The pop-up that popped in and popped out: Off Rhode trade mark concerns

Influencer beauty gurus of South Africa were abuzz this past weekend with the announcement of a Rhode pop-up store at the Mall of Africa. TikTokers wasted no time in running to secure the bag and soon feeds on all social media platforms were filled with hauls and unboxings and reviews of what was deemed to be the all the rage in the beauty industry.

The excitement was, however, short-lived when internet sleuths began to question the authenticity of the goods and the “Come with me to shop the new Rhode store” videos quickly turned into “Come with me to get scammed” videos.

The flaw was in the foundation. What the business behind the pop-up, an alleged reseller of the goods, had not anticipated was that several influencers were already in possession of genuine best-loved Rhode goods, which they had purchased on their travels overseas. These influencers did not shy away from reviewing the products side-by-side for their audiences and very soon, the potholes in the Rhode pop-up surfaced. Questions regarding available stock of limited edition drops, pricing discrepancies, and imperfect packaging quickly came to the fore.

Eyebrows rose even higher when TikTokers started posting screenshots of responses seemingly received by them from Rhode Skin, confirming that their only affiliated sales channels were the official rhodeskin.com website and their verified Instagram Shop and TikTok Shop. Rhode further distanced itself from the pop-up by stating that “we can’t guarantee that you are buying genuine products and can’t vouch for their authenticity, quality or condition. These products may not meet our standards – and in some cases, may be counterfeit”.

The mall, in the wake of the fast-spreading fire, was quick to action, and as quickly as the pop-up had popped in, it popped out and shut its doors for business with TikTokers also confirming the blank canvas where the shop once stood.

Section 34(2)(d) of our Trade Marks Act, renders lawful the parallel importation and sale of genuine “grey goods”, by invoking the so-called “exhaustion of rights” doctrine. It provides a defence in relation to the use of a trade mark on such goods on the basis that the trade mark in question has been applied to the goods with the consent of the owner of the mark. It is only if the goods have been substantially altered, and can no longer be said to be the same as genuine goods emanating from the owner of the trade mark, that there is potential recourse on the basis of trade mark infringement.

Whereas the RHODE trade mark does not appear to be registered in South Africa, it does seem to enjoy protection in the beauty industry and on TikTok, at least, on the basis that it is well-known. In South Africa, Section 35 of the Trade Marks Act provides protection for both registered and unregistered trade marks that are “well-known”. In determining whether a trade mark is well-known due regard is given to the knowledge of the trade mark in the relevant sector of the public, including knowledge which has been obtained as a result of the promotion of the trade mark. The RHODE trade mark is therefore not without protection and the instant closure of the pop-up is a testament to this.

This does beg the question of what steps should be taken to protect the consumer and ensure that the sale of parallel imports is not portrayed in a manner that is commercially misleading causing damage to consumers and brand owners alike.

Section 25(2) of the Consumer Protection Act provides that “a person who markets any goods that bear a trade mark, but have been imported without the approval or licence of the registered owner of that trade mark, must apply a conspicuous notice to those goods in the prescribed manner and form.” In terms of regulation 8(2)(c), the notice must clearly state that the goods have been imported without the approval of the registered owner of the trade mark and that no guarantee or warranty will be honoured by any authorised importer of such goods. 

It is not clear whether such a notice was placed on the premises of the Rhode pop-up, but it seems unlikely considering how TikTokers took to their purchases from the pop-up store and compared them to products acquired from Rhode Skin. 

This frenzy is not a sign that businesses should shy away from healthy competition in the market, but it does sound like a warning that all competitors must adhere to honest business principles and statutory provisions, because a failure to do so may amount to unlawful competition and cause reputational damage.

While common sense and experience prevailed in this case, a lesson to consumers is that the beauty of a product is not always in the eye of the beholder, and one must be circumspect when making a hype purchase.

Written by Kim Rampersadh, Partner at Adams & Adams & Nontando Tusi, admitted attorney and associate at Adams & Adams.