We all know Google, one of the largest and most successful multinational companies in the world
. The word Google is a brand or trademark that serves as a “badge of origin”, which is exceptionally well known worldwide.
Have you ever paused to wonder what Google’s most valuable asset is? Is it its massive bank of computer hardware, its portfolio of software, or its property holdings? No, it is the trademark Google, valued at $44.3 billion (R443bn) and rated the most valuable in the world.
A trademark is created and sustained by being used in trading activities, for instance in advertising and on labels. The strength and value of a trademark depends on the extent of its use. If such use is discontinued, the trademark will die. Think of Studebaker for cars, and Instamatic for cameras. They were famous trademarks, but have faded away.
This same scenario is about to unfold as the World Health Organisation has instigated a global war against smoking and tobacco products. Several countries have banned advertising and the promotion of tobacco products and brands. The war has now entered a new phase and a second offensive has been launched with Australia at the forefront, and other countries, including South Africa, following suit.
The new offensive attacks the use of brands on tobacco packaging. Australia’s plain packaging legislation allows the use of only word trademarks, in plain print of very small size against a fawn coloured background, to appear, along with anti-smoking wording and lurid pictures of potential damage to health, on the product packaging. This legislation sounds the death knell of all logo and label trademarks, most of which are registered separately under trademarks legislation.
Such trademarks are, by virtue of their discontinuation of use, destroyed, literally by the stroke of a pen. This form of mass extermination amounts to brand genocide.
Is destruction lawful?
The question may be asked whether it is equitable and reasonable to destroy valuable items of intellectual property in this manner, purportedly to curtail smoking. Is diminishing the ability of the public to distinguish the cigarettes produced by one firm from those of another likely to stop new smokers from entering the market? Is this destruction of property by the state lawful?
Major international tobacco companies brought this question before the Australian Supreme Court in a challenge to the constitutional validity of the plain packaging legislation. It was argued that the legislation infringed against the clause of the Australian constitution that protects private property.
The court conceded the prevention of the use of trademarks amounted to the “taking” of property from the trademark owners but found that such action did not give rise to the “acquisition” of that property by the state as contemplated by the property clause. It therefore held the legislation to be constitutionally valid.
The decision of the Australian court precipitated victory celebrations around the world, including in South Africa.
Following this decision, Health Minister Aaron Motsoaledi stated South Africa would emulate the Australian legislation. A draft bill to this effect is expected soon.
The property clause in our constitution differs significantly from the Australian equivalent. Our property clause provides essentially that no law can permit an arbitrary deprivation of property. Moreover, if a deprivation of property amounts to expropriation, reasonable compensation must be paid. The emphasis is on the deprivation of property rather than on its acquisition by the state.
There can be little doubt that preventing trademarks from being used, and thereby destroying them, amounts to a deprivation of property. The question is whether the deprivation is arbitrary.
“Arbitrary” has been interpreted to mean that there is insufficient correlation between the objective and the deprivation of the property. The minister could be forced to pay millions of rand in compensation for every trademark destroyed.
If the minister wants to curtail smoking, he should look elsewhere as trademarks are but irrelevant pawns in the game.
Professor Owen Dean holds the Anton Mostert chair of intellectual property at Stellenbosch University. This article is based on his inaugural lecture in the university’s faculty of law last month.