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[2019] ZAGPPHC 176
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Leonard Dingler (Pty) v Afroberg Tobacco Manufacturing (Pty) Ltd and Others (23119/18) [2019] ZAGPPHC 176; 2019 BIP 137 (GP) (31 May 2019)
IN THE HIGH COURT OF THE
REPUBLIC OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
(1)
REPORTABLE:
YES
/NO
(2)
OF
INTEREST TO OTHER JUDGES:
YES
/NO
(3)
REVISED
CASE NO: 23119/18
31/5/2019
In
the matter between:
LEONARD
DINGLER (PTY) LTD
Plaintiff
and
AFROBERG
TOBACCO MANUFACTURING (PTY) LTD
First Defendant
ZAHIR
ABDULKHALEK TURKY
Second Defendant
THE
SOUTH AFRICAN POLICE SERVICE,
COMMERCIAL
CRIME UNIT, JOHANNESBURG
Third Defendant
JUDGM
E
NT
LOUW,
J
[1]
The plaintiff manufactures tobacco products such as roll-your-own,
pipe tobacco
and nasal snuff, including the pipe tobacco brands Boxer
and Best Blend. The plaintiff is the registered proprietor in terms
of
the
Trade Marks Act 194 of 1993
of trade mark registration No.
2009/13383 BLACK AND WHITE in class 34 in respect of
"tobacco;
smokers' articles; matches".
The
plaintiff's trademark registration constitutes an
"intellectual
property right"
as defined ins
1(1) of the
Counterfeit Goods Act 37 of 1997
.
[2]
The plaintiff has instituted an action against the first and second
defendants for
an interdict restraining them from infringing the
plaintiff's registered trade mark in terms of
s 34(1)(a)
of the
Trade
Marks Act. Section
34(1)(a) provides the following:
"The
rights acquired by registration of a trade mark shall be infringed by
-
(a)
the
unauthorized use in the course of trade in relation to goods or
services in respect of which the trademark is registered, of
an
identical mark or of a market so nearly resembling it as to be likely
to deceive or cause confusion. "
The plaintiff alleges in its
particulars of claim that from at least October 2017, the first
and/or second defendant has manufactured
and/or sold and/or
distributed and/or offered for sale in the Republic tobacco products
bearing the trademark BLACK AND WHITE,
which mark is identical to the
plaintiff's trade mark.
[3]
It is further alleged in the plaintiff 's particulars of claim that,
pursuant to a
complaint lodged by the plaintiff, a search and seizure
warrant was issued by the acting senior magistrate, Johannesburg,
which
warrant was executed by the third defendant whose members,
acting in terms of
s 4(1)(a)
of the
Counterfeit Goods Act, seized
and
detained goods bearing the plaintiff's trade mark . The goods
included a large number of completed packs of cigarettes, each
containing 20 individual cigarettes, loose cigarettes, cigarette
packaging boxes, master packaging boxes, uncompleted or reject
cigarettes and a dye stamp. The plaintiff alleges that the goods
which were seized, constitute
"counterfeit
goods"
and that the first
and/or second defendant 's conduct amounts to
"dealing
in counterfeit goods"
which is
prohibited in terms of
s 2(1)
of the
Counterfeit Goods Act. The
relief sought by the plaintiff is an order that the seized goods
constitute counterfeit goods and that the conduct of the first
and
second defendants constitutes an act of counterfeiting and/or dealing
in counterfeit goods.
[4]
The first and second defendants filed a plea to the plaintiff's
particulars of claim
and a counterclaim. The plaintiff thereupon
filed a notice in terms of
Rule 23
to remove a cause of complaint in
respect of both the plea and counterclaim. The first and second
defendants responded by amending
both the plea and the counterclaim.
The plaintiff again filed a notice of objection in respect of both
amended pleadings. The first
and second defendant did not respond
thereto, whereupon the plaintiff filed the present exception to the
amended plea and to the
amended counterclaim.
Exception to the amended plea
First complaint
[5]
In paragraph 3.1 of the plaintiff 's particulars of claim, it is
alleged
that the plaintiff's trade mark BLACK AND WHITE is registered
in respect of tobacco, smokers' articles and matches. In paragraph
7
of the defendant's amended plea, the defendant pleads the following
thereto:
" Plaintiff admits that
its trademark registration was only in respect of 'tobacco; smokers'
articles; matches'. In no instance
does the plaintiff indicate that
it had a trademark in respect of cigarettes."
[6]
In regard to the allegation in paragraph 4.2 of the plaintiff's
particulars
of claim that from a date unknown to it, but from at
least October 2017, the first and/or second defendant has
manufactured and/
or sold and/or distributed and/ or offered for sale
in the Republic tobacco products bearing the trademark BLACK AND
WHITE, which
mark is identical to the plaintiff' s trademark, the
first and second defendants have pleaded the following in paragraph
14 of
their amended plea:
“
The allegations
contained in paragraph 4.2 do not correspond with the a/legations
regarding the averments made at paragraph 3 relating
to the defined
trademark. The trademark referred to in paragraph 3 refers to
'tobacco; smokers articles; matches/ which cannot
constitute
offending goods in terms of the
Counterfeit Goods Act 37 of 1997
.”
[7]
In paragraph 4.3 of the plaintiff's particulars of claim, it is
alleged
that, pursuant to the complaint lodged on behalf of the
plaintiff, a search and seizure warrant was lawfully issued on 27
February
2018, a copy of which is annexed as annexure "LD3"
to the particulars of claim. The following is pleaded in paragraph
15
of the first and second defendants' amended plea:
"It is denied that the
plaintiff had the right to lodge a complaint. Accordingly, the search
and seizure warrant issued on
27
th
of February 2018 was
premised on incorrect information and on incorrect rights alluded to
by the plaintiff and/or its representative
relating to articles that
fall within the
Counterfeit Goods Act 37 of 1997
.”
[8]
The plaintiff's exception to paragraphs 7, 14 and 15 of the
defendant's
plea is that they do not disclose any valid defence based
on alleged misrepresentation as the elements required to obtain
relief
based on a misrepresentation have not been properly pleaded.
The plaintiff's complaint is that the first and second defendants
have failed to address the nature of the alleged misrepresentation
and/or incorrect rights allegedly relied on by the first and
second
defendants. It says that it is prejudiced as it is unable to
understand the allegations made by the first and second defendants
and precisely what defense it is attempting to raise and that the
allegations relating to the alleged misrepresentation are vague
and
embarrassing and that the plea contains no valid defence to the
plaintiff's cause of action.
[12]
In paragraph 21 of the defendant's amended plea, the first and second
defendants deny that the
seizure notice was based on proper
information or that it was lawful, and aver that the misleading
information and/or facts that
was furnished by
inter alia
Mr.
Dingler and/or Mr. Wolmarans, either verbally or in writing, as
agents for the plaintiff, to the South African Police Services
were:
-
that the cigarettes and their packaging manufactured and
sold by the
first defendant breached the
Trade Marks Act;
>
-
that the use of the words BLACK AND WHITE in relation to
the
production and sale of cigarettes and their packaging constituted the
importation, offering for sale, sale, manufacturing,
production
and/or distribution of counterfeit goods in terms of the
Counterfeit
Goods Act which
was prohibited and constituted an offense;
-
that the first and/or second defendant required authorization
for the
use of the words BLACK AND WHITE and that the defendant's use thereof
constituted an infringement in terms of
section 34
of the
Trade Marks
Act;
-
that the plaintiff had the right to institute civil and/or
criminal
proceedings against the first and/or second defendants in terms of
the provisions of the
Counterfeit Goods Act;
>-
that the conduct of the first and/or second defendants
constituted
unlawful conduct;
-
that the conduct of the first and/or second defendants
in importing,
offering for sale, selling, manufacturing, producing and/or
distributing cigarettes and their packaging with the
name BLACK AND
WHITE constituted acts of counterfeiting and a criminal offense as
envisaged in
s 2(2)
of the
Counterfeit Goods Act;
>
-
that the first and/ or second defendants had to cease their
dealings
in cigarette products and their packaging bearing the sign BLACK AND
WHITE and that the plaintiff had the exclusive right
to import, offer
for sale, sale and / or distribute cigarette products and their
packaging despite that plaintiff did not manufacture
cigarettes, that
the first and second defendants' get-up was completely different and
that there could not be any confusion with
the products of the
plaintiff;
-
that the first and/or second defendant had to provide an
inventory of
all their stock of cigarettes and packaging despite the fact that the
plaintiff did not have any rights over them,
and that the first and
second defendants had to cease production of the cigarettes and their
packaging bearing the words BLACK
AND WHITE.
[10] All of
the alleged misrepresentations are dependent on the validity of the
first and second
defendants' plea that the plaintiff's registered
trade mark refers to
"tobacco;
smokers' articles; matches"
and
that there is no indication that the plaintiff has a trade mark in
respect of cigarettes. The first and second defendants' contention
is
that the registration for
"tobacco"
does not cover cigarettes.
[11]
South Africa applies the International Classification of Goods and
Services, known as the
Nice Classification System, in respect of the
classification of trade marks. At the time of registration of the
plaintiff's trade
mark, the applicable version of the Nice
Classification System was the ninth edition which was published in
2006 and came int o
operation on 1 January 2007. The Nice
Classification classifies goods into 34 classis and services into 11
classes.
Part I
lists, in alphabetical order, all the goods in one
list and all the services in another list. Each class has a class
heading.
The heading of class 34 is
"tobacco;
smokers' articles; matches”.
Part
II
lists, in alphabetical order for each class, the goods or services
belonging to that class. Each item of goods or service is allocated
a
"basic number”.
In
the case of class 34, there are 50 it ems. Cigarettes is one of the
items and has the basic number 340020. A copy of the list
is annexed
to this judgment.
[12]
It is therefore clear that cigarettes are covered by the registration
of the plaintiff's
trademark in class 34. It follows that the first
and second defendants' defence of misrepresentations made by the
plaintiff is
unsustainable and that paragraphs 7, 14 and 15 of the
plea therefore do not disclose a defence to the plaintiff's
particulars of
claim.
Second
complaint
[13] The
plaintiff's second ground of exception is that the alleged
misrepresentations,
referred to in paragraph 9 above , do not
disclose a defence to the plaintiff's particulars of claim and that
the alleged misrepresentations
have not been pleaded with sufficient
particularity to enable the plaintiff to respond thereto. In
addition, the exception is that
the first and second defendant's plea
that the plaintiff does not have any rights in terms of the
Trade
Marks Act and
/ or the
Counterfeit Goods Act is
wrong in fact and in
law and that the plea, therefore, does not disclose a valid defence.
[14] What I
have said in regard to the plaintiff's first complaint applies
equally to the second
complaint . The misrepresentations pleaded in
paragraph 21 of the first and second defendant's amended plea do not
constitute a
valid defence to the plaintiff's particulars of claim in
light thereof that cigarettes are covered by the registration of the
plaintiff's
trade mark in class 34.
Third
complaint
[15] The
plaintiff alleges in paragraph 4.10 of its particulars of claim that
the offending
goods were subsequently removed and transported to the
counterfeit goods depot where they are currently detained and stored
in
accordance with the provisions of
s 8
of the
Counterfeit Goods
Act.
[16
] In
paragraph 22 of their amended plea, the first and second defendant's
have pleaded that,
in the event that it is found that the first
and/or second defendants' importation, offering for sale, sale,
manufacture, product
ion and/or distribution of cigarettes and their
packaging constituted a breach of the counterfeit Goods Act, the
conduct of the
plaintiff constitutes an abuse of its dominant
position in the market as defined in terms of the
Competition Act 89
of 1998
, and that the plaintiff violated the provisions of
s 2
the
Competition Act. They
further plead that the plaintiff has engaged in
conduct that constitutes prohibited practice by the
Competition Act
and
that it has, in terms of
s 8
, engaged in an exclusionary act in
seeking to ascribe to itself the right to the use of tobacco in every
form applicable whereas
it is not been engaged in the industry of
selling cigarettes under the name BLACK AND WHITE or any other name.
The first and second
defendants further plead that their use of
tobacco for the manufacture of cigarettes and their packaging, and
the use of the name
BLACK AND WHITE, to which the plaintiff has no
right in respect of cigarettes and the packaging, may also constitute
essential
facilities as described in the
Competition Act,
alternatively
that they are crucial for the first and/or second
defendants to seek access to in order to survive in the market. They
also plead
that the plaintiff's conduct constitutes a barrier to the
first and/or second defendants entering and/or progressing into the
market,
for which there is no objective justification .
[17]The
plaintiff 's third ground of exception is that all allegations in the
first and second defendant's amended plea relating
to the plaintiff
allegedly having contravened the provisions of the
Competition Act 89
of 1998
have no relevance in these proceedings and as such do not
constitute a valid defence to the plaintiff's claim.
[18] The
plaintiff is clearly correct. The first and second defendants do not
dispute the validity
of the plaintiff's trade mark registration. The
registration of the trade mark entitles the plaintiff to the
exclusive use of the
mark in respect of goods which fall within class
34 and to prevent others from so using it . The lawful use of a
registered trade
mark by the owner thereof cannot constitute a
contravention of the
Competition Act. The
first and second
defendants' plea relating to the
Competition Act does
therefore not
constitute a defence to the plaintiff's claim.
Exception
to the first and second defendants' claim in reconvention
First
complainant
[19] In
paragraph 4 of the first and second defendants' amended claim in
reconvention, they
repeat the alleged misrepresentations pleaded in
paragraph 21 of their amended plea, referred to in paragraph 9 above.
In paragraph
5 of the amended claim in reconvention, the first and
second defendants allege that, as a result of the incorrect and
misleading
information furnished by the plaintiff and/or its agents,
the first and second defendants suffered financial loss in the sum of
Rl.6 million as a result of the third defendant seizing, attaching
and removing the goods belonging to the first defendant. In
paragraphs 6, 7 and 8 of the amended claim in reconvention, it is
alleged that the first and second defendants suffered a further
loss
of profit in the sum of R2 million and that the misrepresentation of
facts by the plaintiff that the first and second defendants
were
contravening the
Counterfeit Goods Act and
in terms of which the
plaintiff and/or its agents sought to influence the third defendant
in carrying out the seizure, attachment,
removal and transportation
of the goods, constituted an infringement of the plaintiff's rights
of ownership and possession.
[20] In
paragraph 9 of the first and second defendants' amended claim in
reconvention, they
repeat the allegations in paragraph 22 of their
amended plea that the plaintiff abused its position in the market in
terms of the
Competition Act.
[21
] The
first and second plaintiffs' amended claim in reconvention is
accordingly based on the
same allegations of misrepresentations and
contraventions of the
Competition Act which
were pleaded in their
amended plea and which I have found not to disclose a defence to the
plaintiff's claim. It follows that the
first and second plaintiffs'
amended claim in reconvention also does not disclose a cause of
action against the plaintiff.
Conclusion
[22] In the
result, I find that paragraphs 7, 14, 15, 21 and 22 of the first and
second defendants'
amended plea do not disclose a defence to the
plaintiff's particulars of claim and that paragraphs 4, 5, 6, 7, 8
and 9 of the first
and second defendants' amended claim in
reconvention do not disclose a cause of action against the plaintiff.
[23] I
accordingly make the following order:
(a)
The plaintiff's exception against the
first and second defendants' amended plea and its exception against
their amended claim in
reconvention are upheld with costs.
(b)
The first and second defendant are
afforded 15 days from date of this order to amend their amended plea
and their amended claim
in reconvention, if so advised.
Counsel
for plaintiff: Adv. LG Kilmarten.
Instructed
by: DM Kisch Inc, Sandton.
Counsel
for first and second defendants: Adv. A Bhana SC.
Instructed
by: ST Attorneys, Johannesburg.