INTRODUCTION
When a trade mark rights holder (statutory/common law), is estopped, on the way to the forum, or anywhere else, from acting against a perceived infringing party, it would not be a funny thing*. But that is in fact exactly what the respondent in the recent ruling in Honda Giken Kogyo Kabushiki Kaisha t/a Honda Motor Co Ltd v Big Boy Scooter [2017] ZAGPPHC 513 suggested should happen. In the conventional passing off/infringement situation, the respondent would not have used for a long period of time, and the rights holder would have acted speedily. Clients were advised in the latter regard that inaction could open up, to the respondent, the “defence” of acquiescence (for more detail see 2014 De Jure 172).
THE HONDA JUDGMENT
In giving content to this concept, the court in the Honda ruling (paragraph 11/46) made the following historical references:
“[In] Burnkloof Caterers (Pty) Ltd v Horseshoe Caterers (Green Point) (Pty) Ltd 1974 (2) SA 125 (C) at 137 …Friedman AJ stated:
‘It would appear, however, from the following passage from the judgment of WESSELS, J., in Policansky Bros. v Hermann and Canard, 1910 T.P.D. 1265 at pp. 1278 - 9, that in the field of trade marks our law recognises acquiescence as a defence distinct from that of estoppel:
‘The equitable principle that if a person lies by with a full knowledge of his rights and of the infringement of those rights, he is precluded from afterwards asserting them, has been adopted by our Courts. It forms a branch of the law of do/us ma/us. The principle of lying by is not unknown to the civil law, though its application is not so often met with in our system of law as it is in English law. Sometimes the rights are lost through mere acquiescence, at other times by estoppel, as where the element of prejudice exists in addition to acquiescence. Thus acquiescence can be proved by definite acts or by conduct.’
Whether an applicant can be said to have acquiesced in the conduct complained of, is a question of fact... Acquiescence is, in my view, a form of tacit consent, and in this regard it must, however, be borne in mind that, as WATERMEYER, C.J., said in Collen v Rietfontein Engineering Works, 1948 (1) SA 413 (AD) at p. 422:
‘Quiescence is not necessarily acquiescence,’ and that ‘conduct to constitute an acceptance, must be an unequivocal indication to the other party of such acceptance".
Reference was then made to the judgment in Turbek Trading CC v A & D Spitz Ltd [2009] ZASCA 158:
"[15] Turbek's first line of defence was a reliance on what counsel referred to as an 'equitable defence' of delay: if a party delays in enforcing its rights the party may in the discretion of the court either forfeit the rights or be precluded from enforcing them. The factual basis of the defence was, briefly put, that Spitz had known since 1 October 2001 of Turbek's trade mark applications and its use of the mark 'KG' on footwear but only took steps to enforce its alleged common-law rights when it instituted the present proceedings during July 2007. This delay, according to the submission, amounted to acquiescence which disentitled Spitz from attacking the registrations or obtaining an interdict. Counsel relied on a statement by Patel J that our law recognises a defence of acquiescence distinct from estoppel and that the doctrine can be applied to halt cases where necessary to attain just and equitable results (Botha v White…. That Patel J had failed to take account of binding authority that contradicted his bald statement and that he had misread authority on which he sought to rely was pointed out by Thring J in New Media Publishing (Pty) Ltd v Eating Out Webb Services CC ... During argument it became clear that counsel was unable to contend more than that delay may in a suitable case be evidence of an intention to waive, evidence of a misrepresentation that might found estoppel, or evidence of consent for purposes of the volenti non fit iniuria principle. In other words, counsel was unable to substantiate his submission that acquiescence is a substantive defence in our law. Delay, in the context of trade mark law, may provide evidence of a loss of goodwill or distinctiveness but that was not Turbek's case on the papers. All this does not mean that delay may not have procedural consequences; for instance, it may be a factor to take into account in exercising a court's discretion to refuse to issue a declaration of rights or an interim interdict or, maybe, even a final interdict, leaving the claimant to pursue other remedies such as damages. Maybe this was what Patel J had in mind. If not, he erred." [the court’s emphasis]
The Honda court stated (paragraph 47), with reference to the above passage, that it is apparent that acquiescence no longer forms part of our law. Considering the facts an estoppel defence was rejected. It can be noted that the approach in the Turbek ruling was endorsed in Société des Produits Nestlé SA v International Foodstuffs [2014] ZASCA 187 (paragraph 66).
It is interesting in view of the above to have brief regard to estoppel, which is still applicable in our law.
ESTOPPEL
Estoppel is defined as follows by Sonnekus The Law of Estoppel in South Africa (2012) 2:
“The doctrine of estoppel by representation as applied in the courts of South Africa may generally be said to consist of the following. Where a person (the representor) by his words or conduct makes a representation to another person (the representee) and the latter, believing in the truth of the representation, acts thereon and would suffer prejudice if the representor were permitted to deny the truth of the representation made by him, the representor may be estopped - that is precluded, - from denying the truth of his representation.”
The person that has used a trade mark (B) and wishes to rely on estoppel to ward of an infringement action by the proprietor of a registered mark (A), will have to overcome certain obstacles. Amongst others, there would have to be proof of a (mis)representation. Silence (or inaction by A) can indeed, in certain circumstances, amount to a representation (Sonnekus 165). Also required, is that A must have had a duty to speak. In other words, A should have foreseen that B would have made the wrong inference from A’s “silence” and acted to his prejudice (Sonnekus 165).
This introduces the issue of negligence. Negligence would require an answer to the question whether the reasonable person in the circumstances would have foreseen prejudice to a third party and would have taken steps to prevent detrimental consequences (Sonnekus 243). In the situation under discussion, this would inevitably involve questions as to the period of inaction. Periods of a few years usually feature. Significantly, in Oriental Products (Pty) Ltd v Pegma 178 Investments Trading CC 2011 (2) SA 508 (SCA), it was even said that inaction for a mere two months was sufficient to constitute negligence (paragraph 21). Should A have been aware of B’s use, before B can rely on estoppel? There is case law to the effect that a person can by his negligence be estopped from contending that he was not aware of the nature and contents of a document signed by him (Sonnekus 249 note 50). So A could not necessarily rely on the fact that he was not aware of B’s use of the trade mark.
On the other hand, in favour of A, is the approach, as per Grobler NO v Boikhutsong Business Undertaking (Pty) Ltd 1987 (2) SA 547 (B) that there cannot be a misrepresentation if ownership (of immovable property) can be established from official records (at 562A). This view would, naturally, apply to intellectual property and the Register of Trade Marks, in the case of registered marks of course. However, mere knowledge by B of the existence of A’s registered mark is not always the decisive factor. So, when A informs B that he has no objection to B’s use, and A changes his position and object, for instance after obtaining legal advice, B could raise the estoppel defence (Webster & Page South African Law of Trade Marks (1997) 12-84). In summary, what might be decisive in estoppel cases, is whether a representation was made. In this regard it is worth noting and adapting what was said in William Grant & Sons Ltd v Cape Wine & Distillers Ltd 1990 (3) SA 897 (C), being that “[t]he mere lapse of a number of years during which plaintiffs took no action does not in itself justify a finding of acquiescence on their part” (at 924A). In other words, such circumstances do not necessarily constitute a representation in the context of estoppel.
Elsewhere, in the United Kingdom, for instance, a period of five years is and was relevant. First, with regard to acquiescence, section 48 of the Trade Marks Act of 1994 states the following:
“(1) Where the proprietor of an earlier trade mark or other earlier right has acquiesced for a continuous period of five years in the use of a registered trade mark in the United Kingdom, being aware of that use, there shall cease to be any entitlement on the basis of that earlier trade mark or other right—
- to apply for a declaration that the registration of the later trade mark is invalid, or
- to oppose the use of the later trade mark in relation to the goods or services in relation to which it has been so used,
unless the registration of the later trade mark was applied for in bad faith.” There must thus be knowledge. The same principle featured, secondly, under the old honest concurrent regime. The Registrar’s previous practice was contained in his Working Manual (Journal No 6171, chapter 6, par 11.17.2, own emphasis):
“As a starting point, the mark should have been in use for a reasonable period, usually about five years, prior to the application date. This means the other party, against which the applicant is claiming honest concurrent use, has a reasonable time in which to become aware of the applicant, and to make any challenge. It must be stressed however, that this period is only a guideline. Where circumstances dictate otherwise, this period can be reduced (or, indeed, increased). It may be possible to reduce this period if e.g. the applicant has spent a massive amount on advertising his product and/or has had a very good turnover, even though his use only predates his application by a couple of years. Conversely, the period of use may need to be substantially more than five years, if the turnover is so small that it diminishes the weight that can be given to the length of use.”
CONCLUSION
In conclusion, and whatever the technical differences between acquiescence and estoppel may be, it is always prudent for a client to assert his rights at the earliest opportunity. In the words of Harms DP (Turbek paragraph 15):
“ll this does not mean that delay may not have procedural consequences; for instance, it may be a factor to take into account in exercising a court’s discretion to refuse to issue a declaration of rights or an interim interdict or, maybe, even a final interdict, leaving the claimant to pursue other remedies such as damages.”
Prof Wim Alberts
Footnote *: Contrary to the title of A Funny Thing Happened on the Way to the Forum, which is of course actually a musical and a film of some years ago, which was a farce popular round about 1962 (https://en.wikipedia.org/wiki/A_Funny_Thing_Happened_on_the_Way_to_the_Forum).
