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1987
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[1987] ZASCA 32
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Television Radio Centre (Pty) Ltd. v Sony Kabushiki Kaisha t/a Sony Corporation and Another (465/85) [1987] ZASCA 32; [1987] 2 All SA 196 (A) (30 March 1987)
465/85/AV
IN THE SUPREME COURT OF SOUTH AFRICA
. (
APPELLATE DIVISION
)
In the matter between:
TELEVISION RADIO CENTRE
(PROPRIETARY
)
LIMITED
APPELLANT
AND
SONY KABUSHIKI KAISHA
trading as
SONY CORPORATION
1st RESPONDENT
AND
TEDELEX SOUND & VISION (PROPRIETARY
)
LIMITED
2nd RESPONDENT
CORAM
: CORBETT, HOEXTER, GROSSKOPF, NESTADT, AJJ et NICHOLAS, AJA
HEARD
: 24 February 1987
DELIVERED
: 30 March 1987
JUDGMENT
GROSSKOPF ...
2
GROSSKOPF, JA
The appellant in this case is Television Radio Centre (Proprietary) Limited (
"Television" ) a South African company carrying
on business in Johannesburg
as an importer and distributor of a variety of merchandise. This includes video
cassette recorders, which
are the articles with which this appeal is concerned.
The first respondent is Sony Kabushiki Kaisha trading as Sony Corporation
("Sony"),
a company registered under the laws of Japan. Sony is a manufacturer
and dis-tributor of audio-visual equipment, including video
cassette recorders.
It distributes its audio-visual goods in the Republic of South Africa and
certain adjacent territories through
the agency of Tedelex Sound and Vision
(Proprietary)
Limited
3
Limited ("Tedelex"), which is the second respondent in this appeal. Sony is
the proprietor of the trade mark "Sony" which is registered,
pursuant to the
Trade Marks Act, no 62 of 1963 ("the Act"), in respect of a wide range of goods,
including video cassette recorders.
Tedelex is a registered user of this trade
mark in terms of the Act.
There are three television signal systems in operation throughout the world -
the PAL system used
inter alia
in parts of Europe and South Africa; the
SECAMsystem used, for example, in France, and the NTSC system used principally
in the United
States of America and Canada. The PAL system is also not uniform,
and there are differences between the South African version and
those
respectively utilized in,
for
4
for instance, the United Kingdom and West Germany. As
a
result of these differences, television receivers or tuners
(i.e., that
part of television receiving equipment which
picks up the television signal)
must be compatible with
the specific television system in use in a
particular
country. In other words, it is not sufficient that
a television tuner should be designed to receive the PAL system of
television: a tuner must in addition be designed to receive a specific
version
of the PAL television system. If designed for one version of the PAL system it
may how-ever be adapted to render it compatible
with another version. Thus, for
example, a television tuner designed for use in the United Kingdom or West
Germany may be adapted
to
5 to make it compatible with the South African version of
the PAL system.
Video cassette recorders contain tuners by means of which
they receive the television broadcasts which they re-cord. It follows that
video
cassette recorders which are not designed specifically for the South African
version of the PAL system would have to be adapted
for use in this country. I
deal later with the nature of the alterations which would be required for this
purpose.
Sony manufactures its video cassette recorders in Japan specifically for the
various markets served by it. Its trade mark is applied
to the recorders at the
time of manufacture. To denote the market for which a recorder is
intended
6 intended, Sony adds various letters as suffixes to
the model numbers. Thus the suffix UB indicates that the recorder was designed
for the United Kingdom. The model intended for Western Europe would bear the
suffix E, and that intend-ed for South Africa the suffix
SA. In exceptional
circum-stances Sony authorises Tedelex to adapt machines designed for use
elsewhere so that they may be used in.
South Africa. Such adaptation is,however,
strictly controlled and super-vised by Sony.
In 1983 Sony and Tedelex became aware that Television was importing and
selling Sony video cassette recorders. These recorders were
imported from the
Far East, and were models designed for use in the United Kingdom. Before
sel-
ling
7
ling the machines, Television had them
adapted for use in South Africa. Sony and Tedelex objected to this conduct,
alleging that it
not only constituted an infringement of Sony's trade mark
rights, but also amounted to passing off and unlawful competition
vis-á-vis
both Sony and Tedelex. Subsequent events,which I need not
detail, caused the com-plaints of passing off and unlawful competition
to be no
longer in issue between the parties. The same applies to a further complaint
that Television had infringed the copy- right
in the operating instructions
which Television had supplied to purchasers of Sony video cassette recorders
sold by it. In application
proceedings instituted by Sony and Tedelex in the
Transvaal Provincial Division against Tele-
vision
8
vision, the only remaining disputed issue was that of
alleged
trade mark infringement. The court a
quo
decided this is-
sue in favour of Sony and Tedelex, the applicants in that
court. The material orders granted by the court (M J
STRYDOM AJ) read as follows:
"1 The respondent, its servants and agents,
are interdicted from
infringing the rights
of the first applicant in its registered
trade marks
Nos 61/0167 SONY and 80/3855
SONY by using either of them in relation
to
video cassette rêcorders which are
not designed and supplied by the
first
applicant for use in the Republic of South Africa and which are adapted for
use in the Republic of South Africa by a party other than
the first applicant or
its duly authorised agents (such video cassette recorders hereinafter referred
to as "infringing goods")
2
9
2 the respondent, its servants and agents
are interdicted
from infringing the rights
of the first applicant in its registered
trade
marks Nos 61/0167 SONY and 80/3855
SONY by using them in relation
to
infringing goods without the authority
of the first applicant"
Further orders granted by the court were either con-sequential on the above,
or were not in dispute on appeal. With the leave of the
court a
quo
Television now comes on appeal to this court.
As I have indicated, the only remaining dispute be-
tween the parties relates to the alleged infringement of
Sony's trade mark. The parties' contentions in this regard
require a consideration of sec. 44(1) of the Act. This
section, in so far as it is relevant, reads as follows:
"The
10
"... the rights acquired by registration of a
trade mark shall be infringed by -
(a)
unauthorized use as a trade
mark in relation to goods or services in respect of which the trade mark is
registered, of a mark so nearly
resembling it as to be likely to deceive or
cause confusion; or
(b)
unauthorized use in
the course of trade, otherwise than as a trade mark, of a mark so nearly
resembling it as to be likely to deceive
or cause confusion, if such use is in
relation to or in connection with goods or services for which the trade mark is
registered
and is likely to cause injury or prejudice to the proprietor
of
the trade mark."
This section was considered
by this court in the case of
Protective Mining and Industrial Equipment
Systems (Pty) Ltd v Audiolens (Cape) (Pty) Ltd
in a judgment which is being
delivered contemporaneously herewith. I do not intend re-peating what was there
said save in so far
as it may be
necessary
11
necessary to deal wlth contentions advanced in the present appeal.
The main argument advanced by Mr. Ashton, who appeared for Television, was
based on the. proposition that the ex-
pression "use as a trade mark" in sec. 44(1)(a) of the Act
is limited to use which associates goods with the trade
mark proprietor
in the course of their production and prepara
-
tion for the
market
. Use of the trade mark after the goods had reached the market, such
as the sale of trade marked |
goods by a retailer, could thus, according to this contention, not be "use as
a trade mark" and could at most be use "other-wise than
as a trade mark"
pursuant to sec. 44(1)(b). In support of this contention Mr. Ashton relied on a
dictum
in
Aristoc
12
Aristoc Ld. v Rysta Ld
.
(1945) 62 RPC 65
(
HL) at 82, which was quoted in
Esquire Electronics Ltd v Executive Video
1986 (2) SA 576
(A) at 587 G. This contention was considered in the
Protective Mining
case (
supra
) where it was heldthat these cases
do not bear on the point in issue. As a matter of language, sale by a retailer
of trade-marked
goods falls within the natural and ordinary meaning of the words
"use as a trade mark" read with the definition of "trade mark" in
sec 2 of the
Act, since the seller is using the tr.ade mark for the purpose of indicating a
connection in the course of trade between
the goods and the proprietor of the
mark, and of distinguishing the goods from those connect-ed with any other
person. Conversely
sub-sec(l)(b) cannot
apply
13
apply because the retailer's use is not for any
purpose
other than indicating a connection between the goods and
the
próprietor; and of distinguishing them from the goods of
another person. It is therefore in my view sub-sec.(l)(a)
which is
applicable, and not sub-sec.(l)(b). This does not,
however, necessarily mean that the sale of trade-marked goods
amounts to an infringement of the trade mark, as was shown
in the
Protective Mining
case (
supra
).
In view of my conclusion that the applicable provi-
sion is sub-sec. (1)(a)and not sub-sec(l)(b), it is not neces
sary to consider the remainder of Mr. Ashbon's argument, the sub-
stance of which was that, if Television's conduct fell with-
in the terms of sub-sec.íD(b), there would be no infringe-
ment
14
ment unless its use of the mark was "likely to cause injury or
prejudice to the proprietor of the trade mark". In the circumstances
of this
case, it was contended, Television has, by affixing an appropriate notice to
recorders sold by it, obviated any possibility
of injury or prejudice. to Sony
as the proprietor of the trade mark. As I have said, I need not consider this
argument because in
my view Television's conduct falls under sub-sec.(l)(a)and
not sub-sec.(l)(b). In the alternative Mr. Ashton contended that; if
sub-sec.(l)(a)
is applicable, Television did not commit an infringement because
the video cassette recorders sold by it were genuine Sony products
on which the
trade mark had been affixed by Sony itself as the proprietor of the trade
mark.
In
15
In the
Protective Mining
case (
supra
) such
conduct was held,
in general, not to constitute infringing "use as a
trade
mark" for the purposes of sub-sec.(l)(a). However, in that
case,
otherwise than in the present, the goods in question
had not been altered
after their marking with the trade
mark and before their sale by the alleged
infringer,and the
legal effect of such alteration was expressly left
open.
It must accordingly be dealt with in the present appeal.
The basis of the decision in the
Protective Mining
case was that no
infringement of a trade mark. is committed by a trader who sells genuine goods
properly marked with the trade mark
by or with the consent of the trade mark
owner. This is consonant with the origin of trade mark infringement as a
species
16
species of passing off. What the trade mark
proprietor is entitled to prevent is that the goods of another person are
represented
as his. If another person alters the goods, they are, to the extent
to which they have been altered, no longer the goods to which
the trade mark was
affixed by the proprietor. It then, it seems to me, becomes a mat-ter of degree
whether there has been a change
in the goods sufficiently appreciable to render
them no longer the "genuine goods", i.e., the goods which the trade mark
proprietor
had marked. In determining this issue, one would have regard
inter
alia
to the nature of the goods and the nature, pupose and extent of the
alteration. This issue is essentially a practical one, and each
case must be
decided on its own
facts
17
facts in the light of ordinary business practice and the
reasonable expectations of purchasers.
I turn now to consider the alterations
effected to the video cassette recorders in the present case. Evidence on this
score was given
on affidavit by Mr. G.D.Bishop, the Group Chief Engineer of
Tedelex, and by Television's manag- ing director, Mr. Harry Donde. Mr.
Donde
testified that he was a qualified radio technician by training and had "expert
knowledge of the importation, retail selling
and promotion
of
18
of consumer electronic equipment" including video cassette
recorders. Mr. Donde accordingly did not claim to have ex-
pert knowledge
of the engineering technicalities of instru-
ments like video cassette recorders, and in argument it was
common cause that he was not an expert in this field. Mr.
Bishop admittedly is such an expert, and his opinions must
prevail on the technical matters which are in issue.
Mr. Bishop stated that the "following impcrtant and major alterations are
necessary" to adapt the video cassette recorders imported
by Television for use in South Africa:
"1. The tuner must be exchanged or fundamen-
tally altered. This fundamental alteration which is necessary to the tuners
originally supplied consists of removing the tuner from
the video cassette
recorder, removing the covers, and thereafter altering the os-
cillator
19
cillator and tuned radio frequency coils by 'knifing' to reduce the
inductance. The coils are physically opened so as to encompass
the higher
frequencies. This requires a great deal of skill and ex-pertise to effect
accurately, and also needs good test equipment
to ensure ac-curate 'tracking' of
R/F and oscillator stages.
2.
The intermediate freguency
filters should be changed. These are called 'Surface Acoustic Wave filters' and
are specifically designed
to suit each transmission
standard.
3.
The audio frequency is altered by
substi-tution of 6 MHz ceramic filters and traps for the 5,5 MHz ceramic filters
and traps.
4.
The chroma take-off circuits
should be modified to cover the chroma band and
characteristics.
5.
The luma delay line should
be changed to compensate for the difference in Group Delay
Times."
Examination of aLrecorder sold by Television
indicated,
in
20
in Mr. Bishop's opinion, that Television "only performs
inexpertly the
first three of the above operations". His
overall conclusion was as
follows:
"The effect of the modifications wrought by (Television) is to change the
nature of the video cassette recorder entirely, not only
in so far as its
physical attributes are concerned but also in so far as its opera-tion is
concerned. It is indeed a different machine,
otherwise it would not work in
South Africa."
More specifically, Mr. Bishop stated that the sensitivity of
the tuner of the converted machine was in some respects lower
than normal. Moreover, both the sound performance and pic-
ture quality were below standard.
To sum up: the recorders imported by Television will
not work at all in South Africa unless converted. Conver-
sion
sion requires operations of a technical nature which are not
insubstantial. Even after conversion, the recorders perform less well
than may
reasonably be expected of new machines. In these circumstances I agree with Mr.
Bishop that the recorders converted by Television
must, for pur-poses of this
appeal, be regarded as machines different from those imported. It follows
therefore, that the recorders
sold by Television are not the "genuine goods"
which were marked by Sony with its trade mark. The sale of such re-corders
bearing
Sony's trade mark constitutes, in my view, an infringement pursuant to
sec.44(l)(a) of the Act.
In
22 In the result the appeal is dismissed with costs,
in-cluding the costs of two counsel.
E M GROSSKOPF, JA
CORBETT, JA
NICHOLAS, AJA