OnLine Lottery Services (Pty) Ltd v National Lotteries Board
 4 All SA 470 (SCA)
SUPREME COURT OF APPEAL
7 September 2009
LTC HARMS DP, FDJ BRAND, JA HEHER, V PONNAN JJA and ZL
2010 (5) SA 349 (SCA)
. Editor's Summary . Cases Referred to . Judgment .
 Competition law Unlawful competition Passing off Reasonable likelihood of confusion Descriptive terms
Excluding factors A party cannot be prevented from unambiguously using a descriptive term in its original descriptive
sense, unless it has wholly lost that descriptive sense and become distinctive of the claimant in every context.
 Intellectual property law Trade marks Registrability of trade mark Entry on trade marks register Whether trade
mark was wrongly entered and wrongly remained on the trade marks register If, at the date of application a trade mark
is inherently capable of so distinguishing or is capable of distinguishing by reason of prior use, it is considered to be
registrable, and if it is not capable of such distinction, it may not be registered.
The appellant was accused of competing unlawfully with the second respondent ("Uthingo"), who was a permitted
user of the trade mark "Lotto". The first respondent, the National Lotteries Board, was the registered proprietor of
the trade mark in terms of the Trade Marks Act 194 of 1993 ("the Act").
In 1999, Uthingo became the sole authorised licensee of the right to operate the National Lottery, which it did
using the "Lotto" name.
The appellant promoted its business as one through which tickets for the National Lottery could be ordered. The
Board, however, was of the opinion that the true nature of appellant's activities was the unauthorised sale of
tickets for the National Lottery and that in doing so the appellant was infringing the Lotto trade mark by advertising
its business as "Lottofun". It also believed that the business and services were being conducted in a manner such
as to create deception and confusion in the mind of the public between those services and the services offered by
the Board and Uthingo. As a result, the Board sought interdictory relief against the appellant. That application was
met with a counterapplication by the appellant for the expungement of the Lotto trade mark on the grounds that it
wrongly remained on the register as the word Lotto had not been used as a trade mark within the meaning of
section 27(1)(b) of the Act. The court a quo granted the respondents' orders, and dismissed the counterapplication,
leading to the present appeal.
Held Three questions needed to be answered. The first was whether the registered trade mark "Lotto" be
removed from the trade mark register because it was wrongly entered and wrongly remains on the register as
envisaged by section 24(1) of the Act. The second question was whether the appellant in conducting its business,
passed that business off as that of the National Lotteries Board or as connected in the course of trade with the
Board. Finally, it had to be determined whether the business carried on by the appellant involved the selling of
tickets for the National Lottery which resulted in contraventions of sections 56 and 57 of the Lotteries Act 57 of
Page 471 of  4 All SA 470 (SCA)
A trade mark is a badge which distinguishes the origin of the goods or services to which it is applied from the
origin of other (usually competitive) goods and services. If, at the date of application it is inherently capable of so
distinguishing or is capable of distinguishing by reason of prior use, it is considered to be registrable.
The appellant argued that the Lotto trade mark did not pass the test for either inherent or acquired
distinctiveness in relation to lottery services because it did not tell the public who the services come from but rather
what the services are, and the mark could not perform the function of distinguishing, without first educating the
public that it is a trade mark. It also contended that "lotto" is an ordinary English noun that identifies a particular
genus of games of chance and that the general public would, in 1991, have understood that any goods or services
to which it was or would be attached were of the nature or connected with games of that ilk. The Court agreed that
the word "lotto" was alive in South African language usage at the time of the registration in 1991 and had been for
many years. By adopting the word 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 Court concluded that the marks were
wrongly placed on the register and remained wrongly there. The expungement application should therefore have
Turning to the issues of unlawful competition, the Court pointed out that passing off protects a trader against