PLEASURE FOODS (PTY) LTD v TMI FOODS CC t/a MEGA BURGER AND ANOTHER 2000 (4) SA 181 (T)

2000 (4) SA p181

[zFNz] Flynote : Sleutelwoorde Trade mark - Registration of - Registrability of mark - Whether mark capable of distinguishing - Words 'mega', 'megaburger' and 'mega burger' - Words 'mega burger' instantly recognisable as sign or indication customary in current English language pertaining to retail food trade as designating kind and size characteristics of burger, namely that of large- size hamburger - Same true of word I 'megaburger' - 'Megaburger' having no distinctiveness pertaining to origin but merely descriptive of size - Mark not registrable in terms of s 10(1A) of Trade Marks Act 62 of 1963 nor distinctive in terms of ss 10 and 12 of that Act - Use of word 'mega' in mark descriptive of characteristic of kind, quality or quantity pertaining to hamburgers and use thereof not infringement in terms of J 2000 (4) SA p182 s 34(2) (b) of Trade Marks Act 194 of 1993 - Mark liable to be removed from register in A terms of s 10(2) of that Act as not being capable of distinguishing, consisting of indication which had become customary in current language. [zHNz] Headnote : Kopnota The applicant had registered the trade mark 'megaburger' in three B classes, namely classes 29, 30 and 42. The first respondent, which conducted a fast food business, traded as Mega Burger Fast Foods, specialising in serving large hamburgers at affordable prices. The applicant applied for an interdict preventing the first respondent from infringing its trademark. The first respondent opposed the application and, in turn, applied for the applicant's trade mark to be C removed from the register, inter alia on the grounds that the mark was not capable of distinguishing and that the word was customary in the current language or customary language of the trade. Held , that for several decades in the English language 'mega' had been a generic term that had been applied to a great range of topics and items. This generic use and development of 'mega' had taken place long prior to the registration of the word 'megaburger' D by the applicant. The words 'mega burger' were instantly recognisable as a sign or indication

customary in the current English language pertaining to the retail food trade as designating the kind and size characteristics of a burger, namely that of a large-size hamburger. The same was true of the word 'megaburger'. Where in the advertising material of the applicant's business reference was made to 'mega madness', 'mega coke' and 'mega coffee' this was also the use of E signs or indications customary in the English language and the language of the retail food trade as designating the kind or size characteristics of the individual items. (At 189F - I.) Held , accordingly, that at date of registration the mark 'megaburger' had no distinctiveness pertaining to origin but had been merely descriptive of size. It had been reasonably required for use in F the trade and therefore in terms of s 10(1A) of the Trade Marks Act 62 of 1963 not registrable. Neither had it been distinctive within the meaning as defined in s 12 and as required by s 10 of that Act. (At 189I - J.) Held , further, that the use of the word 'mega' in the mark was descriptive of the characteristic of kind, quality or quantity pertaining to hamburgers and was in terms of s 34(2) (b) of G the Trade Marks Act 194 of 1993 not an infringement of the registered trade mark. It was therefore liable to be removed from the register in terms of s 10(2) of that Act as not being capable of distinguishing, consisting of an indication which had become customary in the current language. (At 190A - B/C.) G

ESTEE LAUDER

Headnote : Kopnota F The appellant had applied to the respondent to register the trade mark 'Estee Lauder Beautiful' in class 3 Schedule 4 to the Trade Mark Regulations promulgated in terms of the Trade Marks Act 62 of 1963. The specification related to a wide range of goods, including cosmetics and toiletries such as perfumes, soap, shampoo, make-up and deodorants. The respondent refused to register the trade mark unless a disclaimer was entered in the register in respect of the word 'beautiful', the effect G whereof would have been to deny to the appellant

the exclusive right to the use of that word. In his reasons for his decision the respondent concluded that the word 'beautiful' was a word reasonably required for use in the trade and 'automatically qualified to be disclaimed whenever it appeared in any trade mark application' and referred to s 10(1A) of the Act, which provided that a mark which was reasonably required for use in the trade was not registrable. The appellant was not willing to agree to any such disclaimer and appealed to a Provincial Division. Before the H hearing of the appeal it applied to amend the specification to relate only to 'perfumes, eau de perfumes and colognes', counsel for the respondent having no objection thereto. On appeal the appellant in the first place stressed that it did not apply for the registration of the mark 'beautiful' simpliciter but for registration of the composite mark, and argued that the respondent had relied on s 10(1A) for requiring a disclaimer and that before that section I could operate it had to be shown that it was the composite mark as a whole and not merely some part of it that was reasonably required for use in the trade. The Court held that this argument misconstrued the thrust of the respondent's reasoning, namely that, if only one element of a composite mark was reasonably required for use in the trade, the mark was not necessarily disqualified but might, in appropriate cases, be registered J subject to the entry of a disclaimer in respect of the matter so required. 1993 (3) SA p44 McCREATH J A The appellant next argued that whilst the word 'beautiful' was, in its ordinary signification, a laudatory epithet, it was not to be so regarded in its context as part of the appellant's composite trade mark, particularly with reference to the goods described in the amendment to the application. Referring to The Shorter Oxford English Dictionary definition of the word 'beauty' as meaning a 'quality . . . which affords keen pleasure to the senses, especially that of sight, or which charms the intellectual or moral faculties', the appellant went on to argue that the B word 'beautiful', whilst having a definite oral and visual significance, had no relevance in general usage insofar as the olfactory senses were concerned and that therefore, as the goods for which registration was sought comprised exclusively fragrances, which appealed to the sense of smell, the word 'beautiful' was adapted to distinguish.

Section 18 of the Trade Marks Act provides inter alia that, if a trade mark contains matter common to the trade or otherwise of a non-distinctive C character, the Registrar or the Court may, as a condition of the mark being entered or remaining on the register, require the applicant to disclaim any right to the exclusive use of any such part of the mark. Held , that the phrase 'common to the trade' meant matter which was in common use in the trade, but that even if the matter was not commonly used in the trade or reasonably required for use therein, it might nevertheless be of a non-distinctive character. D Held , further, that a useful test in this respect was that applied by the High Court of Australia in Eclipse Sleep Products Application 1909 CLR 300, namely whether the matter in question (in the instant case the word 'beautiful') appeared to be likely to become in use regarded as an essential feature of the mark as a whole. Held , further, as to the dictionary definition of 'beauty', that, as appeared from the definition, it was not a quality affording pleasure to E the oral and visual senses only and that from the definition of 'beautiful' in the same dictionary it was apparent that the epithet in its adjectival form could apply to the olfactory as well as to the visual and oral senses. Held , further, that it was a well established principle that a laudatory epithet could not be made the subject of a trade mark monopoly since it would involve an undue limitation on the rights of others to the free choice of language in describing and advertising their goods. F Held , further, applying Heublin Inc and Another v Golden Fried Chicken (Pty) Ltd 1984 (3) SA 911 (T) at 913G, that 'where . . . a mark is inherently totally non-adapted to distinguish, no amount of use or assistance from extraneous circumstances can render it registrable.' Held , further, that the word 'beautiful' was a prominent part of the mark - indeed, in the context the accent fell thereon as the only laudatory element in the three words comprising the mark, and it was, accordingly, G an epithet likely to become in use regarded as an essential feature of the mark as a whole.

Held , further, that s 46 of the Act did not provide an adequate remedy in this respect since it afforded no protection when the word was used in a trade mark and a competitor would only be able to use the word in a non-trade mark sense. Held , further, that an admission would not be appropriate in the instant case since it would not afford the protection, namely to avoid the possibility that the word by user became distinctive and that thereby the appellant acquired a monopoly in the word. H Held , accordingly, that the word 'beautiful' in the appellant's mark was of a non-distinctive character and that a disclaimer in respect thereof was warranted. Appeal dismissed.

JUDYS PRIDE FASHIONS

[zHNz] Headnote : Kopnota Section 18 (b) of the Trade Marks Act 62 of 1963, which deals with the registration of trade marks subject to F disclaimer, provides, inter alia , that if a mark 'contains matter common to the trade or otherwise of a non-distinctive character', the Registrar may impose the condition that the proprietor disclaim any right to exclusive use of such matter. G The appellant sought to register the trade mark 'Fashion World', in stylised form, in class 42 of the register of trade marks in respect of various services relating to clothing, textiles and the like. The application was initially refused on the grounds that the mark was 'nondistinctive, descriptive' and consisted of 'words reasonably required for use in the trade'. After a hearing the appellant was advised that registration would be granted subject to the application being converted to one in terms of s 12 of the Act H and the entering of a disclaimer of the phrase 'Fashion World' against the application. The appellant refused to enter a disclaimer. In an appeal against the Registrar's refusal to register the mark without a disclaimer, Held , that matter 'of a non-distinctive character' was distinct from and independent of 'matter common to the trade': thus, even if the matter was not commonly used in the trade, or reasonably required for use therein, it might nevertheless be 'of a I non-distinctive character'. (At 94D/E-E/F.) Held , further, as to whether the phrase 'Fashion World', simpliciter , was of a non-distinctive character, that, given that it was sought to register the mark in class 42 in respect of services which might generally be said to relate to the sale and promotion of apparel and the like, in that context it was self-evident that the word 'fashion' was reasonably required for use in the J 1997 (2) SA p88

trade and could never be distinctive. Furthermore, it was abundantly clear that the A word 'fashion' was also in common use in the trade. (At 95C-D.) Held , further, as to whether the conjoining of the words 'world' and 'fashion' rendered the combination distinctive within the meaning of that concept in the Act, that the phrase 'Fashion World' was a common English phrase which had two denotations, both having a laudatory connotation. In its first denotation the phrase signified that part B of society which conceived of and -determined the fashions of the day: they might be said to comprise the 'World of Fashion' or 'Fashion World'. It was eminently reasonable to assume that other traders might also wish to associate their wares or services with the elite who made up the 'Fashion World'. In its second denotation the phrase referred to a 'World of Fashion', evoking the vision of a large emporium in which a great diversity of goods might be purchased. (At 95D/E-H/I.) C Held , further, that a mark combining 'world' with a word which had a direct reference to the goods or services was either descriptive or non-distinctive or both. (At 95I/J and 96B.) The dictum in Re Application by Play-a-Lot Ltd 12 IPR 14 at 17 applied. D Held , further, that it was established law that, even with evidence of use, it was generally not possible to register a mark that was a laudatory epithet, the name of a product, common to the trade or appropriate to describe some attribute of the product. (At 95B-C.) Held , accordingly, that the phrase 'Fashion World' was not so obscure as to render it distinctive in respect of the appellant's services and that to permit registration of the E mark without the entry of the disclaimer would be tantamount to erecting a barrier across the public path of language and commerce. (At 96H/I and 97D.)
ONLINE LOTTERY

Headnote : Kopnota The first and second respondents (the registered proprietor of the LOTTO trademark and authorised operator of the South African national lottery, respectively) contended in the North Gauteng High Court that the appellant (On-Line) was infringing the LOTTO trademark by advertising its F online business as 'LottoFun', and, what was more, unfairly competing with them by passing off its online 'LottoFun' business (which was to facilitate the purchase of national lottery tickets) as that of the respondents. In response On-Line sought (by way of counter-application) the expungement of the second respondent's LOTTO trademark on the ground of lack of distinctiveness. The High Court held in favour of the respondents, granting their application for various interdicts against On-Line, while G denying the On-Line's counter-application. On the trademark issue the respondents had argued (1) that the word 'lotto' had, by the peculiar use to which they had put it since its registration in 1991, become distinctive; and (2) that the word had in any event been registrable even prior to such use because it had in 1991 lacked any common or cohesive meaning in the public mind sufficient to preclude the right of registration. On the unlawful H competition issue the respondents had argued that On-Line's use of the name 'LottoFun' had created deception and confusion in the

mind of the public between its services and those offered by the first and second respondents. On-Line appealed to the SCA. On the trademark issue the SCA held as follows in finding in favour of On-Line that first respondent's LOTTO mark had to be expunged from the Register I of Trade Marks: In order to be registrable as intended in s 9 of the Trade Marks Act 194 of 1993, a trademark must be capable of distinguishing the origin of the goods or services to which it applies from that of other (usually competitive) goods and services. Use does not, however, equal distinctiveness: common words are naturally capable of use in relation to the goods or services of any trader J 2010 (5) SA p350 A no matter how extensively such common words have been used by any individual trader of goods or services of that class. (Paragraphs [13] and [15] at 354B and 354F - H.) By adopting the word 'lotto' simpliciter as a trademark the first respondent had appropriated a word already in general circulation (with an ascertainable generic and descriptive meaning) over which it could have no monopoly and which should have been open to use B by all competitive undertakings in the gaming industry. The word contributed nothing to identifying the source of the service which it promoted. Moreover, the first respondent could not have enhanced the inherent absence of power to distinguish by creating a game to which they chose to apply the generic description 'lotto'. (Paragraph [32] at 357E - G.) Another problem for the respondents was that the breadth of the registration, by C essentially embracing all forms of lotteries, covered also types of gambling bearing no relationship to the original 'lotto' concept. (Paragraph [34] at 358G - H.) The SCA then made the following general points in relation to the passing-off issue before finding in favour of On-Line, that there was, on a conspectus of the evidence, no reason for any member of the public to believe that its D LottoFun business was connected with the national lottery or the respondents: Passing-off protects a trader against deception arising from a misrepresentation by a rival concerning the trade source or business connection of the rival's goods or services. A court will not easily find that a descriptive name has become distinctive of the business or products of the person using them, and will not E give what amounts to a monopoly in such words to one trader at the expense of others. If a term is descriptive in the sense that it is the name of the goods themselves, it cannot simultaneously denote any particular trade source, and therefore a party cannot be prevented from unambiguously using a descriptive term in its original descriptive sense unless it has wholly lost that descriptive sense and become wholly distinctive of the claimant. Even if the F claimant succeeds in proving that a prima facie descriptive term has acquired some degree of secondary meaning, the scope of protection for the mark is narrower than for a wholly arbitrary term. Relatively minor differences will suffice to distinguish the defendant's goods or business when both use a mark which is descriptive of the goods or services they provide. This applies even though the defendant is using the closely similar term in a trademark sense. G (Paragraphs [37] - [39] at 359F 360C.)

CENTURY CITY APTS [zHNz] Headnote : Kopnota Century City Property Owners' Association (the Association) held several trademarks related to the name 'Century City'. The Association's aim was to protect the interests of stake-holders in the large commercial and residential development of the same name. The Association approached the High Court where it alleged that Century City Apartments Property E Services CC (the Letting Agency) was infringing its Century City trademarks and was also guilty of passing-off. The Letting Agency brought a counter-application in which it sought the removal of the Century City trademarks from the trademark register on the grounds that: Century City was a place name not capable of distinguishing the goods or services of one person; and that the name served to designate the geographical origin of goods or services. F The High Court found that the Letting Agency had infringed the trademarks and that its usage of the name was likely to cause deception or confusion among the public. The High Court therefore dismissed the counter-application and interdicted the Letting Agency from: infringing the Century City trademarks; from passing off its business as being, or being associated with, G 2010 (3) SA p2 A the Association; and from using the name Century City in its name, website or trading style. On appeal to the Supreme Court of Appeal, The counter-application - geographical origin The Letting Agency's counter-application for the expungement of the Association's registrations relied on s 10(2) (b) of the Trade Marks Act 194 of 1993. B The section provided that a mark may not be registered, and a registered trademark is liable to be removed from the register, if it consists exclusively of a sign or an indication which may serve, in trade, to designate the geographical origin of the services. The factual basis of the argument was that Century City had become a geographical location that designated the geographical origin of services. (Paragraph [19] at 9G - 10A.) C Held , that geographical names ought to remain available as indications of the geographical origin of the category of relevant goods or services. (Paragraph [29] at 13B - C.) Held , further, that the provision on geographical names served a public interest, permitting all to use such descriptive signs freely, by preventing them from D being reserved to one undertaking alone because they have been registered as trademarks. (Paragraph [31] at 13E.) Century City was a huge commercial and residential development, a city within a city, and had become an important landmark. The development had its own post office; public signs directed the public to Century City; and there was a Century City Service Station. Diners and restaurateurs would E describe a restaurant with reference to its location there. (Paragraphs [37], [38] and [40] at 15E - H and 16B - C.) Held , accordingly, that Century City had become the name of a geographical location. The court found that the name may serve, in trade, to designate the geographical origin of services

for various classes of registrations. Such services included entertainment, such as cinemas and a theme park; retail F merchandising services; the providing of food and drink; estate agencies; and real-estate management. (Paragraphs [45] and [46] at 17C - F.) Blameworthy conduct Held , that a party could not rely on an infringement, especially its own, to establish that a trademark had lost its efficacy under this provision. G Wrongful acts by third parties cannot in general destroy rights. This truism also applied to trademark rights. (Paragraph [49] at 19C - D.) Held , however, that on the facts of this case it could not be doubted that the Association was responsible for the fact that Century City had become a geographical location and place name. It was the necessary consequence of the nature of the development. It followed that the registrations stood to be H revoked. (Paragraph [50] at 19E - F.) The undesirability of the CC name of the Letting Agency Held , that, in view of the finding on the registrations, the Association did not have a vested right in the name Century City, and its claim, that the Letting Agency's use of the name was undesirable, floundered. (Paragraph [52] at 19I.) I Held , that, in any event, the names of the two corporations described their differences: the one was a property owners' association and the other was an apartment property-services close corporation. The only similarity was that both were linked to Century City. That in itself was insufficient to justify a conclusion that the business of the one was connected with the business of J the other. (Paragraph [53] at 19J - 20A.) 2010 (3) SA p3 Passing-off A Held , that the objections that applied to the appropriation of a geographical location as a trademark applied to passing-off too. The Association's case based on passing-off failed on the same basis. It was difficult to conceive of a protectable reputation based purely on the name of a geographical location that was inherently descriptive of the origin of the particular service. (Paragraph [54] at 20C - D.) B Appeal upheld and certain of the Century City trademarks revoked.

HEUBLIN

[zHNz] Headnote : Kopnota The quality of distinctiveness is the corner-stone of the Trade E Marks Act 62 of 1963. Distinctiveness has, by virtue of s 12, a particular meaning. It does not per se suffice that the mark has the effect of distinguishing the goods or services of the holder of the right from those of others. It must be "adapted to distinguish". To qualify as such, the mark may, in terms of s 12 (2), either be inherently adapted to distinguish, or, where that degree of inherent distinctiveness is insufficient to render the mark per se adapted to distinguish, by it being F suitably supplemented by use or other circumstances. In other words, the necessary distinctiveness may be either innate or acquired. Where, however, a mark is inherently totally nonadapted to distinguish no amount of use or assistance from extraneous circumstances can render it registrable. In the instant case, it had, in a counter-application, been submitted before the Court a quo that the mark "It's Finger G Lickin' Good" (as applied to chicken products) was inherently not adapted to distinguish and should be expunged from the register on that ground, or, alternatively, on the ground that it was reasonably required for use in the trade. It was contended that, while perhaps highly distinctive, it was an advertisement describing the quality of the goods, that it could be used by any other trader, and that its ingenuity or novelty did not mean that it was adapted to distinguish or H otherwise complied with the requirements for registration. In a cross-appeal to the Full Bench against the rejection of the counter-application for expungement, Held , that while descriptive and laudatory, the mark, especially having regard to the abbreviated and apostrophised form of the word "licking", was a novel, invented slogan constituting an original invented slogan not in ordinary linguistic use and having an inherent adaptability to distinguish which, coupled with its approved extensive use in I relation to the holder's products, had become distinctive thereof. Held , further, that while "finger-licking" was an old phrase, it did not follow that it could not be adapted to distinguish: it is the combination of such words that must be looked at in determining whether the mark is distinctive. Held , accordingly, that the application for expungement on the first ground had to be dismissed. 1984 (3) SA p912 NESTADT J A Held , further, as regards the second ground advanced, that inasmuch as the applicant had not established that the mark as a whole, as opposed to its constituent elements, was reasonably required for use in the trade either presently or in the future, the application on

such ground also had to be dismissed: whilst the mark consisted of words which might reasonably be required for use in the trade, the combination used was highly distinctive.

DIE BERGKELDER

Headnote : Kopnota The appellant sought to interdict the respondent from continuing to infringe its trademark for a particular wine bottle known as a Bocksbeutel . The respondent in turn sought to have the mark expunged, primarily on the ground that, at the time of registration, the mark had lacked, and indeed still lacked, the E necessary capability of distinguishing the appellant's wines from those of other wine producers. The High Court ordered the mark to be expunged. Held , that in order to qualify for protection, a container mark had to be capable of distinguishing, in the sense that the public would perceive the container as a badge of origin and not merely another container. (Paragraph [9] at 281F.) F Held , further, that a Bocksbeutel was not a badge of origin which, without more, distinguished the wine of one producer from that of another. If the appellant's Bocksbeutel were placed alongside any other bocksbeutel , both stripped of their labels, one would not be able to distinguish one from the other. (Paragraph [15] at 282G - H.) Held , further, that the fact that, at the time of registration and subsequently, no other local producer of wine had used a Bocksbeutel did not overcome the difficulty that the G bottle did not serve to distinguish. Whilst a Bocksbeutel assisted in distinguishing the appellant's wine, a Bocksbeutel per se did not perform the function of distinguishing the appellant's wine from any other wines sold in a Bocksbeutel . (Paragraphs [16] - [17] and [18] at 283C - E and 283H - 284B.) Held , accordingly, that the appeal had to be dismissed. (Paragraph [19] at 284D.) H

BEECHAM

Headnote : Kopnota There exists an ever-increasing tendency to seek the protection of intellectual property rights in a field not designed or intended to H cover the area in question. This is not always particularly difficult since such rights may overlap or exist parallel to each other. However, the fact that the requirements under each head differ, as do the nature and duration of the protection, means that each right has to be kept firmly within its legitimate bounds. (Paragraph [3] at 642F/G-G and I 643B-B/C.) The instant appeal resulted from the appellants' desire to uphold a registered trade mark in respect of the shape of a pharmaceutical tablet and for a finding that the respondent, who was selling a tablet in the same form with the same chemical composition, was infringing its mark. (The appellants' patent in relation to the composition of the tablet, an antibiotic, had already J 2003 (3) SA p640 expired.) The Court a quo , a Provincial Division, granted the respondent's application for the expungement of the appellants' A mark and refused the appellants' counter-application for trade mark relief. According to the Registrar's certificate, the mark consisted 'in the shape and curvature configuration of a tablet substantially as shown in the representation' on a photograph. The tablet shown was bi-convex with an oval shape. The mark was not limited by either colour or size. The respondent sought expungement of the mark on a number B of grounds to be found in s 10 of the Trade Marks Act 194 of 1993, inter alia that it was 'not capable of distinguishing within the meaning of s 9' (s 10(2) (a) ) and that it consisted 'exclusively of the shape . . . of goods where such shape . . . [was] necessary to obtain a specific technical result' (s 10(5)). Held , that the test was in essence whether the appellants were using or proposed to use the shape of the tablet 'for the purpose C of distinguishing' it from tablets sold by others or whether the function of the shape was to distinguish these tablets from other tablets. (Paragraph [9] at 646B/C-C.) Held , further, that, although the protection of functional shapes or designs was historically an anathema, it was held in Philips Electronics NV v Remington Consumer Products Ltd [1999] RPC 809 (CA) (heavily relied on by the Court a quo ) D that there was 'no class of marks having a distinctive character by their nature or by the use made of them which [was] not capable of distinguishing'. This meant that whether a mark constituted a trade mark as defined was a factual matter to be approached without any a priori disqualification or classification. Functionality per se was no disqualification. (Paragraph [10] at 646D/E-F.) E Held , further, that, although there could be no inherent objection to a trade mark registration relating to a substantially oval and bi-convex tablet, the question whether such a mark was distinctive within the meaning of s 9 was an issue different, though not always separate from, the issue of whether the mark was a mark under s 10. (Paragraph [11] at 647A/B-B/C.) Held , further, as to whether the appellants' mark was capable of distinguishing that within the meaning of s 9, that the F enquiry had two stages: first, whether the mark was, at the date of application for registration, capable of distinguishing the appellants' goods from those of another person; and, if the answer was no, whether the mark was presently so capable of distinguishing by reason of its use to date. (Paragraph [20] at 649I/J-650B.) G

Held , further, that shape in issue was not inherently capable of distinguishing in the trade mark sense. This was established by the evidence that oval, bi-convex tablets were a common tablet shape in the pharmaceutical industry and that at the launch of appellants' tablet another company had already, for a number of years, marketed an antibiotic tablet with the shape of the registered mark. (Paragraph [23] at 650F/G-H/I.) H Held , further, that the shape had also not become distinctive through use: no pharmacist would regard the shape of the tablet alone as a guarantee that it came from the appellants, and in addition there were many pharmaceutical tablets on the market (including antibiotics) that had an identical or substantially identical shape. (Paragraph [24] at 650I-651B.) Held , further, as to whether the shape was necessary to obtain a specific technical result as intended in s 10(5), that it was I clear from the evidence that an oval shape was important for the ease and safety of swallowing tablets, and for coating and the prevention of crumbling. The choice of the shape in question thus provided a reasonable technical solution to a problem and consequently the registration of the mark was contrary to s 10(5) and also s 10(11). (Paragraph [30] at 652I/J-653B/C.) Appeal dismissed. J

VICTORIAS SECRET V EDGARS

Headnote : Kopnota Section 20(1) of the Trade Marks Act 62 of 1963 provides that ' (a) ny person claiming to be the proprietor of a trade mark used or proposed to be used by him . . . shall apply to the Registrar . . . for registration . . .'. The words 'claiming to be the proprietor of a trade mark' mean J 'asserting a claim to be the proprietor of a mark'. (At 736C/D-D.) 1994 (3) SA p740 A The word 'proprietor' is not in s 20(1) used in relation to the common-law right of property; nor does it import ownership of the mark as such. It appears to be used in the sense of 'one who has the exclusive right or title to the use . . . of a thing'. In terms of s 20(1) one can claim to be the proprietor of a trade mark if one has appropriated a mark for use in relation to goods or services for the purposes stated, and so used it ('appropriate' in this context comprehending 'originate', 'acquire' and 'adopt'). (At 736D, F-F/G and I-J.) B Section 20(1) also applies to a person claiming to be the proprietor of a trade mark 'proposed to be used by him', the word 'proposed' in this context meaning 'to put before one's mind as something that one is going to do; to design, purpose, intend'. When the question of proprietorship is in issue, the following guidelines to the meaning of 'proposed to be used' must be borne in mind: there must be some definite and present intention to deal; while the goods need not be in being at the time, there must not C be 'a mere problematical intention, not an uncertain or indeterminate possibility, but a resolve or settled purpose which has been reached at the time when the mark is to be registered' (In re Ducker's Trade Mark [1929] 1 Ch 113 (CA) at 121). (At 736J-737B and 737D/E-G.) Since a trade mark is a purely territorial concept, the proprietorship, actual use, or proposed

use of a trade mark mentioned in s 20(1) are D premised by the subsection to be within South Africa. It follows, therefore, that the fact that a trade mark is registered in a foreign country does not in itself constitute a bar to its adoption and registration by some other person in South Africa. While it is considered by some that any form of copying another's ideas, devices or trade marks is morally reprehensible, it is not the law that such copying is per se illegitimate. 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. Factors relevant to the determination of an applicant's claim to E proprietorship of a trade mark include dishonesty, breach of confidence, sharp practice or the like. (At 737G-H/I, 738C, F/G and 739H-I.) In terms of s 17(3) of the Act, where separate applications are made by different persons to be registered as proprietors of trade marks that so resemble each other that the use of such marks in relation to the goods or services in respect of which they are sought to be registered would be F likely to deceive or cause confusion, the Registrar may refuse to register any of the marks until the rights of the competing applicants have been determined. In determining which of competing claimants should prevail, the rule is that, all else being equal, the application prior in time of filing should prevail and be entitled to proceed to registration. (At 744D/E-E/F.)

ARJO WIGGINS

Headnote : Kopnota Section 27 of the Trade Marks Act 194 of 1993 permits the removal of a trade mark from the register of trade marks on the grounds of lack D of bona fide use. It has been accepted by the Courts that, whatever the trade mark proprietor's actual motive, inauthenticity of statutory purpose is established by an absence of commercial trade in the article on which the trade mark is used. (Paragraph [9] at 599F/G - G/H.) Since the absence of intention to trade commercially in the particular goods in respect of which the trade mark is registered E renders use of the trade mark statutorily inauthentic, it must follow that use of a trade mark on goods other than with the object of promoting trade in those goods cannot constitute bona fide use for statutory purposes, even if that use promotes trade in other goods. It follows from that that, even if a trade mark proprietor's use of the trade mark on promotional goods is 'commercial', in that it promotes goods in which the proprietor trades, such use is not F commercial in relation to the goods on which it is displayed, since those goods are not being traded. And while the use of the trade mark on those promotional goods is use in order to distinguish them from similar goods of others, that use is not for the purpose of trading in the promotional goods but for the purpose of trading in other goods. (Paragraph [11] at 600D F.) G The appellant was the proprietor in South Africa of the registered trade mark 'Idem' in respect of 'paper, paper articles, cardboard, cardboard articles and paper stationery'. The respondent's application in a Provincial Division in terms of s 27 of the Act for the expungement of the appellant's mark from the register of trade marks in respect of all goods other than 'carbonless paper, namely specialised paper whose purpose it is to perform the same function as H carbon paper because of its special characteristics' succeeded.

In an appeal the Court confirmed the finding of the Court a quo that the appellant had failed to establish bona fide use in relation to goods other than carbonless copying paper. The appellant nonetheless challenged the narrow ambit of the specification of the registration sought by the respondent and argued for a specification embracing 'paper and paper articles'. The I respondent opposed this on the grounds that such a specification would include commodities beyond the appellant's proven trade. Held , that the difficulties in defining the limits of the registration to which the appellant was entitled sprang from the incontestable fact that it had proved statutorily relevant use of its trade mark on 'paper', albeit a sub-set of paper, but paper nonetheless, since the description of its trade goods as 'carbonless' J 2002 (1) SA p593 and 'copying' were merely attributes qualifying a commodity, and that A commodity was protected by the registration sought to be expunged. (Paragraph [16] at 601H/I - I/J.) Held , further, that there was nothing to indicate that carbonless copying paper was commercially quite different from other sorts of paper, nor was there anything to suggest that, commercially, it would be nonsensical to maintain registration of the Idem mark for paper in general, even though it was used only for carbonless copying B paper. (Paragraph [19] at 603B/C - C/D.) Held , further, even accepting that an applicant for expungement was prima facie entitled to removal of a trade mark from the register once non-use of a category of goods was shown, the question to be answered before the Court could determine the ambit of the expungement sought was in what expungable category of goods had C non-use been shown. (Paragraph [20] at 604A - C.) Held , accordingly, that unless it was evident to the Court (or unless the applicant for expungement laid a foundation for suggesting) that the expungement sought described a commercially coherent category of goods within the existing specification, the relief sought by the applicant could not be granted if the trade mark D proprietor had proved relevant use within the category. In this instance the appellant had proved relevant use of its trade mark within a protected category and there was nothing to show that sustaining its registration in respect of that category would not make commercial sense. (Paragraph [21] at 604C - D/E.) Appeal allowed.

SCHULTZ V BUTT

Headnote : Kopnota In order to succeed in an Aquilian action based on unfair competition, the plaintiff must establish all the requisites of Aquilian liability, including proof 1986 (3) SA p668 A that the defendant has committed a wrongful act. In such a case, the unlawfulness which is a requisite of Aquilian liability may fall into a category of clearly recognized illegality, such as trading in contravention of an express statutory prohibition; the making of fraudulent misrepresentations by the rival trader as to his own business; the passing off by a rival trader of his goods or business as being that of his competitor; the publication by the rival B trader of injurious falsehoods concerning his competitor's business; and the employment of physical assaults and intimidation designed to prevent a competitor from pursuing his trade. But it is not limited to unlawfulness of that kind. In some of the cases appearing in the Law Reports, emphasis was placed upon criteria such as fairness and honesty in competition. In judging of fairness and honesty, regard is to be had to boni mores and to the general sense of justice of the C community. While fairness and honesty are relevant critera in deciding whether competition is unfair, they are not the only criteria. Questions of public policy may be important in a particular case, eg, the importance of a free market and of competition in our economic system. The Court accordingly, in a case where the question to be decided was whether the appellant was competing unfairly with the respondent by making a mould of a hull of a ski-boat D designed by the respondent, the respondent's design having evolved over a long period of time, with considerable expenditure of time, labour and money, held that the making of such a mould by the appellant with which to make and sell boats in competition with the respondent was unfair and unjust. The Court held further that the appellant, having trespassed on the respondent's field, added impudence to dishonesty by obtaining a design registration, in terms of the Designs Act 57 of 1967, in his own name for the hull designed by the respondent with E the object of forbidding the field to other competitors. Furthermore, the Court held that there was not any sufficient countervailing public interest to displace the Court's conclusion that the appellant's methods of competition were unfair and unjust. Where the novel part of the design, registered or sought to be registered in terms of the Designs Act 57 of 1967, is nothing more than an ordinary trade variant, it is insufficient to F impart the character of novelty and originality to the whole design where the design is composed of parts that are old and new. Where, in a dispute concerning the registrability of the design of a boat in terms of Act 57 of 1967, the appellant had in terms of the Act registered the design of the window structure of a ski-boat (the hull of which had been designed by the respondent), the Court held that the appellant's window structure was no more than an ordinary trade variant of window G structures in common use in the boat-building trade and as such its introduction could not make the design of the boat new or original. The Court held that basically the design of the window structure was determined by its function to provide some protection to the occupants of the boat against wind and spray and variants in the design were matters of taste or choice in the trade. The Court held, accordingly, that a Provincial Division had correctly ordered the cancellation of the design of the boat in terms of s 10 (2) of the Designs Act 57 of 1967.

MCDONALDS V JOBURGERS

Headnote : Kopnota The appellant ('McDonald's'), a corporation incorporated in the United States of America, operated its own restaurants, selling hamburgers and other fast foods, and franchised others E to do so. It had operated internationally since 1971 and was one of the largest, if not the largest, franchisers of fast food restaurants in the world. Between 1968 and 1985 McDonald's obtained registration in South Africa, mainly in classes 29, 30 and 42 of the register of trade marks, of 52 trade marks, of which 27 incorporated the word 'McDonald' or 'McDonald's'. When the proceedings commenced in these cases in 1993 McDonald's had F not traded or used any of its trade marks in South Africa. During 1992 plans were made by one of the respondents ('Joburgers'), a South African company which franchised a chain of 177 fast food restaurants trading as 'Chicken Licken', to establish another chain of fast food restaurants using the trade mark 'McDonalds' and other marks owned by McDonald's. To this end, it applied in 1993 for the registration of G some of the McDonald's trade marks and, in terms of s 36(1) (a) and (b) of the Trade Marks Act 62 of 1963 ('the old Act') for expungement of the marks held by McDonald's. McDonald's opposed the application for expungement and, in the face of Joburgers' firmly stated intention to register and use the McDonald trade marks, sought and obtained an H interim order preventing Joburgers from infringing its marks, passing-off and unlawful competition. Shortly thereafter, Joburgers bought a fast food outlet in Durban which traded as 'MacDonalds'. When McDonald's became aware in early 1994 that Joburgers was conducting a business in Durban under the name 'MacDonalds', it obtained an order declaring Joburgers in contempt of the earlier order. Joburgers' response was to dispose of I the business to another respondent ('Dax'), a 'Chicken Licken' franchisee operating in KwaZulu-Natal. In May 1994 Dax applied to register the mark 'MacDonalds' in classes 29, 30 and 42 of the register. In August it sought the expungement from the register of the trade marks which McDonald's had asked it to refrain from using. McDonald's brought a counter-application for an interdict preventing Dax from infringing its marks. J The Trade Marks Act 194 of 1993 ('the new Act') came into force on 1 May 1997 (1) SA p3 A 1995. Section 35(3) of the Act protects 'well-known' trade marks emanating from certain countries from use in South Africa of 'a trade mark which constitutes . a reproduction, imitation or translation of the well-known trade mark in relation to goods or services which are identical or similar to the goods or services in respect of which the trade mark is well known and where the use is likely to cause deception or confusion'. This protection is B extended to the proprietor of a well-known mark 'whether or not such person carries on business, or has any goodwill, in the Republic' (s 35(1)). Prior to the enactment of s 35 the proprietor of a well-known mark was not afforded protection in the absence of goodwill in South Africa, and goodwill was generally held not to exist in the absence of user inside the country. On 20 June 1995 McDonald's brought an application in terms of s 35 of the new Act for an C order interdicting Joburgers and Dax from imitating, reproducing or transmitting any of its 52 marks which, it claimed, were well-known marks in terms of the section. To prove its claim

that its marks were well known, McDonald's tendered evidence by the chairperson of the South African Franchise Association to the effect, inter alia , that (a) at numerous meetings, conferences and seminars on various aspects of franchising conducted by the D Association, the business format adopted by McDonald's was held up as the model for efficient franchising; and (b) that over the years the Association had received numerous requests from prospective franchisees and ordinary members of the public for advice on how to become a McDonald's franchisee. Two market surveys had been commissioned by McDonald's. In addition to the results of the surveys - which indicated that, among young E white adults living in affluent suburbs, a substantial majority was aware of the McDonald's name and/or its logos and trade marks - McDonald's tendered the evidence of the person who had designed the surveys, of the persons who had supervised the interviewers, and of the interviewers who had actually conducted the surveys. The three applications, namely the two expungement applications in terms of s 36(1) (a) and F (b) of the old Act and the 'well-known marks' application in terms of s 35 of the new Act, were heard together in a Provincial Division. The Court found in favour of Joburgers and Dax. In an appeal, the Court dealt with the well-known marks application first. Held , that to qualify for the protection afforded by s 35 of the new Act, it would be enough for a claimant to prove that the mark was well known as a mark which had its origin in G some foreign country, provided that, as a fact, the proprietor of the mark was a person falling within ss (1) (a) or (b) of s 35. It was not necessary to show that what was well known was not only the mark itself, but also the nationality, domicile or place of business of the mark's owner, and also the fact that the relevant country was a member of the Paris Convention on the Protection of Industrial Property. (At 15D and 15B/C-C/D.) H Held , further, that the type of protection offered by s 35 was typical of that available under the common law of passing-off, namely a prohibition on the use of the mark in relation to goods or services in respect of which the mark was well known and where its use was likely to cause deception or confusion. (At 19E/F-F.) Held , further, as to whether the mark should be well known to all sectors of the population, I that s 35 was intended to provide a practical solution to the problems of foreign businesses whose marks were known in South Africa but which did not have a business in the country. Given the diversity of the South African population, the legislation would not achieve its desired purpose if protection were granted only to marks which were known, let alone well known, to every segment, or even most segments, of the population: there were few marks, J if any, which could pass that test. (At 20B-D.) 1997 (1) SA p4 A Held , accordingly, that, for the purposes of s 35, a mark would be well known in the Republic if it were well known to persons interested in the goods or services to which the mark related. (At 20E.) Held , further, as to the degree of recognition required before a mark could properly be described as a well-known mark, that the important practical question was not whether a B few people knew the mark well, but whether a sufficient number of persons knew it well enough to entitle it to protection against deception or confusion. (At 20G/H-H.) Held , further, that, given that the purpose of the legislation was to extend the protection of a passing-off action to foreign businesses which did not have a business or enjoy goodwill inside South Africa, provided that their marks were well known in South Africa, it seemed C logical to accept that the required degree of knowledge of the mark would be similar to that protected in the existing law of passing-off, namely a substantial number of persons. The concept of a substantial number of persons was well established and provided a practical and flexible criterion which was consistent with the terms of the statute. (At 21C-D/E.)

Held , further, that, even if the results of the market surveys tendered by McDonald's were D hearsay, the evidence should in this instance be admitted under the exception provided for in s 3(1) (c) of the Law of Evidence Amendment Act 45 of 1988 to the rule against allowing hearsay evidence, for the following reasons: (a) a properly conducted market survey placed the replies of a representative sample of the public before the Court without requiring affidavits from each of them; (b) there was no substantial disadvantage in adopting such a E course; and (c) there could be no prejudice to the other parties as they would have a full opportunity to check the results of the survey. (At 26F/G and 27B-C.) Held , further, as to the argument that, in refusing to allow the evidence of the market surveys, the Court a quo had exercised a discretion with which the Court on appeal could F not interfere unless it considered that the discretion had not been judicially exercised, that a decision on the admissibility of evidence was, in general, one of law, not of discretion, and that a Court of appeal was fully entitled to overrule a decision by a lower court if the appeal Court considered the lower court's decision wrong. (At 27D-E.) Held , further, as to the effect to be given to the evidence, that the persons interested in the G goods and services provided by the proprietor of a well-known mark would be potential customers and, in this instance, potential franchisees. (At 27I.) Held , further, that on the evidence, at least a substantial portion of the persons who would normally be interested in the goods and services provided by McDonald's knew its name, which was also its principle trade mark. That mark, at least, was well known for the H purposes of s 35 of the new Act and was entitled to protection from the deception or confusion which would flow from the respondents using the McDonald's mark in relation to the same type of fast food business. (At 28H-J.) Held , further, as to Dax's submission that, as proprietor of the MacDonalds business, it qualified for the protection from interference or restraint by the proprietor of a well-known I mark offered by s 36(2) of the new Act to a person who, or whose predecessor in title, had 'made continuous and bona fide use of the trade mark', that bona fide use of a trade mark within the meaning of s 36(2) had to be used for the purpose of distinguishing the goods and services provided under that mark from the same kind of goods and services connected in the course of trade with any other person. (At 30D/E-E.) J Held , further, that, on the evidence, Joburgers, Dax's predecessor in title, had 1997 (1) SA p5 A used the 'MacDonalds' mark for ulterior purposes: having been interdicted from using the McDonald's trade mark, Joburgers bought the MacDonalds business and had traded under that name, not for the purpose of using the trade mark 'MacDonalds' to distinguish its business from others, but to use a trade mark confusingly similar to McDonald's, and had continued to trade in this fashion until it had been declared in contempt of the interdict, B whereupon it had disposed of the business to Dax. (At 30E-G.) Held , accordingly, that Joburgers, as Dax's predessor in title, had not used the 'MacDonalds' trade mark for bona fide purposes and that its use did not therefore qualify it for the protection afforded by s 36(2) to a claim under s 35(3). (At 30G/H-H.) Held , further, as to the expungement applications under s 36(1) of the old Act, that, given C that the well-known marks application had succeeded (that application had been fought on the winner takes all principle), it would be anomalous and even futile to proceed with the applications for removal because, even if those applications succeeded, Joburgers and Dax would still be interdicted from using the McDonald's mark. (At 31G/H-H.) Held , further, that, because s 36(1) stated that a registered trade mark 'may' be removed D from the register in the circumstances specified, the Court retained a general or residual discretion to refuse to remove a trade mark from the register, even where s 36(1) (a) or (b) was applicable. (At 32A-B.)

Held , further, that, although a party who had showed himself entitled to relief under s 36(1) would not be deprived of such relief by the exercise of a general discretion unless the E circumstances were exceptional, the circumstances in this case were exceptional. (At 32B-C.) Held , further, as to the argument that the success of the well-known marks application could not be taken into consideration because the expungement application had to be decided under the old Act, that, by using the power conferred under the old Act to refuse an application in the exercise of a general discretion and, by taking into account among all F relevant facts and circumstances in deciding whether to exercise that discretion the circumstance that Joburgers and Dax would not in any event be entitled to use the relevant marks by reason of legislation other than the old Act, the Court was merely applying the principles of the old Act to the facts and circumstances relevant to the exercise of its G discretion. (At 32D-F.) The appeal was accordingly allowed.

DANCO CLOTHING

[zHNz] Headnote : Kopnota An applicant for the expungement of a trade mark from the register of trade marks under s 33(1) of the Trade Marks Act 62 of 1963 bears the J onus of showing that he is 'a 1991 (4) SA p851 A person aggrieved' by the entry of the mark on the register of trade marks, and that he therefore has locus standi to bring the application. At that stage of the proceedings (ie on the issue of locus standi , as opposed to success on the merits) the approach of the Court is flexible rather than rigid, and the test is whether the applicant has proved, as a reasonable possibility , that he has a particular interest in the removal of the targeted mark from the register. Since the issue is locus standi to make the application and not entitlement to the order sought, B and since the offending mark is assumed to be wrongly on the register, the applicant's prospects of success on the merits are material only in the sense that it remains open to a respondent in rebuttal to seize upon the futility of the applicant's case on the merits in order to show that he lacks any real interest. The appellant had been the registered proprietor of two 'French Connection' trade marks in class 25 of the register in respect of clothing since 1980 and 1983 respectively. In 1987 the respondent became C the proprietor of the identical 'French Connection' mark in class 3 of the register in respect of, broadly, cosmetics and toiletries. The appellant had built up a substantial reputation for its 'French Connection' clothing, which was sold through national chain stores with numerous branches throughout the country. During late 1986 the appellant had decided, in line with a trend started by well-known European-based clothing designers and manufacturers, to expand its business into the D field of cosmetics, toiletries and perfumery, which it proposed selling under the 'French Connection' label. Its statement that members of the buying public had generally come to associate particular brands of 'cosmetics, perfumery, toiletries or sun-tan preparations with clothing bearing the same trade mark' was supported by similar views expressed by the merchandise directors of three chain stores, and was not controverted by any evidence from the respondent. During May 1987 the appellant had discovered the respondent's then pending application for

registration of the 'French Connection' mark in E class 3 of the register. Not wishing to become embroiled in litigation, the appellant tried to purchase the mark from the respondent. It was only in October 1987 that the appellant was informed by the respondent's attorneys that the respondent had refused to assign the mark. The appellant had been unaware that the acceptance of the respondent's mark had been advertised in November 1987 and that the period for objection thereto would expire on 25 January 1988. On 7 June 1988 the appellant F applied for the registration of the 'French Connection' mark in class 3 of the register and on 16 November 1988 it launched the expungement proceedings in a Provincial Division. That Court had found that the appellant had failed to prove, on a balance of probabilities, a serious or definite intention to expand its activities into a field where it would become a trade rival to the respondent. On those grounds, the respondent's objection in limine to the appellant's alleged lack of locus standi had been upheld. G As to the merits, the application for expungement had been brought on the grounds that the use by the respondent of the identical mark offended against the provisions of, inter alia , s 17(1) of the Act in that its use in relation to cosmetics was likely to deceive or cause confusion in view of the use by the appellant, in relation to clothing, of its earlier marks registered in class 25. The appellant's evidence as to the likelihood of confusion, which was supported by similar evidence from prominent and knowledgeable persons in the retail trade, was that H clothing, on the one hand, and cosmetics, toiletries, perfumery and sun-tan preparations, on the other hand, were sold in close proximity and through the same trade channels such as large departmental and clothing stores; that customers at retail stores of that kind would, as a matter of course, associate a mark on cosmetics with the identical mark on well-known and popular brands of clothing; and that the appellant's mark on clothing had indeed been well known and popular in 1985. On appeal, I Held , that, while the appellant might not have been as diligent as it should perhaps have been in pursuing and protecting its interests in the cosmetics field, the evidence had disclosed a reasonable possibility that the appellant had intended to expand its business in the manner alleged by it: the trend described by the appellant and others in the trade had made it not unlikely that the appellant would decide to diversify and broaden its market; and it had indeed taken steps to J implement its decision to do so. 1991 (4) SA p852 A Held, further, that, as the test at the stage where locus standi was in issue was proof, as a reasonable possibility, of a particular interest in the removal from the register of a targeted mark, that the appellant had had locus standi to bring the application. Held , further, since for as long as the respondent's identical mark remained on the register, it would serve as a complete bar to the appellant's application for registration in the same class, that the appellant for that reason had a direct interest in having it expunged - for that reason too, therefore, the appellant was a person aggrieved and B had locus standi . Semble: It makes little difference whether a blocking mark is attacked on the basis of non-use or not, or that the proposed registration being blocked is a defensive registration: what is decisive is that one party's proposed mark is blocked by the other party's existing mark which, for good measure, is assumed to be wrongly on the register. The dicta in Mars Incorporated v Candy World (Pty) Ltd 1991 (1) SA 567 (A) C at 574J-

575A and 575G and in Ritz Hotel Ltd v Charles of the Ritz Ltd and Another 1988 (3) SA 290 (A) at 308A-E applied. Held , further, as to the merits, that, for the purposes of comparison, use of the mark by both parties concerned was to be postulated, and that the issue was whether such a postulated and fair use by the respondent of the 'French Connection' mark in relation to cosmetics in 1985 would D have been likely to cause confusion or deception when compared with the use by the appellant of the 'French Connection' mark in connection with items of clothing. Held , further, that, in expungement proceedings under s 33 of the Act, the onus rested upon the applicant for expungement, if he relied, inter alia , on s 17(1) of the Act, to establish on a balance of probabilities that the notional use of the mark in a fair and normal fashion - in this instance, by the appellant in respect of clothing and by the respondent in respect of cosmetics - would, more likely than not, be E deceptive or at least confusing in regard to the source of the respective goods. Held , further, having regard to the nature of the goods (the appellant's clothing and the respondent's cosmetics), their respective uses, and the trade channels through which the appellant's and respondent's goods could notionally be retailed, that the likelihood of confusion or deception among a substantial number of persons had been established on the probabilities. The appeal was accordingly allowed.

TURBEK TRADING