Brief Summary

Trade Marks — Removal from register — Non-use — Appellant's trade mark "Valentino" registered since 1973, subject to removal application by first respondent on grounds of non-use — First respondent's locus standi questioned as he did not trade under the mark but through various companies — Court held that first respondent was not a "person aggrieved" as required by s 36(1)(b) of the Trade Marks Act 62 of 1963, leading to the dismissal of the appeal against the removal order.

Comprehensive Summary

Summary of Judgment

1. Introduction

The proceedings were an application for the removal (expungement) of a registered trade mark from the South African register on the basis of non-use under section 36(1)(b) of the Trade Marks Act 62 of 1963. The matter ultimately came before the Supreme Court of Appeal as an appeal against an order of the Transvaal Provincial Division.

The appellant was Valentino Globe B.V. (a Dutch company and the registered proprietor of the trade mark VALENTINO). The first respondent was Anthony Howard Phillips, who had sought registration of the same mark in his own name and had brought the removal proceedings. The second respondent was the Registrar of Trade Marks.

The procedural history was unusual in its length. Although the removal proceedings were initiated in early 1980, the matter was only enrolled for hearing in the court a quo in 1995. In the Transvaal Provincial Division, the parties placed an agreement before the court regulating the approach to two preliminary issues and the consequences if those issues failed. After the preliminary points were dismissed, and because a Full Court decision was regarded as binding, the court a quo ordered the trade mark removed for non-use. The present appeal was heard with leave of that court.

The general subject-matter of the dispute concerned (i) whether Phillips had locus standi as a “person aggrieved” to seek removal of the registered mark, and (ii) in the event that standing existed, whether use of the mark by persons other than the proprietor or a registered user could constitute “use” sufficient to defeat a non-use removal application. The appeal was determined under the 1963 Act, because the proceedings had begun before the Trade Marks Act 194 of 1993 came into operation.

2. Material Facts

The trade mark VALENTINO was registered on 28 November 1973 in class 25 in relation to certain items of clothing, under registration number B73/6127. The registered proprietor was and remained Valentino Globe B.V. The court accepted as part of the factual setting that the mark was used internationally in relation to clothing designed by the Italian couturier Valentino Garavani, aimed at a luxury market rather than mass distribution.

It was common cause that the appellant itself did not conduct business under the mark in South Africa, and that no registered user agreement under section 48 had been registered before the removal proceedings were launched. The appellant had licensed certain continental manufacturers, and certain South African fashion retailers imported and sold reasonable quantities of VALENTINO clothing from about 1976. The legal significance of this use depended on whether it qualified as “use” for purposes of section 36(1)(b).

On 5 November 1979, Phillips lodged in his own name an application to register the trade mark VALENTINO in class 25 for clothing. The existence of the appellant’s prior registration was an obstacle to Phillips’s application. The removal application was instituted in Phillips’s name, described as “trading as Valentino for Men”, alleging that he claimed proprietorship in South Africa by virtue of his application and his alleged trading under the mark with an intention to continue.

However, the court identified an internal inconsistency in Phillips’s papers. In the founding affidavit, Phillips stated that he deposed on behalf of Fran & Antonio (Pty) Ltd, which he described as “my business”. He alleged that the company was incorporated in 1977 and had traded since that year under the name “Valentino”, specialising in men’s clothing and advertising under the mark. Affidavits from clients were attached asserting association of the mark with his company’s goods. In later replying papers (filed many years thereafter), Phillips indicated that the mark had also been used by other entities (including Valentino (Pty) Ltd and Valentino Clothing CC) and that trading later occurred through a renamed company, Valentino Corporation (Pty) Ltd, which he intended to list on the Johannesburg Stock Exchange.

The critical factual conclusion drawn by the court from these papers was that Phillips personally had not traded, and did not show a genuine intention to trade, under the mark in his own name. Instead, the papers reflected trading and intended trading through separate juristic persons (companies and a close corporation), with Phillips blurring the distinction between himself and those entities.

3. Legal Issues

The central legal questions the Supreme Court of Appeal was required to determine were whether Phillips satisfied the statutory standing requirement of being a “person aggrieved” for purposes of section 36(1)(b), and, if so, whether the Full Court decision in Adcock-Ingram Laboratories Ltd v SA Druggists Ltd and Another 1983 (2) SA 350 (T) was correct in holding that only use by the proprietor or a registered user qualifies as “use” preventing removal for non-use.

The principal dispute concerned the application of legal standards to largely common-cause facts, particularly the application of the “person aggrieved” test to Phillips’s position given that the relevant trading was conducted (or proposed to be conducted) by corporate entities rather than by Phillips personally. It also implicated a legal interpretation of the 1963 Act, especially the relationship between (i) standing to seek removal and (ii) the statutory requirements for who may apply to register, own, and use a trade mark.

A procedural issue also arose as to whether the appellate court was confined because the court a quo had not made findings on the second issue (the correctness of Adcock-Ingram), and whether the appellant could on appeal persist with an approach that treated the matter as turning only on the founding affidavit. The Supreme Court of Appeal treated these points as part of determining whether the substantive order (removal) was correct.

4. Court’s Reasoning

The court began by reaffirming that registered trade marks are intended to be used, and that continuous non-use for five years may justify removal under the statutory scheme. Because the proceedings had been instituted in 1980, the court applied the Trade Marks Act 62 of 1963, notwithstanding that the 1993 Act contained similar provisions.

On the procedural question, the court discussed the practice whereby a respondent may contend, at the outset, that the founding affidavit fails to establish a prima facie case, in a manner sometimes compared to an exception. The court cautioned against allowing that procedure in a case where there was no real conflict of fact on the papers. It further held that, having failed with that approach in the court of first instance, the appellant was not entitled on appeal to require the case to be determined solely by reference to the founding affidavit. The appeal concerned the correctness of the ultimate substantive order (removal), and the appellate court was entitled to consider the matter accordingly. This reasoning also addressed Phillips’s contention that the Supreme Court of Appeal could not decide the second issue because the court a quo had not made findings on it: the appellate inquiry was whether the order was correct, which could entail consideration of the legal foundations on which the result depended.

Turning to the merits, the court set out the established approach to the concept of a “person aggrieved” in trade mark removal proceedings, drawing from prior Supreme Court of Appeal authority. It emphasised that the onus lies on the removal applicant to show, as a reasonable possibility, that they are a person aggrieved, and that the term is given a wide and liberal interpretation. For purposes of this standing enquiry, it is assumed that the challenged trade mark is wrongly on the register. A substantial interest or likelihood of substantial damage from the mark remaining on the register is required. The court noted that an application by the removal applicant to register the same or similar mark is ordinarily prima facie evidence of the necessary interest, because the existing registration constitutes an obstacle; however, this inference is negated if the would-be application is shown to be in bad faith, vexatious, or without substance.

The court then applied these principles to Phillips’s position. It considered the reasoning in Ritz Hotel Ltd v Charles of the Ritz Ltd and Another 1988 (3) SA 290 (A), where the absence of trading (and absence of a genuine intention to trade) in the relevant classes defeated standing. On the evidence in Phillips’s papers, the court found that Phillips had never traded and had no genuine intention to trade personally under the mark VALENTINO. Rather, he had failed to distinguish between himself and a series of companies and a close corporation through which the alleged trading occurred. This prompted the decisive legal question: whether Phillips’s control or interest in those entities could nonetheless render him a “person aggrieved”.

In addressing that question, the court relied on authority emphasising the separateness of corporate legal personality, and rejected the notion that this separateness could be disregarded merely because Phillips was a controller or shareholder. It referred to Francis George Hill Family Trust v South African Reserve Bank and Others 1992 (3) SA 91 (A) and Jeeva and Another v Tuck NO and Others 1998 (1) SA 785 (SE) as support for the proposition that the distinct personality of a company is not a mere technicality and generally cannot be ignored to confer standing on an individual where the legal interest lies with the company.

Although acknowledging that earlier case law (including Ritz) had noted a possible trend in English decisions toward a more relaxed approach in certain group-company contexts, the court held that such a relaxation could not be justified in light of the structure and wording of the 1963 Act. It examined section 20(1), which required an applicant for a trade mark to be a person claiming to be proprietor of a mark “used or proposed to be used by him”. The court linked this to the statutory definition of “trade mark” in section 2, which focused on use or proposed use to indicate a connection between the goods and a person having the right as proprietor or as a registered user. The court then analysed section 24(1), which created two narrowly defined exceptions to the requirement that the proprietor must use or intend to use the mark: one involving a body corporate about to be constituted (with assignment intended), and the other involving a contemporaneous application to register a registered user. Neither exception applied on Phillips’s facts.

The court considered the legislative history, noting that earlier provisions (later repealed) had expressly deemed use by subsidiaries to be use by the holding company and permitted applications in defined corporate-group circumstances. The repeal of those provisions was treated as a strong indication that the legislature did not intend a general “piercing of the corporate veil” for trade mark proprietorship and use requirements. Against that statutory background, the court held that Phillips could not succeed in registering the trade mark in his own name given that the contemplated use was by separate juristic persons, not by Phillips, and that the statutory exceptions did not apply.

On that basis, the court concluded that there was no prospect that Phillips could succeed in his trade mark application, whether in his own name or effectively on behalf of another. Consequently, the obstacle posed by the appellant’s registration could not, in this case, supply Phillips with standing as a person aggrieved, because the necessary premise for that obstacle to constitute a cognisable grievance—namely a sustainable application by Phillips—was absent.

Because Phillips failed at this “first hurdle” of standing, the court held that the removal application should have been dismissed. In those circumstances, the second issue (the correctness of Adcock-Ingram regarding what constitutes “use” under section 36(1)(b)) became academic, and the court declined to determine it.

5. Outcome and Relief

The Supreme Court of Appeal upheld the appeal. It set aside the order of the Transvaal Provincial Division that had removed the trade mark VALENTINO from the register.

The court substituted the order below with an order dismissing Phillips’s removal application. The appellant was awarded costs in the appeal and in the court a quo, and all cost orders were directed to include the costs consequent upon the employment of two counsel.

Cases Cited

Adcock-Ingram Laboratories Ltd v SA Druggists Ltd and Another 1983 (2) SA 350 (T).

Bader and Another v Weston and Another 1967 (1) SA 134 (C).

Berman Brothers (Pty) Ltd v Sodastream Ltd and Another 1986 (3) SA 209 (A).

Consort Trade Mark [1980] RPC 160.

Danco Clothing (Pty) Ltd v Nu-Care Marketing Sales and Promotions (Pty) Ltd and Another [1991] ZASCA 121; 1991 (4) SA 850 (A).

Francis George Hill Family Trust v South African Reserve Bank and Others 1992 (3) SA 91 (A).

Hart v Pinetown Drive-in Cinema (Pty) Ltd 1972 (1) SA 464 (D).

"Holly Hobbie" Trade Mark [1984] RPC 329 (HL).

Hubby's Investments (Pty) Ltd v Lifetime Properties (Pty) Ltd 1998 (1) SA 295 (W).

Jeeva and Another v Tuck NO and Others 1998 (1) SA 785 (SE).

Kaiser Aluminum & Chemical Corporation v The Reynolds Metal Company [1969] HCA 7; 120 CLR 136.

Mars Incorporated v Candy World (Pty) Ltd [1990] ZASCA 149; 1991 (1) SA 567 (A).

Pearson v Magrep Investments (Pty) Ltd and Others 1975 (1) SA 186 (D).

Ritz Hotel Ltd v Charles of the Ritz Ltd and Another 1988 (3) SA 290 (A).

Sodastream Ltd and Another v Berman Brothers (Pty) Ltd 1984 (4) SA 425 (T).

Victoria's Secret Inc v Edgars Stores Ltd [1994] ZASCA 43; 1994 (3) SA 739 (A).

Legislation Cited

Trade Marks Act 62 of 1963, including sections 2, 20(1), 24(1), 36(1)(b), 48, and reference to repealed sections 23 and 24(1)(c).

Trade Marks Act 194 of 1993, section 27(1)(b).

Trade Marks Act 1938 (United Kingdom), as historical background.

Rules of Court Cited

No specific rules of court were cited in the judgment.

Held

The court held that Phillips failed to establish that he was a “person aggrieved” under section 36(1)(b) of the Trade Marks Act 62 of 1963, because on his own version he did not trade, and did not propose to trade, under the mark in his personal capacity, and the statute did not permit treating corporate use or intended use as if it were his own in order to validate his application for registration. As a result, the removal application ought to have failed without reaching the merits of whether there had been qualifying “use” of the registered mark by the appellant or others.

LEGAL PRINCIPLES

The judgment applied the principle that in an application to remove a trade mark for non-use, the applicant bears the onus to show, as a reasonable possibility, that they are a “person aggrieved”, and that the concept is interpreted widely and liberally, assuming for this enquiry that the impugned mark is wrongly on the register. Nonetheless, the applicant must demonstrate a substantial interest or likelihood of substantial damage from the mark’s continued registration.

The judgment reaffirmed that an existing registration that blocks an applicant’s attempt to register a similar mark may constitute prima facie evidence of being a person aggrieved, but that this inference may be negated where the purported application for registration lacks substance or is otherwise not capable of succeeding.

In applying the Trade Marks Act 62 of 1963, the judgment emphasised that section 20(1) requires the applicant for registration to claim proprietorship of a mark “used or proposed to be used by him”, read with the definition of “trade mark” in section 2, which ties trade mark significance to use indicating a connection with a person entitled as proprietor or registered user. The judgment treated section 24(1) as providing narrowly confined exceptions, and held that the statutory scheme does not generally permit disregarding separate corporate personality so as to treat use by a company or close corporation as use (or intended use) by an individual shareholder or controller.

Finally, the judgment applied the principle that where an applicant fails on standing, issues going to the merits of removal (including broader questions about the correctness of prior authority on “use”) may become academic and need not be determined.

Valentino Globe BV v Phillips and Another (6/96) [1998] ZASCA 43; 1998 (3) SA 775 (SCA); [1998] 4 All SA 1 (A) (27 May 1998)