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[2011] ZASCA 4
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Groupe LFE (SA) (Pty) Ltd v Swartland Winery Ltd and Another (467/2009) [2011] ZASCA 4; 2011 BIP 117 (SCA) (4 March 2011)
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 467/2009
In
the matter between:
GROUPE
LFE (SA) (PTY) LIMITED
...........................................................
Appellant
and
SWARTLAND
WINERY LIMITED
..................................................
First
Respondent
THE
REGISTRAR OF TRADE MARKS
...................................
Second
Respondent
Neutral citation:
Groupe LFE v Swartland
Winery
(467/09)
[2011] ZASCA 4
(4 March 2011)
Coram:
Harms DP, Heher, Ponnan, Malan and Tshiqi JJA
Heard:
16 February 2011
Delivered:
4 March 2011
Summary:
Trade marks – infringement – revocation – use
of geographical indications – savings provision – trade
marks contrary to law
______________________________________________________________
ORDER
______________________________________________________________
On appeal from:
Western Cape High Court (Cape
Town) (Bozalek J sitting as court of first instance):
The appeal is dismissed with costs, including the costs
of two counsel.
______________________________________________________________
JUDGMENT
______________________________________________________________
HARMS
DP (HEHER, PONNAN, MALAN AND TSHIQI JJA concurring)
INTRODUCTION
[1] The court below (per Bozalek J) found that the
appellant, Groupe LFE (SA) (Pty) Ltd (‘LFE’), had
infringed a registered
trade mark of the respondent, Swartland Winery
Ltd (‘the Winery’). The particular trade mark is a word
mark, ‘Swartland’,
which was registered with effect from
13 December 1994 in class 33 (the class includes wines) under no
2004/22804. The court granted
an interdict and the customary related
relief against LFE on the Winery’s infringement application,
and it dismissed LFE’s
counter-application for the expungement
of the trade mark registration. This appeal is with the leave of the
court below.
[2] The Winery began its life during 1948 as a wine
co-operative, Die Swartlandse Koöperatiewe Wynkelder Bpk, with
headquarters
at Malmesbury, Western Cape. The area consisting of the
districts of Malmesbury, Darling, the Riebeecks, Moorreesburg,
Porterville,
Piketberg and beyond has been known since the days of
Jan van Riebeeck (the second half of the 17th C) as Het Zwarte Land
in Dutch
and later as Swartland in Afrikaans, allegedly a reference
to the black colour into which an endemic plant turns after the
winter
rains. Advertising material used by Dutch retailers selling
LFE’s wines has a less prosaic explanation: the black is
supposed
to refer to the colour of the rich soil of the area as if
rich soil is good for viniculture. The cooperative was converted into
a public company during 2006 under its present name.
[3] The Wine, Other Fermented Beverages and Spirits Act
25 of 1957 (as amended) introduced the ‘wine of origin’
concept
by permitting the Minister of Agriculture to define wine
producing regions. Wines originating from the area of the divisional
council
of Malmesbury were as from 1 January 1973 to be designated as
‘Malmesbury’ wines of origin. During 1975, the Malmesbury
designation was changed to Swartland. Since then the wine producing
area has been extended to include more than the Malmesbury
district
but it is still not coterminous with the traditional Swartland
geographical area.
[4] The Winery’s name ‘Swartland’ is a
prominent name in the wine industry and the Winery is one of the
leading
wineries. It produces about 2 million 9-litre cases per
annum. The cooperative has always traded as Swartland Winery (or
‘Wynkelder’).
Wines were sold under that name and also
under the name Swartland
simpliciter.
According to the Winery,
its use of the mark Swartland stretches back for some 60 years
(bottles bearing the trademark Swartland
and dated 1968 and 1972 were
introduced as evidence); the mark has during these years become
closely associated with the Winery;
and the relevant public
associated the mark with its well-known and award-winning wines.
Although these facts were disputed during
argument, LFE was not able
to controvert them with evidence.
INFRINGEMENT
[5] The Winery relied on the provisions of
s 34(1)(a)
of
the
Trade Marks Act 194 of 1993
, which states, inter alia, that the
rights acquired by registration of a trade mark are infringed by ‘the
unauthorized use
in the course of trade in relation to goods or
services in respect of which the trade mark is registered, of an
identical mark’.
However, a registered trade mark is not
infringed by the use of any bona fide description or indication of
the geographical origin
of the goods or services if the use is
consistent with fair practice
(s 34(2)(b)).
[6] As has been said before in
Century City
Apartments Property Services CC v Century City Property Owners’
Association
2010 (3) SA 1
(SCA) para 18, this defence represents
the other side of the coin of the requirement that the infringing use
has to be trademark
use. A bona fide description or indication of the
geographical origin of an alleged infringer’s goods or services
amounts
to non-trademark use and whether one considers it as part of
the trademark owner’s cause of action or as a defence does not
make much difference.
[7] This means that the central issue to be decided is
whether LFE used the name Swartland as a trade mark on its wine
bottles,
it being common cause that any trade mark use by LFE was
unauthorized.
[8] LFE’s case is that it used the name Swartland
as a geographical indication (as it is entitled to do) and not as a
trade
mark, and that its wines are actually sold as no-name brands.
The submission is without any merit. The label around the neck of
the
bottle is black and contains in white capitals the name Swartland. In
addition, there is a rather indistinct golden medallion
with the
inscription ‘Wine of origin Swartland’. (The medallion is
also to be found on the main and secondary labels.)
The main label is
also black with a prominent Swartland, 6 mm high, in white capital
letters. Above the name there appears also
in fairly indistinct gold
lettering, 2 mm high, the words ‘wine of origin’ in
Afrikaans. The lower half of the label
contains in grey the term
‘Private Bin’ together with the name of the cultivar and
the vintage. What this conveys to
the average purchaser is two
things: the trade mark is Swartland and it is a wine of origin. The
medallion, on the other hand,
tells one that it is a wine of origin
from Swartland. The secondary label is much the same with a prominent
5 mm Swartland in white
against a black background and below a 1,5 mm
and faint ‘wine of origin’ in gold against the same
background. Surprisingly,
if the intention had been that this was
supposed to be read ‘wine of origin Swartland’, the
phrase ‘wine of origin
Swartland’, which appears at the
foot of the label in 3 mm letters, would have been redundant. The
message is the same as
that on the main label. Furthermore, and
destructive of LFE’s argument is the fact that this label
describes the wine as
‘Swartland Private Bin’ wines. In
addition, LFE’s business name Swartland Vignerons, which
appears on this label,
falsely represents that it grows grapes for
wine. Not surprisingly, the retailer of these wines in the
Netherlands regards the
name Swartland as the trade mark and
advertises the wines as such.
[9] I have thus far concentrated on one type of trade
dress used by LFE in connection with Swartland wines. There is a
second type.
The description above relating to the label on the neck
applies equally. The main label differs somewhat: the name Swartland
appears
in larger script (7 mm) but the reference to wine of origin
in the superscript remains at 2mm; and it does not have the ‘private
bin’ accolade. The presentation of the name SWARTLAND with the
minute superscript ‘wine of origin’ is the same
on the
secondary label. The only difference of note is that the wine is not
described as ‘Swartland Private Bin’ wine.
[10] It follows, as submitted by the Winery and found by
the court below, that LFE is not genuinely, and in good faith, using
the
mark Swartland to indicate the geographical origin of its wines
but, instead, it is using the mark as a trade mark.
[11] LFE made some point of the fact that the wines were
not sold on the local market but were intended for export only, more
particularly
to the Netherlands. I have to confess that I do not know
what the point was, particularly in the light of s 64 of the Act,
which
is in these terms:
‘
The
application of a trade mark in the Republic to goods to be exported
from the Republic and any other act performed in the Republic
in
relation to goods to be so exported which, if performed in relation
to goods to be sold or otherwise traded in within the Republic,
would
constitute use of a trade mark therein, shall be deemed to constitute
use of the trade mark in relation to those goods for
any purpose for
which such use is material under this Act or at common law.’
[12] LFE in this context finally submitted that an
interdict was not justified because there was no proof of financial
loss and,
accordingly, no apprehension of harm. The argument is
without merit because apprehension of harm is not a requirement for a
final
interdict. LFE furthermore accused the Winery of forum
shopping: it should have sued the retailers in The Netherlands for
damages.
Once again, the submission is without any substance. LFE is
a local company; it committed trade mark infringement in South Africa
in terms of a local statute; the order sought applies locally and
only locally; and no other court has jurisdiction in respect
of the
claim. A possible claim for damages against the Dutch firm is also
not an adequate alternative remedy to an interdict, as
submitted by
LFE, because it is not adequate in the circumstances, is not
reasonable in the circumstances, and does not grant similar
protection, all trite propositions.
REVOCATION OF THE TRADE MARK REGISTRATION
[13] LFE sought, by means of its counter-application,
expungement of the trade mark registration. One would normally
consider expungement
first but since, as will appear in due course,
the counter-application stands to be dismissed it is convenient to
deal with it
at this stage. The application was ultimately based on
two grounds for expungement, namely sections 10(2)(b) and 10(12) of
the
Act.
[14] Section 10(2)(b) provides, inter alia, that a mark
may not be registered as a trade mark or, if registered, is liable to
be
removed from the register if it consists exclusively of a sign or
an indication which may serve, in trade, to designate the
geographical
origin of the goods. The provision was the subject of a
detailed analysis in
Century City
supra, and it is not
necessary to revisit the issue. Swartland is no doubt a sign that may
serve to indicate the geographical origin
of wines and it is,
accordingly, prima facie subject to revocation.
[15] There is, however, a proviso to s 10. It states
that a mark may not be refused registration or, if registered, will
not be
liable to be removed from the register by virtue of the
provisions of s 10(2) if at the date of the application for
registration
or at the date of an application for removal from the
register, as the case may be, it has in fact become capable of
distinguishing
within the meaning of s 9 as a result of use made of
the mark. The Winery submitted in the light of the facts set out at
the outset
of this judgment the trade mark was saved by this proviso.
The court below agreed and nothing submitted indicates that it erred
in its assessment.
[16] Special emphasis was placed during argument on
behalf of LFE on the axiom that use does not equal distinctiveness,
but it does
not mean that use cannot under the particular
circumstances of a case establish distinctiveness (and it often
does). The Winery’s
wines have been known for many decades as
Swartland wines and by no other name (save for the use of the
non-distinctive ‘Winery’
suffix). No other wine has been
sold under that name. How, under these circumstances, it can be
suggested that the mark did not
become distinctive is impossible to
fathom.
[17] Turning to the second ground for revocation: s
10(12) of the Act provides, inter alia, that a trade mark that is
contrary to
law may not be registered and, if registered, is liable
to revocation. LFE, in its papers, alleged that the registration of
the
trade mark was in conflict with the provisions of
s 11(3)(a)(ii)
of the
Liquor Products Act 60 of 1989
. Counsel who argued the matter
on behalf of LFE in the court below was, apparently, not enamoured of
the point and did not press
it and it, consequently, did not feature
in its judgment. Applying for leave to appeal, LFE’s attorney
who replaced counsel
and also argued before us, resuscitated the
s
10(12)
point but now with reference to
s 11(3)(a)(i)
of the
Liquor
Products Act. The
two provisions deal more or less with the same
subject-matter.
[18] This provision states in general
terms that, unless otherwise authorized, one may not use a wine of
origin designation in connection
with the sale of wine. Swartland,
clearly, is such a designated area and the use of the trade mark
Swartland in relation to wine
is, accordingly, prima facie unlawful.
There is, however, a savings provision on which the Winery relies.
Section 11(6)
of the
Liquor Products Act provides
that the provisions
of the section are not to be construed as restricting the use of ‘a
trade mark as defined in section
2(1) of the Trade Marks Act, 1963
(Act No. 62 of 1963), which is used or is intended for use in
connection with the sale of a liquor
product’ that was
‘registered, used or established’ on the date of
commencement of this section, which was 1
July 1990.
1
The definition in s 2(1) did not
define a trade mark with reference to registration but included
unregistered trade marks. The facts
set out above indicate
conclusively that the mark Swartland was an ‘established’
unregistered trade mark in respect
of the Winery’s wines having
been settled and accepted in its particular role to distinguish the
Winery’s wine from
other wines at the relevant date.
[19] It follows from this that the court below was
correct also in dismissing the counter-application for expungement of
the trade
mark and that in the result the appeal stands to be
dismissed.
ORDER
[20] The appeal is dismissed with costs, including the
costs of two counsel.
____________________
L T C Harms
Deputy President
APPEARANCES:
APPELLANTS:
S J Gardiner (with him J Hollesen) Attorneys
Werksmans
Incorporating Jan S de Villiers
Cape
Town
Webbers,
Bloemfontein
FIRST
RESPONDENT: A R Sholto-Douglas SC (with him P B J Farlam)
Dr
Gerntholtz, Cape Town
McIntyre
& Van der Post, Bloemfontein
1
Section
2(1) of the 1963 Act read:
‘“
trade
mark”, other than a certification mark, means a mark used or
proposed to be used in relation to goods or services
for the
purposes of—
(a)
indicating a connection in the course of trade between the goods or
services and some person having the right, either as proprietor
or
as a registered user, to use the mark, whether with or without any
indication of the identity of that person; and
(b)
distinguishing the goods or services in relation to which the mark
is used or proposed to be used, from the same kind of goods
or
services connected in the course of trade with any other person.’