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[1993] ZASCA 90
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Frank & Hirsch (Pty) Ltd. v A Roopanand Brothers (Pty) Ltd. (580/91) [1993] ZASCA 90; 1993 (4) SA 279 (AD); [1993] 2 All SA 521 (A) (2 June 1993)
CASE NO 580/91
IN THE SUPREME COURT OF SOUTH AFRICA
(
APPELLATE DIVISION
)
In the appeal of:
FRANK & HIRSCH (PROPRIETARY) LIMITED
APPELLANT
versus
A
ROOPANAND BROTHERS (PROPRIETARY)
LIMITED
RESPONDENT
CORAM
: CORBETT CJ, BOTHA, GOLDSTONE, JJA, NICHOLAS et HARMS, AJJA.
DATE OF HEARING
: 3 May 1993
DATE OF JUDGMENT
: 2 June 1993
JUDGMENT
CORBETT
CJ / /
CORBETT
CJ:
This case is concerned with what has become known as "parallel importation"
and it represents an attempt to prevent this by means
of the law of copyright.
In the Court a quo, the Durban and Coast Local Division, the attempt failed. The
appeal to this Court seeks
the reversal of the decision of that Court, which has
been reported (see
Frank & Hirsch (Pty) Ltd v A Roopanand Brothers (Pty)
Ltd
1991 (3) SA 240
(D & CLD).
The appellant, a South African company
with its principal place of business in Johannesburg, trades as an importer and
distributor
of, inter alia, blank audio and video cassette tapes. Since 1974
appellant has acted as the sole and exclusive importer and distributor
of blank
TDK audio recording tapes ("TDK tapes") in terms of a distributorship agreement
entered into between appellant and the manufacturer
of TDK tapes, TDK
Electronics Co Ltd
3
of Japan ("TDK Electronics"), and the exporter of these tapes,
Furukama Trading Company Limited, of Japan. Included in this agreement
(which I
shall call "the distributorship agreement") are clauses in terms of which (i)
TDK Electronics grants appellant the right
to be the exclusive distributor of
TDK tapes in the Republic of South Africa and in certain other Southern African
states (referred
to as the "Territory") and (ii) appellant undertakes not to
sell sound recording tapes or similar products of "other parties" in
the
Territory.
At the time of the proceedings in the Court below the
distributorship agreement was still in operation. It is common cause that TDK
tapes are amongst the most famous and popular makes of blank audio cassette
tapes in the world. Since 1974 appellant has established
throughout South Africa
a network of dealers to whom it supplies TDK tapes; and these tapes are stocked
by many retail outlets in
South Africa. They are one of
4
the best selling brands of blank audio cassette tapes in South Africa.
Appellant spends considerable sums of money each year on advertising
and
otherwise promoting the sale of TDK tapes and thereby establishing and
main-taining the pre-eminence of these goods in the south
African market. The
importation and distribution of TDK tapes has become one of the major areas of
appellant's business.
The respondent is also a South African company and it has its principal place
of business in Durban. Its trading activities comprehend
the importation into
and sale in South Africa of blank audio cassette tapes, including TDK tapes. It
appears from the answering affidavit
filed cm behalf of respondent in the Court
a quo that respondent obtains its supplies of TDK tapes from Dialdas and Co of
Singapore,
which in turn acquires them from Hock Cheong and Co, also of
Singapore and the authorized dealer appointed by TDK Electronics in
Singapore.
5
TDK Electronics supplies these goods to Hock Cheong and Co
without any restrictions on re-sale; and Hock Cheong and Co's supply of
the
goods to Dialdas and Co and the latter's supply of the goods to respondent are
similarly free of restriction. It appears that
it would be unlawful in terms of
Japanese law for TDK Electronics to impose contractual restrictions on the
re-sale of TDK tapes
supplied by it to its distributors.
The appellant has
for some years been very concerned about the trading activities in South Africa
of respondent in regard to the importation
and sale of TDK tapes, which it terms
"parallel importation". It avers that a parallel importer is in the nature of a
"parasite"
in that he imports goods for which a ready demand has already been
established by the regular and authorized distributor. The "parasite"
slur is,
needless to say, strenuously denied by respondent.
In 1986 and after a
running dispute for some years appellant instituted an action against respondent
in the Durban and Coast Local
Division, claiming that respondent's activities
constituted the infringement of the mark "TDK" and a certain device mark (which
appears
to represent a diamond with its different facets - "the diamond device")
on the cassette tapes, which were both registered trade
marks; or alternatively
that such activities amounted to the contravention of certain provisions of the
Merchandise Marks Act 17
of 1941. The action was heard by Page J, who dismissed
it with costs (see
Frank & Hirsch (Pty) Ltd v Roopanand Brothers
1987
(3) SA 165
(D & CLD).
Thereafter appellant and TDK Electronics considered other ways and means of
preventing the parallel importation of TDK tapes by the
respondent. It was
eventually decided that in order to give effect to the
7
exclusivity of the distributorship agreement TDK Electronics
would assign to appellant all its copyright in the literary and/or artistic
works comprised in the get-up and trade dress of TDK tapes. This was done by
means of a written deed of assignment of copyright entered
into between the
parties in Japan on 4 June 1987. The preamble to the deed recorded that TDK
Electronics was the owner in South Africa
of copyright in -
".... certain original artistic and literary works within the meaning of the
Copyright Act of the Republic of South Africa No. 98
of 1978 in the nature of
packaging, inserts, covers and the like for audio cassette and video cassette
tapes, true copies of which
works are annexed hereto marked 'A1 - A27'
"
and that it might become the owner of
the South African copyright in -
8
"further artistic and literary works of this nature to be made in the
future."
(Annexures A1 - A27 consist of
a series of colour photographs depicting the different aspects of a number of
different TDK audio and
video tapes and showing not only the outward get-up, but
also what are termed the "inserts".) In the preamble- all this was named
"the
copyrighted works". The deed further provided that TDK Electronics assigned and
transferred to appellant -
"...the full and complete South African
copyright and all its right, title and interest in and to the copyrighted works
for the full duration of the term
thereof."
Shortly thereafter, on 16
July 1987, appellant's attorneys wrote a letter to respondent setting out the
full facts of the matter,
including those relating to
9
their exclusive distributorship, the nature of the packaging of
the TDK tapes, their claim that the written and pictorial material
included on
such packaging constituted literary and/or artistic works in terms of the
Copyright Act 98 of 1978
("the
Act") and
the assignment to appellant of the
South African copyright in such material by the owner thereof, TDK Electronics,
for the full duration
of the term thereof, and explaining in detail why the
activities of respondent in importing and trading in TDK tapes constituted
an
infringement of appellant's copyright. The letter further demanded that
respondent refrain from continuing to do so, on pain of
legal action.
Respondent's reply was non-committal and, it appears, it continued to trade
as before. On 15 December 1987 appellant's attorneys again
wrote to respondent
saying that they had received confirmation that respondent had sold in South
Africa a TDK tape
10
manufactured after the copyright had been assigned to
appellant and threatening legal action unless there was compliance with the
requirements of the letter of 16 July 1987.
In January 1988 TDK Electronics
adopted a new get-up for its TDK D60 audio cassette tapes, one of the best
selling products of the
range of TDK tapes. I shall later describe this new
get-up which replaced the then-existing get-up for these tapes. In September
1988 a supplementary deed of assignment was entered into between TDK Electronics
and appellant. The preamble to this deed refers
to the deed of assignment of 4
June 1987 and recites that TDK Electronics has adopted a new trade dress for its
audio and video cassette
tapes. In the body of the deed it is provided that the
artistic and literary works embodied in this new trade dress is comprised
in
the:"further artistic and literary works of this nature to be made in the
future", referred to in the
11
preamble to the original deed; and that the original deed
applies in all respects to the copyright in this new dress.
On 6 October 1988
appellant's attorneys addressed a further letter to respondent explaining that
the new get-up adopted by TDK Electronics
for its blank cassettes was covered by
the assignment of copyright in appellant's favour and that accordingly the
importation, selling
and/or distribution by respondent of TDK tapes in the new
get-up would constitute infringement of appellant's copyright. The letter
ends
with a warning that if respondent should be found to be doing this, infringement
proceedings would be instituted forthwith.
Thereafter appellant was provided with evidence that respondent was
continuing to sell TDK D60 audio tapes. And in May 1990 appellant
instituted
motion proceedings in the Court a quo claiming an interdict and
12
orders for delivery up, an account of profits or,
alternatively, for postponing the question of damages to a date to be arranged,
and costs. The matter came before Booysen J who, for reasons which I shall later
elaborate, dismissed the application with costs,
but granted leave to appeal to
this Court.
I turn to examine the legal basis of appel-lant's case. The
Act
was
extensively amended by the Copyright Amendment Act 125 of 1992, but it is
common cause that this case must be decided on the basis
of the law as laid down
by the Act prior to the 1992 amendments. Sec 23 (1) and (2) provided as
follows:
"23. (1) Copyright shall be infringed by any person, not being the owner of
the copyright, who, without the licence of such owner,
does or causes any other
person to do, in the Republic, any act which the owner of the copyright may
authorize.
(2) Without derogating from the generality of subsection (1),
copyright
13
shall be infringed by any person who, without the licence of the owner of the
copyright and at a time when copyright subsists in
a work
-
(a)
imports an article into the Republic for a purpose other than for
his private and domes-tic use;
(b)
sells,
lets, or by way of trade offers or exposes for sale or hire in the Republic any
article; or
(c)
distributes in the Republic
any article for the purposes of trade, or for any other purpose, to such an
extent that the owner of the
copyright in question is prejudicially
affected,
if to his knowledge the making of that article constituted an infringement of
that copyright or would have constituted such an infringement
if the article had
been made in the
Republic."
("Republic", of course,
means the Republic of South Africa - sec 2 of the Interpretation Act 33 of
1957.) The appellant relies upon
infringement in terms of sec
14
23(2) - sometimes termed "secondary" or "indirect"
infringement - and its claim relates specifically to the new get-up of the TDK
D60 audio cassette tapes. (I shall call these "the tape (or tapes) in issue".)
This get-up is illustrated by photographs of the two
sides of the tape in issue
which constitute annexures EG3 and EG4 to the founding affidavit. In addition,
we have been provided (as
was the Court a quo) with a sample of such a tape.
Appellant avers that this get-up embodies artistic and/or literary works within
the meaning of those concepts in the Act.
In terms of sec 24(1) of the Act
infringements of copyright are actionable at the suit of the "owner of the
copyright". Sec 21 defines
in whom ownership of copyright vests. And sec 22
deals, inter alia, with assignment of copyright. It provides that copyright is
transmissible
as movable property by assignment; that an assignment of copyright
may be limited so as to apply to
15
some only of the acts which the owner of the copyright has the
exclusive right to control, or to a part only of the term of the copyright,
or
to a specified country or other geographical area; and that no assignment of
copyright shall have effect unless it is in writing
signed by or on behalf of
the assignor. The effect of a valid assignment is to vest in the assignee
ownership of the copyright in
the work or works covered by the assignment and
entitles the assignee to sue for infringement of such copyright (see
Galago
Publishers (Pty) Ltd and Another v Erasmus
1989 (1) SA 276
(A), at 279 F-G;
Dean,
Handbook of the South African Copyright Law
, at 1-35).
In the present case it is not in dispute that in terms of sec 21 ownership of
whatever copyright there is in the get-up of the tapes
in issue originally
vested in TDK Electronics; that this copyright in so far as it obtained in South
Africa, was validly assigned
to appellant; and that such copyright still
subsists. In order
16
to complete its cause of action in terms of sec 23(2)
appellant had to establish also -
(a) that respondent either imported into South Africa the tapes in issue for a
purpose other than for his private or domestic use,
or sold, let or by way of
trade offered or exposed for sale or hire in South Africa the tapes in issue, or
distributed in South Africa
the tapes in issue for the purposes of trade or for
any other purpose to such an extent that the owner of the copyright in question
is prejudicially
affected;
(b)
that to respondent' s knowledge the making
of
the tapes in issue either -
(i) constituted an
infringement of appellant's copyright, or (ii) would have constituted such an
infringement if the article had been
made in South Africa; and
17
(c) that respondent had no licence from the owner of the copyright to do what he
did.
It is not disputed that the evidence of the
activities of the respondent in importing and marketing the tapes in issue
established
one or more of the requirements of (a) above. As to (b), appellant
relied on alternative (ii). This aspect of sec 23(2) was considered
by Goldstone
J in the case of
Twentieth Century Fox Film Corporation and Another v Anthony
Black Films (Pty) Ltd
1982 (3) SA 582
(W). In this case the Court held:
(1) that the words in sec 23(2) -
". . . . would have constituted such an infringement if the article had been
made in the Republic"
18
applied, and could only apply, to an imported article, i e one not made in South
Africa;
(2) that the hypothesis that the Court is required to make in terms of these
words is that the imported article was made in South
Africa by the person who
made it in fact; and
(3) that if that person could lawfully have made it in South Africa, there is no
infringement of copyright.
(See the judgment at 589H
- 594H.) It seems to me, with respect, that these propositions are a correct
interpretation of the relevant
words of sec 23(2). It follows, as a logical
corollary, that, if the person who made the article could not lawfully (i e
without
infringing copyright) have made it in South Africa, a person who, with
the requisite knowledge and without licence, either imports
the article into
South Africa or sells or distributes it here commits an infringement of
19
copyright in terms of sec 23(2): see
Paramount Pictures
corporation v Video Parktown North (Pty) Ltd
1983 (2) SA
251
(T), at
261B-F; also Dean, op cit, 1-23/4; Dean in an article entitled "Parallel
Importation - Infringement of Copyright",
(1983) 100 SAW 258
, at 261-71.
In
applying these statutory provisions, thus interpreted, to the facts of the
present case the cardinal questions which must be asked
are: whether, if TDK
Electronics had made the tapes in issue in South Africa, this would have
constituted an infringement of appellant's
copyright in the get-up of the tapes;
if so, whether respondent knew this; and whether respondent acted without the
licence of the
owner. The answer to the first of these questions depends in turn
on whether there was in the get-up of the tapes in issue subject-matter
enjoying
copyright protection. It is to this question that I now turn.
20
Annexures EG3 and EG4 and the sample handed in show that the
tape in issue is permanently encased in a transparent plastic cassette
into
which is built portions of the mechanism. When packed and ready for sale the
cassette is enclosed in a transparent plastic container
the two halves of which
are hinged together and which opens and shuts to a slight pressure of the
fingers. This container is virtually
devoid of embellishment. Inside the
container there are placed pieces of paper called "inserts". The container
itself is enclosed
in a cellophane wrapper. In its fully-packed state the
cassette (in its container) measures about 11 cm x 7 cm and is about 1,5 cm
thick. In determining whether there is subject-matter in the get-up of the tape
in issue I shall concentrate on the wrapper and the
inserts. For reasons which
will emerge later it is not necessary to deal with what appears to be printed on
the sides of the cassette
itself.
21
One side of the cassette, when packed and enclosed in its
wrapper, is obviously the one which would normally be uppermost on display
("the
obverse side"). The upper portion of the obverse side of the wrapper consists of
a transparent panel through which portions
of the tape and the cassette
mechanism are visible. The rest of this side is opaque and is divided into a
number of rectilinear strips
or panels of different colours -white, black, red
and gold. On the transparent panel appear (in white) the aforementioned diamond
device, the mark TDK and the words "Reliable cassette mechanism". "D60" (the "D"
in white and the "60" in green) is printed against
the background of a black
panel and other techni-cal information appears on a white panel. The reverse
side of the wrapper has a
red background on which appear, inter alia, the
diamond device, the TDK mark, D60 (in white) on a small black panel, a narrow
gold
panel on which are printed the words "Dynamic Cassette Low Noise
22
High Output", material descriptive and laudatory of the
cassette, printed in black, in English, German and French, and various other
inscriptions. The designs and colouring on obverse and reverse sides of the
wrapper are carried over onto the edges of the cassette,
upon which there are
also various inscriptions, including the diamond device and the TDK mark.
The
two inserts are somewhat different from one another. The one, made of thick,
stiff paper is folded to fit into one portion. of
the hinged container ("the
first insert"). When the container is closed (whether empty or containing the
cassette) part of this insert
forms a series of strips or panels, coloured
white, grey, black, red and gold which are visible oh portion of the obverse
side and
also on the bottom edge, after the wrapper has been removed. The rest
of the insert is only visible on the obverse side when the
container is empty.
At the top of it is a strip coloured pink on
23
which appear in red lettering certain inscriptions and below
that a blank space with horizontal dotted lines. The purpose of this
part of the
insert was not explained to us, but I would infer that it is to provide the user
of the tape with a convenient table
upon which to list what he has recorded on
the tape. On the reverse side is visible, when the wrapper is removed and
irrespective
of whether the container is empty or not, a similar table. The
other insert ("the second insert") consists of an oblong piece of
paper. On the
one side (colours white and red) are a number of strip (pull-off) labels; and on
the other a warranty relating to the
cassette in English, German and French
(black print against a white background). The original author of the get-up of
the tapes in
issue, an employee of TDK Electronics named Nobora Yemura, did not
claim to have made or devised the second insert and it can consequently
be
ignored. In terms of the Act copyright may exist in
24
respect of, inter alia, original "literary works" and
"artistic works". These are defined in the Act as follows:
" 'artistic work' means, irrespective of
the artistic quality thereof
-
(a)
paintings, sculptures, drawings, engravings and
photographs;
(b)
works of architecture, being
either buildings or models of buildings; or
(c)
works of artistic craftmanship, or works of craftmanship of a
technical nature, not falling within either paragraph (a) or
(b);
"literary work" includes,
irrespective of
literary quality and in whatever mode or form expressed
-
(a)
novels, stories and poetical works;
(b)
dramatic works, stage directions, cinematograph film scenarios and
broadcasting scripts;
(c)
textbooks,
treatises, histories, biographies, essays and
articles;
(d)
encyclopaedias and
dictionaries;
(e)
letters, reports and
memoranda;
25
(f)
lectures,
addresses and sermons; and
(g)
written tables
and compilations."
Applying these definitions I am
satisfied that the whole of the wrapper constitutes "artistic work" within the
meaning of the statutory
definition. As this definition indicates, artistic
quality is not a necessary requirement. Nevertheless, 1 am satisfied that
considerable
design and draughting skill has gone into the production of this
wrapper. The obverse side has a lay-out which is attractive, eye-catching
and
colourful; and, though less skill would appear to have been required to produce
the reverse side, it, too, shows evidence of
artistic quality. Moreover, it is
interesting to note that the English Courts have recognized items such as labels
as having the
necessary qualities to constitute artistic work: see
Charles
Walker & Co Ltd v The British Picker Co Ltd
[1961] RPC 57
;
Tavener
Rutledqe Ld v Specters Ld
[1959] RFC 83. In the
Charles Walker
case
26
the label, as illustrated on page 58 of the report, appears to
have substantially less artistic merit or quality than either side
of the
wrapper here in issue.
At this point I should make it clear that appellant
disavows any copyright in the diamond device and the TDK mark individually and
dehors the wrapper or the insert as a whole. These two features had originally
been made by someone other than the author of the
wrapper and insert and were
incorporated in the wrapper and the insert by the author thereof.
The claim
that the wrapper includes literary work is perhaps more debatable, but in view
of the finding in respect of artistic work
it is not necessary to pursue this
aspect. And, I might add, I did not understand respondent's counsel to seriously
dispute the proposition
that the wrapper constitutes or contains artistic work.
Nor did he suggest that this artistic work was not original; "original" in
this
context
27
meaning that the work should emanate from the author himself
and not be copied (see
Klep Valves (Pty) Ltd v Saunders Valve Co Ltd
1987
(2) SA 1
(A), at 22H - 23B).
Turning to the first insert, I am of the view
that, mainly on the strength of the portion displaying the. coloured strips and
panels,
this item of get-up has artistic subject-matter. Again it is not
necessary to consider literary subject-matter. Nor is it necessary
to deal with
the inscriptions printed on the cassette itself. As far as can be ascertained
this is not separable from the cassette.
Assuming at this stage that
appellant has shown infringement of copyright, it will be entitled to an
interdict against respondent
on the strength of, and in respect of, the wrapper
and the first insert and will be entitled also to the delivery up of these
items.
But it will not be entitled, and this is conceded by appellant, to any
such orders in respect of the cassette
28
tape itself. In view of the impossibility of separating the
inscriptions on the cassette from the cassette it is not feasible to grant
any
such orders in regard to the inscriptions.
I hold, accordingly, that the
get-up of the tapes in issue did contain subject-matter for copyright
protection. The assignment of
the South African copyright in respect of the
get-up of the tapes in issue vested in appellant exclusively all the rights
comprehended
by the South African copyright and divested TDK Electronics
thereof. It follows that, hypothetically, the making in South Africa
of the
get-up of the tapes in issue by TDK Electronics would have constituted an
infringement of appellant's copyright.
The next element required to establish appellant's cause of action is
knowledge of this on the part of respondent. In the case of
Gramophone Co Ltd
v Music Machine (Pty) Ltd and Others
1973 (3) SA 188
(W)
29
"knowledge" in the similar sections (secs 17(2) and 17(3) ) of
the previous Copyright Act 63 of 1965 was held to mean notice of facts
such as
would suggest to a reasonable man that a breach of copyright law was being
committed (see p 207 F-G); and also
Paramount Pictures Corporation v Video
Parktown North
(supra) at 261G; and the discussion in
Copinger and Skone
James on Copyright
, 13 ed, p 140.) It is not necessary to decide whether
this formulation is precisely correct or adequate for, in my view, appellant,
by
means of its letters of 16 July 1987 and 6 October 1988, placed before
respondent sufficient facts from which it could and should
have appreciated that
its commercial activities relating to the tapes in issue constituted
infringement of appellant's copyright.
And it would have been no answer for the
respondent to say that although it knew all the relevant facts it nevertheless
believed,
as a matter of law, that it was committing no infringement
(
Copinger and
30
Skone James on Copyright
, op cit, p 241;
Sillitoe and Others v
McGraw-Hill Book Company (UK) Ltd
[1983] FSR
545, at 557). None of this appeared to be contested by the respondent in this
Court.
Subject to the question of licence (with which I shall deal later) the
appellant would thus appear to have established all the requirements
of a cause
of action in terms of sec 23(3) of the Act. It was never-, theless non-suited in
the Court a quo. The Court's reasons
for doing so appear from the reported
judgment, pages 244 I - 246 D. Here the learned Judge a quo commences his line
of reasoning
by focussing on the words in the section which relate to an article
the making of which would have constituted an infringement of
copyright if the
article had been made in South Africa (at 244 I). Having referred to the
purposes of the law of copyright and certain
provisions of the Act he concludes
that copyright in a literary or artistic work is infringed by
31
making an article which is a reproduction, publication or
adaptation of the work without licence of the owner of the copyright; or
by
importing such an article for the purposes of trade. The learned Judge then
poses the question (at 245 H-I):
"What is the position, though, if a physical reproduction of the work by
accessio becomes part of a principal thing so that the thing
thus made is not a
reproduction, publication or adaptation of the work but a different thing
altogether and what if such a physical
reproduction of the work together with
other physical things by specificatio becomes a new thing or
article?"
He answers this question by
stating the following (at 245 I to 246 C):
"It seems to me that the answer to this question must be that it is not an
article the making of which constitutes an infringement
if only the making of
an
32
accessory part of the article which has been made constituted an
infringement. If the Legislature had meant to refer to such articles,
it should
have said so, e g by referring to an article or any part thereof. To hold
otherwise would mean that the importer of a car
which has components such as
shock absorbers of another manufacturer fitted, upon which literary or artistic
work is printed or painted,
could be infringing copyright and be prohibited from
importing the car.
The remedies of the Copyright Act could not possibly have
been meant to apply to such a situation. The short answer would be that
the car
is not an article the making of which infringed copyright. The car would not be
a copy, reproduction or adaptation of the
work. The reproduction work would
merely be an accessory component thereof.
It seems to me that these cassette
tapes are also not
articles the making of
which would have constituted infringement
of
copyright. The physical reproductions
of the artistic or literary works comprising the get-up were indeed
33
accessory to the principal things, i e the cassette tapes and by accessio or
specificatio became part of the cassette tapes, the
articles in
question."
Respondent's counsel
supported this line of reasoning. Indeed, despite the fact that respondent
raised a number of other defences
on the papers and in argument before the Court
below, this was virtually the only ground upon which respondent's counsel
resisted
the appeal in this Court. He did also argue the question of licence,
but without much conviction.
I am, with respect, unable to agree with the
reasons and decision of the Court a quo. The reliance on the concepts of
accessio and
specificatio, is, in my view, misplaced. In
Wille's Principles
of South African Law
, 8 ed, the section edited by Prof C G van der Merwe
contains the following definitions of accession and specification:
34
"Accessio is a method of acquiring ownership by a person in a thing by virtue of
it being added to, or incorporated with, a thing
belonging to himself" (at
285).
"Specification occurs when a person creates a nova species (a new product) out
of materials which belong wholly or partly to another
without there being any
legal relationship between the parties. The maker only becomes the owner of the
new product if it cannot
be reduced to its original form" (at
287).
(See also
Aldine Timber Co v
Hlatswayo
1932 TPD 337
, at
341.) I fail to see how these principles which
deal with the passing of ownership in corporeal property have any relevance to
the
present situation. The owner of copyright in certain subject-matter holds a
bundle of incorporeal rights created and regulated by
statute. The statute
determines when and how these rights come into existence, how they may be
transferred and when and
35
how they terminate. Respondent's counsel conceded that he knew
of no authority which suggested that the principles of accessio and
specificatio
apply to incorporeal rights; and I would be surprised if there were any. In any
event, I do not see how common law rules
regarding the passing of ownership
(even if applicable on the facts) could displace the specific provisions of the
statute governing
the law of copyright. And finally the reasoning of the Court a
quo, as I understand it, relies upon the principles of accessio and/or
specificatio in order to establish not that the copyright in the wrappers was
transferred to someone else when the cassettes were
encased in them, but that
it, somehow, ceased to exist. This, in my view, is wholly contrary to the
provisions of the Act, which,
as I have stressed, regulates how and when
copyright terminates. It seems to be an inescapable consequence of the decision
of the
Court a quo that wherever the physical
36
reproduction of a work in which A has the copyright becomes
part of a "principal thing" (which itself is either not the subject-matter
of
copyright or over which A has no copyright) A loses his copyright and can have
no claim for its infringement; and that this principle
would apply to both
direct and indirect infringement. If this were so, the protection afforded to an
author by the copyright law
would be nullified in a number of important
instances. Thus, for example, an artist who painted an original artistic work
would,
presumably, not be entitled to sue under either part of sec 23 if a
reproduction of that painting were used without permission as
a dust-cover for,
or an illustration in, a book of which someone else was the author. Similarly, a
writer or poet would have no claim
against a publisher who unauthorizedly
included his short story in a collection of short stories or his poem in an
anthology of poetry.
Many other examples spring to mind.
37
That this is not the law is well illustrated by two English cases and an
Australian one. The first is
Tavener Rutledge Ld v Specters Ld
, supra. In
that case plaintiff and defendant both sold sweets (particularly fruit drops) in
tins. In each case the top of the tin
_ was decorated by a coloured drawing
depicting fruitdrops and a central panel which featured the producer's name, the
name of the
product, viz "fruit flavoured drops", and certain other information.
In an action in which the plaintiff claimed, inter alia, infringement
of
copyright, the Court held that defendant's label so closely resembled
plaintiff's that it constituted a copy thereof and the copyright
claim
succeeded. The essential facts of that case are very similar to those in the
present case.
In the second case,
Moffat and Paige Limited v George Gill and Sons
Limited and Francis Marshall
(1902) 86 L.T. 465
(CA), the plaintiff was the
publisher of an
38
annotated edition of Shakespeare's "As You Like It". The
defendant published an annotated edition of the same work. Plaintiff sued
successfully for infringement of copyright, the Court finding that defendant's
publication was substantially a copy of plaintiff's.
It was also held that the
plaintiff's work was subject-matter of copyright. Clearly this copyright applied
only to the author's annotations,
since as Collins MR pointed out (at 470) it
was open to anybody to compile an edition of "As You Like It". The annotations
were obviously
accessory to the main work, but that did not prevent there having
been an infringement of copyright.
In the Australian case,
R A & A Bailey & Co Ltd v Boccaccio Pty
Ltd and Others; R A & A Bailey & Co Ltd v Pacific Wine Co Pty Ltd
(1986) 6 IPR 279
, an instance of parallel importation, the product in question
was a liqueur manufactured in the Republic of Ireland, called "Bailey's
Original
Irish Cream". It was marketed in a
39
distinctive bottle and part of the get-up was a label which
contained various inscriptions and a picture of a country scene. In an
action in
the Supreme Court of New South Wales it was not disputed that there was
copyright in the label as being an artistic work
and it was so found. The
defendant raised other defences (which failed), but nowhere was it suggested
that because the label was
accessory to the bottle of liqueur no copyright in
the label existed.
The example of the motor car and its shock absorbers used
by the Judge a quo to reinforce his reasoning is, in my view, unhelpful.
From a
practical point of view I find it very unlikely (i) that printing on a shock
absorber would constitute a literary or an artistic
work; and (ii) that, if it
did, the owner of the copyright would not have licensed its use; and (iii) even
assuming he had not, that
the importer would have
40
knowledge of all this. If, contrary to the probabilities,
these circumstances all co-existed, then, subject to the de minimis principle,
the importer might have a problem. In other words, the example does not
demonstrate the correctness of the approach adopted by the
Judge a quo.
It
remains to deal briefly with the questions of licence and estoppel raised by
respondent and, as I have indicated, argued but faintly
before us. Reduced to
its essentials, respondent's argument is that TDK Electronics labelled and
packaged the tapes without any restriction
on resale and the subsequent lack of
restriction on resale to, inter alia, a South African importer by the person
first purchasing
them, occurred to the knowledge of and without action by
appellant against TDK Electronics; that this constituted an unconditional
consent by conduct on the part of the appellant to (and thereby an implied
licence for) the sale of the goods in
41
that form, so packaged and labelled; and that this consent
extended to resales. There is no substance in this argument. When asked
what
action appellant could have taken against TDK Electronics, respondent's counsel
was unable to give an adequate reply. Moreover,
after the assignment of the
copyright and by means of its letters of 16 July 1987 and 6 October 1988
appellant made it abundantly
clear to respondent that the continued importation
and sale of the tapes in issue would infringe its copyright. This would have
dispelled
any notion of an implied licence. And, of course, after the assignment
only appellant could grant a licence in regard to South Africa.
Respondent's counsel conceded that if the implied licence argument failed,
the one based on estoppel could not succeed.
For these reasons, I hold that appellant did establish infringement of its
copyright in the get-up
42
(comprising the wrapper and the first insert) of the tapes in
issue and that its appeal must be allowed. Appellant is entitled to
an interdict
and delivery up of the wrappers and inserts which came into its possession after
it received the letter of 6 October
1988. Appellant also claimed relief by way
of an account of profits but during the hearing of the appeal this was wisely
abandoned.
In appellant's notice of motion the prayers for an interdict and for an order
for delivery up are directed against "respondent, its
servants and agents".
Orders of this nature are sometimes, but not always, sought and granted by the
Court in copyright and other
intellectual property cases (see, for example,
Tie Rack plc v Tie Rack Stores (Pty) Ltd and Another
1989 (4) SA 427
(T),
at 451 F;; but cf
Paramount Pictures Corporation v Video Parktown North (Pty)
Ltd
, supra, at 263 D and G) . In so far as an order in this form refers
to
43
"servants" it seems to me to be redundant, particularly in the
case of a limited liability company which perforce acts to a great
extent
through its servants. The unqualified reference to "agents" is anomalous in that
such agents are not before the Court and
consequently the order would not be
binding on them. These points were discussed in the speech of Lord Uthwatt in
Marengo v Daily Sketch and Sunday Graphic Ltd
[1948] 1 All ER 406
(HL),
at 407 (a passing off case) with reference to the English practice of granting
an injunction against "the defendants, their
staff servants and agents". He
pointed out that the reference in an order to staff, servants and agents could
not bind such persons,
but was merely a warning to them against possibly
committing contempt of court by knowingly assisting the defendant in a breach of
the injunction. The learned Law Lord considered that this form of order was open
to objection and concluded (at 407 H):
44
"I suggest (my suggestion is, perhaps, a one-sided compromise with tradition)
that the judges might well consider whether injunctions
should not assume the
form of restraining 'the defendants by themselves their servants workmen and
agents or otherwise' from committing
the prohibited acts. In the present case
the defendants are a limited company and can act only through others. I invite
your Lordships,
therefore, to consider whether the injunction here should not
take the form of restraining the 'defendants by their servants workmen
agents or
otherwise' from commission of the acts to be
enjoined."
(See also Copinger, op cit,
par 11-63, p 341.)
My researches indicate that in this country
there is no established tradition regarding the form of
such orders and,
in my view, it is appropriate to discard
what is in truth a misleading and
ineffectual formula and
simply to grant the order, whether it be for an interdict
45
or delivery up, as against the defendant or respondent, as the
case may be.
Respondent's counsel contended that the failure of the argument
on an account of profits merited a special order in regard to costs
should the
appeal succeed. I cannot agree. The appellant has achieved substantial, indeed
almost overwhelming, success and it is
entitled to its costs of appeal in
full.
The following order is
made:
(1) The appeal is allowed with costs, including those occasioned by the
employment of two counsel.
(2) The order of the Court a quo is set aside and the following order is
substituted:
"It is ordered:
(a) That respondent is interdicted from infringing the applicant's copyright
in the get-up (consisting of the cellophane wrapper and
the first
46
insert) of TDK D60 audio cassette tapes (hereafter referred to
as the "subject works") by:
(i) importing into the Republic of South Africa audio tapes in the get-up of
which copies of the subject works appear; and/or
(ii) selling, exposing for sale or distributing for trade audiotapes in the
get-up of which copies of the subject works appear;
(b)
that respondent deliver up
to the applicant for destruction all copies of the subject works which are in
their possession or under
their control; and
(c)
that respondent pay the costs of suit, including the costs of two
counsel."
M M CORBETT
BOTHA JA) GOLDSTONE JA) NICHOLAS AJA) CONCUR HARMS AJA)