SOUTH AFRICA: THE "REAL" OWNER OF A TRADE MARK TRIUMPHS: BUT WHO WILL HAVE THE LAST LAUGH?
The facts, briefly, were that the ENRICO COVERI (EC) trade mark was the name of an Italian clothing manufacturer. His mark was registered in South Africa but allowed to lapse. Barel, a third party, later registered the trade mark ENRICO COVERI in his name. Both Barel and the first respondent, Popular Trading (PT), imported goods bearing the ENRICO COVERI mark into South Africa. Barel relied on the Counterfeit Goods Act to have the goods of PT confiscated. The central question before the court was the nature of PT's goods. This resolved itself in practical terms to the issue of the meaning of the phrase “counterfeiting”:
“(b) means, without the authority of the owner of any intellectual property right subsisting in the Republic in respect of protected goods, manufacturing, producing or making, or applying to goods, whether in the Republic or elsewhere, the subject matter of that intellectual property right, or a colourable imitation thereof so that the other goods are calculated to be confused with or to be taken as being the protected goods of the said owner or any goods manufactured, produced or made under his or her licence;”
The minority judgment (paragraph 23) reached the following conclusion:
“Even though Popular Trading’s imported goods are not ‘identical’ to Mr Barel’s goods, the fact that they bear a mark that is ‘the subject-matter’ or a ‘colourable imitation’ of Mr Barel’s registered trademark, would be enough to constitute counterfeiting. This is so because one could engage in counterfeiting merely by using the protected trademark, whether on the same goods or different goods. To be ‘the subject-matter’ means simply that the mark on the goods from Popular Trading must be identical to Mr Barel’s trademark. And to be a ‘colourable imitation’ means that it must look like Mr Barel’s trademark, so that it must be ‘calculated to be confused with’ or at least be of such a nature that it is ‘taken as being’ the registered trademark"
The majority judgment (paragraph 44) found the following:
"But, the above interpretation would ignore or exclude the meaning of the word ‘calculated’ in the definition of ‘counterfeiting’. It is a long-standing rule in the interpretation of legislation that every word in an enactment should be given a meaning and not be treated as tautologous or as superfluous. The Legislature, by using the word ‘calculated’ in the definition of ‘counterfeiting’, required the confusion to have been the result of planning, design or intention. Mens rea in the form of dolus is accordingly imported into the definition of ‘counterfeiting’ by the use of the word ‘calculated’. Thus, for B to be said to have committed counterfeiting, it must be established that B intended his goods to be confused with A’s protected goods or that he intended his goods to be taken as B’s protected goods. In other words, B acted with an intention to deceive. Without such intention, there cannot be counterfeiting under paragraph (b) of the definition of ‘counterfeiting’. This interpretation of ‘counterfeiting’ is consistent with what this Court has previously said about the meaning of ‘counterfeiting’, namely that ‘it involves deliberate and fraudulent infringement of trademarks’. In R v Johnstone Lord Nicholls described counterfeiting as fraudulent trading, while Lord Walker said that counterfeiting ‘involve[s] deliberate, and generally fraudulent, infringement of various intellectual property rights’."
PT thus triumphed. But what about the future?
In terms of the practical impact of the judgment, PT would not necessarily have much to celebrate. This is on account of the fact that both the minority and majority judgments by implication found that the goods of PT were infringing - which is a basic requirement of the Counterfeit Goods Act. All things being equal, Barel would seemingly thus be able to move against PT on the ground of section 34(1)(a) of the Trade Marks Act.
It would be up to EC to then attack Barel's registration. The use of EC's mark by way of the import activities of PT does not predate Barel's (alleged) use/filing date. Consequently, EC would not be able to rely on section 10(12) of the Trade Marks Act (prior user rights). That leaves open section 10(6) of the Act (prior well known mark). But the question would be whether ENRICO COVERI would be for shoes what McDONALD's was for hamburgers? The crucial date here would be the filing date of Barel's class 25 registration (in 2007). In the McDonalds's case the court used the criterion of the mark being well known amongst people interested in the goods. This was, practically, customers and potential franchisees. The latter could be substituted in the current context with retailers of shoes. So, was ENRICO COVERI well known amongst customers or retailers of shoes in 2007? However, Barel may seemingly rely on section 14(2) of the Trade Marks Act, which reads as follows:
“In the case of a trade mark which is sought to be removed from the register on the ground that it offends against the provisions of paragraph (6)…of section 10, the court or the registrar, as the case may be, may, in the case of honest concurrent use or of other special circumstances which make it proper to do so, refuse to remove the trade mark from the register.”
The question to be answered though is whether his use complies with the requirements for honest concurrent use? In terms of the relevant factors set out in the Pirie case, stated to be applicable to our law by Webster and Page South African Law of Trade Marks par 6.17, one problematic aspect might be whether the choice of the trade mark was honestly made? From the evidence it seems plausible that the trade mark was selected by Barel because it was an existing mark.
Should Barel's defence be upheld, it could then launch infringement proceedings against PT. On the other hand, if EC could succeed in expunging Barel's mark, it could in theory rely on section 35(3) of the Trade Marks Act (well known marks) to stop Barel's use. Again, the important question would be whether EC can meet the burden of proof? Was the mark well known on the date of Barel's first use?
If EC is content to have Barel on the register of trade marks, it could of course elect to apply for registration of its mark on the basis of honest concurrent use relying on its claimed use over several years.
The position in terms of passing off is complicated. It would seem that neither party can succeed against the other because both have used the mark for relatively long periods of time. PT claims use since 2009, Barel claims use since 2005. There is thus at least 16 years of concurrent use. But is it honest? The English writer Wadlow The law of passing off (6ed) 9-131 states for instance:
“The term ‘honest concurrent use’ derived from successive Trade Marks Acts is inappropriate in passing-off. If there has been concurrent user in fact, then it cannot be conclusive whether or not it was honest. The distinctiveness of marks is frequently destroyed by conduct which would have been actionable, even fraudulent, had the claimant acted in time. A fortiori, a concurrent right to use the mark, or more properly an immunity, can be obtained by use which was less than honest in its inception.”
It is sometimes said that a particular outcome might be law but it is not justice. The next step in this matter could make it hard to distinguish between the two.
Author: Wim Alberts
