It’s always a gamble: On-Line Lottery Service v National Lotteries Board

On-Line Lottery Services (Pty) Limited (“On-line”) recently appealed the decision of the North Gauteng Provincial Decision (“the court a quo”) in which the court a quo:

-          found that On-line’s use of the LOTTO FUN AND LOGO trade mark in relation to its online business to facilitate the purchase of national lottery tickets was infringing the registered trade marks of the National Lotteries Board; and

-          rejected an application by On-line to expunge the LOTTO trade mark registrations on the basis that the word LOTTO was not capable of distinguishing, was generic and descriptive and that the National Lotteries Board had not made use of the word LOTTO as a trade mark and LOTTO was therefore liable to removal from the Trade Mark Register (“the Register”) on the basis of non-use.

On appeal, the Supreme Court of Appeal (“SCA”), after having considered the meaning of the word LOTTO, held that:

“By adopting the word simpliciter (without adaptation or qualification) as a trade mark for lottery services, the registering party simply appropriated to itself a word already in general circulation which possessed an ascertainable generic and descriptive meaning over which it could have no monopoly and which should have been open to use by all competitive undertakings in the gaming industry. The word 'lotto' could, as counsel for On-line have submitted, contribute nothing to identifying the source of the service which it promoted. Moreover, as stressed earlier, the Board and its operator could not enhance the inherent absence of power to distinguish by creating a game to which they chose to apply the generic description 'lotto”.

The SCA further held that there was no bona fide use of the LOTTO trade mark in relation to financial services during which the registration stood.

As a result of the above, the SCA held that the LOTTO trade marks were wrongly made and remain on the Register and accordingly ordered the expungement of the trade mark registrations from the Register.

On the issue of passing off, the SCA found that there was no passing off nor was there any contravention of the Lotteries Act by On-line as On-line merely facilitated the purchase of National Lottery tickets through either the internet or short message systems (“SMS”).

In stating the above, the SCA, again, confirmed that the function of a trade mark is to serve as a “badge of origin”. Trade mark owners will be well advised to bear the aforementioned principle in mind when adopting trade marks, and especially trade marks which are highly descriptive. In this regard, and although it cannot be argued that the threshold for registration has been lowered under the Trade Marks Acts No. 1994 of 1993 and the Registrar of Trade Marks seems ever more willing to accept trade marks which are highly, if not purely, descriptive, failure to adhere to the above principle will leave trade mark owners in a position where, although they have successfully obtained registration of a trade mark, will not be possible to enforce such registration, similar the National Lotteries Board in the above case.

Jayde Moita – Attorney