A recent UK judgment on so-called "bait and switch" is worth a look. What is interesting about it is that the overall approach adopted by the UK court is similar to that adopted by the South African Supreme Court of Appeal a few years back, namely one that is both robust and pragmatic.
The UK bait and switch case is Pliteq Inc & Another v iKoustic Ltd and Another. Bait and switch has been described in a previous court case as follows: where the "defendant deliberately uses the claimant's trade mark as a bait to attract the consumer's attention and then exploits the opportunity to switch the consumer's purchasing intention to his own product." Bait and switch is clearly something that should be unlawful. As the judge in one UK case said, "bait and switch selling can be prevented on the basis that the process of buying goods and services should, from selection through to purchase, be free of distorting effects of confusion."
In the present case, the plaintiff was a producer of specialist goods that were branded Genieclip and Geniemat, brand names that are protected by UK and EU trade mark registrations. The defendant operated an e-commerce site on which it sold the plaintiff's products under the plaintiff's trade marks. The defendant was in fact the plaintiff's key UK distributor.
After some time, the defendant started producing its own range of similar goods which it sold alongside the plaintiff's goods - the defendant's goods were branded MuteClip and MuteMat. The plaintiff claimed that the defendant was luring customers to buy its own goods through its use of the plaintiff's trade mark, in other words, bait and switch. The plaintiff accepted that it was lawful for the defendant to offer consumers alternative products, but it argued that the defendant was using the plaintiff's trade mark in relation to its (the defendant's) products. The defendant raised various defences including exhaustion of rights.
The bait and switch claims failed for various reasons. One was that the plaintiff had been unable to prove that people visiting the defendant's website were doing so purely because of the defendant's use of the plaintiff's trade marks. Another was that the defendant's website had made it quite clear that it was selling competing products, which meant that this case did not fall within the ambit of a precedent set by a previous case, in which the court said: "It must be shown that the advertisement does not enable an average internet user, or enables that user only with difficulty, to ascertain whether the goods or services referred to therein originate from the trade mark proprietor or an undertaking economically connected to it."
The judge went on to find that the present case was different from the famous case of Lush. In that case, Amazon had bought the trade mark Lush as a Google Ad keyword, and this had led customers to its site where they were only offered competing goods. This was held to be an infringement because consumers would reasonably have expected to find Lush soap on the site.
But in the present case, the defendant did in fact have stocks of the plaintiff's goods. There was no trade mark infringement because there was no confusion as to origin. Or, as courts sometimes like to say, there was no infringement because the origin function of the trade mark had not been affected. The court also accepted the defendant's argument that its use of the plaintiff's trade marks was used in relation to the plaintiff's goods and that these rights had been exhausted.
In South Africa, the most relevant judgment is Cochrane Steel and this involved one company buying a competitor's trade mark as an AdWord. Unusually, this case was based on passing off rather than trade mark infringement as there was no trade mark registration. The court adopted an approach that postulates a smart internet-savvy populace. The court there said this:
"Consumers will assume, as all internet users do, that they will have to separate the wheat from the chaff in deciding which hyperlinks appearing as a result of their search should be clicked. That presumably will cause irritation and perhaps even annoyance but it does provide the consumer with alternatives, thereby fostering competition."
This is a topical and interesting area of trade mark law.
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