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[2013] ZAKZDHC 31
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Futura Footwear Ltd v Minister of Police and Others (1540/2013) [2013] ZAKZDHC 31 (11 June 2013)
IN THE
KWAZULU-NATAL HIGH COURT, DURBAN
REPUBLIC OF
SOUTH AFRICA
Case No: 1540/2013
In
the matter between:
FUTURA
FOOTWEAR LIMITED
..................................................................
Applicant
and
MINISTER
OF POLICE
....................................................................
First
Respondent
THEMBA
M SISHI
......................................................................
Second
Respondent
MARIAAN
RAATH
..........................................................................
Third
Respondent
SALOMON
S.A.S.
........................................................................
Fourth
Respondent
TRAIL
TERRAIN SPORTS CC
........................................................
Fifth
Respondent
OXYROS
CC
...................................................................................
Sixth
Respondent
JUDGMENT
Delivered on 11 June 2013
Vahed
J:
Acting under a warrant (“the
warrant”) obtained on 4 February 2013 in terms of the
Counterfeit Goods Act, 37 of 1997
(“the Act”), the third
respondent, an officer in the employ of the South African Police
Service, on 6 February 2013,
seized certain shoes, which had been
imported into South Africa by the applicant. In the present
application the applicant seeks
to set aside that warrant and obtain
release of the shoes seized pursuant thereto.
The application is opposed by the
fourth and fifth respondents.
The applicant is an importer and
distributor of footwear. Amongst others, it imports footwear bearing
the trademarks POWER and
the POWER device. It does so under licence
from Bata Brands S.A.R.L.
The first respondent is the MINISTER
OF POLICE who was cited in his capacity as the Minister in
government responsible for the
South African Police Service.
Although the first respondent initially gave notice, intending to
oppose the application, that
was subsequently withdrawn and he now
abides my decision.
The second respondent is the
magistrate who issued the warrant on 4 February 2013. He also issued
an earlier warrant (“the
earlier warrant”) relating to
the same consignment of shoes. He has not entered the lists.
As indicated above, the third
respondent is an officer in the South African Police Service,
holding the rank of Inspector. She
applied for and executed the
warrant, which is the subject matter of this application and the
earlier warrant.
The fourth respondent is a French
company. It is the proprietor of the intellectual property rights
associated with the brand
SALOMON.
The fifth respondent is a South
African close corporation and operates as the agent and/or licensee
for footwear bearing the SALOMON
brand.
The sixth respondent operates and is
in charge of the warehouse depot where the seized goods have been
stored.
As indicated above, only the fourth
and fifth respondents oppose the relief sought in this application.
They are the applicant's
competitors.
Mr
Michau
SC who, with Ms
Joubert
, appeared for the applicant and Mr
Bester
SC
who appeared for the fourth and fifth respondents have furnished me
with detailed heads of argument. These have been of great
assistance
to me and I record my acknowledgement. I borrow freely from them.
In order to fully appreciate the
applicant's complaints and its reasons for contending that the
warrant falls to be set aside
it is necessary to understand the
factual background preceding its execution.
On 8 April 2011 800 pairs of shoes
("the shoes") were seized from the applicant at its
premises. This was done in terms
of the earlier warrant. The earlier
warrant was issued pursuant to a complaint made on oath by a
deponent to an affidavit made
on behalf of the fourth and fifth
respondents. The third respondent acted as commissioner of oaths in
that affidavit.
Under case number 10980/2011 the
applicant commenced application proceedings in this Court seeking an
order setting aside the
earlier warrant. That application was
opposed by the fourth and first respondents. They raised a number of
defences in support
of their allegation that the shoes were
counterfeit. In that application the applicant relied upon a number
of deficiencies in
the earlier warrant. The application papers, and
the subsequent argument in court also dealt with the merits of the
defences
raised by the fourth and fifth respondents. The applicant
also raised a number of 'defences' to the fourth and fifth
respondent's
allegations of and concerning counterfeiting. It
appears that these were also dealt with during argument.
The matter was eventually argued and
on 29 November 2012 this Court,
perPenzhorn
AJ, delivered a
judgment setting aside the earlier warrant and directing that the
shoes be released to the applicant. In essence,
that judgment
concentrated on the deficiencies in the earlier warrant and found it
unnecessary to deal with the defencesraised
by the fourth and first
respondents or with the 'defences’ raised by the applicant in
opposition to the counterfeiting
allegations. For reasons which are
not entirely clear the handing down of that judgment did not come to
the attention of at least
the applicant and the first and third
respondents and the shoes were not released.
It was only in late January 2013 that
matters came to the attention of the applicant and on 23 January
2013 it obtained a copy
of the written judgment. On 25 January 2013
that fact was communicated telephonically to the third respondent
and she was requested
to release the shoes. At her insistence that
request was communicated to her in writing and delivered to her on
30 January 2013.
She was then expected to issue what has been
referred to as a release notice. The release notice was issued by
her on 4 February
2013. The fact of its issue was only communicated
by her to the applicant’s attorneys on 6 February 2013. The
release notice
itself indicated that the goods would be released to
the applicant on 8 February 2013.
The shoes, however, were not
released.
On 4 February 2013, the same day that
the release notice was issued by the third respondent, she again
acted as commissioner of
oaths to an affidavit of complaint by the
same deponent, again on behalf of the fourth and fifth respondents.
The third respondent
then again approached the second respondent and
obtained the issue of the warrant, which is the subject matter of
this application.
On the papers it is not clear what prompted the
issue of the warrant (i.e. the second warrant). The absence of an
affidavit from
the third respondent explaining what happened and the
sequence of events is to be lamented. On the probabilities the
conclusion
that it was the applicant's approach to her for the issue
of a release notice spurred her into action to obtain the issue of
the second warrant is inescapable.
On 6 February 2013 the third
respondent telefaxed a copy of the release notice to the applicant's
attorneys. During a telephone
conversation on the same day she also
informed them of the issue of the second warrant and the fact that
the shoes had again
been seized and detained by her. The seizure and
detention occurred at the premises of the sixth respondent.
The affidavit of complaint filed in
support of the second warrant was based almost exclusively upon the
affidavits of complaint
filed in support of the earlier warrant.
They were in fact annexed to and incorporated by reference in the
affidavit of complaint
filed in support of the second warrant,
which, additionally, informed the second respondent that "…
[t]he Durban
High Court found fault with the original warrant in
this matter in that the warrant did not, the court found, adequately
describe
the counterfeit goods. There was no finding that the goods
were not in fact counterfeit, and no finding that the [fourth
respondent's]
Copyright was not infringed".
The affidavits delivered in the
earlier High Court application and
Penzhorn
AJ’s written
judgment were not placed before the second respondent. The second
respondent was not appraised of their contents.
On that basis the issue of the
warrant was sought and obtained on 4 February 2013.
The applicant contends that by the
time the warrant was sought and obtained on 4 February 2013 the
fourth and fifth respondents
were fully aware of its (i.e. the
applicant's) cogent defences to the infringement and counterfeiting
claims. As such those facts
ought to have been placed before the
second respondent for him to properly apply his mind to whether the
second warrant ought
to have been issued.
Section 6 of the Act provides as
follows:
'The
warrant contemplated in section 4(2) read with section 5(1) will be
issued in chambers by any judge of the High Court or by
a magistrate
who has jurisdiction in the area where the relevant suspected act of
dealing in counterfeit goods is alleged to have
taken or to be taking
place or is likely to take place, and will be issued only if it
appears to the judge or magistrate from information
on oath or
affirmation that there are reasonable grounds for believing that an
act of dealing in counterfeit goods has taken or
is taking place or
is likely to take place, and the Inspector seeking the warrant may be
asked to specify which of the powers contemplated
in section 4(1) is
or are likely to be exercised.'
It is immediately clear that the
second respondent needed to be put in a position where he could
conclude that there were "…
reasonable grounds for
believing
…" that the applicant was dealing in
counterfeit goods.
In my view it was necessary for the
third respondent, and indeed the deponent to the second affidavit of
complaint, to have placed
all of the relevant information before the
second respondent for him to properly address the need to issue the
second warrant.
I pause to mention that, like in this matter, the
third respondent was also a respondent in the earlier application.
In
Cadac (Pty) Ltd v Weber Stephen
Products Company &Ors
2005 BIP 439 (W)
Schwartzman
J
said the following:
’
11.4
By reason of the far reaching consequences that can flow from the
exercise of the power given to a complainant under [the Act]
“
(be)
it on his head if he acts in an unjustified, improper or reckless
manner in causing this seizure and detention of alleged counterfeit
goods
"
… Accordingly, the least that is required of a complainant in
what is an
ex
parte
application for a warrant is that it disclose all material facts that
might influence a Judge's or magistrate's decision to issue
the
warrant. It follows that if in such an
ex
parte
application,
there is a material non-disclosure for whatever reason that might
influence the outcome, then "
unless
they are very cogent practical reasons while order should not be
rescinded, the Court will always frown on an order obtained
ex parte
on incomplete information and will set it aside even if relief could
be obtained on a subsequent application by the same
applicant
"
– per LeRoux J in
Schlesinger
v Schlesinger
1979 (4) SA 342
(W)
at page 350A to B.’
Schwartzman
J also said that:
’
13.
There was an incomplete disclosure in the affidavit, resulting in the
First Respondent not making a full disclosure of all material
facts.
What was not referred to were the two similar, albeit slightly
smaller kettle grills, that the Applicant had marketed without
objection for 18 months. What was not disclosed was the Applicant's
defence to the complaint – in law it may have been good
or it
may have been bad – but it remained material to be known to the
Judge or magistrate. What was also not disclosed was
the Applicant's
request to be heard before a search warrant was issued. To have
afforded it this opportunity would not have frustrated
a genuine
attempt to invoke the provisions of [the Act].’
And
‘
15.
I therefore find that a full disclosure might have influenced the
Judge's or magistrates's decision. The First Respondent has
not
advanced any compelling or substantial reasons for this failure. In
this sense, there was a wrongful seizure, removal and detention
of
the Applicant's goods. It follows that the one should, on this
ground, be set aside. A consequence of that flows from this finding
is that the goods seized in terms of the warrant must be returned to
the Applicant.’
And
‘
17.
What suffices for purposes of this judgment is that it should be
borne in mind that the far reaching remedies made available
to a
complainant in terms of [the Act] are directed at stopping a fraud as
a preliminary to criminal or civil proceedings. The
object of the Act
is not to give a party to a genuine trademark dispute a weapon to be
used
in
terrorem
against its opponent.'
In
Cadac (Pty) Ltd v Weber-Stephen
Products Co
2011 (3) SA 570
(SCA), at para 6, the Act was
categorised as follows:
‘
Counterfeiting
involves deliberate and fraudulent infringement of trademarks, and
"counterfeit cases involve an infringer attempting
to reproduce
– and substitute for – the goods (not just a trademark)
of the trademark owner". That is why the
Act is concerned with
trademark and copyright infringements that are criminal in nature.
The Act does not permit a rights holder
to steal a march on an
alleged infringer in order to settle a bona fide dispute about the
boundaries of rights. Those disputes
should be litigated and either
the Trade Marks Act or the Copyright Act.’
In the earlier application, both on
the papers and during argument, the applicant explored its reasons
for rejecting the counterfeiting
allegations made by the fourth and
fifth respondents. It follows, in my view, that that material ought
to have been placed before
the second respondent. There was thus an
incomplete disclosure when the second warrant was applied for. I am
accordingly of the
view that all the material facts were not before
the second respondent and that for that reason alone the fourth and
fifth respondents
must be non-suited.
Having reached that conclusion there
is no need for me to embark upon an analysis of the applicant's
contentions on the merits
of the allegations with regard to
counterfeiting.
I accordingly make the following
order:
a. The warrant
issued by the second respondent on 4 February 2013 in terms of the
Counterfeit Goods Act, 37 of 1997
and executed by the third
respondent on 6 February 2013 at the premises of the sixth respondent
in respect of the shoes imported
into South Africa by the applicant
is set aside.
b. The first, third
and sixth respondents are directed to forthwith release the seized
shoes to the applicant.
c. The fourth and
fifth respondents, jointly and severally, the one paying the other to
be absolved, are directed to pay the applicant's
costs, such costs to
include those consequent upon the employment by the applicant of two
counsel and are to include all costs
reserved on previous occasions.
_____________
Vahed J
CASE
INFORMATION
Date of Hearing: 20 May
2013
Date of Judgment: 11 June
2013
Applicant’s
Counsel: R Michau SC (with I Joubert)
Applicant’s
Attorneys: D M KischInc
Locally represented by:
Booysen& Co Inc
1 A Holwood Park
5 Canegeate Drive
Umhlanga Rocks
(Ref: R3331ZA00)
Tel: 031 536 1700/58
Respondent’s
Counsel: A J Bester SC
Respondent’s
Attorneys: Ron Wheeldon Attorneys
Locally represented by:
Stirling Attorneys
42 Laurel Road
Glenwood
Durban
(Ref: LR001003A/TL)
Tel: 031 205 4975