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[2015] ZAGPPHC 593
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Philip Morris Products S.A. v Westminster Tobacco Co. (Cape Town and London) (Pty) Ltd and Another (2644/2014) [2015] ZAGPPHC 593; 2015 BIP 285 (GP) (6 August 2015)
REPUBLIC OF SOUTH AFRICA
IN
THE
GAUTENG DIVISION OF
THE
HIGH
COURT, PRETORIA
DELETE
WHICH IS NOT APPLICABLE
[1]
REPORTABLE:
YES
/NO
[2]
OF
IN
TEREST
TO OTHER JUDGES:
YES
/NO
[3]
REVISED
DATE
_____________SIGNATURE___________
CASE NO: 2644/ 2014
DATES
HEARD:
1
1
-
2
1
/05/2015
& 27/05/2015
In
the matter between:
PH
I
LIP
M
O
RRIS
PRODUCTS
S.A.
Applicant
and
WESTMINSTER
TOBACCO CO.
(CAPE
TOWN
AND
LONDON)
(PTY)
LTD
First
Respondent
REGISTRAR
OF
TR
A
DE
M
ARKS
Second Respondent
JUDGMENT
J W
LOUW, J
[
1
]
The
first
respondent is
the registered
proprietor of
tr
a
de
mark
registration
no.
1
952/00688
PARLIAMENT
and
of
trade
mark
registration
no.
1
997/17613
PARLIAMENT
(label).
Both
registrations
are
in
cl
a
ss
34
and
are
in
respect
of cigarettes
and other tobacco
related
goods.
[2]
On
22
October
2008,
the
applicant
launched
an
application
before
the
Registrar
of
Tr
a
de
Marks
for
the
expungement
of
the
first respondent’s
marks
from
the
register
in
terms
if s
27(1)(b)
of
the
Trade
Marks
Act,
1
94
of
1
993
(the
Act).
The
applicant
alleged
that
the
marks
were
li
a
ble
to
be
removed from the register because
the first respondent
had
not made
bona
fide
use
of
the m
a
rks
in
relation
to
the
goods
for
which they are
registered
for
a continuous period
of
five
years
or longer,
up
to
a
date three months
before
the
institution
of
the
expungement application. Section
27(1)(b)
provides
the
following:
“
Subject
to
the
provisions
of
section
70(2), a
registered
trade
mark
may,
on
application
to
the
court,
or,
at
the
option
of
the
applicant and
subject to
the
provisions
of
section
59
and in the
prescribed
manner,
to
the
registrar
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
–
(a)
…
.
(b) 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.”
[3]
When the expungement application came before the
registrar, the
applicant
applied
that
it
be
referred
to
oral
evidence
or
trial
in
order
to
allow
for
cross-examination
of
the
first
respondent’s
witnesses.
The
respondent
opposed
the
application
but
the
registrar
decided
to
refer
the application
to
the
High
Court
in
terms
of
s
59(2)
of
the
Act. The
parties
then
agreed
on
the
form
of
the
order
to
be
made.
In
terms
of
the
order,
oral
evidence
was
to
be
heard
on
the
issue
whether
the
first
respondent made
use
of
the
registered
marks
during
the
relevant
period
of
22
July 2003
to
22
July
2008
and
whether
any
such
use
was
bona
fide
within
the meaning
of
s
27(
1)
(b)
of
the
Act.
The
registrar
has
indicated
that
she abides
the
decision
of
the
court.
The
costs
of
the
application
for
expungement
and
the
application
for referral
to
the High
Court
for oral evidence
were
reserved
for
determination
by
the
court,
save
in
respect
of
those orders in
relation
to
costs
which had
already been made
by
the
registrar.
[4]
The
first
respondent,
to
whom
I
shall refer
as
the respondent, does
not
dispute
that
the
applicant
is
an interested person,
and that it
therefore has
locus
standi
to bring
the
application.
The
applicant is
an
international
tobacco
company
and
has applied for registration of the
mark
PARLIAMENT in South Africa under tr
a
de
mark application no.
2006/02685. The
application is
pending.
It
is
also
common
cause
that,
in
terms
of
s
27(3)
of
the
Act,
the
respondent
bears
the
onus
of
proving
bona
fide
use
of
its
registered
marks
during
the
relevant
period.
[5] The
respondent
is
a
wholly-owned
subsidiary
of
British American
Tobacco
Services
(Pty)
Ltd which,
in
turn,
is a
wholly
owned
subsidiary
of
British
American
Tobacco
South
Africa (Pty)
Ltd
(BATSA).
BATSA
is
a
wholly-owned
subsidiary
of
British
American
Tobacco
Holdings
South
Africa
(Pty)
Ltd. The
use
on
which
the
respondent
relies,
is
permitted
use
of
the
registered
m
a
rks by
BATSA.
The
applicant
has
admitted that
BATSA
m
a
nufactured and
offered for sale cigarettes
bearing the tr
a
de
mark
PARLIAMENT
in
South
Africa
from
January
to
July
2008
and
that
it used
promotional
point
of
sale
material
bearing
the
trade
mark,
but denies
that
such
use
was
bona
fide
and
further
denies
that
BATSA
is
a
permitted user of the
PARLIAMENT
trade mark.
Permitted
use of the marks
[6]
Sections 38(1) and (2) of the Act provide the following:
(1) Where
a
registered
trade
mark
is
used
by
a
person
other
than
the
proprietor
thereof with
the
licence
of
the
proprietor,
such
use
shall be deemed to
be
permitted
use
for
the
purpose
of
subsection
(2).
(2) The permitted use
of
a
trade
mark
referred
to
in
subsection
(1)
shall
be
deemed
to
be
use
by
the
proprietor and
shall
not
be
deemed
to
be
use
by
a person
other
than
the
proprietor
for
the purposes
of
section
27
or
for
any
other
purpose
for
which
such
use is
material
under
this
Act
or
at
common
law.”
[7]
The respondent’s main
answering affidavit
to
the
expungement
application
was
deposed
to
by
Ms.
Liesl
Hegland
who
was,
at
the
time
when
the
a
ffidavit
was deposed
to,
BATSA’s marketing manager
(Southern
African
markets)
and
had
been
employed
by
BATSA
in various
marketing
positions
for
eleven
years.
She
states
in
paragraph
1.3 of
her
answering
a
ffidavit
that
the
facts to which she
deposes
in
the
affidavit
are,
unless
otherwise
indicated,
either
within her
personal
knowledge
or
extracted
from
the
records
of the
respondent
or
BATSA,
to
which
she
has
and
can
obtain
direct
and
unrestricted
access
by
virtue
of
her
position.
In
paragraph
1
.4
of
her
affidavit
she
states
that
she
is
well
acquainted
with
the
respondent’s
trade
mark
portfolio.
In p
a
ragraphs
3.2
and
1
6.2
of
her
a
ffidavit
she
states
that
BATSA
is the
operating
company within the
British
American
Tobacco
group
of
companies,
that
it
is
licensed
by
the
respondent
to
use
the
PARLIAMENT
trade
m
a
rks
and
that
it
is the
permitted
user
of
the
PARLIAMENT
trade
marks. Mr.
Ulreich
Peter-John
Tromp,
who
deposed
to
the
applicant’s
replying
affidavit,
states
in
respect
of all these
allegations
that
he
has no knowledge thereof and cannot
admit or deny
same.
[8]
The
applicant was asked
by
the
respondent
in
a
list of
pre-trial
questions whether
the
applicant would admit
that BATSA
was
the
permitted
user of the
registered
marks and was licensed by the respondent
to
use
the
marks. The
answer
was
no. The
submission
in this
regard by
Adv.
Puckrin
SC,
who
appeared with
Adv.
Michau
and
Adv.
Kilmartin
on
behalf
of
the
applicant,
was
firstly
that
neither
Ms.
Hegland
nor
Mr.
Luche
Jacques
Joubert,
who
both
testified
on
behalf
of
the
respondent,
had any persona
l
knowledge of the conclusion
of
an oral licence
a
greement
between the respondent and BATSA.
[9]
Ms.
Hegland
did
not,
when
giving
oral
evidence,
testify
about
a
licence
agreement
between
the
respondent
and
BATSA,
neither
was
she
crossexamined
about
it.
Her evidence
in
her answering
affidavit
therefore
stands
uncontested.
[
1
0]
Mr.
Joubert
is
the
in-house
legal
counsel
of the
British
American
Tobacco
group
of
companies
in
South
Africa
and
his
responsibilities
include
that
of
company
secretary
for
the
various
companies
in
the
group.
He
testified
that
BATSA
is
the
main
operating
company
in the
group
through
which
the
manufacture,
m
a
rketing
and distribution
of cigarette
products are done.
British
American Tobacco Services (Pty) Ltd
(Services) is
a
wholly-owned
subsidiary of BATSA
and
it
in
turn
wholly
owns
a
number
of
subsidiary
companies,
one
of
which
is
the
respondent. The sole
purpose of these subsidiaries is to hold trade marks for
exploitation
by
BATSA.
The
directors
of
Services
and
of
the
subsidiaries are
all
directors of
BATSA.
Mr.
Joubert
testified
that
BATSA uses
and exploits
the
trade
marks
under
licence
from
the
various
subsidiaries
for the
benefit
of
the
whole
group
of
companies.
No
formal written licence agreements exist
where no
third
parties
are
involved,
and
there
are
no financi
a
l
terms
to
the
licence
agreements.
Bec
a
use
the
respondent
is
a
wholly-owned
subsidiary
of
BATSA,
it could
not
withhold
its
permission
for
BATSA to
use its registered
marks.
[
1
1
]
Mr.
Joubert
was
asked
in
cross-examination who
applied his
or
her
mind
to
conclude
the
licence
agreement
with
BATSA
in
respect
of
the
use
of the trade
mark
P
a
rliament.
He said that
it
would
be
the
board
of
directors of the
respondent
which
would
have
overlapped
with
that of
BATSA
and that the decision to licence would have been ta
ken
simultaneously
with
the
decision
to
exploit
the
m
a
rk.
The
directors
of
the
respondent, who were also
directors of BATSA,
would
have been
intimately
a
ware
of
and
involved
in
the
strategy
of
BATSA
to
exploit
the
Parliament
trade
m
a
rk.
[
1
2]
It is
clear
from
Mr.
Joubert’s
evidence
about
the
m
a
nner
in
which
the
group
of
companies
functioned,
with
BATSA
being
the
operating
company
and
the
subsidiaries
being
wholly-owned
by
BATSA
and
simply
being
the
registered
owners
of
the
various
trade
marks
which
could
and
would be
exploited
by
BATSA,
that
there
would
not
have
been
any
express
licence
a
greement,
whether
oral
or
in
writing,
when
a
decision
was taken to
exploit
a
p
a
rticular
mark
owned
by
any
of
the
subsidiaries.
The
licence
agreement
would
have
been
tacitly
concluded
as
a
necessary
corollary
of
the
decision
to
exploit
the
mark
in question,
in
this
case
PARLIAMENT.
It
is
not required, and it
was
not
so contended
by
the applicant,
that
a licence
agreement
has to
be
in
writing.
[1]
[
1
3]
It
was
put to
Mr.
Joubert
that
it was clear from
the
BAT
Group
delegation
document,
more
specifically
from
paragraph
7.7(b)
on
p.
387J
of
Bundle
B,
that
entry
into
any
intra-
group
a
greement
involving
the
sub
licence
of
trade
m
a
rks
between
two
or
more
group
companies
requires
the support from
Central
Fin
a
nce,
Group
Tax and
BatMark (the
tr
a
de
mark
management
division
in
the
UK
which
manages
tr
a
de
marks),
and
that
“
sub-licence”
must
mean
licence.
Mr.
Joubert
agreed
that no
approval was
obtained
from
BATMark,
but
said the
licensing
of trade
m
a
rks
was
not
governed
by this document
and
that
no approval
was
required from
BATMark.
[
1
4]
It was
submitted
by
Mr.
Puckrin
during
argument
that
the
reference
to
“sub-licence”
in
p
a
ragraph
7.7(b)
must
include
licence
as
it
was
inconceivable that no
delegation was catered
for
to
conclude
a licence.
Whether
the
word
“
sub-licence”
in
paragraph
7.7(b) of the document
must
be read to mean or include “
licence”
is, of course, a matter of
interpretation. The heading
of
p
a
ragraph 7
is
“
Brand,
product innovation
&
trade marks”.
P
a
ragraph
7.7(b)
reads
as
follows:
“
Entry
into
any
intra-Group
agreement
involving:
a)..............
b)
The
sale, transfer, assignment, sub-licence or
termination of any
trade mark
licence
between
two
or
more
Group
companies.”
There
is then
a
note on the
right
h
a
nd side
of the
page opposite the
whole
of
paragraph
7.7 which
reads:
“
requires
support
from
Central
Finance,
Group
Tax and BATMark.”
[
1
5]
In
my view,
the
word
“
sub-licence”
in
paragraph 7.7(b) cannot be
read
to mean
or
include
“
licence”.
The approval of BATMark is
required
for
the
“
sub-licence
......
of
any
trade
mark
licence.”
The
respondent
does
not
hold
a
licence in
respect of
the PARLIAMENT trade marks.
It
is
the
proprietor of the marks.
It
also did not purport
to grant any sub-licence
to
BATSA. The
approval
of
BATMark
for
the
granting
of
a licence
by
the
respondent
to
BATSA
to
use
the
PARLIAMENT
trade
m
a
rks
was
therefore
not required.
[
1
6]
I accordingly find
that the
respondent
has
proved
that
it
granted a
licence
to
BATSA to
use the
PARLIAMENT
trade
marks and that any
bona
fide
use
of
the
marks
by
BATSA
would
have
inured
to
the
benefit
of
the
respondent.
Bona
fide use of the marks
[
1
7]
The
meaning
of
the
term
“
bona
fide
user”
in
s
1
36
of
the
1
9
1
6
Trade
M
a
rks
Act
was
considered
in
Gulf Oil Corporation
v Rembrandt
Fabrikante
en
Handelaars
(Edms) Bpk.
[2]
Trollip
J
said the
following:
[3]
“
The
ground
in sec.
136 on
which
the application
is
based is
‘
that
there
has
been
no
bona
fide
user
of
such
trade
mark
in
connection
with
such
goods
during
the five years
immediately
preceding
the
application’.
………
It
is
necessary
to
consider
some
aspects of
the
meaning
of ‘user’
and
‘
bona fide’
in
the context
of
sec.
136.
I think,
firstly,
that
‘user’
must
mean
the
use
of
the
trade
mark that
is
contemplated
in
the definition
of
‘trade
mark’
in
sec.
96
of
the
Act,
that
is,
use
in
connection
with the goods
‘
for
the purpose
of
indicating
that
they
are
the goods
of
the proprietor
by
virtue
of
manufacture, selection, certification,
dealing with
or
offering for sale’.
(See
Electrolux
Ltd
v Electrix
Ltd.,
71
R.P.C.23 at p.
35
line 44).
Secondly,
such
user
may
take
place
at
any
time
during the
five-
year
period and
need
not
be
continuous
within
or
co-extensive
with
that
period.
Mr.
van
der
Spuy
contended,
relying
upon
the Nodoz
case,
1962 R.P.C.
1
,
that
a single
act
of
user
during
that
period
was
sufficient.
In
that
case
it
is
true
that
the
Assistant Comptroller
held
that
a
single
sale
of
goods under the
trade
mark
in
question was
a
sufficient
bona
fide
use
to
defeat the
application for
rectification;
but that was
because
there
was
evidence
before him that
the
sale
was ‘in
the
course
of
trade’ and
there
was
no
evidence
that
it
was
not
bona
fide
(p.
4
lines
6/7).
On
appeal
the
Court
merely
assumed
that
a
single
act
of
user
would
be
sufficient
but
held
that it
had
not
been
proved.
That
case
does
not,
therefore,
assist
Mr.
van der Spuy’s contention. It
seems hard to
believe that
it
could have been intended
that
a
single,
isolated
act of
user
would
be
sufficient
to
defeat
an
application
for
expungement
and
to
confer
immunity therefrom
for
a
further
five
years.
In
this regard
it
is
not
without significance
that
in
our sec.
136
the term
‘user’
is employed in
contrast
with
the
corresponding section of
the
U.K.
Act in which ‘use’ appears.
According
to
the
Oxford
English
Dictionary ‘user’
is
a
term
of
law that
means
continued
use,
exercise
or
enjoyment
of
a
right. It may
therefore
be
that
our
section
requires
some
degree
of
continuity
(actual
or
prospective)
of
the use
of
the
trade
mark
by
the
proprietor.
However,
it
is
not
necessary for
me
to
express
a
firm
and
final
view
on
that
aspect
because
it
is
obvious
that
the
time,
extent
and
continuity
of
use
are
all
factors
that
are
relevant
to
the
determination of
the proprietor’s
bona
fides,
and,
as
will appear
presently,
it
is
on
that
element
that I
think
the
present
case turns.
Thirdly, ‘bona
fide’ must be
given some effective
meaning.
In
my
view
it
cannot
be
confined
to
meaning
merely
real
or genuine
as
opposed
to
fictitious
or
simulated,
or
honest
as
contrasted
with
dishonest, because it is difficult to
conceive how a
user,
in
the
sense
of
the
exercise
of
a
right,
can
be
said
to
be
fictitious,
simulated
or
dishonest,
and
in any
event,
a
fictitious,
simulated
or
dishonest
user
would
not
in
law
be a
user
at all,
and
the
addition
of
the
qualification
‘bona
fide’ would
therefore
have
been
totally
unnecessary.
The words
were
obviously
inserted
to give a particular quality to
the
user
which
it
was
intended
should
defeat
an
aggrieved
person’s application. (See
the judgment
of
the
T.P.D.
in
Mahomed
&
Son
Ltd v
Estate
Horvitch,
1928
AD 1
at
pp.
2
-
9
,
and
the
authorities
referred to
therein). The
expression
obviously
relates
to the
proprietor’s state of mind in
using his trade mark
and
therefore
his
object or
intention
in
using
it.
[4]
Kerly
on
Trade Marks, 8th ed. at p.
218, says
that
in
the
corresponding
section
in
the
U.K. Act
‘
the
expression
‘bona fide’
is also used where the contrast seems to
be, not between
honesty
and dishonesty,
but rather between
what is
genuine
and
what
is a mere
device
to secure some
ulterior
object’.
……………
.
Now
the
system
of
registering
trade
marks
is designed
to
protect,
facilitate and
further
the
trading
in the
particular
goods in respect of which the
trade
mark
is registered.
The
very name, ‘trade mark’, connotes that, and the
definition
thereof in sec.
96
of the
Act
confirms it.
I
would therefore say that ‘bona
fide user’
in
sec.
136
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.
[5]
”
[
1
8]
In
Arjo
Wiggins
Ltd
v
Idem
(Pty)
Ltd
and
Another
[6]
,
Cameron
JA
said
the
following:
[7]
“
[8]
The present matter differs from Rembrandt in several respects.
[8]
......
[9]
Despite these differences, both the rationale of Rembrandt and its
outcome seem to me to indicate that the use of the trade
mark on the
promotional products did not constitute bona fide use as contemplated
by the statute. The basis of the decision in
Rembrandt was that to
constitute bona fide use the proprietor had to use the trade mark
upon goods with the object or intention
of protecting, facilitating
or furthering trade in those goods. It is true that there the inquiry
into bona fides concerned the
proprietor’s authenticity of
purpose in orchestrating a tiny handful of sales with the objective
of
protecting
its
mark
from
expungement
on
the
ground
of
non-use.
Here
the
proprietor
had
no
such
objective,
but only
the
commercially
authentic
aim of
promoting
sales
of its
traded
goods.
But
the core
of Trollip J’s reasoning, as
approved by this
Court, was
not
that
bona
fide
use
is
negatived
by
the
ulterior
purpose of
thwarting a
competitor’s
registration (a conclusion incompatible with
Electrolux Ltd v
Electrix Ltd and
Another,
[9]
upon which both Trollip
J and Steyn
C
J
relied
),
but that,
whatever
the proprietor’s actual motive, inauthenticity of statutory
purpose is established
by
absence
of commercial trade in the article
on which the mark is used.
[10]
[10]
It
is
in
this
context
that
Trollip J’s
formulation
of
the
general
purpose
of
the
statutory
system of
trade
mark
protection,
expressly adopted in McDonald’s,
[11]
must be
understood
............
[11]
Though
Trollip
J
attached some
significance to
the
word
‘user’
in
contrast
to
‘
use’
in
the 1916
Act,
both the Trade
Marks
Act
62
of 1963
(the 1963 Act) and
the
present
Act
refer
simply to
‘bona
fide
use’,
and
I
conclude,
as
in
the
McDonald’s
case,
that
the
reasoning
of
Trollip J
is
entirely
applicable.
Since
absence
of intention to trade commercially in the particular goods in
respect of which the trade mark is registered
renders use of the
mark
statutorily inauthentic,
it
must
follow that use
of
a trade
mark on
goods
other
than with
the
object of promoting trade in those goods cannot
constitute bona fide use for statutory
purposes, even if that use promotes
trade
in other goods.
[12]
Although
Arjo’s
use
of
the
trade
mark on the
promotional
goods was ‘commercial’
in that it
promoted goods in which
it
did
trade,
it
was
not
commercial use
in
relation
to the
goods on
which
it was
displayed since those
goods
were
not
being
traded.
And while the use of the trade mark on those goods was use in order
to
distinguish
them
from
others’ similar goods, that
use
was
not for the
purpose of trading
in
those
goods, but
in
other
goods
within
the
specification.
As
it
has
been
expressed elsewhere, regarding all items within the specification
other than carbonless copying paper,
Arjo
proved no ‘course
of
trading embarked on as an end
in
itself’.
”
[
1
9
]
The
case
presented by
BATSA
was
that
it
was,
at
the
time,
faced
with
increased
sales
by
competitors
in
the
low-price
segment
of
the
cigarette
market,
and
that
it
set
a
bout
devising
a
strategy
to
deal
with
the
onslaught on BATSA’s market
share.
Its
main
brand
of
cigarettes
was Peter
Stuyvesant,
which
accounted
for
about
45
°
/
o
of
the
entire
cigarette
m
a
rket
in
South
Africa
and
which
was
selling
at
R16,30
per
packet
of
20
cigarettes. BATSA’s
own
lowest
price
offering
was
Princeton,
which
was selling at R12,40.
Cigarettes
in
the low price
segment
were, however,
selling at
prices
between
R9,50 and R10,00
per
packet. There
was, therefore,
a
significant
gap
between
the
price
of
Princeton
and
the
price at
which
cigarettes
in
the
low
price segment
were
selling.
[20] In
2006,
BATSA
conducted
what
was
called
a
simulated
test
m
a
rket
(STM)
for
the
brand
Pall
Mall.
The
aim
was
to
understand
the
potential
of
Pall M
a
ll at
various
price points within
the low
price
segment and its
potential
to
draw consumers from opposition
leg
a
l
low price
brands
as
well
a
s
to
up-trade
consumers
from illicit
cigarettes in
the
market.
The
STM
simulated
a
national
launch
of
P
a
ll
M
a
ll. The
results
of
the
STM
indicated
that
Pall
Mall
had
limited
potential to
draw
consumers
from
legal
low priced
brands
and
that it,
in
fact, mainly
drew
consumers from the
Peter Stuyvesant
brand. If
l
a
unched
nationally,
it
would
result
in the
cannibalisation
of
Peter
Stuyvesant.
[21]
Following the STM, a meeting was held in
June
2006 which was
attended
by
a
visiting
contingent
of
the
AME
(African
Middle
East)
Regional
Management
of
British
American
Tobacco’s
international
operation. South
Africa
falls within
the
AME
region.
The
AME
contingent
included the
regional director, the
regional financial controller
and the regional
marketing
director.
The
meeting
was
attended
by
the
local executive
committee
of
BATSA,
which
included,
amongst
others,
the
man
a
ging director,
the
head
of
marketing
and
the
head of legal (Mr.
Joubert).
During the
meeting,
the
growth
of the illicit tr
a
de
and the
growth
of
the
low
price
segment
and
how
to
respond
thereto
were discussed.
Ms.
Yvette
Steyn,
BATSA’s
head
of
m
a
rketing,
gave
a
presentation
which
had
been
prepared
by
her
and
other marketing colleagues,
including
Ms.
Hegl
a
nd,
which
dealt
with
a
number
of
options
on
how
to
deal
with
these
issues,
which
included
a
national
launch
of
a brand
at
a
low
price
but
which
was
contra-indicated
as
a
result
of the
P
a
ll
Mall
STM.
The
visiting
contingent proposed
that
BATSA
investigate
the launch
of
a
brand
on
a
tactical
basis,
which
meant
that
instead
of launching
a
br
a
nd
nationally,
BATSA
had
to
identify
specific
areas
where
the
growth
of
the
leg
a
l
low
segment
was
prevalent
and
then
introduce
an
available
brand
in
specific
outlets
in
that
pocket
of
the
market
at
a
price
which
could
compete
and
only
for
a
duration
which
would
enable
BATSA
to address the
problem. This
was
referred to as a
controlled launch through
which
the
risk
of taking
consumers
away
from
BATSA’s
own
br
a
nds
rather
than
from competitor brands
would
be
mitigated.
It was
something
which
BATSA
had
not
done
before.
With
regard
to
illicit
cigarettes
in the
low
segment,
a
directive
was
issued
by the
visiting
contingent
that
BATSA
should
not
try
to
compete
with
them
on
price,
but engage
the
relevant
enforcement agencies
to create
a
wareness
for
the
size
of the
problem
and
the
risk
posed to the fiscus.
[22]
The
specific
brand
to
be
used
for
purposes
of
the
tactical launch
in
the
low
price
segment
which
was
decided
upon
at
the
AME
meeting
was
not
discussed
at
the
meeting.
Towards
the
end
of
2006
or
the
beginning
of
2007,
Mr.
Joubert
proposed
to
BATSA’s
marketing
management
tea
m
that
PARLIAMENT
be
considered
as
a
br
a
nd
to
be
used
for
the
purpose.
He was awa
r
e
that
the
br
a
nd had
become vulnerable bec
a
use of
non-use.
The
applicant
was
a relatively new
entrant
in
the
South
African
m
a
rket
and
he wanted to
protect
the
brand.
He was
a
ware
that
the
applicant
was
the
proprietor
of the
PARLIAMENT
trade
m
a
rk
in other jurisdictions.
[23]
M
s.
Hegland,
who
at the time
was
BATSA’s
m
a
rketing
m
a
nager
responsible
for
its
value
portfolio
(mid
and
low
priced
products)
was
part
of
the
tea
m
which
compiled
the
presentation
for
the
AME
meeting. She
did
not
attend
the
meeting
but
was
aware
of
its
outcome.
She
went
on
maternity
leave
in
March 2007. On her return at the end of October
2007,
she
was
informed
that
there
was
a
plan
to
do
a
test
l
a
unch
with
Parliament
in
the
Cape
Peninsula
in
approximately
1
02
outlets
around
1
4
December
2007.
By
virtue
of
her
responsibilities
for
the
value
segment,
she
took
responsibility
for
the
planned
activity.
The
product
specifications
for
Parliament
filter
and
light
cigarettes
had
by
that
time
been
finalised
as
well as the packaging
bearing the PARLIAMENT trade mark and the
tobacco
blend, and
one
million sticks,
i.e.
single
cigarettes,
had
been
manufactured. All the specifications
had
been prepared by a
product
development
team. An
advertisement
poster
for
use
at
point
of
sale
had also been developed.
[24]
The
launch
of
Parliament
cigarettes
in
the
Peninsula
did
not
happen
as pl
a
nned.
The
reason was
that
towards
the
end
of 2007, BATSA
planned
a
phased
roll-out
of
a
new
distribution
approach,
moving
from
a
predominantly wholesale
distribution
system to
what was referred
to
as
DSS
(Direct
Store
Sales).
DSS was
deemed
to
be a
high
risk
project
and
BATSA’s
executive
decided that no
additional
brand
activity
should
coincide
with
the
DSS
roll-out.
The
Peninsula
was a
region
that
was
going
to move
to DSS
and
it
was
therefore decided
not
to proceed with the
launch of
P
a
rliament in the Peninsula.
[25]
Ms. Hegland’s
evidence
was
that
she
was
p
a
rt
of
the
discussions
which led
to
the
decision
not
to
overlay br
a
nd
activity where DSS
was
going
to be
rolled
out
and
said
that an
alternative
therefore
had
to be
evaluated. A
region
was
identified
that
was
not
affected
at
the
time
by
the
DSS
roll-out,
which
was
the
Northern
Cape,
and
thereafter
a
specific
a
rea
was
identified
where
BATSA
had
seen
low
price
opposition
activity
spikes.
The
area
identified
was
Upington,
where
the
feedback
received
indicated
that
there
were
sales
increases
in
low
price
products.
One
of
BATSA’s
sales
representative in
the
Upington
area, Mr.
J. A. Nel,
was
instructed
by
BATSA’s
area
man
a
ger
in
Upington,
Mr.
M
a
rio
Erasmus,
to
identify
twenty
independent
convenience
stores
(“kleinhandelaars”)
which were
considered
to
be
low-price
hotspots
and
then
to introduce Parliament
to
them.
Mr.
Nel
testified
that
he
was
informed
that
it
was
a
test
market
and
that
the
product
was
to
be
distributed
from
their
regional office
(from
so-called
boot
stock,
i.e.
stock
with
which
he
was
issued
and which
was
loaded
into
his car) as it would
not be
a
vailable from the
wholesalers. The
reason
was
to
retain control
over
the
tr
a
de
mark.
[26]
Mr.
Nel
further
testified
that
he
went
to
the
convenience
stores
and
inquired
from
the
owner
about
sales
of
opposition
low
price
br
a
nds
such
a
s
Voyager
and
Seh
a
wi.
If the
sales
were,
in
his opinion,
high,
he put the
name
of
the
store
on
the
list
of
20.
The
price
of
P
a
rliament
was
between
R10
and
R
1
1 per
packet,
which
was
competitive
with
the
price
of
Voyager
and
Seh
a
wi.
He
started
selling
P
a
rli
a
ment
to
some
of
the
stores
on
1
7
January
2008
and
recorded
the
sales
in
a
cash
book
which
was
handed
in
a
s
Exhibit
“A”.
The
last
seven
invoices
show
sales
to
seven
different
stores. His
subsequent
cash
books
which
recorded
sales
on
subsequent
dates
were no
longer
available,
but
copies
of
ten
further invoices
reflecting
sales
of Parli
a
ment
are
annexed
to Ms. Hegl
a
nd’s
answering
affidavit
and
those sales
are
a
dmitted
by
the
applicant.
Another
representative,
Mr.
M
a
rtin
Steyn,
later
helped
him
with
the
sales.
Mr.
Nel
also
placed
promotional
material
bearing
the
Parliament
trade
mark
in the
various
stores.
[27]
Mr.
Nel
reported
to
his
area
m
a
nager
on
a
weekly
basis
at
BATSA’s
satellite
office
in
Upington.
Together
they
prepared
a
weekly
report
which
was
sent
by
e-mail
to
the
head
office.
Mr.
Steyn
later
took
part
in
this
reporting
process.
The
weekly
reports
contained
the
sales
figures
for
the
week
and
feedback
from
the
retailers
under
the
heading
“
Retailers
(Acceptance
levels,
off
take,
POP
items
and
comments”.
The
first
report
inter
alia
stated
“
Parliament Filter
and
Lights
were
received
in
Upington
on
Thursday
17-01-2008,
and
successfully
launched
at
all targeted
20
outlets
during Thursday
and
Friday
19-01-2008.
Retailers
accepted the
brand
very
well,
even
Village
Shop,
a
pro
opposition
retailer,
made
it
the
same
price
(R11.00 p.p.)
as
Sehawi,
Mega,
Voyager
and
Sharp
and
even
put
it
face-on
next
to
the
opposition
cheapies..........
”
.
Later
reports
were
less optimistic
and
sales
progressively
declined.
Ms.
Hegland
received
the
weekly
reports
and
in
turn
reported
to
her
superiors.
She
testified
that
the
test
l
a
unch
in
Upington
did
not
achieve
its
purpose
in
terms
of
significant
sales
or
a
significant
reduction
in
opposition
sales
of
leg
a
l
low
priced products.
[28]
A
“
Demand
Review
Meeting”
wa
s
held
on
30
May
2008
which
was
attended
by
Ms.
Hegland and at which
the
following
was
minuted:
“
Voyager
brand
is
currently
experiencing
significant
SOM
[13]
growth
due
to its
retail
pricing
strategy (retailers
are
achieving
significant
profit
margins
on
the brand
and
are
therefore
driving
the
growth
of
Voyager).
·
LH
(Ms.
Hegland)
has
met
with
AIT
[14]
team
to
investigate
possible
strategies
to
minimise the
impact
of
illicit Voyager
on
the
market
and to
ensure legitimate product
is
sold
at
an
appropriate price.
Decision
has
been
taken
to
tactically
place
Parliament
in
stores
to
compete
directly
with
Voyager.
·
……
..”
[29]
On
2
June
2008,
Ms.
Hegland
wrote
an
e-mail
to
BATSA
’
s
regional
manager of
the Free
State
area which stated
that
the shelf life
of
the
remaining
stock
of
900
000
sticks
would
expire
in
July
2008
and
advised
that
the
recommendation was
to
sell
the
stock,
which
was
at
the
respondent’s
Bloemfontein
distribution
centre,
in
prominent
low
price
areas
in the
Free
State. A
price card was
attached
to
the e-mail.
[30]
The price
card
attached to
the
e-mail indicated
the
recommended
retail
price
as
R10.00
per
pack
of
20’s.
Ms.
Hegland
had,
prior
to
sending
the
e-mail, made
a
presentation
to
BATSA’s
pricing
committee in
which
she
recommended
that
the
price
be
reduced
to
R10.00
per
packet. The
recommendation
was accepted. In a
subsequent
e-mail, sent
by
Ms.
Hegl
a
nd
on
29
July
2008,
she
indicated
that
the
stock
would
only
exceed
shelf
life by
the end
of August
and
not
July
as
previously
advised.
[31]
Towards the end
of
June or
the
beginning
of
July 2008,
Ms.
Hegland
gave
a
presentation
to
the
respondent’s marketing leadership tea
m
in which
she indicated that
P
a
rliament was struggling to
compete with
Voyager on
price,
that
the
sales
rate
in
the
20
outlets
in
Upington
was
too slow
and
that
the
product
was
to
exceed
its
shelf
life
in
August 2008.
She
recommended that the Upington test market be
closed at
the
end
of
July and
that
P
a
rliament be
deployed nationally, but
tactically
in
low price
hotspots.
She
referred
to the tactical
price
promotion in the Free State where
the
recommended retail price per packet had been reduced from R l
1.80 to
R
l
0.00 in
outlets
in
low price hotspots which were supplied from the Bloemfontein
distribution centre.
By
that
time
the
stock
on h
a
nd
had, as a
result
of sales
in the Free State,
been reduced from 950
000
sticks to 641
000.
[31]
Two
Free
State
retailers,
Mr. Van
der
Walt
and
Mr. Tickley,
deposed
to
affidavits
and
testified
about
the
sale
of
Parli
a
ment
through
their
outlets.
Mr.
Van
der
Walt’s
evidence
was
that
he
was
the
owner
of
an
Engen
store
in
Welkom
and
that
he
first
stocked
Parliament
cigarettes
in
June
2008
after
ordering
the
stock
from
a
BATSA
representative.
Point of
sale
material
was
supplied.
He
identified
a
number
of
invoices
for
such
stock and said that
P
a
rliament
did
not
sell well
initially
but
that
sales
increased
a
s
customers
came
to
know
the
brand.
Mr.
Tickley’s
evidence was
that
he
was
the
proprietor
of
the
T
a
xi
Cash
&
Carry
store
in
Parys
and
that
he
stocked
Parli
a
ment
cigarettes
for
some
months
during
2008.
Point of sale
material was
also supplied to him. During
the first few weeks
sales
were
slow,
but
increased
a
s
more
people
became
a
ware
of
the
brand.
Ultimately,
he
recorded
sales
of
approximately
8
cases,
which equates
to
about
80
000
sticks.
[32]
Subsequent to the expiry of the relevant period
of five years,
arrangements were made
to
extend
the
sale
of
the
remaining stock of
P
a
rli
a
ment
cigarettes
to
Gauteng
on
a
basis
similar
to
what
was
done
in
the Free State.
[33]
It
was
submitted
on
behalf of the
applicant
that
the
respondent
should
have
called
Ms.
Yvette
Steyn,
who
was
BATSA’s
director
of
marketing
and
at
all
times
Ms. Hegl
a
nd’s
superior, as
a
witness.
Reference
was
made
to
Ms.
Hegland’s evidence
that
Ms. Steyn
participated
in
the
AME meeting
and
in
fact
drafted
the
page
containing
the
conclusions
reached
at
that
meeting.
I
t
was
submitted that an
adverse
inference
should be
drawn
from
the
respondent’s
failure
to
call
Ms. Steyn as a witness.
[34] In
my
respectful
view,
the
criticism
is
not justified. The AME
meeting
was
attended
by
Mr.
Joubert
when
the
presentation
which had
been
prepared by Ms.
Steyn
and other m
a
rketing
colleagues, including
Ms.
Hegland,
was
discussed.
He
testified about
what
transpired at
the
meeting. Ms. Steyn took the meeting through the
presentation. The proposals
contained
in
Ms.
Steyn’s
presentation
were
not
accepted
by
the
meeting.
Mr. Joubert’s
evidence
was that the
leadership
of the AME
proposed
a
l
a
unch
of a
br
a
nd
on a
tactical
basis, which meant that
instead
of launching a brand nation
a
lly
and
through
the entire m
a
rket,
they wanted
BATSA
to identify specific areas where the growth of
the
legal low
segment was prevalent,
then
have
a brand
available to
introduce
only in
that
pocket
of
the market
at
a
specific
price
that
can compete
with
the
low
price
segment
in specific
outlets
where
the
problem was
most
prevalent
and
only
for
the
duration
needed to
address
the problem.
It
was
referred to as a controlled launch and the
rationale behind
it
was
to
mitigate
the
risk
of
taking
consumers
from
BATSA’s
own brands
as
opposed to
from
competitor
brands
by
controlling the
outlets within
which
the
brand
is
l
a
unched,
the
duration
for
which
it
is
sold
marketed
and
the
price
at
which it
is
made
available.
The
page
of
the
presentation
referred
to was
not part
of
the
presentation presented by Ms.
Steyn.
It was drafted
after
the
discussion
to
ensure
that
everyone
understood
the
conclusion
of
the
meeting
and
was
recorded
by
Ms.
Steyn
on
her
laptop
at
the
meeting.
There
is,
therefore, no
compelling
reason why
she should
have been called as a witness.
[35]
It
was
submitted
on
behalf
of
the
applicant
that
Mr.
Joubert’s
evidence
was
unsatisfactory.
In
this
regard,
it
was
submitted
that
he
had
said
in
his
first
witness
statement
that
the
purpose
of
the
launch
was
to
combat trade in illicit cigarettes, but that he later
proffered another
reason,
n
a
mely
limited
l
a
unches
into
legal
low
hotspots
in order
to
disrupt
the
market. Mr.
Joubert
did
not
refer
to
a
disruption
of
the
market.
That
was
the
evidence
of
Ms
Hegland.
What
Mr.
Joubert
said
in
his
statement was
the
following:
“
During
the
period
2005-2008
it
became clear that the
concept,
and
trade,
of
“
duty
not
paid”
cigarettes
was
becoming
more
prevalent
and
established
in
the
South
African
market.
The data
received
from
Research
International
distinguishes
between
counterfeit products
and
“duty
not paid” products.
BATSA
identified
the
risk of
growth
of the
“duty
not paid” sector and took steps to
curtail
the
growth
of
this
sector.
The
exploitation
of
the
PARLIAMENT
product was aimed
at
curbing
this
trend.”
When
asked
during
cross-examination
to
explain
the
statement, he
said
the following:
“
If
you
go
back
to
the
low
price
segment,
the
segment
that
we
were
targeting,
this
was
a segment
that
was
on
the
face
of it selling
product
at
a
legal
price.
In
other
words
it
was a price
above
what
we regarded
as
a suspicious activity
price.
One
of
the
main
competitors
in
this
brand,
was
a
brand
called
Voyager.
I
think
that
is
also
mentioned
in
Ms
Flemming’s
statement. Voyager was gaining
ground rapidly and the
odd
thing about
Voyager
was
that it
seemed to
gain
traction
at
a
very
low
price
in
a
manner that
a
brand
would
do
that
had
brand
equity.
So
it
was
a phenomenon
from
an
independent
manufacturer
that
we
were
concerned
about.
However,
this very
same
independent manufacturer
called
GLTC,
which is still
prevalent
in
the market,
was
to our
understanding
embarking
on a
number
of
activities
that
we regarded
as
illicit
activities.
COURT
:
As what?
Illicit
activities,
in
other words
the
distribution of
illicit
brands
in
addition
to
Voyager.
And
what
they
were also
doing
at
the
time,
was
starting
to
explore
with
grocery
outlets.
In
other
words
outlets
that
we
regard
as
quite
a
high
status sales channel, to list Voyager in those
outlets.
We
wanted
to
ensure
that
their
activities
on
the
illicit
front
was
exposed
to
the
effect
that
it
would
curtail
the growth
in
Voyager.
The
strategy
as
we
understood
it
at
the
time,
was
that
they
played
in
the
legal
market
with
Voyager,
so
we
were never
in a
possession
(sic)
to find any
Voyager
products
that
could be
proved
to
be
illegal, in other
words
where the
duties
weren’t
paid.
But the
rest
of their
portfolio
or brands were
selling at
prices
which
clearly
indicated
that
it
is
illicit.
So
yesterday
I
spoke
about
manufacturers
that
was
on
the
one hand
conducting
a
legal
business
and
what
we
call
the
third
shifts
or
in
the
background
conducting
an
illicit
business
under
the
front
of
the
legal
business.
We believed
at that
stage that GLTC
was
such
a company, GLTC
being
the
owners
and
manufacturers
and
distributors
of
Voyager.
So
while certainly I
would
reiterate the fact that we were not able to compete on
price
with
illicit product, it didn’t mean that competition in the low
price segment
was irrelevant
to illicit
trade, because
this
very
competitor
distributing
Voyager
was
also a very big player in the illicit market.
We
didn’t at
that
stage
from
an AIT
perspective,
and I’m not
talking
marketing
now,
I’m
talking
about
the
area
that
I
was
involved
in
more
in
detail
-
we
did
not regard
these issues as stand-alone issue there was a common threat in the
market
and
we saw
the
launch
of
Parliament
or
the
launch
of a
brand
at
that
space
-
later
on
it
was
different
brands
that
were launched
in
that
space
-
as
useful tools to
compete and put pressure on the illicit trade generally.
MR
PUCKRIN
:
Despite
your
lengthy
explanation
let’s agree
on
one
thing
the
bald statement
at
page
417
of Exhibit
C,
sorry
Bundle
C
paragraph
10
“the
exploitation
of
the
Parliament
product was
aimed
at
curbing
this
trend,
which
is
duty
not
paid”
that
statement
without
qualification
is
false.
MR
JOUBERT:
I
think that
statement
without the
context that
I
provided
is
not
correct.
MR
PUCKRIN:
Correct,
either
that
is
not
correct
or
the
explanation
you
gave
yesterday
and
in
your
supplementary
statement
is not
correct
they can’t live
cheek by jowl
do you
agree?
MR
JOUBERT:
I
actually
don’t
agree
with that
in toto.
MR
PUCKRIN:
Alright
well I’ll argue it let’s not
us argue between
us.
COURT:
Let him say why he doesn’t agree.
MR
PUCKRIN:
I’m
sorry.
MR
JOUBERT:
I
don’t
want
to
add
more
than
my
previous
answer
but I
do
want
to
emphasise
the
fact
that
these
things
were
not
happening in
isolation.
The
threat
to
the market
yes
we
divided
our
responses
into
illicit
trade
and
a
marketing
response
to
the low
price
but at
the
end
of the day
the
threat
was one
that
had
a
commercial generality and that
commercial
generality
was
the
fact
that
there
was severe
down-trading
to
both
the
low
price
a
well
as
illicit
portions
of
the market.
So
from
that
perspective
nothing
happened
in
isolation
but
to
the
extent
that
you
want
to specifically
pose
Parliament
against
illicit
trade to
directly
influence
the
sale
of illicit
trade
with
that I
agree
that was not the
intent.”
[36]
Although this evidence of
Mr.
Joubert explained that
there
was
an
additional
object
of
the
launch,
namely
a
marketing
response
to
legal
low
priced
products
of
competitors,
more
particularly Voyager,
Mr.
Joubert
did
not
explain
why
that
further
object
was
not
mentioned
by
him
in his
statement.
As
appears
from
his evidence
above,
he
in fact
conceded
that
the
statement
without
the
further
context
which
he
provided
was
not
correct
and
agreed
that
it
was
not
the
intent
to
pose
Parliament
against
illicit
tr
a
de.
[37] It
was further
submitted
by Mr. Puckrin
that
Ms Hegland was an
unsatisfactory
witness.
The main reason
for
the
criticism was
that
Ms
Hegland had said in her
affidavit that the Parliament
brand
“
has
been
positioned
by
BATSA
as
an
important
new
brand
in
the
Low
price
sector”,
that
it
was “
imperative
to
set
the
pricing
strate
g
y
correctly
to
compete
properly in
the
legitimate
Mid
and
Low
price
sectors”
and
that
“
the
insights
gained
from
this
initial
introductory
period
(in
Upington)
have
contributed immensely
to
the
respondent
developing a commercially
viable
long-term sales
strate
g
y
for the
PARLIAMENT
brand”,
whilst
her
evidence
in
court
was that the ultimate
goal
was to conduct disruptive
launches
of
limited
duration
in
legal
low
hotspots.
Ms.
Hegland
said
the
following
in
her
evidence in
chief
with
reference
to
the
outcome of
the
AME
meeting:
“
The feedback
was
that
a
national
launch
was definitely
not
an
option
and
to go
head
on
against
other
low
opposition
brands
would
not
be
the
way
to play
it
and
that
we
should
consider
and
evaluate
and
investigate
tactical
options
to
fight
the
opposition.
At
that point the belief was that the proliferation
in that segment actually helped
that
not
any
one
brand
got
traction
to
the point
where
it
had
huge
equity
and
that it
assisted
us in
a way to protect
Stuyvesant
and therefore the feeling
was
that if one
could tactically go in where there was specific low price activity or
hot
spots happening
in the market as I
had explained
before,
one
could attempt
to
only
reduce
the
opposition
in
those
specific
outlets
and
in
so
doing
not
pull
Stuyvesant
into that brand or activity.
”
She was
then
asked
by Adv.
Morley
SC, who
appeared
for
the
respondent
with
Adv.
Joubert,
what
was
meant
by
“
tactical
execution”.
She
said:
“
(T)actical
means
that one
has to specifically
go
play
where
there is a problem
that
it
is
not
something
that
should
be addressed
on
a
national
level.
And
to
launch a low
price brand in an outlet where there is not even low growth,
would
absolutely
be
to
the
detriment
to
your
portfolio.
So
this
looks
at
very
much
a
focussed approach in short term bursts to, I
suppose disrupt that environment to
the point of
-
and disrupt the opposition traction in that
environment.
”
She
was
then
asked
what
she
meant
by
the
term
“
disrupt”.
She
said
the
following:
“
(T)he
objective
would
be
to
include
a
brand
in
the
low
price
segment
by
doing
so distract
the
consumer
to
have
even
an additional,
another
choice.
MR
MORLEY:
Yes
MS
HEGLAND
:
As
we believed
that the many
choices
that
came and
went
within
that,
whether
it
be
illicit
or
low,
low
players,
helped
in
a
way
that
the
consumer
didn’t
particularly
just
go
to
one
brand,
because
there
were
just
so
many
options
that
it
assisted
in
not
....
it
assisted us
to
the
point
where
opposition brands
didn’t
get particular
traction
on
a
national
level.
MR
MORLEY:
And what would be the
commercial advantage in
proceeding
in
that
way,
if
any?
MS HEGLAND:
Well the commercial advantage
would be not to disrupt your
own
popular
and premium
portfolio
and
therefore protect
your
own
profit.”
[38]
I agree
with Mr.
Puckrin
that
this
evidence
is
different
to
what
was
presented
in
Ms.
Hegland’s
affidavit.
Launches
of
limited
duration
in
legal
low hotspots
with
the
object
of
disrupting
the business
of
a
competitor
and to
protect
the
Peter Stuyvesant br
a
nd
cannot
be equated with a
commercially
viable
long-term
sales
strategy
for
P
a
rliament
cigarettes
to
compete
in the
legitimate
mid
and
low
price sectors.
[39] If
one
accepts,
which
I
do
as
it
was
Ms
Hegland’s
evidence,
that
the
respondent’s
intention
was
to
conduct
launches
of
limited
duration
in
legal
low
hotspots
in
order
to
disrupt
the
competition
and
to
protect
its
Peter
Stuyvesant brand,
the
question
arises
whether such launches,
of
which
Upington was the first,
can,
in
the words
of Cameron JA
in
Arjo,
be
described
as statutorily
authentic.
In my view
not.
The basis of the
decision
in
Rembrandt
was
that
to
constitute
bona
fide
use, the
proprietor
of
the
m
a
rk
had
to
use
the
mark
upon
goods
with
the
object
or
intention
of
protecting,
facilitating
or
furthering
trade
in those
goods.
That
was
not
the
respondent’s
object
or
intention.
If a
mark
is
used
on
goods
not
with
the
object
of
promoting
trade
in
those
goods
as
an
end
in
itself,
but
with an
ulterior
purpose
such
as
disrupting
the business
of
a
competitor,
or
protecting
its trade
in
other
goods,
such
use
does
not,
in
my
view, constitute
bona
fide
use
of
the
trade
mark
and
can
therefore
not
be
said
to
be
statutorily
authentic.
[40] It
follows that the respondent
has
failed
to discharge the onus of
proving
bona
fide
use
of
the
Parliament
trade
marks
during
the
relevant
period. I
accordingly grant
the
following
order:
(a) Trade
Mark
1
952/00688
and
Trade
Mark
1
997/17613
are
removed
from
the
register.
(b) The respondent is
ordered
to pay
the
costs
of
the
application,
including
the
costs
of
the
application
for
referral
to
oral
evidence
and
the
hearing
of
oral
evidence,
such
costs
to
include
the
costs
of two counsel.
Counsel
for applicant: Adv. C E Puckrin SC; Adv. R Michau SC;
Adv.
L G Kilmartin Instructed by: D M Kisch Inc
Counsel
for first respondent: Adv. G E Morley SC; Adv. I Joubert
In
structed
by: Spoor
&
Fisher
[1]
See
Cadbury
(Pty) Ltd v Beacon Sweets & Chocolates (Ptv) Ltd
1998 (I) SA 59 (T) 76 H/I – J.
[2]
1963
(2) SA 10
(T).
[3]
At
23 A - 24E.
[4]
Emphasis
added.
[5]
Emphasis
added.
[6]
2002
( I) SA 591 (SCA).
[7]
At
paras. [9] - [11]
[8]
The
differences were in the facts of the two cases.
[9]
71
RPC 23
[10]
Emphasis
added.
[11]
1997
(I) SA I (A)
[12]
Emphasis
added.
[13]
Share
of Market
[14]
Anti
Illicit Trade