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[2014] ZAWCHC 4
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Etraction (Pty) Ltd v Tyrecor (Pty) Ltd (16926/11 , 16926A/11) [2014] ZAWCHC 4; [2014] 2 All SA 90 (WCC); 2014 BIP 127 (WCC) (5 February 2014)
REPORTABLE
Republic
of South Africa
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
Case Number: 16926/11
and 16926A/11
In
the matter between:
ETRACTION
(PTY)
LTD
...................................................................
Applicant
and
TYRECOR
(PTY)
LTD
..................................................................
Respondent
JUDGMENT
DELIVERED THIS DAY OF 5
TH
FEBRUARY 2014
SALIE-SAMUELS
AJ
:
This
judgment is divided into two principal parts: the application for an
interdict and the counter application for partial expungement
of the
trade mark.
The
parties were both legally represented. Mr.Seale, appeared for
the Applicant and the Mr. Micau for the Respondent.
The
Application
[1]
The Applicant, Etraction (Pty) Ltd (hereafter the Applicant) seeks an
interdict restraining Tyrecor (Pty) Ltd (hereafter the
Respondent)
from infringing the Applicant’s registered trade mark and
costs. The application is supported by the affidavit
of Imtihaz Tayob
Rahimtola, a duly authorised director of the Applicant. The
Applicant’s trade mark is INFINITY, registration
number
2008/0612 in class 12 in respect of “vehicle components and
accessories; tyres, wheels, rims” dated 15 April
2008. The
Applicant avers that the Respondent is infringing its rights by
“…
using
in relation to tyres and/or in relation to wheels and/or in relation
to tyre and wheel combinations, the trade mark INFINITY
or a mark so
nearly resembling the Applicant’s aforementioned mark as to be
likely to deceive and/or to cause confusion”.
[2]
The Respondent, supported by the affidavit of Charl Pierre De
Villiers, resists the application. The primary basis of its defence
is that it’s (the Respondent’s) predecessor in title,
Falck Trading (Pty) Ltd, commenced the use of the trade mark
INFINITY
during 2006 as a consequence of which Respondent and its
predecessor’s use of the trade mark INFINITY predates the
date
of registration of the Applicant’s trade mark. Respondent
argues that such use provides it with a defence in terms of
section
36(1) of the Trade Marks Act 94 of 1993 (hereafter the Act). The
Respondent also makes a counter application for partial
expungement
of the trade mark in respect of tyres, which will be dealt with
later.
[3]
The parties traversed numerous issues that cast no light on their
dispute, and I will not refer to them in my judgment. The
real issues
between the parties in respect of the application are as follows:
Does
the Applicant have a right to prevent the Respondent from using the
trade mark INFINITY registered in its name in the Register
of Trade
Marks? Does section 36(1)(b) of the Act provide the Respondent with a
defence on the facts?
[4]
It is trite law that the requirements for obtaining a final interdict
are: a clear right, no other satisfactory remedy and proof
of
irreparable harm if the interdict is not granted.
The
first issue is therefore whether or not the Applicant has a clear
right. It is common cause that the Applicant is the registered
proprietor of the INFINITY trade mark. A trade mark proprietor has
the exclusive right, subject to the provisions of the Act, to
use the
trade mark. The primary provision of the Act which secure this right
is section 34(1) of the Act. The Applicant relies
on section 34(1)(a)
and in the alternative section 34(1)(b) of the Act. The relevant
portion of section 34(1)(a) provides that
“
The
rights acquired by registration of a trade mark shall be infringed by
–
(a) the
unauthorised use in the course of trade in relation to goods or
services in respect of which the trade mark is registered
of an
identical mark or of a mark so nearly resembling it as to be likely
to deceive or cause confusion”.
It
is trite law that for there to be infringement in terms of section
34(1)(a) there must be: (i)use of the identical or a
confusingly similar mark, (ii) in the course of trade, (iii) in
respect of identical goods in relation to which the trade
mark is
registered. It is also clear that if there is use of the identical
mark in respect of identical goods, the question of
likelihood of
deception or confusion need not be proved but is presumed. On the
facts in this matter, there is no need to consider
section 34(1)(b)
because the trade mark INFINITY is registered in respect of tyres:
there is consequently use of the identical
mark in respect of
identical goods, not use in respect of similar goods which is the
hallmark of section 34(1)(b) of the Act.
[5]
The facts are that the Respondent does not deny using the trade mark
in respect of tyres and even though the Respondent contests
the
validity of the registration of the trade mark INFINITY in respect of
tyres, the Applicant has established
prima
facie
infringing use, even on the test in
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) (referred to as the
Plascon-Evans
rule). The Respondent has raised both a defence and mounted a counter
application in response to the application. It is clear that
if the
counter application succeeds, the Applicant has no right and that
ends the matter. I am, however, of the view that it is
more
appropriate to first deal with the Respondent’s defence, and
then the counter application, since even if the defence
succeeds, the
counter application still has to be considered as it is not solely a
defence to the Application.
[6]
The Respondent’s defence is that section 36(1) of the Act bars
the Applicant from instituting infringement proceedings
against the
Respondent, as its predecessor had commenced using the trade mark
prior
to the Applicant applying for registration
of INFINITY in its (the Applicant’s) name. The Applicant
alleges in the founding affidavit deposed to by Mr Rahimtola, that
it
commenced its use of the trade mark INFINITY during 1995. Nothing
turns on the date Applicant commenced using the trade mark
INFINITY
as it bases its claim squarely on the registration which is dated 15
April 2008 (this is confirmed by a certificate from
the Registrar of
Trade Marks attached to the Applicant’s documents marked
exhibit
M2
).
The 15
th
April 2008 is, therefore, the first date from which the Applicant can
claim the
exclusive
right to use the trade mark INFINITY
in
South Africa
.
[7]
The relevant portion of section 36(1) of the Act, provides that
“
Nothing
in this Act shall allow the proprietor of a registered trade mark to
interfere with or restrain the use by any person of
a trade mark
identical with or nearly resembling it in relation to goods or
services in relation to which that person or a predecessor
in title
of his has made continuous and bona fide use of that trade mark from
a date –
(a)
anterior
to the date of first-mentioned mark in relation to those goods or
services by the proprietor or a predecessor in title
of his; or
(b)
to
the registration of the first-mentioned trade mark in respect of
those goods or services in the name of the proprietor or a
predecessor in title of his,
whichever is the
earlier, or to object (on such use being proved) to the trade mark of
that person being registered in respect of
those goods or services
under section 14.”
Webster
& Morley
Webster
& Page:
The
South African Law of Trade Marks, Company Names and Trading Styles
4ed paragraph 12.45.1 (page 12-79) correctly argue that the aim of
the section is to “preserve common law rights that are
antecedent to the rights of the registered proprietor”. The Act
does not invest a prior user with a right – it derives
from the
common law. How does a prior user obtain the common law right to use
the trade mark? Before answering this question I
will refer to the
facts.
[8]
The Applicant, through the founding affidavit of Mr Rahimtola,
obviates the necessity for the Court to rely on the
Plascon-Evans
rule referred to earlier to establish when the Respondent’s
predecessor’s use commenced. The deponent swears that:
“
During
2006, I saw INFINITY tyres at an exhibition but was unable to trace
the products on sale in the trade. In 2007, the Applicant
noted
limited sales of the INFINITY tyres but was not aware of the
activities that gave rise to those sales. However, in 2008 the
Applicant heard that INFINITY tyres were being imported into South
Africa by the Respondent on an increasing scale” (paragraph
14).
This
evidence confirms the Respondent’s version that it and its
predecessor has made “continuous and
bona
fide
use since July 2006, to date” (paragraph 14 of Mr De Villiers
answering affidavit). The question still arises, however, what
is the
basis of the Respondent’s rights at common law?
[9]
The Respondent’s right to use the trade mark INFINITY was
conferred by implication by the person in China who supplied
it with
the tyres it imported, whomsoever that person was. It is well
established there is no need for anyone to be aware of the
identity
of the trade mark proprietor: in
Birmingham
Vinegar Brewery Co
v
Powell
(1896) 13 RPC 235
, 250 the Court held that the public may be misled
by mistaking one class of goods for another even though they may not
know the
names of the makers of either (clearly each class consists
of the one person’s goods. Blanco White & Jacob
Kerly’s
Law of Trade Marks and Trade Names
12ed, Sweet & Maxwell, London (1986) states that:
“
It
is not necessary to show that the customers who knew the goods of the
plaintiff’s firm by a particular name or get up knew
anything
whatever about the plaintiff. It is immaterial that they did not even
know his name, for it is sufficient to prove that
purchasers of his
goods recognised, by the use of the marks in question in connection
with them that they were goods of a particular
class and show that
such class is,
in
fact
,
constituted by his goods”
(page
373, paragraph 16-32; my emphases).
The
existence of implied consent to use a trade mark granted by placing
goods on the market without any restrictions on exporting
was
confirmed by the Appellate Division in
Protective
Mining & Industrial Equipment Systems (Pty) Ltd (formerly Hampo
Systems (Pty) Ltd) v Audiolens (Cape) (Pty) Ltd (the
Pentax case)
1987
(2) SA 961
(AD).
Frank
& Hirsch (Pty) Ltd v Roopanand Brothe
rs
1987 (3) SA 165
(D) establishes that a trade mark proprietor who
sells goods without restriction
unconditionally
consents to it being resold in that form under the mark (page 185B).
[10]
The Applicant in the founding affidavit gives no indication of the
source of the goods which it markets under the trade mark
INFINITY
and it does not allege that it is the manufacturer of the wheels
which it markets under that trade mark. The Applicant
has, throughout
the proceedings, elected not to provide any direct indication of its
relationship to the INFINITY tyres which it
markets. It is so highly
improbable that the Applicant would have described itself as “a
trader in wheels, tyres and related
products” had it
manufactured the goods in which it trades that a relationship of that
type is excluded. The significance
of this finding is that the
Applicant is also an importer of the tyres which it markets under the
INFINITY trade mark. I agree
with the submission of Mr Micau for the
Respondent in that had the Applicant claimed any common law rights
predating its use of
the trade mark, the possibility of an action for
passing-off must have been canvassed with its legal representation,
however, had
been abandoned In my view abandonment of the
possibility of a passing-off action strongly indicates a recognition
that
no enforceable common law exclusive right existed.
[11]
Before I can conclude my finding whether the Respondent has the right
to use the trade mark, I need to satisfy myself that
the Respondent
is in fact the successor in title of Falck Trading (Pty) Ltd.
Counsels were requested to file additional heads
of argument dealing
with the law in respect of successors or predecessors in title in
relation to juristic personalities.
Indeed they obliged and the
Court is indebted to both counsel for the supplementary heads filed
in that regard.
[12]
The success of the Respondent’s defence in terms of Section 36
depends upon whether it is able to prove that it is to
be regarded as
the successor in the title of an entity that made
bona
fide
use of the trade mark INFINITY prior to the date of registration of
the applicant’s trademark. In support of its succession,
the Respondent claims that Tyrecor Holdings (Pty) Ltd, a company
which later changed its name to Falck Trading (Pty) Ltd thereafter
continued to do so for a period of approximately 2 ½ years and
that Falck Trading’s business, namely that of selling
tyres,
was taken over by the Respondent during March 2009. The Respondent
bears the
onus
of proof in respect of the claimed prior use, either by itself or by
its predecessor in title. It insofar needs to discharge
the
burden of convincing this Court that it had acquired these rights
from Falck Trading.
[13]
On behalf of the Applicant, it is contended that the acquisition of
the business of one company by another must take place
by means of a
contract
, one which would transfer the business from the one
company to the other. In response, the Respondent contends that
the absence
of documentation relating to the transfer of the business
from Tyrecor Holdings (Pty) Ltd does not mean that it did not occur
or
moreover, that Tyrecor Holdings was not a predecessor in title
regarding the importation of INFINITY branded tyres.
[14]
In adjudicating this issue in dispute, I have also considered the
redacted minutes of a meeting of Respondent of 8 November
2007
(paragraph 15.2, page 146 of the infringement application) which
reads under the heading “shareholding” as follows:
“
Falck
Trading:
Falck Trading will
be a property holding company and will import till Feb by which time
Tyrecor licences will be sorted out”.
The
Respondent submits further that no formal documents or agreements
exist regarding the take-over of the business. Due to
the
common shareholding and directorship of the various companies,
Respondent contends: “
everything
was done verbally…”
(paragraph
15.3, page 147 of the infringement application.) I am persuaded
that there was a transfer or an assignment of rights
and obligations
between the predecessor and successor in relation to the import and
sale in INFINITY branded tyres .
That the Respondent
appears not to have a written contract in its possession or that
relevant provisions of the Companies Act have
not been complied with,
does not vitiate such a transfer of rights and the Respondent faces
sanctions embodied in the Companies
Act. However, it does not
in my view affect the Respondent’s defence available in
terms of Sections 36 of the
Act.
[12]
The
upshot of my finding that the Respondent had a right to use, and its
predecessor in title, Falck Trading (Pty) Ltd, had used
the trade
mark prior to the Applicant seeking registration of the trade mark
INFINITY, is that the application for an interdict
fails and the
defence raised by section 36(1) of the Act
succeeds
with costs.
The
Counter Application
Under
Case No 16926A/2011
In
the matter between
ETRACTION
(PTY)
LTD
............................................................................
Applicant
And
TYRECOR
(PTY)
LTD
...........................................................................
Respondent
In
re: the counter-application of
TYRECOR
(PTY)
LTD
................................................................................
Applicant
And
ETRACTION
(PTY)
LTD
...................................................................
First
Respondent
THE
REGISTRAR OF TRADE MARKS
.......................................
Second
Respondent
[13]
The Respondent in the main application (which will continue to be
referred to as the Respondent) counter applies for the partial
expungement of the trade mark by the deletion of “tyres”
from the Applicant’s registration. The Respondent argues
that
from 2006 the Applicant was aware of its use of the trade mark in
respect of tyres and consequently when the Applicant sought
registration of the trade mark in the Applicant’s name, it did
not have a
bona
fide
claim to proprietorship of the trade mark and had no
bona
fide
intention of using the trade mark in respect of the goods in respect
of which it is registered. The Respondent joined the Registrar
of
Trade Marks as a respondent in its counter application as the
Registrar would be required to alter the registration of the trade
mark if the counter application succeeded.
[14]
The Applicant, in opposing the application for partial expungement,
asserts that it had the bona fide intention of using the
trade mark
in relation to tyres and in amplification submits that when it filed
its trademark application to register the trademark
INFINITY in class
12, it was contemplated that the sourcing and branding of Applicant’s
INFINITY tyres would follow.
It is further argued by the
Applicant that it had the “definite intention” (paragraph
14.8, Page 10 of the Expungement
Application) to use the mark
INFINITY as its principal trade mark in relation to its own range of
tyres, wheels and rims and still
has the intention of doing so.
In reply, it is contended on behalf of the Respondent that the
Applicant’s absence of
any use of the trade mark INFINITY on
tyres do not support the bold assertions that it wishes to use the
trade mark and it would
appear that it clearly never had a definite
intention to use.
[15]
The Respondent bases its application on three sections of the Act:
10(3), 10(7) and 27(1)(a). The essence section 10(3) is
prohibition
against registration of a trade mark in respect of which “the
applicant for registration has no
bona fide
claim to
proprietorship”; section 10(7) prohibits the registration of a
mark “the application of which was made
mala fide
; and
section 27(1)(a) empowers an interested person to apply for removal
of trade mark from the register if the:
“
trade
mark was registered without any bona fide intention on the part of
the applicant for registration that it should be used in
relation to
those goods or services by him or any other person permitted to use
the trade mark as contemplated by section 38 and
there has in fact
been no bona fide use of the trade mark in relation to those goods or
services by any proprietor thereof or any
person so permitted from
the time being up to the date three months before the date of the
application”.
Notwithstanding
the manner in which the Respondent has pleaded in the counter
application (using “and” in the final
line of paragraph
20.4 of De Villiers’ answering affidavit) should the Respondent
succeed in terms of any of the sections,
there will be no need to
traverse any other.
[15]
There is generally no bar to a person adopting for use and
registering a trade mark in South Africa where that trade mark is
already used by another person abroad:
Victoria’s Secret
Incorporated v Edgars Stores Ltd (the Victoria’s Secret case)
[1994] ZASCA 43
;
1994 (3) SA 739
(AD). In that case the question was whether
Edgars was entitled to adopt and register the trade mark, VICTORIA’S
SECRET,
in South Africa, given that Victoria’s Secret
Incorporated was the proprietor (and originator) of the trade mark in
the USA.
Victoria’s Secret Incorporated had applied for
registration in South Africa subsequent to Edgars’ application
for registration
of the identical trade mark. The Court set out the
law as follows:
“…
a
trade mark is purely a territorial concept; it is legally operative
or effective only within the territory in which it is used
and for
which it is to be registered. Hence, the proprietorship, actual use,
or proposed use of a trade mark mentioned in s 20(1)
are all premised
by the subsection to be within the RSA” (page 745G).
The
Court in the
Victoria’s Secret
case held that: “In
the case of a foreign trade mark, there is no legal bar to its
adoption in South Africa unless it is
attended by something more …”
(page 746F). The Court explained that “unless it is attended by
something more”
meant that the adoption should not be attended
by “any factors that may have vitiated or undermined his right
or title to
the proprietorship thereof. Those factors would
comprehend dishonesty, breach of confidence, sharp practice, or the
like”
(page 747H-I).
[16]
With reference to the matter before me, the Applicant had adopted the
trade mark INFINITY as the trade mark was already beisng
used by the
person from whom the Applicant obtained the INFINITY merchandise
which it sold. It struck me highly relevant
in this
matter, that sometime during March 2008 business attempts including a
business meeting) were entertained by and between
the parties.
This in essence took the form of the Applicant trading in INFINITY
branded tyres and selling thereof to the
Respondent. These
discussions though did not result in a successful business
transaction. The Applicant’s adoption
of the trade mark
INFINITY by applying for its registration
two
weeks after discussions with the Respondent
considered in conjunction with the
Applicant’s
delay from the time of registration
of
the trade mark until 17 August 2011 before instituting proceedings,
as well as its
use
of the trade mark from
1995
until 2008
before applying for registration, constitutes conduct approaching
“sharp practice”. Applicant’s conduct vitiated
its
application for registration as a
bona
fide
claim to proprietorship of the trade mark is a primary requirement
[1]
for registration.
[17]
The
Court in
Broadway
Pen Corporation & Another v Wechsler & Co (Pty) Ltd and
Others
(the
Everglide case)
1963
(3) SA 434
(T)
found
that
an
applicant’s claim is only
bona
fide
if he/she/it intends to use the trade mark in respect of his/her/its
own
goods
.
The salient facts of that case were that Broadway, a USA corporation
sought the expungement of the trade mark EVERGLIDE, which
was
registered in Wechsler’s name in South Africa. Wechsler had
claimed proprietorship of the trade mark EVERGLIDE in its
application
for registration, despite the fact that it (Wechsler) has previously
sold EVERGLIDE trademarked goods. It had also
previously acknowledged
Broadway’s ownership of the trade mark by unsuccessfully
negotiating with Broadway to become the
exclusive distributor of
EVERGLIDE pens in South Africa. The trade mark EVERGLIDE, indicated
that the goods had their origin in
Broadway who had placed or at
whose behest the trade mark was placed on the goods, not Wechsler.
The Court held: “it is clear
from the context … that
whoever used the mark used it as Burnham’s or Broadway’s
mark to indicate
its
goods”.
The Court held that Wechsler intended “merely to use the mark
on behalf of Burnham or Broadway” and ordered
expungement of
the trade mark because the
“…
facts
point[ed] irresistibly to the conclusion that Wechsler’s
intention was to use the mark in South Africa either as sole
representative of or otherwise for and on behalf of Burnham or
Broadway so as to indicate that the writing instruments were the
latter’s and not its own goods” (page 446B).
The
absence of an intention to use the trade mark in respect of its own
goods disqualified Wechsler from claiming proprietorship.
The phrase
“use in respect of its own goods” means that the person
must intend to use the trade mark in respect of
goods which as a
matter of law are regarded as having their origin in him/her/it. This
is because the definition of a trade mark
in section 2(1) of the Act
requires the person to use the trade mark to distinguish the goods in
relation to which it is used or
proposed to be used “…
from the same kind of goods … connected in the course of trade
with any other person
[other than the user]”.
[18]
There are three forms of trade mark use: affixation to goods,
placement of trademarked goods on the market and advertisement
of
trademarked goods.
[2]
The
relevant use for the establishment of origin is affixation since the
affixation of the trade mark creates trademarked goods,
as a result
of which all subsequent users indicate
origin
in the trade mark proprietor. The Applicant did not affix the trade
mark INFINITY to any goods: it also imported the INFINITY trademarked
goods. This is additional proof that the Applicant did not
intend using the mark on its own goods. Naturally a trade mark
proprietor need not personally affix the trade mark to the goods, but
the affixation must be done at his/her/its behest or with
his/her/its
consent for the goods to have their origin in the trade mark
proprietor.
[19]
A factor which indicates that the Applicant was not
bona
fide
in its application for registration is the fact that it applied for
registration knowing of the Respondent’s right to use
the trade
mark. A trader who applies for registration of a trade mark knowing
of another person’s rights does not act
bona
fide
:
the
Sidewalk
Cafes (Pty) Ltd t/a Diggers Grill v Diggers Steakhouse (Pty) Ltd &
Another
1990 (1) SA 192
(T). In this case, the defendant, which I shall
call Steakhouse, claimed the exclusive right to the trade mark
DIGGERS GRILL
for the
whole
of SA
,
despite its manager actually knowing that Sidewalk Café’s
was operating a restaurant under that name in Natal (as
it then was):
this was held not to be
bona
fide
claim. The Court found that respondent was not entitled to claim
exclusive proprietorship in the whole country and to obtain exclusive
rights to the trade mark thereby depriving applicant of his vested
rights in the trade mark.
[20]
The parallels between Wechsler’s actions in the
Everglide
case and the Applicant’s are clear: the Applicant used the
trade mark in respect of the goods which it had imported, not
goods
to which the trade mark INFINITY had been affixed at its (the
Applicant’s) behest. The Applicant, therefore, used the
trade
mark to indicate origin in the person who trademarked the goods.
There are also clear parallels between the conduct of Steakhouse
in
the
Digger’s
Grill
case and the Applicant in the present case: the Applicant was aware
that the Respondent was using the trade mark to an increasing
degree
when it applied for registration of the trade mark.
[21]
The Applicant’s conduct in adopting the trade mark when it did
not have a
bona fide
claim to proprietorship of the trade mark
INFINITY at the time of its application for registration, because it
was aware of the
Respondent’s use of the trade mark, and what I
find as the absence of an intention on its part to use the trade mark
INFINITY
in relation to
its goods
, results in its application
being completely vitiated. The counter application succeeds, with
costs, and the Registrar is directed
in terms of section 24(1) of the
Act, to expunge the word “tyres” (spelt “tires”)
from the Applicant’s
trade mark registration.
___________________
SALIE
- SAMUELS, AJ
[1]
Martin BSC
The situs of the registered trade mark
right considered in the light of parallel importation
LLD thesis, University of the Western Cape
(2007)
211 argues that this is the basic
requirement because t
he other aspects of the applicant’s
qualifications, such as him being required to have a
bona fide
intention to use the trade mark (s 10(4)), and him not having made a
mala fide
application for registration (section 10(7),
qualify his claim to proprietorship.
[2]
Martin “Some
comments on the infringement of registered trade marks by
advertisement of goods on the Internet” (2013)
1
South
African Intellectual Property Law Journal
25 (forthcoming) relying on Beier F-K “The doctrine of
exhaustion in EEC trademark law – scope and limits (1979)10
International Journal of Industrial
Property and Copyright
23.