This month the High Court heard argument that bidding on a competitor trade mark as a keyword amounted to unlawful competition. The case is significant because it is the first of its kind in South Africa and directly affects Google’s revenue streams from this country and those seeking to optimise their digital communication strategies.

The case is between two fence manufacturers; one (Cochrane Steel) a first market entrant for a specific and highly popular type of security fence and the other, a growing competitor (M-Systems) represented by legal counsel Darren Olivier, partner and Ian Learmonth, professional assistant, at Adams & Adams.

The respondent’s argument was that unless passing off could be shown (which M-Systems contends was not established) an unlawful competition argument must fail and also, that there is significant international precedent that such a practice was, in any event, lawful especially where the trade mark (in this case CLEAR VU) was not used in the ad text.

The applicant submitted that unlawful competition should be extended to cover new forms of liability – essentially dilution based unfair advantage but inherently couched on the notion that such a practice (keyword bidding using competitor trade marks) was unfair.

Both counsel made extensive reference to judgements in Europe and New Zealand where the issue has been debated, and also our own common law.

The applicant made a request for an interim order pending the registration of their trade mark (which is being opposed by the respondent) and attempted to introduce evidence that the respondent was using their trade mark in ad text which was denied by the respondent who asked for the evidence to be struck. After hearing counsel for several hours, the Judge reserved judgement and this is expected within the next 30 days.

Written by Darren Olivier, partner, Adams & Adams