihood of confusion.

The court will, however,  also bear in mind that purchasers of some products are likely to be more discerning than  purchasers of others, for  example someone buying a car or an expensive watch is likely to be more careful (and less likely to be confused) than the purchaser of a packet of rice – some courts have, for example, taken the view that there's less likelihood of confusion in the area of  prescription drugs than there is with other goods because the consumers are astute and careful medical professionals.    Following this reasoning,  the court in the Knight's Gold case applied a somewhat higher test than normal, based on the fact that  whisky, being an expensive product, is bought by discerning people.  The judge said this:

‘Counsel for the applicant submitted that both products are sold in a bar or crowded lounge, and if ordered verbally, the noise would be such that when a customer articulates the applicant's whisky, the barman or waiter as the case may be, would be deceived or confused into believing that the customer is asking for the respondent's whisky. I do not share these sentiments. In my view, counsel for the respondent is correct in stating that even though whisky is a popular drink, it is not a cheap drink. Consequently, a consumer is likely to exercise circumspection and a greater degree of care in making a purchase. It is not an overstatement that whisky drinkers take pride in the product and assimilate in it such that they are able to distinguish whether it is single malt or blended as well as a source of origin.'

The court went on to find that, notwithstanding the imperfect recollection that must surely result from the consumption of the product in question, confusion would not arise here: ‘I am inclined to find that it is unlikely that the notional purchaser of the applicant's whisky, even with an imperfect recollection or perception, when confronted with BLACK KNIGHT, would focus attention only on the word KNIGHT and ignore the word BLACK. To my mind, the whole mark BLACK KNIGHT serves to distinguish the respondent's whisky from that of the applicant.'

On to passing off. To succeed in a passing off claim you generally need to show that your product has a reputation or goodwill, and that the other party's product is likely to cause confusion.   But Distell's claim failed  here too.  One of the big differences between a trade mark infringement and passing off  is that, whereas with trade mark infringement it's simply a comparison of the two marks, with passing off surrounding factors like get-up are considered.   The court found that   there were significant differences in the get-ups of the products, for example in respect of bottle shape, colour and logo, which meant that there would be no confusion.

But there were further problems with the passing off claim. An unusual feature of this case was that KZN Wines & Spirits had been using the mark Black Knight for 11 years. The court found that although Distell may have established that it had a reputation in 2011 (when the legal proceedings started), it had failed to prove that it had a reputation in 2002 (when Black Knight first appeared on the market).  The court also felt that it was relevant that Distell had been unable to prove a single instance of actual confusion in 11 years – although actual confusion is not a prerequisite for either a trade mark infringement or a passing off claim, there's no getting away from the fact that a court is more likely to find that there is a likelihood of confusion if it can be shown that there has in fact already been confusion.  The judge quoted this from the famous Arsenal case in the UK:

‘Where the defendant has been carrying on his trade for some time, the court can expect to be relieved of the need to speculate as to the likelihood of confusion and damage. In most cases, it will be able to see what has actually happened. If the claimant has suffered substantial damage, one can expect it to be apparent. Absence of evidence of confusion becomes more telling and more demanding of explanation by the claimant the longer, more open and more extensive the defendant's activities are.'

I'll drink to that!