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1990
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[1990] ZASCA 135
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Tool Wholesale Holdings (Pty) Ltd. v Action Bolt (Pty) Ltd. and Another (535/88) [1990] ZASCA 135; 1991 (2) SA 80 (AD); [1991] 1 All SA 424 (A) (16 November 1990)
Case No. 535/88
IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)
In the matter between:
TOOL WHOLESALE HOLDINGS (PROPRIETARY) LIMITED
Appellant
and
ACTION BOLT (PROPRIETARY) LIMITED
First
Respondent
and
THE REGISTRAR OF TRADE MARKS
Second Respondent
CORAM:
HOEXTER, E M GROSSKOPF, MILNE, JJA et NICHOLAS, GOLDSTONE,
AJJA
HEARD:
4 September 1990
DELIVERED:
16 November 1990
JUDGMENT
HOEXTER, JA
2
HOEXTER, JA
The appellant ("TWH") and the first respondent ("AB")
are private companies. The second respondent in this appeal is the Registrar
of
Trade Marks ("the registrar"). TWH is the proprietor of five trade marks ("the
five marks") registered under the provisions of
the Trade Marks Act, No 62 of
1963, as amended ("the Act"). In the Witwatersrand Local Division TWH instituted
an action ("the action")
against AB. TWH sought an interdict against AB on the
grounds of alleged trade mark infringement and passing off. Thereafter the
action was stayed pending the outcome of an application ("the application") by
AB against TWH in the Transvaal Provincial Division
("the court below"). The
judgment in the application is the subject of the present appeal.
3
In the application AB sought an order directing the registrar to rectify the
register of trade marks by expunging the five marks therefrom.
The application
was resisted by TWH and, affidavits having been filed by both sides, the matter
was heard by McCREATH, J. The learned
judge granted the application and ordered
TWH to pay the costs thereof. The judgment of the court below has been reported:
Action
Bolt (Pty) Ltd v Tool Wholesale Holdings (Pty) Ltd and Another 1988(4) SA
752 (T) With leave of the court below TWH appeals againt
the whole of the
judgment. AB opposes the appeal. The registrar abides the decision of this
court.
The five marks are respectively: (1) 80/6862-Action Handle Bar ("the
AHB mark") registered in Part A of the register; (2) B80/6863-Action,
registered
in Part B;
(3)
80/8267-Action (and man
device) registered in Part A;
(4)
80/8268-Action Handle Bar (and man device)
registered
4
in Part A; and (5) 83/8992-Action Do-It-Yourself Centres
(and man device) registered in Part A. The five marks are
registered in
Class 42 of Schedule IV and each is in
respect of:-
"Retail and wholesale services relating to tools (including electrically
operated tools and welding apparatus), hand tools, paint,
gardening and outdoor
living requisites and hardware generally."
For
several years TWH has operated various retail hardware stores on the
Witwatersrand. Another of its stores sells hardware on a
wholesale basis. AB
carries on business as a supplier to the building industry of fastening systems
such as rivets, rivet nuts, screws
and bolts. AB is also a supplier of
industrial power tools.
During or about the year 1986 AB began to use the
trade name "Action Fastening Systems", together with a device, in relation to
its
products. This led to the action by TWH against AB; and, in turn, to the
application
5
by AB against TWH. AB's application for expungement of
the five marks was
based on the following provisions of the
Act: first, sec 33(1); second, sec
33(1) read with sec
16(1); and, third, sec 36(1)(a) and 36(1)(b). It is
common cause that AB
is a "person aggrieved" within the
meaning of the aforementioned provisions
of the Act.
In regard to sec 33(1) of the Act, AB contended
in the court below that the five marks represented entries
"wrongly remaining on the register" and that they had
furthermore been made "without sufficient cause". In his
judgment (at 753H) McCREATH, J described as the thrust of
AB's
argument:-
" that the selling of goods, both wholesale
and retail, does not constitute 'services' as envisaged by the Trade Marks Act
and that registration as a services mark for 'wholesale
and retail' services is
accordingly not permissible in law."
The same
contention was the main core of the argument
advanced by Mr Bowman who appeared for AB in the appeal.
6
Service marks first became registrable in terms of amendments introduced by
the Trade Marks Amendment Act, No 46 of 1971. Mr Plewman,
who argued the appeal
on behalf.of TWH, correctly submitted that in so amending the Act the
Legislature had intended to enlarge the
scope of the monopoly which might be
obtained by the registration of a trade mark; and that the introduction of
service marks in
1971 was designed to afford additional rather than alternative
statutory monopoly protection.
The definition of a trade mark in sec 2 of the
Act now reads thus:-
"....'trade mark', other than a certification mark, means a mark used or
proposed to be used in relation to goods or services for
the purpose of
-
(a) indicating a connection in the course of trade
between the goods or services and some person having the right, either as
proprietor
or as a registered user, to use the mark, whether with or without any
indication of the identity of that person; and
7
(b) distinguishing the goods or services in relation to which the mark is
used or proposed to be used, from the same kind of goods
or services connected
in the course of trade with any other person."
The resultant position is that trade marks used or proposed
to be used in
relation to services may be registered and
will enjoy the same protection as
those used or proposed to
be used in relation to goods. The Act does not contain a
definition of
"services". However, a clear
differentiation between the use of a mark in
relation to
"goods" on the one hand and "services" on the other, is to
be noticed in sec 2(3) of the Act which reads as follows:-
"2 ( 3 ) (a) Ref erences in this Act to the use of a mark in relation to
goods shall be construed as references to the use thereof
upon, or in physical
or other relation to, goods.
(b) References in this Act to the use of a mark in relation to services shall
be construed as reerences to the use thereof in any
relation to the performance
of such services."
8
In the United Kingdom the Trade Marks Act, 1938, as amended
("the UK Act"), does contain a definition of a "service
mark". Later in
this judgment a close examination will be
necessary of a decision in the High
Court and the Court
of Appeal in a matter reported only after the
application
in the instant appeal had been decided: Dee Corporation
plc and Others
(1990) RPC 159
("the Dee case") . At this
juncture, however, brief reference
may conveniently be made
to a passage in the Dee case in the judgment of
FALCONER,
J in the Chancery Division, because it contains a useful
indication of the ambit of the statutory definition of a
"service mark" in the UK Act. At 165 (line 35) to 166
(line 10) the learned Judge remarked:-
"The Trade Marks (Amendment) Act 1984 amended the Trade Marks Act 1938, inter
alia, to provide for the registration of service marks.
The statutory definition
of 'service mark', set out in section 1(7) of the 1984 Act, as amended by the
Patents, Designs and Marks
Act 1986, is as
follows:
9
'service mark' means a mark (including a device, name, signature, word, letter,
numeral, or any combination thereof) used or proposed
to be used in relation to
services for the purpose of indicating, or so as to indicate, that a particular
person is connected, in
the course of business, with the provision of those
services, whether with or without any indication of the identity of that
person.'
Moreover, by the 1984 Act, in section 68(1)
of the 1938 Act, the 'Interpretation' section, there has been inserted the
following definition
in respect of the 'provision of services':
'..provision, in relation to services, means their provision for money or
money's worth.'
Reading that definition of
'provision' into the definition of 'service mark', the latter may be written
thus:
'In this Act 'service mark' means a mark (including a device, name, signature,
word, letter, numeral, or any combination thereof)
used or proposed to be used
in relation to services for the purpose of indicating, or so as to indicate,
that a particular person
is connected, in the course of business, with the
provision for money
10
or money's worth of those services
whether with or without any indication of the identity of the person.'
(Emphasis added)."
So much for the statutory definition of a "service mark" in the UK Act.
Despite the fact that with us "services" lack statutory definition,
an
indication of what "services" in the Act were not intended to encompass is to be
found in the judgment of this Court in Miele
et Cie GmbH & Co v Euro
Electrical (Pty) Ltd 1988(2) SA 583(A), a decision much debated in argument both
in the court below and
before us. Some discussion of the facts in the Miele
case, and an examination of so much of its ratio as bears on the issue in the
present appeal, may help to clear the way for a consideration of the main
arguments addressed to us.
The Miele company, which was registered in West Germany, manufactured and
supplied superior domestic appliances which were sold under
its trade mark
"Miele".
11
The Miele company registered the name "Miele" under the Act to cover a wide
range of domestic and other appliances. Later registrations
were effected under
the Act of the word "Miele" in its international script form. In 1979 the Miele
company and a company known as
Euro Electrical (Pty) Ltd ("Euro Electrical")
concluded an oral contract authorising Euro Electrical to import, sell, service
and
repair Miele appliances in South Africa. Euro Electrical was also authorised
to use the name "Miele", in its international script
form, in the name of its
business and repair service. Euro Electrical duly used "Miele Appliances" as its
trade name. In 1982 Euro
Electrical cancelled the contract. It was pointed out
to Euro Electrical that, as a result of the cancellation of the contract, it
no
longer enjoyed the right to use the names "Miele" and "Miele Appliances" as its
trading style; and that such use would constitute
an infringement of the
Miele
12
company's trade mark. Euro Electrical nevertheless
persisted in the use of
the names. It continued, for
example, to display neon signs on its shop front
on which
the word "Miele" appeared in international script form.
The word
"Miele", in its international script form,
appeared on the back and sides of
Euro Electrical's
delivery van. On the other hand Euro Electrical's
name
appeared neither on its shop front nor on its delivery van.
In the Transvaal Provincial Division the Miele company
unsuccessfully
applied for an interdict restraining Euro
Electrical from infringing its
registered trade mark under
sec 44 (1) (b) of the Act by using the name "Miele
Appliances" as its
trade name.
Those provisions of sec 44(1 ) of the Act
pertinent
to the Miele case read as follows:-
"44(1) Subject to the provisions of sub-sections (2) and (3) of this section
and of sections forty-five and forty-six, the rights
acquired by
13
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:
Provided that "
(Emphasis provided.)
Although sec 44(1)(b) of the Act refers only to a
trade mark so nearly resembling the registered one as to be
likely to
deceive or cause confusion, this court held in
14
the Miele case (at 594H) that it was clear that the subsection likewise
applies to the use of an identical mark. It was held (at 594-5)
that in order to
establish infringement under subsec 44(1)(b) a proprietor of a registered trade
mark has to prove the following:
(1) that there was use of the mark by the
defendant; (2) that such use was unauthorized; (3) that such use was in the
course of trade;
(4) that such use was otherwise thah as a trade mark; (5) that
such use was in relation to, or in connection with, goods or services
for which
the mark was registered; and (6) that such use is likely to cause injury or
prejudice to the proprietor of the mark. This
court concluded that each of the
aforegoing six ingredients of the cause of action created by sec 44(1)(b) had
been estabiished and
the appeal was upheld. Of more particular significance, for
purposes of the instant appeal, is the line of reasoning adopted by this
court
in
15
concluding that the fourth and fifth requirements had been
satisfied (viz
that Euro Electrical's use of the mark was
use otherwise than as a trade
mark; and that such use was
in relation to, or in connection with, goods or
services for
which the mark had been registered).The unanimous judgment
of
this court in the Miele case was delivered by CORBETT,
JA. At 598I-599G the
learned judge of appeal observed:-
"Subsection 44(1)(b) requires the user to be 'in relation to or in connection
with goods or services for which the trade mark is
registered'. Thus user in
relation to or in connection with goods not covered by the trade mark
registration or in relation to services
where the registration is for goods, or
vice versa, falls outside the ambit of the subsection.
It is Miele' s case that the purpose of Euro Electrical's use of its (Miele's)
trade mark as a trade name is to indicate an association
of some kind between
Euro Electrical's business and that of Miele, either that the business is that
of Miele itself or that it is
a local branch or agency of Miele; that this
constitutes user in relation to or in connection with goods in respect of which
the
trade mark is registered; and that this user is use otherwise than as a
trade mark.
16
Euro Electrical concedes (in coúnsel's heads of argument, at any rate)
that its use of Miele's trade mark is to signify a connection
in the course of
trade between the business of Euro Electrical and that of Miele, but contends
that this user is in relation to services
and not goods, and that, in any event,
even if it does relate to goods, it is use 'as a trade mark' in terms of sec
44(1)(a). The
first of these contentions, if borne out by the facts, would
provide an answer to Miele's claim, since its registered trade marks
relate only
to goods; the second, if well founded, would be a defence on the basis that
Miele, so it is argued, specifically abandoned
in the Court a quo its cause of
action based on s 44(1)(a).
The first question to be considered is whether Euro Electrical's use of the
trade mark 'Miele' is in relation to or in connection
with goods or in relation
to or in connection with services. During the course of argument Mr Goodman was
asked 'What services?';
and to this he replied 'the services of selling,
distributing and repairing Miele's products'. Repairing is, of course, a
service,
but in the context of Euro Electrical's business it is merely ancillary
to the main activity of selling goods. And, in my view, it
is artificial and
incorrect to regard the selling of goods, even if they all emanate from a single
manufacturing source, as the provision
of services. Euro Electrical uses the
mark, as I have said, as its trading style in order to indicate that its
business, in which
it
17
sells Miele products, is associated with Miele. If that user is in relation to
or in connection with anything, it is, in my view,
goods and not services; the
goods being the Miele products and other goods sold by Euro Electrical."
Against the background sketched above it
is
necessary next to notice in relation to the
performance of
what services TWH claims that it is using the five marks.
In this connection a useful summary is to be found in a
portion of a
paragraph of TWH's heads of argument. It
reads as follows:-
"The evidence shows that the appellant does not
merely sell goods to its
customers but also
employs expert staff who furnish advice to
customers
(such as 'die onhandiges wat nie eens h
gloeilampie kan vervang nie') on such
matters as
the use of tools and equipment, the cleaning of
swimming pools
and 'how to be your own plumber.'
The appellant's motto is 'We'll show you
how.'
When it advertised for department managers, it
stated that it
required persons who not only had
a thorough knowledge of the products
concerned
but who were also able to advise and
help
customers "
18
As a random example of the services performed by TWH, Mr
Plewman called
attention to the following advertisement
annexed to its affidavits:-
"HARDWARE SHOP WITH IMPORTANT DIFFERENCE Action Paint and Hardware (tel
789-1708) is the hardware shop with the dif ference for two
reasons - the
expertise of its staff and its vast range of stock.
The variety of products in Action Paint and Hardware satisfies most tool and
hardware requirements: In the many departments in the
big Randburg Mall store
there are 26 000 product items - from paints and power tools to electrical and
fastening components, to garden
accessories and furniture.
That makes for one-stop shopping, and Acticn's delivery service means that it's
shopping in comfort too.
The Action motto is 'We'll show you how.' In each department there is a member
of staff who either has a National Institute of Hardware
certificate (a
qualification recognized throughout the world), or is an expert in practical
terms by virtue of experience.
Three of the staff at Randburg's Action Paint and Hardware have recently been
awarded among the highest marks of their group, and
one of them
is
19
the Institute's 'Student of the Year.'
It is Action' s boast that they are experts in their field - 'to beat us you
must be better. ' Price-wise, they can compete with
anyone."
McCREATH, J accepted the submission advanced
on
behalf of AB that the sale of goods, whether by
wholesale
or retail, does not constitute "services" within the
meaning of
the Act; and that registration as a "services
mark" for "wholesale and
retail" services is legally
impermissible. The learned Judge concluded (at 755I -
756A):-
"....that the selling, or offering for sale, of goods, whether on a wholesale or
retail basis, does not constitute a service within
the meaning of the Act and
registration for 'retail and wholesale services' is accordingly a specification
which is contrary to the
provisions of the Act. The registrations in respect of
the first respondent's aforesaid trade marks do not therefore comply with
the
definition of a trade mark as they do not indicate a connection in the course of
trade between the first respondent, as proprietor,
and a service or services (as
envisaged by the Act) performed by it. Four of the said marks are thus entries
made in the
20
register without sufficient cause "
(I interpose
that in respect of the AHB mark a period of seven years since the date of
registration thereof had elapsed and that therefore,
subject to certain
provisos, in an application for expungement the original registration of the AHB
mark had to be taken as valid.
To this feature of the case, and the way in which
McCREATH, J dealt with it, I shall return later in this judgment.)
It is clear from the passage from the judgment
of
the court a quo quoted above that McCREATH, J
interpreted
the words "retail and wholesale services" in the
specification
of each of the five marks as signifying "the
selling, or offering for sale, of goods, whether on a
wholesale or retail
basis." Counsel for TWH submitted
that in so interpreting the words McCREATH
had fallen into
error. In TWH's heads the argument was stated thus:-
"It is submitted .... that the word ' retail and wholesale services relating to'
mean 'services
21
relating to the sale (whether wholesale or retail)', since merely to sell goods
or offer them for sale is not in itself the performance
of a service. The
appellant's marks were registered as service marks and must be interpreted
accordingly. The expressions 'retail'
and 'wholesale' relate to methods of
selling and not to methods of performing services; and it was obviously the
intention to refer
to any services performed in relation to or in connection
with the sale of goods of the types described, whether such sale be wholesale
or
retail."
That the expressions "retail" and
"wholesale" relate to
methods of selling and not to methods of performing
services is clear. I am nevertheless quite unable to
read the specification's introductory phrase "Retail and
wholesale
services" as evincing any intention to refer to
services performed in relation to or in connection with the
sale of goods. The fact that the five marks were
registered as service
marks hardly gives a court licence to
do violence to the precise and
unambiguous terms of the
specification. The argument on behalf of TWH involves
an invitation to rewrite the specification by
22
assigning to it a meaning of which, upon an ordinary
grammatical construction, it is plainly not susceptible.
In my respectful view McCREATH, J was entirely right in
construing "retail and wholesale services" as he did; and
I endorse the learned Judge's further conclusion that such
a specification is contrary to the Act.
In dealing with the facts of the Miele case
McCREATH, J pointed out (at 755D-E) that in the Miele case
this court held that in the context of Euro Electrical' s
business the
repairing of the goods of the Miele company
was merely ancillary to Euro
Electrical's main activity of
selling goods; and that (per CORBETT, JA at 599F):-
"....it is artificial and incorrect to regard the selling of goods, even if they
all emanate from a single manufacturing source,
as the provision of
services."
In what follows I shall refer to the
aforementioned
statement as "the Miele dictum". In the court below it
was contended on
behalf of TWH that, for the purposes of
23
the decision in the Miele case, the Miele dictum was an obiter statement. The
same argument was repeated on appeal. I have already
indicated in some detail
what issues arose in the Miele case. For the reasons cogently advanced at 755E-I
in the judgment of the
court below, I share the view of the learned judge that
the Miele dictum represented an integral and essential part of the reasoning
in
this Court's judgment in that case. Before leaving the Miele case, and in order
to avoid possible future misunderstanding, I would,
however, add the following.
In the course of the judgment in the court below there is a passage (at
754I-755B) in which the learned
judge expresses the view - if I understand him
correctly - that whatever may be the position under the comparable USA
legislation,
the decision of this court in the Miele case would in South Africa
preclude the registration of a service mark in respect of any
business
24
engaged not solely in the production or merchandising of goods, but also in
the rendering of services. The propriety of such a registration
(which would no
doubt hinge on the particular facts of a given case) does not appear to me to
have been an issue in the Miele case.
It seems to me, with respect, that the
passage at 754I-755B may have been stated rather too widely.
If, as I have
already held, the court below correctly construed the specification for the five
marks, that disposes of the appeal
in respect of all the marks except (on the
grounds already stated) the AHB mark. For the reasons which follow, however, it
seems
to me that even if the specification in the instant case had included an
explicit catalogue of those "services" which in its affidavits
TWH claims to
perform in connection with retail and wholesale selling, the intrinsic nature of
these services is such that the specification
would still be
25
contrary to the Act. I say so because in my view the "services" adumbrated
are simply part and parcel of the process of selling. The
services in question
are indissolubly linked to the sales.
This brings me to the Dee case (supra).
It involved three large and well-known chains of retail stores. In their
applications, which
were heard together, each applicant sought registration in
Part B of the register of the name and logo of their stores as service
marks in
Class 42. By agreement, each applicant's specifi-cation of service included
"retail services"; but in addi-tion thereto
each applicant filed a declaration
setting out those services offered to customers and prospective customers which
they considered
to be "retail services."
Objection to the marks was taken
under secs 17(2) and 68 of the UK Act on the basis that the examiner was not
satisf ied that the
applicants used or proposed to use the
26
mark for the purpose of indicating a connection in the
course of business
between themselves and all the relevant
services. At the hearing before the hearing officer who
represented the
Registrar of Trade Marks, the applicants
were represented by counsel. The
hearing officer
sustained the objection. In the course of the written
reasons for his decision the hearing officer stated (at
162, lines 11 - 44):-
"The nub of the objection is the inclusion of 'retail services' within the
specification of services of the application. Now what
is a retail service? My
understanding is that it is the sale of goods indivïdually or in small
quantities to consumers. The
selling of goods is trading and a mark used in
relation to this activity is a trade mark according to the definition of the
latter
in section 68 of the 1938 Act. The applicants, however, are of the
opinion that a retail service consists of more than just the selling
of goods
and list the following as falling within the term:-
(i) Information, advice and professional assistance given in response to
enquiries from customers.
27
(ii) The provision of a selection of goods to meet the customer's possible
needs. (iii) Convenience of location of stores and opening
times and also of
layout of goods in stores. (iv) Preparation of goods to the particular
requirements of customers. (v) Delivery
of goods. (vi) Supply of carrier bags.
(vii) Provision of car parks, toilets, restaurants and creches. (viii) Credit
facilities;
the applicants accept certain credit cards. (ix) Congenial
circumstances including the colour schemes of the stores, provision of
background music, air conditioning.
These facilities and activities are, of course, commonly provided by retailers,
as a means of attracting Customers to one store rather
than another. They are
ancillary to or adjuncts to the conduct of the trading in goods for increasing
the trade in goods, and do
not normally qualify for the purpose of registering a
service mark."
Later in his written reasons (at 164,
lines 11 - 21) the
hearing officer said:-
28
"Mr Hobbs urged me to consider his submissions in the light of the practices in
some other countries, particularly the United States
of America, which do
register service marks in respect of retailing services. The U S Registry
originally did not consider retail
stores to be services but had changed its
thinking and now did register service marks in respect of 'gathering together
various products,
making available a place for purchasers to select goods, and
providing other necessary means for consummating purchases.' This is
of interest
but does not alter the fact that, in my understanding, the law in this country
does not provide f or the registration
of a mark as a service mark unless it is
used in relation to a business which is the provision of a service or services
for payment
(money or money's worth)."
In the
concluding paragraph of his written reasons the
hearing officer stated (at
164, lines 25 -29) that the
applications were refused -
"...under the terms of section 17(2) because marks used in relation to retail
services per se do not qualify for registration as
service marks according to
the description of such marks given in section 1(7) of the Trade Marks
(Amendment) Act 1984 as amended
by section 2(1)(b) of the Patents, Designs and
Marks Act 1986."
29
The applicants in the Dee case appealed to the Chancery
Division of the
High Court. FALCONER, J concluded (at
171, lines 31 - 32) that the hearing officer had correctly
refused each of
the applications and he dismissed the
appeals. In the course of his judgment
the learned judge
observed (at 168, lines 26 - 46):-
"Mr Hobbs for the appellants ....submitted that retail services are the
provision of personal assistance and ready-made facilities
for the selection and
purchase of goods on an 'off the shelf' or 'over the counter' basis. But that
would include shop assistants
answering questions from potential purchasers of
the goods on sale in the shop or store, an essential aspect of retail trading in
those goods by which the shop or store seeks to achieve sales of the goods.
Moreover, that definition is too indefinite to provide
an identifiable
specification of the service or services for a registration so that any person
could know whether he would infringe
or not. It has, of course, long been
settled that to infringe a registered trade mark the alleged infringing use must
be in relation
to goods falling within the specification of goods of the
registration, and the like principle holds for service marks in view of
the
language of section 4(1) of the 1938 Act as
amended.
30
Mr Hobbs further submitted that without 'retailing services' a person wanting
particular goods would have to find a source of such
goods, select those for
purchase, transport and store them as necessary to bring them to the point of
use. But it seems to me that
those are the very activities involved in carrying
on trade in such goods; they are what a trader does in placing goods before the
public as being his goods - cf the words of Lord Wright in Aristoc at page 82,
lines 50 to 51 - activities in which the use of his
mark would bé used as
a trade mark."
The applicants in the Dee case
appealed to the Court of
Appeal. A Bench consisting of SLADE, STOCKER and
BINGHAM,
LJJ dismissed the appeal. In the course of his judgment
SLADE, LJ
pointed out that, apart from anything else, the
applicants failed to clear
the statutory hurdle, in the UK
Act, of showing the provision of services for
money or
money's worth. At 179 (lines 21 to 31) SLADE, LJ
remarked:-
"In the case of each of the applicants there was evidence to the effect that
the cost of providing the facilities and activities comprised
in the 'retail
services' offered by them are passed on
31
to their customers in the prices charged by them f or the goods sold by them in
their stores. This factor was and is the foundation
of their submission that
their 'retail services' are 'provided for money or money's worth.' However, it
could not be contended that
these 'retail services' are charged for as such.
Though intelligent customers would no doubt be aware that they would be ref
lected
in a mark-up of the prices of the goods sold to them. no separate charge
would be made in respect of them. And indeed some potential
customers may avail
themselves of the facilities for selection of goods offered in the applicants'
stores without in the event effecting
any
purchase."
Nor, in the view of the learned Lord
Justice, did the
applications satisfy the real rationale of service
marks.
At 180 (lines 28-35) SLADE, LJ said:-
"The broad purpose of the trade mark legislation has been to afford a means of
statutory protection for the goodwill of persons who
trade in goods. The broad
purpose of the new service mark legislation, as I understand it, is to afford a
corresponding means of
statutory protection for the goodwill of persons who
trade in the provision of services. If they are not actually trading in the
relevant services, but the services provided by them are merely ancillary to
their principal trading
activities,
32
I see no reason why the legislature should have intended to give them any
protection."
Later in his judgment (at 181, lines 14
- 24) SLADE, LJ
said the following:-
"We have been referred to several cases where questions have arisen as to
whether applicants can be said to be trading in goods so
as to entitle them to
registration of a trade mark or are merely providing customers with documents in
the course of the supply of
a service : (Compare for example AIRCO Trade Mark
1977 F.S.R. 485
and Bank of America National Trust and Savings Associations
Trade Mark 1977 F.S.R.7 with VISA Trade Mark (supra)). Such cases may
give rise
to nice questions of fact. In my judgment, however, no corresponding questions
of fact arise in the present case. The proposition
that the provision of 'retail
services' will as such support an application for registration as a service mark
is, in my judgment,
untenable. All the constituents of the 'retail services'
relied on must be regarded as ancillary to, indeed as part and parcel of,
the
function of trading in goods."
I conclude my
quotations from what was said by the Court of
Appeal in the Dee case by referring to two brief passages
in the judgments of STOCKER, LJ and BINGHAM, LJ
33
respectively. At 183 (lines 1 to 14) STOCKER, LJ rounded
off his judgment with the following remarks:-
The 'business' of a retailer of goods is not the
provision of the services by
which the sale may
be induced or rendered easier or more agreeable.
The
'business' of the retailer is the sale
itself
Though the definition of 'service mark' does not include the word ' trade' I am
of the view that the expression 'in the course of
business' imports the
conception that the trade of an applicant for a service mark is the 'provision
of services'. Services, therefore,
which are incidental to or an adjunct of
retail sales of goods are not services which it is the business or trade of the
applicant
to provide."
In his concurring judgment
BINGHAM, W (at 183, line 37-
184, line 8) stated:-
"Just as a trade mark gives monopoly rights to one trading in distinctive goods,
so (as it seems to me) a service mark gives monopoly
rights to one who is
trading in distinctive services
I do not, however,
think that a retailer of goods (who may obtain trade mark protection for the
goods he sells) can sensibly be regarded
as trading in the provision of retail
services. Doubtless these applicants, and other retailers,
34
take great care and use much imagination and spend large sums of money to
provide attractive premises and an attractive range of
goods and an attentive
and helpful sales staff and an efficient and convenient selling procedure. But
these services (if one calls
them such) are not services which the retailer
sells as such; they are simply things he does to promote sales and
maximise his profits as a retailer I find
nothing in the Act to suggest that the essentially simple process of selling
goods by retail is to be broken down so as to label
part of the process the
rendering of retail services and the balance the tradings in
goods."
In regard to the significance
of the Dee case to
a resolution of the issues in the present appeal, Mr
Plewman rightly
reminded us that our law governing the
registration of service marks does not
require an
application of the acid-test of the provision of services
"for
money or money's worth" which the UK Act prescribes.
However, the appeal in
that case did not f ail simply
because the alleged services were not
performed for money
or money's worth. Another, and no less decisive factor
in
the dismissal of the appeal, so I consider, was the nature
35
of the relevant services. From the reasoning of the judgments of the Court of
Appeal in the Dee case there may be extracted, I think,
a number of propositions
which are consonant with the Miele dictum and which point to the correctness of
the conclusion reached by
McCREATH, J in the instant case that the
specifications were contrary to the Act. Only three such propositions need here
be mentioned:
(1) Service marks are designed to provide statutory protection for the goodwill
of persons who trade in the provision of services;
(2) The business of a retailer of goods is not the provision of services
calculated to facilitate the sale. The business of a retailer
is the sale
itself.
(3) Services which are purely ancillary or incidental to retail selling are
logically indissociable
therefrom.
36
As to proposition (1) above, although the definition of a "service mark" in
the UK Act does not include the word "trade", STOCKER,
LJ (at 183, lines 10-14)
took the view that the concept of trading was necessarily imported by the
expression "in the course of business."
That our own Act has the same postulate
is made clear by the inclusion of the phrase "a connection in the course of
trade" in para
(a) and likewise the phrase "connected in the course of trade" in
para (b) of the definition of a trade mark. As to that, in my view
the af f
idavits in the present case clearly demonstrate that TWH does not trade in the
provision of services. Turning to propositions
(2) and (3) above, while the Dee
case dealt specifically with "retail" services the legal principles enunciated
in regard thereto
would, as a matter of logic, apply with equal force to
"wholesale" services.
We are indebted to the industry shown by counsel
37
in making available to us, together with the heads of argument, extracts from
American treatises as well as copies of a large number
of decisions in the
courts of the United States of America dealing with the registrability or
otherwise of a broad spectrum of "services."
For purposes of the present appeal
I do not propose to delve into the rich mine of American authority on the point.
Mr Plewman called
our attention to the fact that in the United States the Lanham
Act does not itself differentiate between "primary services" on the
one hand and
"incidental or ancillary services" on the other. It would seem, nevertheless
(see McCarthy, Trademarks and Unfair Competition
2nd ed (1984) vol 1 at p 939)
that the USA Trademark Office is in general somewhat disinclined to regard those
services which are
"commonly incidental" to the production of sale of goods as
constituting services sufficient to justify the registration of a mark
as a
38
"service mark" apart from a trade mark. And according to Callmann, Unfair
Competition, Trade Marks and Monopolies,
4th ed vol 4A at p 93, to qualify as
a service mark for registration the service concerned "must not be wholly
incidental to the advertising
or sale of merchandise." I have already indicated
that in my opinion in the instant case the services which TWH performs are
indissolubly
part of and wholly incidental to its sales, whether retail or
wholesale.
To sum up so far: by virtue of the provisions of sec 33(1) of the
Act the five marks had originally been entered on the register without
sufficient cause and they represented in law entries wrongly remaining on the
register.
As already pointed out the AHB mark was protected by the provisions
of sec 42 of the Act since a period of seven years had elapsed
since the date of
registration
39
thereof. Such protection would not have been accorded to the AHB mark if it
offended against the provisions of sec 16 (prohibition
of registration of
deceptive matter, etc.) McCREATH, J found it unnecessary, however, to consider
whether sec 16 was applicable.
The learned judge held (at 756C - 757A) that in
any case all five marks were liable to expungement by virtue of the provisions
of
sec 36(1)(a) of the Act (registration without any bona fide intention of use
in relation to the services and absence in fact of such
use). His reasons were
these:-
(1)
the use by TWH of the marks
as the name of its hardware store was not use as a trade
mark;
(2)
TWH's use of the marks in relation
to or in connection with the sale of goods by wholesale or retail did not
constitute use as a "service
mark";
40
(3) TWH's use of the mark in relation to other
services ancillary to the sale of goods was also
not use in relation to services.
Suffice it to say
that also on this part of the case I find myself in respectful agreement both
with the findings of fact and the
legal conclusions stated in the course of a
concise and closely-reasoned judgment.
The appeal is dismissed with costs.
G G HOEXTER,
JA
E M GROSSKOPF, JA )
MILNE, JA )
NICHOLAS, AJA ) Concur
GOLDSTONE,
AJA )