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[2012] ZASCA 68
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The Gap Inc v Salt of the Earth Creations (Pty) Ltd and Others (695/11) [2012] ZASCA 68; 2012 (5) SA 259 (SCA); 2012 BIP 135 (SCA) (23 May 2012)

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THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 695/11
THE
GAP, INC
…....................................................................................
Appellant
and
SALT
OF THE EARTH CREATIONS (PTY) LTD .
......................
First
Respondent
KINGSGATE
CLOTHING (PTY) LTD
…................................
Second
Respondent
PAUL
VIVALDI FASHIONS (PTY) LTD
….................................
Third
Respondent
THE
REGISTRAR OF TRADE MARKS
…..............................
Fourth
Respondent
Neutral
citation
:
The Gap Inc v Salt of the Earth Creations (Pty)
Ltd and others
(695/11)
[2012] ZASCA 68
(23 May 2012)
BENCH:
CLOETE, PONNAN, MALAN, WALLIS JJA and KROON AJA
HEARD: 4 MAY 2012
DELIVERED: 23 MAY 2012
CORRECTED:
SUMMARY:
Trade mark –
Trade Marks Act 194 of 1993
,
s 27
–
application for expungement of on the grounds of lack of bona fide
use.
___________________________________________________________________
ORDER
___________________________________________________________________
On
appeal from
:
North Gauteng High Court,
Pretoria (Southwood J sitting as court of first instance):
1. The
appeal is upheld.
2. The
order of the court below is set aside and in its stead is substituted
the following:
‘
The
application is dismissed.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
PONNAN
JA (CLOETE, MALAN and WALLIS JJA and KROON AJA concurring):
[1] The protagonists – the appellant, the Gap Inc, a United
States corporation, and the first to third respondents, three
South
African companies, namely, Salt of the Earth Creations (Pty) Ltd,
Kingsgate Clothing (Pty) Ltd and Paul Vivaldi Fashions
(Pty) Ltd –
are no strangers to our courts in their fight for proprietorship of
the trade mark Gap (in respect of clothing
in this country).
1
The present appeal with the leave of this court is in respect of the
appellant’s Gap trade mark no. 94/10423 in class 3 registered

in respect of, inter alia, body personal care products, which
Southwood J, on the application of the respondents, ordered be
expunged
from the Register of Trade Marks on the basis of non-use in
terms of the provisions of s 27(1) of the Trade Marks Act 194 of 1993

(the Act). The fourth respondent, the Registrar of Trade Marks, took
no part in the proceedings either in this court or the one
below.
[2] In heads of argument filed on behalf of the appellant, and orally
from the bar in this court, we were advised by counsel that
the
protagonists have settled all pending litigation between them and
that the appeal was not being opposed by any of the respondents.

However, as the judgment of Southwood J is one
in rem
in that
it affects a public register, the appellant, notwithstanding the
settlement of the matter, was constrained to proceed with
the appeal
because as Steyn CJ put it in
Rembrandt Fabrikante en Handelaars
(Edms) Bpk v Gulf Oil Corporation
1963 (3) SA 341
(A) at 348:
‘
. . .
generally speaking, the existence of an exclusive right to a trade
mark flows from and is dependent upon registration, and
the nature
and extent of such a right is determined by the entries in the
register. The right to a registered trade mark is effectively

assigned, transferred, modified, partly divested of its
exclusiveness, or terminated, by such entries.’
[3] Section 27(1), to the extent here relevant, reads:
‘
(1) …a
registered trade mark may, on application to the court,…by any
interested person, be removed from the register
in respect of any of
the goods or services in respect of which it is registered, on the
ground either –
that the trade mark was
registered without any
bona fide
intention on the part of the
applicant for registration that it should be used in relation to
those goods or services by him or
any person permitted to use the
trade mark as contemplated by section 38, and that there has in fact
been no
bona fide
use of the trade mark in relation to those
goods or services by any proprietor thereof or any person so
permitted for the time
being up to the date three months before the
date of the application;
that up to the date three
months before the date of the application, a continuous period of
five years or longer has elapsed from
the date of issue of the
certificate of registration during which the trade mark was
registered and during which there was no
bona fide
use
thereof in relation to those goods or services by any proprietor
thereof or any person permitted to use the trade mark as

contemplated in section 38 during the period concerned; . . .
[4] As Harms JA, quoting from the European Court of Justice, made
plain in
AM Moolla Group Ltd v The Gap
2005 (6) SA 568
(SCA)
para 26:
‘
A
trader registers or acquires a trademark primarily not in order to
prevent others from using it but in order to use it himself
(although
exclusivity of use is of course a necessary corollary). Use by the
proprietor is indeed a central and essential element
of ownership
[since] rights may lapse or be unenforceable in the event of
non-use.’
In terms of the provisions of s 27(3) the onus of proving bona fide
use where non-use has been alleged rests upon the trade mark

proprietor – in this instance the appellant. It is not
necessary that the use was continuous use although intermittent use

may be indicative of the fact that it was not bona fide (
AM Moolla
para 27). The European Court of Justice in
Ansul BV v Ajax
Brandbeveiliging BV
[2003] RPC 40
para 36 has held that ‘genuine
use’ (which corresponds with bona fide use in s 27(1)
(b)
of
the Act) must be ‘
understood
to denote
use that was
not merely token, serving solely to preserve the rights conferred by
the mark. Such use had to be consistent with the
essential function
of a trade mark, which is to guarantee the identity of the origin of
goods or services to the consumer or end
user by enabling him,
without any possibility of confusion, to distinguish the product or
service from others which have another
origin.'
[5] In
K Mart (Pty) Ltd v K Corporation and The Registrar of Trade
Marks
an unreported decision of the Transvaal Provincial Division
dated 18 December 1987, Eloff DJP held:
‘
In my
judgment the definition is wide enough to cover a case such as the
present where the goods are in existence and identifiable,
where they
are advertised in publications appearing regularly in South Africa as
part of first respondent’s business policy
and strategy to
promote international business, and where the marks are clearly used
in the advertisements and promotional material.’
In
K Mart
, evidence was adduced of efforts at establishing
trading outlets in South Africa and of correspondence and
negotiations with stores
such as Edgars and Dion. Eloff DJP made the
point that in promoting and advertising the business goods and
services, as also in
negotiations, the trade mark K Mart had been
used. The learned Deputy Judge President accordingly concluded that
‘the negotiations
with Edgars and Dion’s and the various
other concerns mentioned. . .constitutes use of the mark in
question’.
[6]
K Mart
was cited with approval in
Contrapest Holdings
SA (Pty) Ltd v Ecolab Inc
1998 BIP 217 (T). In
Contrapest
,
McCreath J stated at 219D-F:
‘
Various
cases have clearly demonstrated that the amount of use required to
defeat an application for expungement is small so long
as such use is
bona
fide
.
Thus in
Vac-u-Flex
Trade Mark
(1965)
FSR 176
it was held that the dispatch of a single sample of a product
sufficed to constitute use so long as there was a real endeavour to

introduce the goods into the market. In
Bon
Matin
(1989)
RPC 537
Whitford J held that two isolated usages of the trade mark
Bon Matin in an export price list and in an information booklet were

sufficient effectively to counter an application for expungement on
the basis of non-use. The proprietor of the trade mark had
merely
sent to potential distributors a price-list and a brochure which
contained photographs of its products.’
[7] In both
K Mart
and
Contrapest
reliance was placed
on the following dictum of Falconer J in
Hermes Trade Mark
(1982)
RPC 425:
‘
Thus,
if the registered proprietor should commence a series of
advertisements featuring his mark as part of an introductory
campaign,
prior to putting his goods on the market under the mark,
but before they were actually on the market, in my judgment such use
would
clearly be use of the mark in the course of trade, not upon the
goods in physical relation thereto, but it would be in other relation

thereto, the point being that it would be use in the course of trade,
in those goods, albeit in advertisements.’
[8] The application for expungement was issued on 5 March 2008 and,
as such, the relevant period during which the appellant had
to prove
bona fide use was 4 December 2002 to 4 December 2007.
[9] According to
Ansul
(para 38):
‘
. . .
when assessing whether there has been genuine use of the trade mark,
regard must be had to all the facts and circumstances
relevant to
establishing whether the commercial exploitation of the mark is real,
in particular whether such use is viewed as warranted
in the economic
sector concerned to maintain or create a share in the market for the
goods or services protected by the mark.'
The evidence adduced by the appellant of use may conveniently be
divided into two periods - 2002 to 2003 (the first period) and
2007
onwards (the second period).
[10] The first period: During or about October 2002 and following
upon negotiations for a period of almost six months, Gap
International
BV (the appellant’s subsidiary and licensee of
the Gap trade marks) entered into a retailer licence agreement with
Clicks
Group Limited (Clicks), a national retailer of health, beauty
and life-style products. In terms of this agreement Clicks undertook

to distribute Gap personal care products through its nationwide chain
of stores. Gap products appeared in approximately 100 Clicks
outlets
throughout South Africa and on 11 December 2002 the appellant issued
an invoice for a total of 2200 units of the appellant’s
‘Sense’
eau de toilette. However between January and May 2003 Clicks only
sold a total of 21 bottles of GAP personal
care products. Southwood J
took the view that that was ‘a tiny number of bottles and an
insignificant volume’. On this
aspect of the case the learned
Judge concluded, after referring to several considerations that
weighed with him, that ‘the
sale of the goods [by the
appellant] to Clicks had been done for an ulterior purpose i.e.
simply to save the class 3 mark’.
Whether Southwood J’s
conclusion on this aspect of the case is indeed correct hardly need
detain us. For, it seems to me,
that the matter can be determined by
leaving out of the reckoning the evidence of use adduced by the
appellant in respect of the
first period.
[11] The second period: In 2006 the appellant appointed Stuttafords
Stores (Pty) Ltd (Stuttafords), described as one of the country’s

premier department store groups, as an authorised distributor of Gap
merchandise in South Africa. According to Julie Gruber, the
Vice
President and Deputy General Counsel for the appellant, Gap branded
clothing, shoes and other merchandise were supplied to
Stuttafords
from early 2007 and proved an immediate success. She adds:
'5.3 In August 2007, Marco
Cicoria and Alfred Emdon, the Chief Executive Officer of Stuttafords,
met with representatives of the
First Respondent and its affiliate
entities, particularly Nina King, who has since left the First
Respondent's employ to place
further orders for GAP apparel. At that
time, the Stuttafords representatives were also shown GAP body care
products.
5.4 There was a great deal of
interest shown by Stuttafords in the body care products which
culminated in an order being placed
in October 2007. In this regard I
refer to the affidavit of Marco Cicoria and in particular, Annexure
"MC3" thereto being
confirmation of the order being placed.
5.5 Further, I refer to the
purchase order issued by the First Respondent for the product
ordered, also attached to Cicoria's affidavit.
It was envisaged that
the body care products would be on sale before Christmas 2007 in
South Africa.
5.6 Unfortunately, due to the
resignation of Nina King in late 2007, who had been the main contact
person for the sourcing of GAP
body care products by Stuttafords, and
as a result of the involvement of Inter Parfums, the shipment of the
body care products
was delayed. This was largely due to the fact that
Inter Parfums operates on the basis of appointing an agent in a
specific country
or region through which retailers place their orders
and from which orders are despatched. As the First Respondent and
Inter Parfums
were still finalising their business relationship, the
Stuttafords' order had to be dealt with differently, namely delivery
had
to be effected to a GAP retail store in the US, before shipping
to South Africa.
5.7 I am advised that the order
placed in October 2007 will reach South Africa during April 2008.
Furthermore, Inter Parfums are
in the process of selecting a South
African distributor which will be appointed to supply Stuttafords
with GAP branded personal
care products from the second quarter of
2008. In this regard, I refer to the affidavit of Herve Bouillonnec
filed evenly herewith.
5.8 Consequently, the First
Respondent has always had a
bona fide
intention to use its
class 3 trade mark registration in South Africa and in fact has made
use of its trade mark through sales to
Clicks and Stuttafords, not to
mention its numerous approaches to other South African retailers
including Edgars, Foschini and
Ascot Pharmacies to retail body care
products. In this regard I refer to the affidavit of Marci Friedman,
marked Annexure "JG
1A".'
That is corroborated by Marco Cicoria, the Group Marketing and
Merchandising Director of Stuttafords, who states:
‘
3.5
Since the introduction of GAP branded merchandise into Stuttafords
stores in March 2007 close on R18 000 000 worth of GAP apparel
has
been sold in the three Stuttafords stores referred to above. These
sales clearly evidence the extent of the reputation vested
in the GAP
trade mark in South Africa.
4. On 14
th
August
2007 in a meeting in New York between myself, Alfred Emdon, the Chief
Executive Officer of Stuttafords and various representatives
from The
Gap, the issue of introducing GAP branded personal care items into
Stuttafords stores was raised. . . I was happy with
the assortment of
product, being a new line of bath and skin body lotions, made
available to Stuttafords and immediately made contact
with the Group
Cosmetics Manager who would be responsible for sourcing these
products from The Gap.
. . .
6. On 3
rd
October
2007, following on from various communications between Stuttafords
and The Gap, an order for 800 units of various body
lotions was
placed with The Gap. . .’
[12] Southwood J was, however, not persuaded. He concluded: ‘In
my view the respondent has not established
bona fide
use in
respect of the goods sold to Stuttafords’. What appeared to
weigh with the learned Judge were what he described as
‘two
difficulties’ which he articulated thus:
‘
First,
the point was not relied upon in the respondent's answering
affidavits (Julie Gruber simply referred to these matters by
way of
background and in order to establish her evidence that the respondent
always had the intention to use the class 3 mark in
South Africa) and
no attempt was made to establish that such use was in South Africa.
. . .
[Second] [e]ven if it is
accepted that the matter was pertinently raised, it appears that the
negotiations took place in New York
and that the mark was used once
in an e-mail to Stuttafords and once in an order form. It is not
clear whether the latter document
was seen in South Africa. '
[13] As to the first: With respect to the learned Judge, that
statement is inconsistent with the evidence that I have quoted.
Plainly the evidence adduced by Ms Gruber and Mr Cicoria was with a
view to establishing bona use by the appellant of its class
3 mark in
this country. It, moreover, is irreconcilable with the following
finding to be found earlier in the judgment of the learned
Judge:
‘
The
[appellant] alleges that it used the class 3 mark on two occasions
during the relevant 5 year period (i.e. 4 December 2002 to
4 December
2007): during the period August 2002 to May 2003 and again during the
period October 2007 to May 2008. The [appellant]
relies on a number
of affidavits in support of these allegations. The [respondents]
cannot and have not disputed the facts set
out in these affidavits.'
[14] As to the second: The appellant did not rely on actual delivery
of the Gap branded products to Stuttafords as constituting
‘use’.
Nor could it have, given that the products had yet to arrive in the
country during the relevant period. Rather,
what the appellant relied
upon was the negotiations and exchange of correspondence culminating
in the placing of an order. Trade
marks are territorial. The
negotiations between the appellant and Stuttafords were clearly for
the use of the South African trade
mark Gap in class 3 products in
this country. It is thus somewhat artificial to suggest that if the
negotiations were to have occurred
within the borders of this country
that would have constituted use, but where, as occurred here, the
negotiations took place outside
of our borders that cannot constitute
use. What is of significance, it seems to me, is that the
negotiations involved South Africans
representing a South African
company taking steps to use a South African trade mark in South
Africa. Moreover the negotiations
and correspondence were clearly
aimed at sourcing and offering for sale Gap class 3 merchandise in
South Africa. In those circumstances
that the negotiations occurred
outside the borders of this country is irrelevant.
[15] I consider that the evidence adduced by the appellant refutes
the suggestion that it had not, in the relevant period, used
its mark
in South Africa. It may well have been on a more modest scale
relative to its activities elsewhere in the world but it
surpasses
the fairly low threshold set by the authorities to which I have
referred, in particular
K Mart
and
Contrapest.
I should
perhaps add that those principles accord with what was stated in
Ansul
(para 39):
‘
Assessing
the circumstances of the case may thus include giving consideration,
inter alia, to the nature of the goods or service
at issue, the
characteristics of the market concerned and the scale and frequency
of use of the mark. Use of the mark need not,
therefore, always be
quantitatively significant for it to be deemed genuine, as that
depends on the characteristics of the goods
or service concerned on
the corresponding market.’
[16] I certainly do not agree that such use as has been established
is such as to attract the inference that it was not bona fide.
The
requirement of bona fide user:
'means a user by the proprietor
of his registered trade mark in connection with the particular goods
in respect of which it is registered
with the object or intention
primarily of protecting, facilitating, and furthering his trading in
such goods, and not for some
other, ulterior object.'
(Per
Trollip J in
Gulf Oil Corporation v Rembrandt Fabrikante en
Handelaars (Edms) Bpk
1963 (2) SA 10
(T) at 24D, cited with
approval in
AM Moolla Group
para 42.)
On the view that I take of the matter there is no basis for the
finding that the appellant was inspired by an ulterior objective.
[17] It follows that I would allow the appeal. That leaves costs: We
were informed from the bar by counsel that the parties were
agreed
that no order for costs should issue either in this court or the one
below. In the result the appeal is upheld and the order
of the court
below is set aside to be replaced with the following:
‘
The application is dismissed.’
_________________
V M PONNAN
JUDGE OF APPEAL
APPEARANCES:
For
Appellant: CE Puckrin SC
R
Michau
Instructed
by:
D
M Kisch Inc
Pretoria
Rossouws
Attorneys
Bloemfontein
For
1
st
& 3
rd
Respondents: O Moosa SC
(On
a watching brief)
Instructed
by:
MacRobert
Inc
Pretoria
Claude
Reid Inc
Bloemfontein
1
AM
Moolla Group Ltd & others v The Gap Inc & others
2005
(2) SA 412
(SCA);
AM Moolla Group Ltd & others v The Gap Inc
& others
2005 (6) SA 568
(SCA) and
Stuttafords Stores
(Pty) Ltd & others v Salt of the Earth Creations (Pty) Ltd
2011 (1) SA 267
(CC).