Laugh It Off markets T-shirts in South Africa for profit and claims to make social commentary by so doing. The firm reproduces on its T-shirts a label design similar in appearance and colour to Sabmark's Carling Black Label design mark, replacing "Black Label" with "Black Labour", "Carling Beer" with "White Guilt" and "America's lusty lively beer" with "Africa's lusty lively exploitation since 1652". The High Court granted Sabmark (part of the SABMiller Group) an injunction based on violation of the anti-dilution provisions of the South Africa Trademarks Act, section 34(1)(c). The Supreme Court of South Africa affirmed. Laugh It Off then appealed to the Constitutional Court of South Africa on the ground that its conduct was permitted as a right of free expression under section 16 of the Constitution Act of South Africa. The Constitutional Court found in favour of Laugh It Off, essentially on the ground that Sabmark had failed to prove a likelihood of economic detriment to its Black Label trademark sufficient to outweigh the right of free expression conferred by the Constitution Act.
The conflict between these competing rights is particularly evident in the United States of America, where the right of freedom of expression has long been enshrined in the First Amendment of the US Constitution. The Trademark Dilution Revision Act (TDRA), which became law on 6 October 2006, attempts to create a more predictable balancing of free speech and trademark rights than previously was the case. An important precondition for an action to lie under the TDRA is that the junior user must use the famous trademark, or a substantially similar mark, to indicate the source of his or her own goods or services, ie, the impugned use must be a "trademark" use. The TDRA has also significantly expanded the scope of the fair use defence. Under the TDRA, dilution by tarnishment is not easy to prove, however.
To succeed in a claim for dilution by tarnishment, the plaintiff must show that:
• its mark is nationally famous and distinctive, inherently or through acquired distinctiveness (15 USC sections 1125 (c)(1) and (2));
• the defendant made a "trademark use" of a mark or trade name that is substantially similar to the famous mark (15 USC sections 1125(c)(1) and (2)(C)); and
• as a result of such similarity, the junior user created a mental association between the defendant's mark and the famous mark that is likely to harm the famous mark's reputation (15 USC sections 1125(c)(2)(C)).
Proving harm is not easy, unless perhaps the impugned use involves sex, drugs or some illegal activity.
A number of commentators have argued that the TDRA's restriction of the tarnishment cause of action to use of a famous mark as a "designation of source" gives more expansive protection of free speech than pre-TDRA tarnishment law. By requiring that the junior use constitute use as a trademark, the TDRA shields many expressions including parodies from tarnishment claims. The TDRA thus does not allow a trademark owner to prevent the unauthorised use of its mark to communicate ideas, if such use is not as a trademark. Conversely, the First Amendment cannot be relied upon to defend expressions that are false or misleading.
The experience to date of trademark owners seeking to prevent tarnishment under the TDRA has been mixed. In Louis Vuitton Malletier SA v Haute Diggity Dog LLC, 464 F. Supp. 2d 495 (E.D.Va. 2006), aff'd, 507 F.3d 252, 269 (4th Cir. 2007), Louis Vuitton's claim was rejected on the ground that it had failed to prove that the defendant's allegedly inferior dog squeak toy Chewy Vuiton was likely to cause harmful dilution by tarnishment. On the other hand, Victoria's Secret finally was able to obtain an injunction enjoining the use of the Victor's Little Secret store name under the TDRA, despite having failed to do so under the previous legislation (V Secret Catalogue Inc v Moseley, Civ. A. No. 3:98CV-395-S, 2008 WL 2152189 (W.D.Ky. 21 May 2008)).
In Canada, the balancing between freedom of expression guaranteed by the Canadian Constitution and the statutory and common law rights of trademark owners has not been addressed as explicitly by statutory enactment. Canadian case law to date indicates that the freedom of expression guaranteed by the Canadian Constitution does not extend to allowing appropriation of or substantial damage to a private property right of another. In the author's view, it is therefore likely that a case involving similar facts to Laugh It Off in Canada would have been decided in favour of the trademark owner. That said, trademark owners should not be too sanguine about reliance on traditional trademark rights when issues of freedom of expression occur.
Trademark owners rightly regard trademarks as valuable property rights. Considering that the activities of the defendant in Laugh It Off were so offensive to the integrity and image projected by the Black Label trademark, and done with a profit motive in mind, it is hard to accept such activities as being a legitimate expression of free speech. That said, trademarks are not only property rights, they are also language tools by which a trademark owner communicates a message to the public. In that sense, a trademark itself is a form of expression. It is part of the language by which we communicate. Many famous trademarks are found in dictionaries, because they are part of the language, even though their main function is to signify source, quality, affiliation, etc. The real conflict, then, is between the right of the trademark owner to communicate a truthful message to the public, and the right of the public to express ideas as a normal consequence of living in a free society.
In Canada, the Constitution Act, 1967 contains a Charter of Rights and Freedoms. Section 2(b) of the Charter provides that everyone has the right to freedom of expression. The question is, what are the limits of the right of free expression, especially when the exercise of that right interferes with, or damages a communication right of another, such as the right of a trademark owner to communicate with the public?
In Canada, the Laugh It Off T-shirts would not be an infringement of the trademark registration covering the Black Label trademark because there is no likelihood of confusion, but it would be a violation of section 22 of the Trade-marks Act, which provides that "no person shall use a trade-mark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto".
An early Canadian case involving tarnishment is Source Perrier SA v Fira-Less Marketing Co, (1983) 70 CPR 2d 61 (FC). In this case, the defendant put out carbonated water in bottles marked Pierre Eh! as a spoof of the then Prime Minister Pierre Elliot Trudeau. Source Perrier was not amused, and applied for and obtained an injunction restraining the use of Pierre Eh! for bottled water.
In Perrier, the constitutional argument was rejected by the court, with the following words: "The most liberal interpretation of ‘freedom of expression' does not embrace the freedom to depreciate the goodwill of registered trademarks, nor does it afford a licence to impair the business integrity of the owner of the marks merely to accommodate the creation of a spoof."
A more important, though roundly criticised, case is Michelin v CAW Canada, (1996) 71 CPR (3d) 348. CAW is a labour union, and it attempted to unionise Michelin workers at a Michelin plant in Canada. As part of its recruitment efforts, CAW distributed pamphlets that used the word Michelin and also depicted a variation of the well-known Michelin cartoon figure, called Bibendum or the "Michelin Man". In CAW's brochure, the Michelin Man was shown crushing a worker with its foot. Michelin sued CAW both for trademark and copyright infringement. CAW denied there had been any infringement, and argued that even if there had been an infringement, the Charter gave them the right to express their position in the way they did.
In Michelin, both the word Michelin and the Michelin Man figure were registered trademarks. There was no trademark infringement because there was no likelihood of confusion, and the court found that there had been no actionable tarnishment under section 22 of the Trade-marks Act because the distribution of pamphlets was not considered to be the kind of commercial activity required by section 22.
In the case of the Laugh It Off facts, though, there was commercial activity in connection with the sale of T-shirts, and therefore it appears likely that a Canadian court would find for SAB just as was the case at trial in the Laugh It Off case.
Although Michelin did not succeed in proving dilution under section 22, it was able to persuade the court that the reproduction of a depiction of the Michelin man was a copyright violation. In answer to the Charter defence, the court found that there is no justification for using another's private property under the guise of freedom of speech.
The Michelin case has been criticised as being too simplistic an analysis. It has been argued that the mere fact that a trademark or copyright is a property right should not mean that the freedom of expression right is trumped.
The Michelin case was followed in another more recent labour dispute involving the use of "gripe sites" on the internet, rather than pamphlets, British Columbia Automobile Association v Office and Professional Employees' International Union (2001), 10 CPR (4th) 423 (BCSC). The union created a website that was accessed by domain names such as bcaaonstrike.com and made other uses of trademarks registered by the association, including "BCAA", although it also displayed disclaimers of any endorsement by the association. The association brought actions for passing off and breach of section 22 of the Trade-marks Act, as well as a claim for copyright infringement.
In dismissing the passing off claim, the court stated: "When a Web site is used for expression in a labour relations dispute, as opposed to commercial competition, there is, I think, a reasonable balance that must be struck between the legitimate protection of a party's intellectual property and a citizen's or a Union's right of expression... the common law should not be interpreted in a way to unreasonably infringe a person's freedom of expression." In dismissing the section 22 claim, the court held that the "Union is entitled to express its positions and speak freely provided it does not violate section 22... I think that to accept the argument that the reference to an employer's trademark to identify a Union site depreciates goodwill associated with that trade-mark would be a result that goes far beyond what Parliament intended by section 22". Thus, this decision follows the criticised "commercial use" analysis found in the Michelin case.
Honest comparative advertising in Canada is another example of the tension between trademark property rights and rights of free expression. Although such advertising has been held to not be an infringement of a registered trademark on the ground that it is not a trademark "use" properly speaking, in any case it is likely that the Charter could be invoked in support of honest comparative advertising. In such a situation, the right of a competitor to make an honest expression of commercial speech trumps the right of the trademark owner to the exclusive use of its registered mark.
In summary, under Canadian law the mere fact that a property right has been used without authority is the beginning, not the end, of the analysis. How and where one should draw the line between the competing rights of trademark owners and persons relying on the right of free expression of ideas will no doubt occupy the attention of courts and legal scholars for many years to come in Canada as well as elsewhere.