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[2013] ZASCA 114
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Bayerische Motoren Werker Aktiengesellschaft v Grandmark International (Pty) Ltd and Another (722/12) [2013] ZASCA 114; 2014 (1) SA 323 (SCA); 2013 BIP 427 (SCA) (18 September 2013)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 722/12
Reportable
In the matter between:
BAYERISCHE
MOTOREN WERKE
AKTIENGESELLSCHAFT
...................................................................
Appellant
and
GRANDMARK
INTERNATIONAL (PTY) LTD
...................
First
Respondent
ALLAN C. HO
........................................................................
Second
Respondent
Neutral citation:
Bayerische Motoren Werke
Aktiengesellschaft v Grandmark International
(722/12)
[2013]
ZASCA 114
(18 SEPTEMBER 2013)
Coram
: BRAND, NUGENT, CACHALIA and WALLIS JJA and
SWAIN AJA
Heard: 26 AUGUST 2013
Delivered: 18 SEPTEMBER 2013
Summary: Designs Act 195 of 1933 – designs for
replacement parts of motor vehicles – whether aesthetic designs
–
Trade Marks Act 194 of 1993
– descriptive use.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from:
North Gauteng High Court,
Pretoria (Ranchod J sitting as court of first instance):
The appeal is dismissed with costs that include the
costs of two counsel.
_______________________________________________________________
JUDGMENT
________________________________________________________________
NUGENT JA (BRAND, CACHALIA and WALLIS JJA and SWAIN AJA
CONCURRING):
[1] The appellant – Bayerische Motoren Werke
Aktiengesellschaft (BMW) – is a German corporation that designs
motor vehicles
and, by itself and through licencees, manufactures and
distributes the vehicles internationally. It was the proprietor of
various
designs registered under the
Designs Act 195 of 1993
until
they expired after commencement of these proceedings. It is also the
proprietor of various trade marks registered under the
Trade Marks
Act 194 of 1993
.
[2] Four of its registered designs, and one of its
registered trade marks, are relevant to this appeal. The designs are
for certain
components of particular models of BMW motor vehicles –
a bonnet, a grille, a headlight assembly, and a front fender. They
were registered as ‘aesthetic designs’ in Class 12 in
Part A of the register.
1
[3] Grandmark International (Pty) Ltd – the
respondent – imports and distributes motor vehicle components
manufactured
mainly in Taiwan. The affidavits disclose – and it
was common cause – that amongst the articles it imported were
exact
embodiments of the four designs. The packaging of one of the
components also contained writing that is said to infringe one of
BMW’s trade marks.
[4] BMW applied to the North Gauteng High Court for
orders interdicting the alleged infringements, and for related relief
so far
as the designs are concerned, which has become superfluous now
that the period for which they were registered has expired. What
is
now sought by BMW if the designs were infringed is a declaration to
that effect, which will be relevant to proceedings it has
commenced
for payment of royalties.
2
[5] In response to the claims of design infringement
Grandmark counter-claimed under s 31 of the Act for revocation of
their registration,
on the grounds that the designs did not qualify
for registration under s 14. In the event that its claim for
revocation failed
it asked for an order referring the matter to the
Competition Tribunal established under the
Competition Act 89 of
1998
, alleging abuse of dominance by BMW. As for the trade mark, it
denied the writing infringed. Ranchod J upheld the claim for
revocation,
which made it unnecessary to consider referring the
matter to the Competition Tribunal, and dismissed the claim of trade
mark infringement,
but granted BMW leave to appeal to this court.
[6] The
Designs Act distinguishes
between ‘aesthetic
designs’ and ‘functional designs’ and allows for
the registration of each in parts A
and F of the register
respectively. It defines an aesthetic design to mean
‘
any design applied to any article, whether
for the pattern or the shape or the configuration or the
ornamentation thereof, or for
any two or more of those purposes, and
by whatever means it is applied, having features which appeal to and
are judged solely by
the eye, irrespective of the aesthetic quality
thereof’.
and a functional design to mean
‘
any design applied to any article, whether
for the pattern or the shape or the configuration thereof, or for any
two or more of
those purposes, and by whatever means it is applied,
having features which are necessitated by the function which the
article to
which the design is applied, is to perform, and includes
an integrated circuit topography, a mask work and a series of mask
works’.
[7] It is evident from the definition that to qualify
for registration in part A a design need not be exclusively
aesthetic, but
may combine both aesthetic and functional features.
Where it incorporates functional features, however, those features
are excluded
from protection by
s 14(5).
Moreover,
s 14(6)
excludes
from the protection of a registered functional design any feature of
pattern, shape or configuration of an article that
is in the nature
of a spare part for a machine, vehicle or equipment. That section
might, by implication, contemplate that those
features are also not
capable of falling with the category of protectable aesthetic
designs, but we are not called upon to decide
whether or not that is
so.
[8] In view of the long history of design protection in
England the jurisprudence of that country can provide assistance at
times
in construing comparable statutes in this country, but always
bearing in mind that our legislation does not replicate that of
England,
and that there have been developments in recent years
towards harmonising the laws of the European economic community.
[9] Relying upon jurisprudence from that country this
court – in
Homecraft Steel Industries
(Pty) Ltd v SM Hare & Son (Pty) Ltd
3
–
considered the principle underlying the
protection of aesthetic designs, with reference to the definition of
a design under the
former
Designs Act. That
Act did not distinguish
aesthetic from functional designs, nor allow for registration of the
latter, but nonetheless distinguished
the two by excluding functional
features in the definition of ‘design’. The effect of
that exclusion is that the definition
of a ‘design’ under
the former statute corresponds substantially with that of an
‘aesthetic design’ in
the present statute, and what was
said in
Homecraft Steel Industries
has
equal application in this case. Corbett JA said the following:
4
‘
In the leading English case of
Amp
Incorporated v Utilux (Pty) Ltd
[1972]
RPC 103
, Lord REID discussed the apparent policy of the legislation
relating to registered designs as follows (at 107-8):
"Those who wish to purchase an article for use are often
influenced on their choice not only by practical efficiency but by
appearance. Common experience shows that not all are influenced in
the same way. Some look for artistic merit. Some are attracted
by a
design which is strange or bizarre. Many simply choose the article
which catches their eye. Whatever the reason may be, one
article with
a particular design may sell better than one without it: then it is
profitable to use the design. And much thought,
time and expense may
have been incurred in finding a design which will increase sales.
Parliament has been concerned to see that the originator of a
profitable design is not deprived of his reward by others applying
it
to their goods."
Lord REID went on to point out that under the legislation in question
protection was given not to everything that could be called
a design,
but only to a design falling within the definition. In the same case
Lord MORRIS of BORTH-Y-GEST referred in particular
to the requirement
of the definition that the features in the finished article “appeal
to and are judged solely by the eye”.
He said (at 112):
"The question is raised as to the sense in which the features in
a finished article are to appeal to and are to be judged
solely by
the eye. I think that it is clear that the particular feature which
is in question or under consideration must be seen
when the finished
article is seen. But the words of the definition point, in my view,
to considerations other than that of merely
being visible. The
phrases 'appeal to' and 'judged solely by the eye' denote features
which will or may influence choice or selection
. . . This does not
mean that the 'appeal' or the attraction must be to an aesthetic or
artistic sense – though in some cases
it may be. The features
may be such that they gain the favour of or appeal to some while
meeting with the disfavour of others.
Beyond being merely visible the
feature must have some individual characteristic. It must be
calculated to attract the attention
of the beholder."
In his speech in this case Lord PEARSON said, with reference to the
definition of “design” (at 121):
"The emphasis is on external appearance, but not every external
appearance of any article constitutes a design. There must
be in some
way a special, peculiar, distinctive, significant or striking
appearance – something which catches the eye and
in his sense
appeals to the eye."
Similar views were expressed by Lord AVONSIDE in the Scottish Court
of Session in the case of
G A Harvey & Co (London) Ltd v
Secure Fittings Ltd
[1966] RPC 515
in the following terms (at
518):
"The judge of the design is the eye and the eye alone and to the
eye it must appeal. The design, to appeal, must be noticeable
and
have some perceptible appearance of an individual character. Where,
as in the present instance, the design is for a shape or
configuration of the article as a whole, the only effective
application of the design rests in making an article of that shape
or
configuration. In that situation, in order to achieve application of
the design to an article, the article produced must be
such as
appeals to the eye as possessing, by reason of its shape or
configuration, features which distinguish it from others of
its type
and class."
(This judgment was referred to with approval in the
Amp
Incorporated
case
supra
at 112-3, 119 and 121-2.)
These citations give, I think, a general indication of the features
which a design must possess in order to appeal to and be judged
by
the eye. And the next question which arises is: whose eye?’
[10] I
n
answer to that question the learned judge adopted what
had been said in
Swisstool Manufacturing Co. v
Omega Africa Plastics
5
as follows:
‘
This question was discussed at length by
ELOFF J in
Swisstool Manufacturing Co v
Omega Africa Plastics
1975 (4) SA 379
(W) at 382F-383F. Here reference is made to the
Amp
Incorporated
case
supra
in which it was held that the eye in question must be the eye of the
customer. (See also
Benchairs Ltd v
Chair Centre Ltd
[1974] RPC 429
at
442-3;
Ferrero's Design Application
[1978] RPC 473
at 482-3.) ELOFF J stated (at 383B) that it would not
be inconsistent with what has been said in previous South African
cases
"to hold that while the eye is to be the eye of the Court, the
Court should view the design through the spectacles of the
customer".
I think, with respect, that this statement pithily expresses what I
conceive to be the correct approach, viz that while the Court
is
ultimately the arbiter it must, when determining these matters,
consider how the design in question would appeal to and be judged
by
the likely customer of the class of article to which the design is
applied.
This visual criterion is, of course, of cardinal importance not only
in determining whether a design meets the requirements of
the
definition, but also in deciding questions of novelty and
infringement.’
[11] What emerges from that analysis is, essentially,
that aesthetic designs are those that invite customer selection –
and
customer discrimination between articles – solely by their
visual appeal.
[12] In this case BMW says that considerable money, time
and expertise goes toward designing the appearance of its motor
vehicles,
which plays a material role in customer selection of its
vehicles in preference to others, and I am sure that is true. It goes
on to submit that because the designs of its vehicles qualify as
aesthetic designs, albeit that they might incorporate functional
features, it follows that the components that go to make up that
design are also aesthetic designs. I don’t think that is
correct. On the contrary, that submission seems to me to point to why
the designs of the components are not aesthetic designs.
[13] The designs now in issue are designs of individual
components, and must be judged for the qualities of the individual
components,
independently of the design of the built-up vehicle. The
articles embodying the designs are not selected by customers for
their
appeal to the eye. They are selected solely for the function
they perform – which is to replace components so as to restore
the vehicle to its original form.
[14] Counsel for BMW submitted that an owner of a BMW
vehicle may choose to replace a component with a component of a
different
design, suitable modified if needs be, so as to alter the
appearance of the vehicle. We are not concerned, of course, with
components
of a different design that might be fitted to BMW
vehicles, but with BMW’s components, and the submission needs
to apply
the other way round. Perhaps there are eccentric motorists
to whom it might appeal to fit a BMW fender, for example, to a
vehicle
of a different kind – though it is difficult to imagine
one – but the designs are not to be judged by their appeal to
eccentricity. The eye through which the design must be judged is that
of the likely customer, who will choose it so as to maintain
the form
of the vehicle. Indeed, it can be accepted, from their nature, that
most customers will not even see the component before
it is fitted to
the vehicle, nor make any selection at all, other than by giving
instructions for the restoration of the vehicle.
[15] There are some motor vehicle components –
examples given in a case before the Registered Designs Appeals
Tribunal in
England are wing mirrors, wheels, seats and the steering
wheel
6
–
that are intended to be inter-changeable between
vehicles, and perhaps their designs are capable of being registered
as aesthetic
designs, but we are not concerned with designs of that
kind. There is no suggestion that the purpose of the BMW components
is to
be fitted, upon selection by customers, to vehicles of a
different kind. The purpose they are intended to serve is solely to
replace
the components of the respective BMW vehicles.
[16] In those circumstances the designs are purely
functional and were rightly held not to qualify for registration as
aesthetic
designs.
[17] So far as the alleged trade mark infringement is
concerned, before us BMW alleged infringement of only one of its
registered
trade marks – the letters BM. It alleged that the
trade mark is infringed by its appearance on two articles reflected
in
photographs attached to the founding affidavit. There is no
explanation in the papers of what those articles are but we were told
they are labels attached to the packaging of one of the components.
[18] One article contains a composite of the following
lettering and numbering: GORDON AUTO BODY PARTS CO.LTD; MFG LOT;
1004A; GD471;
BM 3 SRS 92-05 HOOD’. The other contains the
following letters and numbers following immediately after one
another: ‘BM3S01HD4
BM 3 SERIES (E46) PARTSLINK NO BM 1230
115’.
[19] In
Commercial Auto Glass
(Pty) Ltd v BMW AG
7
Harms ADP said of trade mark infringement:
‘
[As] this Court recently held in line with
developments in Europe and the United Kingdom, the defendant's use
must have been "trade
mark use", meaning that –
"[t]here can only be primary trade mark infringement if it is
established that consumers are likely to interpret the mark,
as it
is used by the third party
, as designating or tending to
designate the undertaking from which the third party's goods
originate."
'What is, accordingly, required is an interpretation of the mark
through the eyes of the consumer as used by the alleged infringer.
If
the use creates an impression of a material link between the product
and the owner of the mark there is infringement; otherwise
there is
not. The use of a mark for purely descriptive purposes will not
create that impression but it is also clear that this
is not
necessarily the definitive test.'
[20] A customer would not view the trade mark ‘BM’
in isolation of its surrounding features. In the first case it can
hardly be said that the trade mark is used as a badge of origin when
the label states it to have a different origin. Moreover,
the
numbering surrounding, and immediately following, the mark clearly
reflects its use to identify of the component concerned,
and the same
is to be said of the lettering and number on the second tag. In my
view the marks are clearly not used as trade marks
and the claim for
infringement correctly failed.
[21] In view of my findings it is not necessary to deal
with the claim for referral to the Competition Tribunal.
[22] The appeal is dismissed with costs that include the
costs of two counsel.
___________________
R W NUGENT
JUDGE OF APPEAL
APPEARANCES
For Appellant: R Michau SC
A Cockrell SC
L G Kilmartin
Instructed by:
Adams & Adams, Pretoria
Honey Attorneys Inc, Bloemfontein
For Respondent: D Unterhalter SC
G Marriott
Instructed by:
S J Pluke Attorneys, Johannesburg
Webbers, Bloemfontein
1
Registration
Numbers A1989/0062, A1998/0064, A1998/0065, and A1998/0056,
respectively.
2
Section
35(3)(
d
) entitles the registered proprietor of a design to
recover from an infringer a reasonable royalty in lieu of damages.
3
Homecraft
Steel Industries (Pty) Ltd v SM Hare & Son (Pty ) Ltd
[1984] ZASCA 36
;
1984
(3) SA 681
(A).
4
At
p. 691 A-I.
5
Swisstool
Manufacturing Co. v Omega Africa Plastics
1975 (4) SA 379
(W).
6
Ford
Motor Company Limited and Iveco Fiat SpA’s Design Applications
[1993] R.P.C. 399
, and on appeal
[1994] R.P.C. 545
(QB).
7
Commercial
Auto Glass (Pty) Ltd v BMW AG
2007 (6) SA 637
(SCA) para 3. See,
too,
Verimark (Pty) Ltd v BMW AG
2007 (6) SA 263
(SCA) paras
5-6.