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[2015] ZAWCHC 111
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Global Vitality Incorporated v Enzyme Process Africa (Pty) Limited and Others (20884/2013) [2015] ZAWCHC 111; 2015 BIP 520 (WCC) (21 August 2015)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No: 20884/2013
DATE:
21 AUGUST 2015
In
the matter between
:
GLOBAL
VITALITY
INCORPORATED
..............................................................................
Applicant
And
ENZYME
PROCESS AFRICA (PTY)
LIMITED
.....................................................
First
Respondent
THE TRUSTEES FOR
THE TIME BEING OF THE
TEMBELETU
TRUST (IT
2665/2003)
...................................................................
Second
Respondent
THE COMMISSIONER
FOR INTELLECTUAL
PROPERTY
AND
COMPANIES
..............................................................................
Third
Respondent
Court:
Justice J Cloete
Heard:
17 August 2015
Delivered:
21 August 2015
JUDGMENT
CLOETE
J
:
Introduction
[1]
On 18 December 2013 the applicant launched
these proceedings seeking a final interdict against the first and
second respondents
on the basis of passing off, the cancellation of
certain trade mark registrations, as well as what is essentially
consequential
or ancillary relief.
[2]
It is clear from the papers that from the
outset the first and second respondents (in the form of their duly
authorised representative,
Mr Geoffrey Ainslie (‘
Ainslie’
))
have resorted to almost every conceivable means to frustrate finality
in this litigation. They only filed their answering affidavits
after
being compelled by an order to do so; orchestrated a postponement on
dubious grounds; failed to comply with an order to file
their heads
of argument; and generally displayed flagrant disregard for the
process of court. They failed to file heads of argument
for the
second time when the matter came before me and have also not appeared
at the hearing.
[3]
Given that the applicant seeks final relief
on motion, the Plascon-Evans rule applies, and I turn to set out the
salient facts which
I am satisfied the applicant has succeeded in
proving on the application of that test.
Salient
facts
[4]
The applicant is an American manufacturer,
distributor and seller of dietary nutritional supplements. It has
supplied and distributed
these supplements worldwide through duly
authorised agents, distributors and/or resellers since 1988, first in
the name of its
predecessor in title, S.T.D. Corporation trading as
Enzyme Process Laboratories and thereafter, from 26 October
1995, as Global
Vitality Incorporated trading as Enzyme Process
International (sometimes with the word “Corporation”
added). The name
Enzyme Process International was registered as a
trading name with the Arizona Department of State on 19 October
2011, indicating
its “domestic begin date” as 3 January
1996.
[5]
Furthermore, the following trade marks were
registered in the USA:
5.1
Registration no. 1709677
ENZYME
PROCESS
in class 5 in the same of S.T.D. CORPORATION. This mark was filed on
9 January 1991, registered on 25 August 1992 and
cancelled
on 2 March 1999. It was cancelled merely because the proprietor
failed to file a statement or declaration of use,
as required in
terms of US Trade Mark legislation;
[1]
5.2
Serial no. 77440982
ENZYME
PROCESS INTERNATIONAL
in class 1 in the name of ENZYME PROCESS INTERNATIONAL – Filed
on 6 April 2008 and abandoned on 2 December 2009;
[2]
and
5.3
Registration no. 4200754 (Serial number 85259588)
ENZYME
PROCESS INTL
in
class 5 in the name of ENZYME PROCESS INTERNATIONAL CORPORATION –
Filed on 7 March 2011 and registered on 4 September
2012.
[3]
[6]
The
applicant is a licensee of United States trademark registration no.
4200754
ENZYME
PROCESS INTL
by
virtue of a tacit licence.
[4]
[7]
The applicant has thus built up a
substantial reputation and goodwill vesting in the trademark
ENZYME
PROCESS
in the USA by virtue of the
extensive use of the trademark since 1988 - as a trading name and as
its brand name.
[8]
The applicant began exporting its
ENZYME
PROCESS
supplements to South Africa in
1995 through an entity,
ENZYME PROCESS
CC
, which acted as exclusive
distributor and reseller of the applicant’s goods under the
trademark
ENZYME PROCESS
and
the business name
ENZYME PROCESS CC
.
On 1 April 2003 Ainslie, the majority member of
ENZYME
PROCESS CC
, instead registered the
first respondent (‘
EPA’
)
and continued business through EPA as the applicant’s
authorised distributor and reseller in South Africa under this name.
Sales grew substantially over the years from 1995 and, by the time
the supplements were supplied to EPA, were worth an average
of USD
212 674 per annum.
[9]
During 2012 a dispute arose between the
applicant and the first respondent over payments for orders
delivered. The applicant also
began receiving complaints from
customers in South Africa about less effective and unavailable goods.
[10]
The applicant took two steps. First, it
terminated the distribution agreement with the first respondent on 1
May 2012. Second, it
investigated the complaints and discovered that
the first respondent had been importing similar supplements from
another manufacturer
in the USA in unmarked packaging during 2012.
Upon receipt of the unmarked goods, the first respondent had labelled
them with a
revised label prominently displaying the applicant’s
ENZYME PROCESS
trade
mark.
[11]
The applicant then discovered in early 2013
that the second respondent, of which Ainslie is a trustee, had
applied for various trade
marks to be registered in South Africa
during the period July 2007 until May 2012, which trade marks are
applied and used on the
applicant’s products.
[12]
The first respondent has not ordered any
products from the applicant since 2012 when the payment dispute
arose. However goods bearing
the applicant’s
ENZYME
PROCESS
trademark are still being sold
by it in South Africa.
Grounds
of opposition
[13]
The first and second respondents oppose the
relief sought by the applicant primarily on the following grounds,
namely that:
13.1
The goodwill and reputation built up in the
ENZYME
PROCESS
trademark in South Africa is
only as a consequence of the first respondent’s activities, and
not that of the applicant;
13.2
Since May 2012 the
ENZYME PROCESS
mark and brand has not had any connection to the products of the
applicant and any goodwill or reputation that did accrue to the
brand
subsequent to this date could not have any connection to the
applicant;
13.3
There is no evidence that the applicant or the
ENZYME
PROCESS
trademark and brand is
proprietary to the applicant, or that the applicant’s trading
name is connected to it at all;
13.4
The applicant has failed to present any evidence to establish its
goodwill and reputation in South Africa
in relation to the marks
CYTOTROPHIN, LIQUEZYME, HEALTH IS AN
ENZYME PROCESS, PROTO-MORPHOGEN
and
GLANDULARS
.
[14]
As will appear from what follows hereunder
I am persuaded that there is no merit in any of the defences raised
by the first and
second respondents.
Passing-off
[15]
The first leg of the relief sought by the
applicant is to interdict and restrain the first and second
respondents from making any
further use of the trade mark
ENZYME
PROCESS
, or a mark confusingly similar
thereto.
[16]
Passing-off is defined as follows:
‘
The
wrong known as passing off consists in a representation by one person
that his business (or merchandise, as the case may be)
is that of
another, or that it is associated with that of another and, in order
to determine whether a representation amounts to
passing off, one
enquires whether there is a reasonable likelihood that members of the
public may be confused into believing that
the business of the one
is, or is connected with, that
of
another.’
[5]
[17]
As it was more recently stated by the
Supreme Court of Appeal:
‘
Passing
off occurs when A represents, whether or not deliberately or
intentionally, that its business, goods or services are those
of B or
are associated therewith. It is established when there is a
reasonable likelihood that members of the public in the marketplace
looking for that type of business, goods or services may be confused
into believing that the business, goods or services of A are
those of
B or are associated with those of B.’
[6]
[18]
The requirements necessary for the
applicant to establish passing-off are the following:
18.1
The applicant must prove the existence of the requisite reputation;
namely that its get-up or mark has become
distinctive of its goods or
services, in the sense that the public associate the get-up or mark
with the goods or services of the
applicant.
[7]
18.2
There must be an express or implied representation by the offending
party which is false and unauthorised;
[8]
and
18.3
The applicant must prove that the representation made by the
offending party is likely to cause confusion
amongst purchasers or
potential purchasers of the products as to the trade source of the
product or the business connection thereof.
[9]
[19]
In
order to prove its reputation, the applicant may put up evidence of
the nature and extent of the use it has made of the mark
by way of
evidence of extensive sales and advertising. The court may infer the
requisite reputation from this evidence.
[10]
The applicant’s reputation must exist at the time that the
other party commenced its offending conduct.
[11]
[20]
An
agent or distributor who merely sells, or imports and sells, goods
manufactured by another without adding anything to the mark
or get-up
under which they are produced, does not thereby acquire any goodwill
in the name or get-up; because those symbols acquire
a reputation
that the goods emanate from the original manufacturer and not the
agent.
[12]
[21]
The enquiry as to
which trade source the symbol has come to indicate in the territory
in question is in every case one of fact.
[22]
The
applicant must also prove that the offending party’s
misrepresentation is
likely
to cause confusion amongst purchasers or potential purchasers.
Whether there is a likelihood of such confusion arising is a question
of fact, which must be determined by the court in the light of the
circumstances of each case.
[13]
Evidence
of actual deception or confusion is not essential to success in
passing-off cases.
[14]
[23]
The
court must notionally transport itself from the courtroom to the
particular marketplace and ‘
become
one’
with those who might be expected to make use of the goods offered by
the two traders.
[15]
Regard
is to be had to the likely impact of the get-up employed by the two
traders on the notional ‘
ordinary
customer’
.
[16]
[24]
In
determining the likelihood of deception or confusion, ‘..
.one
postulates neither the very careful nor the very careless buyer, but
an average purchaser, who has a general idea in his mind
of what he
means to get but not an exact and accurate representation of it. Nor
will he necessarily have the advantage of seeing
the two products
side by side. Nor will he be alerted to single out fine points of
distinction or definition’
.
[17]
[25]
In
considering whether a defendant’s product is likely to deceive,
one looks not only at the distinctive features, but at
what the
purchaser himself would be likely to be guided by, that is to say the
general appearance and get-up of the article.
[18]
[26]
If
there are a large number of similarities and also some differences,
the onus lies upon the offending party to prove that the
differences
are such as to distinguish the two articles and convey to the
ordinary purchaser that the goods are not those of the
other, if it
wishes to avoid the inference of deception being drawn.
[19]
[27]
Where
it is indeed shown that there has been a measure of copying on the
part of an offending party, who then seeks to maintain
his imitation,
this suggests that he believes and has had confirmation of his
belief, that imitation confers on him some advantage
that an original
get-up would not.
[20]
[28]
The first and second respondents do not
dispute the applicant’s assertion that the mark
ENZYME
PROCESS
enjoys a substantial goodwill
and reputation in South Africa.
[29]
What is in dispute, however, is to which
party such goodwill and reputation accrues. Notwithstanding the
applicant’s evidence
of its extensive use of the mark
ENZYME
PROCESS
in South Africa since 1995, the
first and second respondents deny, on purely speculative grounds,
that the
applicant
has any such reputation or goodwill in its
ENZYME
PROCESS
mark in South Africa.
[30]
However, on the first and second
respondents’ own version, Ainslie only became involved as
distribution agent of the applicant’s
ENZYME
PROCESS
marked goods in 1997, two years
after the applicant started exporting these supplements. The first
respondent only became involved
when registered in 2003. The second
respondent was never involved in the distribution.
[31]
Ainslie
claims that from 1997 until early 2000 the products received from the
applicant were sent to him in packages and he had
to bottle and label
them himself, using the name
ENZYME
PROCESS
.
He has not produced any evidence in support hereof, and the evidence
adduced by the applicant to the contrary is overwhelming.
[21]
[32]
Ainslie
also maintains that the products sold in South Africa never displayed
the names ENZYME PROCESS INTERNATIONAL or GLOBAL VITALITY,
but that
the applicant’s products were sent to him as follows:
[22]
32.1
In bulk form in packages, to be bottled and labelled in South Africa
by
EPA
in
South Africa;
32.2
Bottled and unlabelled, in which case it was labelled by
EPA
in South Africa; and
32.3
Bottled and labelled, in which form he then redistributed it in South
Africa. In this case, Ainslie submits
that the label always displayed
ENZYME PROCESS™, as well as a sticker with the name and contact
details of
EPA
,
thus implying that the applicant’s mark became associated with
EPA in this manner.
[33]
The evidence proves the contrary:
33.1
First, EPA was only registered in 2003. Between 1997 and 2003, the
entity did not exist and the products
could not have been labelled
with the details of EPA;
33.2
Second, from 2003, when EPA was established and the sticker was
applied, the bottles were still labelled
by the applicant and the
fact that a sticker was placed over a small portion bearing the first
respondent’s details takes
the matter no further;
[23]
and
33.3
Third, all products sent to South Africa were labelled by the
applicant and each label displayed the applicant’s
name (ENZYME
PROCESS INTERNATIONAL) and address, as is clear from all the labels
annexed to the founding affidavit which the first
and second
respondents admitted. The exception was three products out of a range
of 120 products (MSM, Ester-C Plus, and Pure Protein).
[24]
[34]
The
applicant furthermore produced sales figures and details on
quantities of goods supplied to the first respondent over the past
7
years and attached a schedule of invoices issued to it;
[25]
as well as in excess of 100 invoices for inspection by the
respondents.
[26]
The applicant also provided examples of labels as applied to its
ENZYME
PROCESS
goods
supplied to the first respondent, which labels the respondents
admitted.
[27]
These labels bear the applicant’s trading name, ENZYME PROCESS
INTERNATIONAL, as well as the applicant’s
ENZYME
PROCESS
trade
mark as applied to its goods by the applicant.
[35]
The
applicant provided evidence in the form of extracts from websites,
Google search results, blog posts, printouts from the first
respondent’s own LinkedIn profile and the website found at
www.enzymeprocess.co.za
(which
website was deactivated in 2012).
[28]
These referred to the applicant’s
ENZYME
PROCESS
goods,
ENZYME PROCESS INTERNATIONAL, and specifically referred to the first
respondent as the applicant’s “African distributor”.
[36]
In
response to this, the first respondent offered bare denials coupled
with the “explanation” that its accounting system
had
crashed, and that its attempts to reconcile its records failed as it
was too costly and time consuming.
[29]
The applicant has pointed out however that all that was lost was
three weeks’ worth of pastel data; and that it was all
recaptured and restored.
[30]
[37]
Accordingly, the only reasonable inference
to be drawn is that the applicant has demonstrated that its
ENZYME
PROCESS
mark entered the market in 1995
and established a substantial reputation, which reputation not only
existed
at the time that the
first
respondent commenced its offending conduct but even
prior
to
the first respondent being appointed as
distributor and reseller.
[38]
In contrast to the evidence presented by
the applicant, the first respondent did not produce any evidence as
to its purported reputation
in the
ENZYME
PROCESS
mark (by way of sales,
advertising or promotion).
[39]
On
the first respondent’s own version, it imported products from
other suppliers in the USA and bottled and labelled them
itself,
using the name
ENZYME
PROCESS
.
[31]
[40]
The
supplements that have been sold by the first respondent since 2012
are not goods manufactured or supplied by the applicant,
yet they are
sold under a newly designed label bearing the applicant’s mark
ENZYME
PROCESS
.
To add insult to injury, the supplements are in certain instances
being sold side-by-side on the same shelves as the applicant’s
ENZYME
PROCESS
goods.
[32]
Having
regard to the get-up of the two products it is immediately apparent
that the differences are largely insignificant.
[41]
The first respondent is thus selling goods
unrelated to the applicant under a get-up containing the applicant’s
trade mark
where the labelling is substantially similar, which trade
mark has come to designate the goods of the applicant in South Africa
since 1995 and in which trade mark the applicant enjoys a substantial
reputation.
[42]
Given that the applicant’s
ENZYME PROCESS
goods
have been sold in South Africa since 1995, and given the fact that
the first respondent entered the market in an effort to
sell its own
products under a get-up so similar to that employed by the applicant,
the only reasonable inference to be drawn is
that the first
respondent has done so in order to benefit from the likelihood of
deception or confusion from customers.
[43]
In these circumstances there can be little
doubt that the applicant has established passing-off.
Expungement
[44]
The second leg of the relief sought is to
have certain trade marks registered in the name of the second
respondent cancelled in
terms of s 10 as read with s 24 of the Trade
Marks Act 194 of 1993 (‘
the Act’
)
.
The marks are dealt with individually below.
A
Trade mark registration nos. 2007/16466-70 ENZYME PROCESS logo
in classes 5, 16, 29, 35 and 44
B
Trade mark registration nos. 2012/11714-18 ENZYME PROCESS logo
in
classes 5, 16, 29, 35 and 44
[45]
The applicant relies on
s
24
(1)
of the Act which reads as follows:
‘
In the
event of... an entry wrongly made in or wrongly remaining on the
register... any interested person may apply to the court...
for the
desired relief, and thereupon the court... may make such order for...
removing the entry as it... may deem fit.’
[46]
It is
not in dispute that the applicant is an ‘
interested
person’
.
[33]
In broad terms, class 5 is for medicinal or nutritional supplements,
class 16 is for printed publications, class 29 is for foodstuffs,
class 35 is for rendering a service in retail and household trade,
and class 44 is for healthcare services.
[34]
[47]
S 10 of the Act lists marks that are not
registerable as trade marks or, if registered, are liable to be
cancelled and removed from
the register.
[48]
Cancellation of these trade marks is sought on the
basis of ss 10(2), 10(3), 10(7) and 10(16) of the Act and, in respect
of the
class 16 registrations, on s 10(4) as well.
[49]
The relevant subsections which are relied upon read as follows:
‘
(2)
…
a mark which –
(a)
is not capable of distinguishing within the meaning of section 9;
(b) consists
exclusively of a sign or an indication which may serve, in trade, to
designate the kind, quality, quantity, intended
purpose, value,
geographical origin or other characteristics of the goods or
services, or the mode or time of production of the
goods or of
rendering of the service; or
(c)
consists exclusively of a sign or an indication which has become
customary
in the current language or in the bona fide
and established practices of the
trade;…
(3)
... a mark in relation to which the applicant for registration has
no
bona fide claim to proprietorship
…
(7)
... a mark the application for registration of which
was
made mala fide
…
(16)
… a mark which is the subject of an earlier application …
if the
registration of that mark
is contrary to existing rights
of
the person making the later application for registration …’
[emphasis
supplied]
and:
‘
(4)
… a mark in relation to which the applicant for registration
has
no bona fide intention of using
it as a
trade mark …’
[emphasis supplied]
[50]
In
New Balance Athletic Shoe Inc v
Dajee
and Others NNO
the court confirmed the following test for
proprietorship for purposes of s 10(3):
‘
An
applicant can rightly claim to be the common-law proprietor of the
trademark if he has originated, acquired, or adopted it and
has used
it to the extent that it has gained the reputation as indicating that
the goods in relation to which it is used are his.
…
He
can then claim to be registered as the statutory proprietor of the
trademark with all the benefits and rights conferred by the
Act. But
[the
section]
is
not confined to that kind of applicant.
It
also applies to one who has originated, acquired, or adopted the
trademark but has hitherto not used it at all, or to the requisite
extent,
provided he proposes to use it.'
[35]
[51]
In
Victoria's
Secret
Inc
v Edgars Stores Ltd
[36]
,
the
c
ourt
held that ‘
the
person who has appropriated the mark for use in relation to goods or
services as a trademark can claim to be the proprietor.
In this
context the word
“
appropriate
”
includes
“
originate
”
,
“
acquire
”
and
“
adopt
”
’
.
Such a person will be the proprietor unless the adoption is attended
by something more, such as any factors that may have vitiated
or
tainted his right or title to the proprietorship thereof. These
factors
include
dishonesty, breach of confidence, sharp practice, or the like.
[52]
In
Strydom
v Bader
[37]
the
court dealt
with
the
issue
of whether an application for a trade mark registration had been made
mala
fide
in terms of
ss
10(3) and 10(7) as follows:
‘
[31]
The provisions of ss 10(3) and 10(7) of the Act overlap to a
considerable extent.
For purposes of the
application of both subsections to the facts of the present case the
single issue is whether Von Waltsleben
had “a bona fide claim
to proprietorship” of the trade mark at the time when he
applied for the registration thereof
in the name of Solocorp. If he
did not, his application would have been made mala fide.
[32]
The resolution of the issues in this matter thus depends upon the
interpretation and application of two key statutory criteria.
The
first is “bona fide use” within the meaning of s 36(1) of
the Act and the second is “bona fide claim to proprietorship”
within the meaning of s 10(3) of the Act.
[35]
… there are two categories of persons who may apply for
registration - those who are actual users of the trade mark
and those
who propose to use it. In regard to the first category, ie the actual
users, the requirements for the acquisition of
common-law
proprietorship of a trade mark apply.
[36]
It appears from this formulation, which was referred to with approval
in
Victoria's Secret
at 744B-C, that there are two
requirements for the acquisition of common-law proprietorship, which,
for ease of reference, I shall
call appropriation and drawing power.
[37]
“Appropriation” is the term used in
Victoria's
Secret
at 744I, by Nicholas AJA
as a compendious expression of the words “originate, acquire
and adopt”.
“
Drawing power” is the
English equivalent of
“
werfkrag
”
.
[38]
The second category of applicants who are entitled to apply for
registration comprises those who propose to use the trade mark.
…
[40]
The expressions “bona fide” and “mala fide”
appear in various provisions of the Act.
In
LAWSA
2 ed Vol 29
Trade Marks
para 30 it is submitted, with reference to s 10(7) of the Act, that
an action (such as the registration of a
trade
mark) is mala fide if it would be regarded as contra bonos mores in
the particular trade or industry concerned.
I
agree with this submission.’
[53]
Having regard to the facts set out
hereinabove, it bears emphasising
that the applicant started
ex
porting its goods into South Africa under
the trade mark
ENZYME PROCESS
in 1995 and Ainslie acted as the
applicant’s authori
s
ed distribution
agent in South Africa since 1997 (via the entity ENZYME PROCESS CC).
The use of the
ENZYME PROCESS
trade mark by the applicant
predates any use of the trade mark by the first and second
respondents.
[54]
Of
further
significance
is the fact that, on Ainslie’s own version, he knew
from
as early as 1997 that
S.T.D.
CORPORATION was related to entities called ENZYME PROCESS
LABORATORIES and ENZYME PROCESS INTERNATIONAL
,
[38]
and
that the former was being used by the applicant in South Africa in
respect of the same or similar goods. It was nonetheless
Ainslie
himself who filed the trade mark applications in his capacity as
trustee of the second respondent.
The
second respondent therefore filed the applications without any
bona
fide
claim to proprietorship thereof.
[55]
Neither
the first nor the second respondent
approach
ed
the applicant at any stage to discuss the protection of trade mark
rights in South Africa, as one would reasonably expect from
any
business relationship when the parties are dealing in good faith. The
applicant also did not consent to the second respondent
filing any
trade mark applications in its own name. In fact, the applicant only
became aware of the trade marks filed by the second
respondent
in
2013
after the business relationship terminated
.
[39]
[56]
It can thus safely be inferred
that
the second respondent sought registration of these trade marks in an
attempt to secure rights in South Africa
to
effectively prevent the applicant from continuing to sell its goods
here
in the event of
the
distribution agreement
being terminated, and that
as such it acted
mala fide
for purpose of s 10(7) of the Act
.
[57]
I am accordingly persuaded
that
these trade mark registrations stand to be cancelled and removed from
the register in terms of
s
24 of the Act,
read with
ss
10(3) and 10(7).
[58]
As previously indicated, s 10(16)
of
the Act provides that a mark may not be registered as a trade
mark or, if registered, is liable to be removed from
the register if
the registration of that mark is contrary to the existing rights of
the person who filed a later application for
registration of the same
or similar mark.
[59]
In
Turbek
Trading
CC v A & D Spitz Ltd and Another
[40]
,
Spitz applied for the removal of Turbek’s registration on the
basis of s 10(16) on the ground that Turbek’s trade
mark was
contrary to its existing rights, Spitz having filed a later
application for the same mark. The Supreme Court of
Appeal held
as follows:
‘
In
context the question is whether the mark ‘KG’ formed part
of Spitz’s goodwill. Spitz had to show that it was
at the date
the common-law proprietor of the
“
KG
”
trade mark and this required proof
that Spitz
“
originated,
acquired or adopted it and has used it to the extent that it has
gained the reputation as indicating that the goods
in relation to
which it is used’ belonged to Spitz …”
’
[60]
The
enquiry is thus
whether the marks are
the same or similar
,
and whether the
proprietor of the later application ha
s
proved the required goodwill or reputation vesting in the mark in
question.
[61]
The
applicant filed trade mark applications for its
ENZYME
PROCESS logo
trade
mark on 3 December 2013, not long after it became aware that the
second respondent
had
filed
and secured registration of a similar trade mark to which
the
first and/or second
respondents have no bona fide claim to proprietorship. The applicant
had no option but to do
so
in order to protect its trade mark rights following the respondents’
unlawful actions.
[41]
[62]
Given the applicant’s substantial
reputation in South Africa, and that its reputation already existed
and vested in the applicant
at the time that the first and
second respondent commenced
their
offending
conduct,
the
second
respondent’s
ENZYME PROCESS logo
trade marks
, when used
in relation to the goods and/or services for which they are
registered, accordingly amounts to a passing-off.
[63]
Furthermore, the
marks are visually,
phonetically and conceptually similar. The marks consist
predominantly of the words
ENZYME PROCESS
. The addition of the
other visual elements does little to distinguish the marks from each
other in light of the dominance of these
two words. The goods
in respect of which the marks
pertain are
the same or similar. As a result, confusion or deception is likely to
arise among customers should the same or similar goods be
sold in the
market place, whether side by side or even on different shelves.
Customers are likely to believe that both items emanate
from the same
manufacturer.
[64]
As such,
I agree with the applicant
that
the second respondent’s
ENZYME PROCESS logo
trade mark
registrations stand to be cancelled and removed from the register in
terms of
s
24 of the Act, read together
with
s
10(16) thereof.
[65]
It is the applicant’s submission that the class 16 trade marks
were filed without the necessary intention to ever make
use
there
of.
Certainly the respondents have adduced no evidence
to the contrary. There is no suggestion that the respondents intend
using the
mark for purposes of printed publications. Their class 16
registrations should thus also be expunged.
C
Trade mark registration nos. 2007/16460-1 CYTOTROPHIN in
classes 5 and 29
;
Registration nos. 2007/16477-8
PROTOMORPHOGEN in classes 5 and 29; Registration no. 2007/17651
GLANDULARS in class 5
[66]
The applicant seeks cancellation of the above trade mark
registrations on the basis of
ss
10(2), (3)
and (7) of the Act.
[67]
The
applicant has explained that c
ytotrophins
(also known as “glandulars”) are animal glands that are
freeze dried and taken in pill form to provide the
body with extra
hormones.
The
words “cytotrophins” and “glandulars” are
interchangeable and both are generic words used to describe
a
particular kind of dietary supplement.
Protomorphogens
are cellular nuclear material extracted from specific animal tissues
containing the essential building blueprint
for the construction of
that tissue.
[42]
The
word “protomorphogen” is similarly generic. None of these
words are proprietary to any person or entity and should
be free for
use by all manufacturers of dietary supplement products. The first
and second respondents do not seriously dispute
this but have instead
contented themselves with the bald submission that these are the
opinions of ‘
a
layperson’
and
that ‘
as
such
[it]
amounts
to inadmissible evidence’
[43]
.
I do not understand the applicant’s explanations to be opinion
evidence but rather factual evidence, and one would have
expected a
proper response if the first and second respondents had one to
furnish.
[68]
I thus accept that
these words are not
capable of distinguishing the particular goods of the second
respondent from that of any other manufacturer
;
and
that the registrations of the trade mark
accordingly fall squarely within s 10(2) and
should
thus
be cancelled and removed from the register.
[69]
In any event, for the reasons already given, it is
clear that
the applications for these registrations were filed
in bad faith at a time when the second respondent had no bona fide
claim to
proprietorship in these marks. These marks are secondary
marks used by the applicant
, and it is not
disputed that the
applicant supplied the first respondent with
more than 28 000 units of cytotrophin, protomorphogens and glandulars
over the period of their business relationship.
D
Trade mark registration no. 2007/16462 LIQUEZYME in class 5
[70]
The applicant seeks cancellation of this mark
on
the grounds set out in ss 10(3), (7) and (16). The applicant has
shown that
LIQUEZYME
is a secondary mark that has been
used by
it,
and
that
more than 13 000 units
were
supplied
to the first respondent for resale over a
seven
year period.
E
Trade mark registration nos. 2007/16463-5 HEALTH IS AN ENZYME
PROCESS in classes 5, 29 and 35
[71]
These marks wholly incorporate the applicant’s
ENZYME PROCESS
trade mark, and in light of what is set out hereinabove, clearly also
fall to be cancelled, again on the grounds contained in ss 10(3),
(7) and (16).
Company
Name
[72]
On the third leg, the applicant seeks an
order directing that the first respondent change its registered
company name to a name
that does not incorporate the mark
ENZYME
PROCESS
, or any mark confusingly
similar thereto.
[73]
It is the applicant’s case that the
first respondent’s company name falsely implies or suggests, or
would reasonably
mislead a person to believe, that the first
respondent is still its distributor or associated with the applicant
in another significant
way.
[74]
S
11 of the Companies Act
71
of 2008 (‘
the
Companies Act’
)
provides that:
‘
11.
Criteria for names of companies. –
…
(2)
The name of a company must –
(a)
not be the same as –
…
(iii
a registered trade mark belonging to a person other than the
company, or a mark in respect of which an application has been filed
in the Republic for registration as a trade mark …
(b)
not be confusingly similar to a name, trade mark, mark, word
or expression contemplated in paragraph (a) unless –
…
[
none
of the exceptions apply
]
(c)
not falsely imply or suggest, or be such as would reasonably
mislead a person to believe incorrectly, that the company –
(i)
is part of, or associated with, any other person or entity; …
’
[75]
In each case - under
ss
11(2)(a)(iii)
,
11
(2)(b) or
11
(2)(c)(i) - the court is accordingly required to
compare the first respondent’s company name,
ENZYME PROCESS
AFRICA
, with the applicant’s trade mark,
ENZYME PROCESS
.
[76]
S
157(1)
of the
Companies Act sets
out who has locus standi to make use
of the remedies contained in
s 156
‘
and
who may therefore apply to Court, the Companies Tribunal, the Panel
or the Commission to address complaints or secure rights’
[44]
and, in terms of
s 157(1)(a)
, includes a person ‘
directly
contemplated’
in any provision of the
Companies Act. S
156 provides that:
‘
156.
Alternative procedures for addressing complaints or securing rights.
A
person referred to in
section 157(1)
may
seek to
address an alleged contravention of this Act, or to enforce any
provision of, or right in terms of this Act … by
–
(a)
…
(b)
Applying to the Companies Tribunal for adjudication in
respect of any matter for which such an application is permitted in
terms
of this Act;
(c)
Applying for appropriate relief to the division of
the High Court that has jurisdiction over the mat
t
er
;
or …
’
[emphasis
supplied]
[77]
There is an internal remedy contained in
s 160
of
the
Companies Act for
the resolution of disputes concerning the
reservation or registration of a company’s name:
‘
160.
Disputes concerning reservation or registration of company names. –
(1) …
any other person with an interest in the name of a company,
may
apply to the Companies Tribunal in the prescribed manner or form for
a determination whether the name … satisfies the requirements
of this Act.
’
[emphasis
supplied]
[78]
It is the applicant’s submission that the existence of
the
internal remedy
in s 160
does not preclude
its
application to
court
for
relief in respect of
a complaint
regarding the first respondent’s company name.
[79]
SS
157 and 160 both contain the word
may
,
not
shall
,
as is found in many other sections. If given its ordinary meaning,
the word
may
,
as set out in the Concise Oxford English Dictionary, means
“expressing possibility”, “expressing permission”,
“expressing a wish or hope”.
[45]
In contrast, the word
shall
mean
s
“expressing a strong assertion or intention”, “expressing
an instruction or command”.
[46]
The word
may
thus
logically
allows for a discretion, instead of being peremptory, as with the
word
shall.
[80]
The
Supreme Court of Appeal
has
held the following regarding the interpretation of statutes:
[47]
‘
[18]...The
present state of the law can be expressed as follows. Interpretation
is the process of attributing meaning to the words
used in a
document, be it legislation, some other statutory instrument, or
contract, having regard to the context provided by reading
the
particular provision or provisions in the light of the document as a
whole and the circumstances attendant upon its coming
into existence.
Whatever the nature of the document, consideration must be given to
the language used in the light of the ordinary
rules of grammar and
syntax; the context in which the provision appears; the apparent
purpose to which it is directed and the material
known to those
responsible for its production. Where more than one meaning is
possible each possibility must be weighed in the
light of all these
factors. The process is objective not subjective. A sensible meaning
is to be preferred to one that leads to
insensible or unbusinesslike
results or undermines the apparent purpose of the document. Judges
must be alert to, and guard against,
the temptation to substitute
what they regard as reasonable, sensible or businesslike for the
words actually used. To do so in
regard to a statute or statutory
instrument is to cross the divide between interpretation and
legislation. In a contractual context
it is to make a contract for
the parties other than the one they in fact made. The ‘inevitable
point of departure is the
language of the provision itself’,
read in context and having regard to the purpose of the provision and
the background to
the preparation and production of the document.
[19]
All this is consistent with the ‘emerging trend in statutory
construction’. It clearly adopts as the proper approach
to the
interpretation of documents the second of the two possible approaches
mentioned by Schreiner JA in
Jaga v Dönges NO and
another
, namely that from the outset one considers the
context and the language together, with neither predominating over
the other. This
is the approach that courts in South Africa should
now follow, without the need to cite authorities from an earlier era
that are
not necessarily consistent and frequently reflect an
approach to interpretation that is no longer appropriate.”
[81]
S 160(4) confers on a court the power to review a
decision of the Companies Tribunal. However having regard to the
plain wording
of ss 157 and 160 it seems to me that to interpret
s 160(4) as limiting a court’s jurisdiction to review
power
only would lead to what the Supreme Court of Appeal warned
against in
Natal Joint Municipal Pension
Fund
, namely ‘
insensible
or unbusinesslike results’
.
[82]
First, the legislature specifically adopted the
use of the word ‘
may’
.
Second, the applicant would otherwise be compelled to institute
proceedings in two separate forums at the same time, for
inextricably linked
relief, revolving
around the same legal principles and the same facts.
Third,
this would potentially result in two different forums (i.e. the
Companies Tribunal on the one hand, and the court on the
other)
arriving at different conclusions on the same factual matrix. The
decision of the Companies Tribunal would then be subject
to review by
the High Court in terms of s 160(4), whereas the decision of the
High Court would be subject to the appeal process,
with the two legal
processes running parallel to each other.
[83]
Furthermore, in this case, the name of the first
respondent is not the only issue to be decided. The case revolves
around various
other legal issues that cannot be decided by the
Companies Tribunal.
[84]
In light of the above it is my view that this
court is not precluded from deciding the company name issue.
[85]
Having regard to the facts and the findings
already made, there can be little doubt that the first respondent’s
name
falsely implies or suggests, or would reasonably mislead
a person to believe incorrectly, that the first respondent is
the
applicant’s distributor or is otherwise significantly
associated with the applicant.
[86]
In
addition, the applicant adduced evidence of customers who previously
used the applicant’s
ENZYME
PROCESS
goods, but noticed differences in the labelling and effectiveness
from 2012, which led to queries lodged directly with the
applicant.
[48]
Although denied
by Ainslie, he has been unable to advance any satisfactory basis for
that denial.
[49]
[87]
Not only is the first respondent’s company name the same
as the applicant’s
ENZYME PROCESS
trade mark (but for
the word “AFRICA” at the end of the company name), there
is
thus also
a reasonable likelihood that
the public, when doing business with the first respondent and
purchasing products bearing the applicant’s
ENZYME PROCESS
trade mark, may be confused into thinking that the first
respondent is associated with the applicant.
This
much is borne out by the queries which customers lodged with the
applicant.
[88]
I am thus also persuaded that the applicant
should succeed on the third leg of the relief sought
.
Domain
name
[89]
On
the fourth leg, the
applicant seeks an order directing the first respondent to transfer
the registered domain
www.enzymeprocess.co.za
to
it
.
[90]
R
egulation
11
(1)
of the Alternative Dispute Resolution Regulations
[50]
,
made under
s
69 of the Electronic Communications and Transactions Act
[51]
,
reads
as follows:
‘
Appeal,
availability of Court proceedings, implementation of decision and
repeat disputes
11.
(1) Nothing done in terms of these Regulations
prevents any party from litigating on any related matter in the High
Court of the
Republic of South Africa.’
[91]
Regulation 3(1)(a) provides that “
A
registrant must submit to proceedings under the rules if a
complainant asserts ... that ... the complainant has rights in
respect
of a name or mark which is identical or similar to the domain
name and, in the hands of the registrant the domain name is an
abusive
registration; ...”
[92]
An "Abusive Registration" is
defined as
‘
a
domain name which either-
(a)
has been used in a manner that
takes unfair advantage of, or is unfairly detrimental to the
complainant's rights; or
(b)
was registered or otherwise
acquired in a manner which, at the time when the registration or
acquisition took place, took unfair
advantage of or was unfairly
detrimental to the complainant's rights…’
[93]
Regulation 4(1) provides the following:
‘
Evidence
of Abusive or Offensive Registration
4.
(1) Factors, which may indicate that the domain name is an abusive
registration include-
(a)
Circumstances indicating that the registrant has registered or
otherwise acquired the domain name primarily to –
…
(iii)
disrupt unfairly the business of the complainant; or
(iv)
prevent the complainant from exercising his, her or its rights;
(b)
circumstances indicating that the registrant is using, or has
registered, the domain name in a way that leads people or businesses
to believe that the domain name is registered to, operated or
authorised
by, or otherwise connected with the
complainant;
…’
[94]
The applicant has demonstrated that its
ENZYME PROCESS
trade mark entered the South African market in 1995 and established a
substantial reputation which vests in it.
[95]
The offending domain name incorporates the applicant’s
trade mark in its entirety, and contains no other significant element
that serves to distinguish it from the applicant’s trade mark.
Put simply, the offending domain name is identical in
all material
respects to the applicant’s trade mark.
[96]
In this regard, the proviso in regulation 5(c) stipulates that
‘
The burden of proof shifts to the Respondent to show that
the domain name is not an abusive registration if the domain name …
is identical to the mark in which the Complainant asserts rights,
without any addition’.
[97]
The
applicant referred to SAIIPL Decision
ZA2007-0007
[52]
at para 4.7, in which the Panel stated that:
‘
The
name forming the subject of the domain name in question is the mark
FIFA. This is identical to the mark in which the Complainant
had alleged registered and common-law rights, and which the
adjudicator finds established for the purposes of this complaint.
This shifting of the burden disposes of the matter, in that the
Registrant has not responded to the complaint.’
[98]
The
first and second respondents merely contend that the domain was set
up by a former employee of the first respondent; that Ainslie
was
unaware of its existence on the LinkedIn page until he received the
applicant’s papers; and that in any event ‘
the
website was never very active or generated substantial sales’
[53]
.
[99]
In
selecting the offending domain name, the first respondent
exploited
the
goodwill and reputation of the applicant’s
ENZYME
PROCESS
trade mark, whilst
at
the same time
blocking the applicant’s registration of th
at
domain name in South Afric
a.
Although,
according to the applicant, the website was deactivated during
2012,
[54]
there is nothing in
theory to prevent the first respondent from reactivating it any
stage.
[100]
Having regard to the proven facts, I am
persuaded that
the applicant has shown that the offending
domain name is an abusive registration
.
Delivery
up of goods
[101]
The fifth leg of the relief sought by the
applicant, namely delivery up of the offending material follows
consequentially from the
finding of passing-off in its favour, and no
more thus needs to be said.
Conclusion
[102]
In the result an order is granted in the
following terms:
1.
The first and second respondents are interdicted and restrained from
making any further use of the trade mark ENZYME PROCESS
,
or a mark confusingly and/or deceptively
similar to the applicant’s ENZYME PROCESS trade mark;
2.
The third respondent is directed to rectify the register of trade
marks in terms of section 24 of the Trade Marks Act 194 of
1993 (“
the
Act”
) by cancelling and removing the following trade marks
in the name of the second respondent:
2.1
registration nos. 2007/16466-70 ENZYME PROCESS logo in classes 5, 16,
29, 35 and 44;
2.2
registration nos. 2007/16460-1 CYTROTROPHIN in classes 5 and 29;
2.3
registration no. 2007/16462 LIQUEZYME in class 5;
2.4
registration nos. 2007/16463-5 HEALTH IS AN ENZYME PROCESS in classes
5, 29 and 35;
2.5
registration nos. 2007/16477-8 PROTOMORPHOGEN in classes 5 and 29;
2.6
registration no. 2007/17651 GLANDULARS in class 5; and
2.7
registration nos. 2012/11714-18 ENZYME PROCESS logo in classes 5, 16,
29, 35 and 44;
3.
The first respondent is directed to change its company name to a name
that does not incorporate the trade mark ENZYME PROCESS,
or any mark
confusingly and/or deceptively similar to the applicant’s
ENZYME PROCESS trade mark, within 30 (thirty) calendar
days from date
of this order;
4.
The first respondent is directed to transfer the registered domain
name
enzymeprocess.co.za
to the applicant within 30 (thirty)
calendar days from date of this order;
5.
All products, marketing material, signage, stationery and other goods
bearing the trade mark ENZYME PROCESS, or a mark confusingly
and/or
deceptively similar to the applicant’s ENZYME PROCESS trade
mark, are to be removed from circulation by the first
and/or second
respondents immediately and delivered up to the applicant for
destruction within 30 (thirty) calendar days from date
of this order;
6.
The costs of this application, including all reserved costs orders,
are to be paid by the first and second respondents, jointly
and
severally, the one paying the other to be absolved; and
7.
The applicant is authorised to effect service of this order on the
first and second respondents by email to Mr Geoffrey Ainslie:
geoff@enzymeprocess.co.za
.
J
I CLOETE
[1]
Answering
affidavit, p. 203, para 55.3.1; Annexure “GA13”, p.
271-272; Replying affidavit pp. 318 – 319, paras
133 - 136
[2]
Answering affidavit, p. 203, para 55.3.2; Annexure
“GA14”, p. 273-274
[3]
Founding affidavit, p. 12 para 29, “Annexure SR7”, p.
82’ Answering affidavit, p. 203, para 55.3.2
[4]
Replying affidavit, p. 318, para 135
[5]
Capital
Estate and General Agencies (Pty) Ltd v Holiday Inns Inc.
1977
(2) SA 916
(A) at 929C
[6]
Pioneer
Foods (Pty) Ltd v Bothaville Milling (Pty) Ltd
2014 (2) All SA 282
(SCA) at para [7]
[7]
Caterham
Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd and Another
[1998] ZASCA 44
;
1998 (3) SA 938
(SCA) at 950E-F
[8]
Royal
Beech-Nut (Pty) Ltd t/a Manhattan Confectioners v United Tobacco Co
Ltd t/a Willards Foods
[1992] ZASCA 113
;
1992 (4) SA 118
(A) at 122C-D
[9]
Capital
Estate & General Agencies (Pty) Ltd & Others v Holiday Inns
& Others
(supra
)
at 929C-D
[10]
Cambridge
Plan AG v Moore
1987 (4) SA 821
(D) at 837; approved in
Hollywood
Curl (Pty) Ltd v Twins Products (Pty) Ltd
(1)
1989 1 SA 236
(A) at 249J
[11]
Webster and Page,
South
African Law of Trade Marks
,
pp15-28;
Caterham
Car
Sales & Coachworks Ltd v
Birkin
Cars
(Pty) Ltd and Another
(supra) at para [22]
[12]
Webster and Page,
South
African Law of Trade Marks
,
pp15-47
[13]
Capital
Estate & General Agencies (Pty) Ltd and Others v Holiday Inns &
Others
(supra) at 929E;
Royal
Beech-Nut (Pty) Ltd t/a Manhattan Confectioners v United Tobacco Co
Ltd t/a Willards Foods
(supra) at 126I
[14]
John
Craig (Pty) Ltd v Dupa Clothing Industries (Pty) Ltd
1977 (3) SA 144
(T) at 156-157
[15]
Oudemeester
Groep Bpk and Another v SA Breweries Ltd
1973 (4) SA 145
(W) at 161C-E;
John
Craig (Pty) Ltd v Dupa Clothing Industries
(supra) at 153G
[16]
Pasquali
Cigarette Co Ltd v Diaconicolas and Capsopolus
1905 TS 472, 475
[17]
Blue
Line Manufacturing (Pty) Ltd v National Brands Ltd
2001 (3) SA 884
(SCA) 887F-G
[18]
Kellogg
Co v Bokomo Co-Operative Ltd
1997 (2) SA 725
(C) at 733I-734G;
Blue
Line Manufacturing (Pty) Ltd v National Brands Ltd
(supra) at 892C-F
[19]
Webster
& Page, South African Law of Trade Marks
,
p. 15-54
[20]
Blue
Line Manufacturing (Pty) Ltd v National Brands Ltd
(supra) at 891A-C
[21]
Answering
affidavit, p. 193, para 20; Replying affidavit, p. 300, para 36;
Supporting affidavit Buirski, p. 363, para 12-13
[22]
Answering
affidavit, p. 196, paras 28.2 and 28.3; Annexure “GA5A”,
p. 245-257
[23]
Founding
affidavit, annex “SR 11”, Record p. 106
[24]
Founding
affidavit, p. 15, para 39; Annexure “SR10”; Answering
affidavit, p. 216, para 112; Replying affidavit, p.
305, para 64;
Supporting affidavit, p. 363, paras 12-13
[25]
Founding
affidavit, p. 15-17, paras 40-44; Annexure “SR12”, p.
107-113
[26]
Notice
in terms of Rule 35(12), Record Vol. 2, p. 1-2 & pp. 191-336
[27]
Founding
affidavit, p. 15, para 38; Annexure “SR10”, p. 85-105;
Answering affidavit, p. 216, para 112
[28]
Founding
affidavit, pp. 19-22, paras 47-59; Annexures “SR13-18”,
pp. 114-136
[29]
Answering
affidavit, pp. 199-200, paras 42-45
[30]
Replying affidavit, p. 311, para 94; confirmatory affidavit
Abrahams, pp 357-358
[31]
Answering
affidavit, p. 193, para 20
[32]
Founding
affidavit, p. 28, para 87; Annexure “SR27”, pp. 163-164
[33]
Answering
affidavit, p. 231, para 199
[34]
Founding affidavit, pp. 32-34
[35]
2011
BIP 106 (GNP) p. 115 at [23]
[36]
[1994] ZASCA 43
;
1994
(3) SA 739
(A) at 743H-745H
[37]
2010
BIP 192 (WCC) at 198
[38]
Answering
affidavit, p. 193, para 19
[39]
Founding
affidavit, p. 26, para 72-73; Answering affidavit, p. 228, paras
178-179
[40]
2010
(2) All SA 284
(SCA) at para [17]
[41]
Founding
affidavit, p. 34, para 100
[42]
Founding
affidavit, p. 38, para 121 – 123; Annexure “SR28 –
SR29”, pp. 165 - 171
[43]
Answering affidavit, p. 232, para 202
[44]
Henochsberg
on the
Companies Act 71 of 2008
Vol
1, p. 548
[45]
Page
883
[46]
Page
1321
[47]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) at [18] – [19]
[48]
Founding
affidavit pp. 24-25 paras 68 – 70, p 76 para 71; Record pp.
154 – 158, 172 – 174 and 176 – 177
[49]
Answering
affidavit pp. 226 – 228, paras 169 - 176
[50]
Government Gazette No. 29405, 22 Nov 2006, Vol 297, No 8587
[51]
Government Gazette No. 25 of 2002
[52]
Federation
Internationale de Football Association (Fifa) v X Yin
[53]
Answering affidavit, Record, p. 222 paras 143-146
[54]
Founding affidavit, p. 21 para 56