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Trade marks going up in smoke

24th April 2012

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The age old proverb says “there is no smoke without fire”. The legislatures of several countries are about to turn this proverb on its head. The anti-smoking lobby has gained such strength in these countries that the fire brands of the anti-smoking lobby with their fiery rhetoric have moved governments to do their utmost to achieve the demise of smoking as a social practise. These campaigns have resulted in fire generating no smoking. It is not the objective of the Vine Oracle to debate the merits or demerits of such a policy. The Vine Oracle is, however, a custodian of intellectual property law and has a comment to make on the strategy of destroying trade marks or brands in order to achieve this objective.

Numerous countries, including the United Kingdom, Australia and South Africa, have banned the use of cigarette trade marks in advertising and have required very prominent warnings regarding the dangers of smoking to be printed on cigarette packets and the like. This practice has seriously undermined the value of cigarette trade marks because trade marks thrive on use and exposure to the public for their wellbeing. While it has often been claimed that smoking can retard the physical growth of children, there can be no doubt that inhibiting the use of cigarette trade marks limits their growth as items of intellectual property and as commercial assets.

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It is well known trade marks can be extremely valuable commercial assets of a business and some of the most famous trade marks, like COCA COLA and MICROSOFT, have been valued as being worth several billions of US dollars. A business’s trade marks and other intellectual property can be amongst their most valuable assets or items of property.

Intellectual property shares many characteristics with physical or tangible property, as indeed it should, since they are both forms of property, merely being intangible and tangible varieties, respectively. The constitutional court has indeed ruled that intellectual property falls within the ambit Article 25 of the Bill of Rights in the Constitution, the Property clause, and that it thus enjoys the same degree of protection as tangible property.

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A registered trade mark can become invalid and liable to cancellation – thus to being extinguished – through not being used in the course of trade for a period of five years or more. It follows that, if the proprietor of a registered trade mark is prevented from using his trade mark in relation to the goods for which it is registered for a period of five years or more, he can lose that item of property through it being extinguished. In the event that the non-use is brought about by the State, and more particularly by legislation, the State is in effect expropriating that property. Accordingly, it can be argued that, by preventing registered cigarette trade marks from being used, the State is depriving the trade mark proprietor of his property and indeed expropriating it.

In terms of the Article 25 of the Constitution, a person cannot be deprived of his property – having it expropriated – unless due compensation is paid by the depriver of the property. In the present instance, the State is the doer. Consequently, if the South African government forbids the use of cigarette trade marks it is arguably expropriating those trade marks and it is thus required to pay due compensation to the trade mark proprietors. Given the repute and value of trade marks such as ROTHMANS, DUNHILL, PETER STUYVESANT and the like, each of these items of property has a value of many millions of Rands. Quite a treasure trove to pay in compensation!

It is reported that the Australian government has legislated for cigarettes to be sold from this December in drab olive packs with large health warnings and no brand logos. Four tobacco companies have instituted court proceedings in Australia to stop this measure. The litigants have brought their case on the basis the new law is unconstitutional and that the government will be acquiring their property without compensation. The case is seen to be a test case on a worldwide basis as other countries, including South Africa, are contemplating similar legislation. As argued above, the Vine Oracle believes that the tobacco companies have an arguable case, and certainly would have a good prospect of success in South Africa, given the property clause of the Bill of Rights and the Constitutional Court’s interpretation of it.

It will be recalled that a few years ago the government yet again made noises about stopping South African Rugby from using the SPRINGBOK emblem, which is a registered trade mark owned by SA Rugby. At the time, Professor Owen Dean, the current incumbent of this Chair of Intellectual Property Law, expressed the view in the media that by preventing SA Rugby from using the SPRINGBOK emblem the government would be depriving South African Rugby of an item of property and that this could not be done without paying due compensation. This contention formed part of the lively debate which at the time surrounded the government’s proclaimed intention. We all know that in the final result the government largely backed down on this issue and the SPRINGBOK emblem remains the brand of SA Rugby and is to be found in all its glory on the national rugby jersey. Who knows, perhaps the government was influenced at the time by the argument that it would have to pay compensation to the tune of many millions of Rands to South African Rugby if it went ahead and prohibited the use of the SPRINGBOK emblem? It certainly ought to have taken very serious account of this eventuality.

In proclaiming its intention of emulating the Australian government and preventing the use of brands on cigarette packets by legislation, has the South African government properly thought through the implications and consequences of its action? Does it feel sufficiently strongly about this issue to pay millions of Rands in compensation to the proprietor of each registered trade mark which is prevented from being used in this manner and thus being condemned to a certain demise?

A case of this nature brought by tobacco companies in South Africa would give the Constitutional Court a different morsel to chew on. It might even appreciate a change of diet from the kind of fare that has been dished up to it of late by the politicians.

Perhaps the government should put this issue in its pipe and smoke it!

Written by Prof OH Dean, Stellenbosch University

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