Counterfeit controversy

Most people agree that counterfeiting is a very bad thing - more heinous even than, oh let's think of something really gross, conducting a cellphone discussion in a crowded restaurant. And most people agree that we need a rigorous law to deal with it. A law which allows the authorities to seize goods which are thought to be counterfeit, so that criminal or civil proceedings can be brought. So three cheers then for the Counterfeit Goods Act - HIP HIP HOORAY, FOR IT'S A VERY GOOD LAW, FOR IT'S... (that'll do thanks!)

So why are there so many stories about the search and seizure procedures being abused? The latest of these involves CROCS (you know those silly plastic things which replaced shoes a year or so back). According to newspaper reports, Shoprite Checkers (or whatever that boringly non-descript chain of shops is called these days) has sued SARS for the return of the 10,000 pairs of shoes which SARS seized (if you don't believe us, just pop in to your local tax office and you'll see that they're all walking around in bright orange footwear). So why the seizure? Did Checkshop Riters forget to submit a tax return? Nope, much worse than that, the shoes were supposedly counterfeit.

Now to confiscate 10,000 pairs of shoes is pretty serious stuff, even if the importer is a company the size of Checkrite Shoppers. So you'd like to think that this kind of step isn't taken lightly. But thinking always brings disappointment. Because, if Riteshop Checkers is to be believed, the magistrate who issued the warrant didn't have all the facts - letters which the company had sent to SARS denying that the goods were counterfeit were withheld, and it wasn't even made clear to the magistrate on what basis the shoes were deemed to be counterfeit.

And there's another aspect to this. Even if a full case was put to the magistrate, what are the chances that the matter was properly considered? Some of our very best friends are magistrates, but it is simply a fact of life that very few have any intellectual property law experience. And a case like this raises some pretty tricky issues. For example:

•·         The Counterfeit Goods Act is a masterpiece of gobbledygook, but it basically provides that it's illegal to deal in counterfeit goods. Counterfeit goods are goods which were made without the authority of the owner of a South African ‘intellectual property right' and which infringe that right. And the term ‘intellectual property right' is defined as a trade mark, a well-known mark, a prohibited mark and anything which enjoys copyright protection in South Africa.

It's clear from the reports that the goods which were seized did not feature the brand name CROCS or the Crocodile Logo which is used with it, but rather the name SPORT (they're devastatingly clever with names those Chinese, sometimes they even spell them right too!). From this fact, Crocs' Director for Product Development deduced (and assured the magistrate) that the goods must be counterfeit because genuine CROCS goods always feature the name and the logo. That is, of course, what is known as a non sequitur (a Latin term for bollocks!) The only conclusion which can in fact be drawn is that the shoes were made by a company other than Crocs or one of its licensees. The shoes only become counterfeit if they infringe an intellectual property right of Crocs. And if the name and logo haven't been infringed, what intellectual property right has?

•·         As one of the thousands of discerning South Africans who read The Law of the Brand with as much relish as Engineering News - Not Just For Engineers and Heat, you know that product shapes can be trade marks, but there's nothing in the reports to suggest that Crocs relied on any shoe shape trade mark registrations. Even if it did, this area of trade mark law is becoming increasingly controversial and the courts are extremely reluctant to recognise trade mark registrations for product shapes - the highest court in Europe held that a Philips registration for a three-headed shaver was invalid, and our Supreme Court of Appeal did the same thing for an oval tablet shape registration. It's not entirely clear what the law on product shapes is right now, but it seems that, before a court will uphold a shape trade mark registration, it must be shown that the shape is significantly different from the norm and that it has been used for so long that the shape is seen by the public as a brand or distinguishing feature. As far as we are aware, the CROCS brand is a new kid on the block, so it's quite possible that any trade mark registrations which might exist are somewhat suspect.

•·         Copyright law does theoretically protect product shapes but this protection is very limited - we won't bore you with the details, but basically the law is that if the product is more utilitarian than aesthetic, there's no protection. Although we're prepared to concede that some shoes look nice (although not CROCS), for the most part we buy shoes so that we won't get sore feet.

•·         It is possible to get a design registration for a new product shape, but there is no mention of this in the reports and, in any event, registered designs fall outside the list of intellectual property rights covered by the counterfeiting act.

•·         Well-known marks are covered by the counterfeiting legislation, and a statement made by the Crocs' man makes us thinks that this may have been the basis of the seizure. He said that thousands of pairs of CROCS shoes are sold in South Africa every month and that, as such, he is ‘of the view that the Crocs shoe design trade mark is known to a substantial number of people in South Africa'. Now it may well be true that many people when seeing shoes of this type think CROCS rather than the more logical ‘Yuck, sweaty feet' or ‘Gosh I'm glad I can afford leather, but well known mark protection really is intended for the seriously big boys (McDONALD'S and GAP have both been held to qualify), and there is in fact a case which says that it only applies to marks which haven't been used here. It doesn't, we think, apply to the shape of a shoe which is simply the flavour of the month.

So why exactly were the shoes seized?