McDonald's International Property Co Ltd v Gianni and Another (A566/2006) [2007] ZAGPHC 226; 2007 BIP 231 (T) (4 October 2007)

IN THE HIGH COURT OF SOUTH AFRICA /ES

(TRANSVAAL PROVINCIAL DIVISION)

APPEAL NO: A566/2006

RTM CASE NO: 1998/09833

DATE: 4/10/2007

NOT REPORTABLE

IN THE MATTER BETWEEN

McDONALD'S INTERNATIONAL PROPERTY CO LTD APPELLANT

AND

DEAN DESMOND GIANNI 1ST RESPONDENT

THE REGISTRAR OF TRADE MARKS 2ND RESPONDENT

JUDGMENT

MYNHARDT, J

INTRODUCTION

[1] 0n 8 December 2004 McDonald's Corporation applied by means of the prescribed TM3 form to the Registrar of Trade Marks ("the Registrar") for the rectification of the register of trade marks ("the register") "by the cancellation of the trade mark No 1998/0983 McBiscuit in terms of Section 24, read together with Sections 10(12) and 10(14), of the Trade Marks Act". An order was also sought that the respondent pays the costs of the application.

It is common cause between the parties at this stage that the number of the respondent's trade mark which was mentioned in the form, was wrong. The correct number is 1998/09833.

[2] Despite the fact that the applicant for the expungement of the respondent's trade mark was McDonald's Corporation according to the form, the supporting affidavit, or founding affidavit, which was filed of record in support of the application, was deposed to by Mr Peter Sipho Moyanga ("Moyanga") who deposed to the affidavit on behalf of McDonald's International Property Co Ltd and which was said to be the applicant. This company, so it was alleged in paragraph 3 of the affidavit, is a wholly owned subsidiary of McDonald's Corporation. The latter company "is the parent company of a group of companies which operate the McDonald's business internationally". The applicant, said Mr Moyanga, "is the owner of the intellectual property of the McDonald's group, including its trade marks, in several countries, including in South Africa".

It appears from the record of the proceedings before the Registrar that it was accepted by all the parties involved in the matter that the applicant was indeed not McDonald's Corporation but McDonald's International Property Co Ltd.

[3] The respondent opposed the application. He filed an answering affidavit. In response to that the applicant filed a replying affidavit and a supplementary replying affidavit.

[4] 0n 15 March 2006 the Registrar made an order as follows:

"1. There is no likelihood of deception or confusion therefore the application to fully expunge the mark by the applicant is dismissed.

2. In respect of the alternative relief sought by the applicant that the registration in question should be expressly limited to biscuits, the application is upheld/granted.

3. Each party will carry its own costs."

[5] The present appellant, the applicant before the Registrar, has appealed to this court against the order of the Registrar. It seeks an order expunging the respondent's trade mark McBiscuit from the register and an order for costs in its favour.

The respondent has cross-appealed to this court against the order limiting its trade mark to "Biscuits" only. His counsel, Mr Michau, has informed the court that the respondent is "for the purposes of this case, prepared to abandon the cross-appeal and persist with the registration of his trade mark in respect of 'biscuits' only;" (I quote from counsel's written heads of argument).

Mr Michau has also conceded, rightly in my view, that the respondent will have to pay the wasted costs which were occasioned by the cross-appeal. Such an order will be made. The appellant would, in my view, be entitled to a costs order up to the date on which Mr Michau's heads of argument were filed.

FURTHER EVIDENCE

[6] The record of the proceedings before the Registrar which was put before this court does not contain copies of the certificates, or the originals thereof, that were issued by the Registrar to the appellant as proof of the registration of the trade marks which were registered. Instead of that Mr Moyanga referred to "a portfolio of the Applicant's trade marks in South Africa" in his founding affidavit. That portfolio was contained in an annexure to his affidavit. The annexure contained particulars about the number, date, status, mark and class in which it was registered, of a large number of trade marks which were registered in the appellant's name.

[7] 0ne of the annexures to Mr Moyanga's affidavit is a copy of a letter dated 2 May 2002 which was written by the appellant's attorney, Dr Dean, to the respondent. In this letter Dr Dean referred to "a schedule of our clients' various relevant trade marks". That schedule was annexed to the letter. It contained particulars about, inter alia, the trade mark itself and the class in which it was registered, of a large number of trade marks which were registered in South Africa.

[8] The appellant has now applied to this court, by notice of motion which was filed of record on 7 September 2007, for leave to substitute the two schedules mentioned above, with a new schedule of trade marks. This schedule lists twenty five registered trade marks. Each trade mark is further identified by its certificate of registration which was issued by the Registrar. These certificates reflect, inter alia, in respect of each of the twenty five trade marks, the class in which the mark was registered and the goods or services in respect of which the mark was registered.

The appellant is also seeking leave to put these certificates before the court as evidence of the registration of the registered trade marks.

[9] In addition to the aforegoing the appellant has also sought leave to put another schedule before the court which reflects "the associations between the applicant's various trade marks".

This schedule contains particulars of a large number of registered trade marks. Some of them are included in the (new) schedule of twenty five marks. The schedule reflects which trade marks are linked to, or associated with, other trade marks. So, for instance, does the schedule reflect that the registered mark MacBurger, which was registered in class 30 under number 89/8598, is associated with two other registered MacBurger marks in classes 29 and 42 respectively and which were also registered in 1989 under numbers 89/8597 and 8599 respectively. The certificate of registration of MacBurger mark number 89/8598 forms part of the schedule of marks referred to in the preceding paragraph. It appears from that certificate that the mark is indeed associated with mark number 89/8599.

[10] The application for the substitution of the two existing schedules and the admission of the evidence by means of the certificates and the evidence about the association of the marks, is supported by an affidavit by the appellant's attorney, Dr Dean.

Dr Dean says that the appellant wants to place the evidence before this court because it was not necessary to do so in the proceedings before the Registrar. The Registrar was entitled, says Dr Dean, to refer to his own registers at any time and for any purpose. In order to put this court in the Registrar's shoes, in so far as that may be possible, says Dr Dean, it has now become necessary to put the additional evidence before the court. This court can receive such evidence, said Dr Dean, in terms of section 22(a) of the Supreme Court Act, 1959, no 59 of 1959.

The evidence about the associations between the different trade marks is also essential, said Dr Dean, because those associations are relevant and important to the appellant's case in regard to the "series principle" which is "germane to the pending appeal".

The importance for the appellant of these associations, according to Dr Dean, arises from sections 30(3) and 31(1) of the Trade Marks Act, 1993, 194 of 1993, ("the Act") in terms of which the Registrar or the court may accept proof of the use of an associated registered trade mark as equivalent to proof of the use of a trade mark that a party may be required to prove. These provisions, according to Dr Dean, may be of assistance to the appellant in regard to the question whether it "has established a likelihood of deception or confusion arising from the use of the offending mark in the context of the Appellant's reputation in the series of trade marks incorporating the 'MAC' prefix".

The evidence about the associations is vital, according to Dr Dean, in adjudicating on the appellant's complaint based on section 10(14) of the Act because it proves "The undeniable fact of a series of associated 'MAC' trade marks which use the distinctive 'MAC' prefix with a descriptive suffix, …"

[11] The respondent opposed the application. His local attorney deposed to an answering affidavit which was filed of record on Thursday 13 September 2007. A supplementary answering affidavit was filed of record on Friday 14 September 2007. The appeal was heard on Monday 17 September 2007. The attorney said that the manner in which the appellant's case was conducted before the Registrar was unsatisfactory. No details of the specifications or indication of any association of marks was furnished to the Registrar. Furthermore, said the attorney, he could find no indication that the association of the marks formed part of appellant's case before the Registrar.

In the event, however, of this court holding that the Registrar could have taken into account the particulars appearing in his register, the respondent has placed copies of some twenty three trade mark certificates before the court. This was done on the basis that the register of trade marks contains particulars of trade marks of which the prefix Mc or Mac form part and that the Registrar could also have had regard to these certificates in adjudicating the matter.

The respondent's attorney has filed a supplementary answering affidavit on Friday 14 September 2007 wherein he gave particulars of two further registered marks, Mac. These marks were registered in classes 29 and 30 respectively in 1993 under nos 1993/07410 and 1993/07411 respectively.

In yet another supplementary affidavit which was deposed to by an attorney employed by the appellant's attorneys of record, and which was handed up in court on 17 September 2007 at the hearing of the appeal, by the appellant's leading counsel, Mr Morley SC, it is stated that both those Mac marks have lapsed on 26 August 2003 and have since been removed from the register.

The response of respondent's counsel to this further affidavit was, rightly in my view, that the fact that the marks have been removed from the register after 26 August 2003 is irrelevant; the relevant fact is that both those marks were on the register on 8 June 1998 which is the relevant date in respect of respondent's mark because his mark was registered on 3 January 2002 with effect from 8 June 1998.

At least three of these trade marks were registered in class 30 and related to, inter alia, biscuits. They are no 2001/9677 McVities and no 1978/02479 Mac's, and no 1993/07411 MAC. Apart from these three marks the list also contains marks like McBeans, McCain, McBean, McBeef and MacMunch.

[12] 12.1 In argument before this court appellant's counsel adopted the stance that it

was not necessary for the appellant to seek leave to substitute the two schedules which were annexed to the founding affidavit. Counsel submitted that if the phrase "listed on Annexure A and attached as Annexures A1 to A25" is added to the end of prayer 4 of the notice of motion after the word "marks" then the same object could be achieved, namely to put the certificates and names of the twenty five marks before the court. This means that prayers 1 and 2 of the notice of motion could be deleted or ignored and that prayer 4 be amended by the addition of the extra phrase.

The respondent's counsel did not offer any objection to this approach. As a matter of fact, in the end, respondent's counsel did not object to an order be granted in terms of prayers 3 and 4 as amended of the notice of motion. The initial opposition to the application was not persisted with. Respondent's counsel also agreed that the costs of the application be costs in the cause of the appeal.

12.2 Under these circumstances there is no reason why the further evidence offered by both the appellant and the respondent should not be received by this court. The application therefore succeeds and in so far as it is formally necessary to do so an order will be granted in terms of prayers 3 and 4, as amended, of the notice of motion.

THE APPELLANT'S CASE

[13] The case for the appellant may be broadly summarised as follows:

It is the owner of a large number of registered trade marks in South Africa in respect of the trading, or business, activities of McDonald's Corporation which is a corporation existing in terms of the laws of the United States of America with its principal place of business in Illinois, United States of America. That company is the operating company of the McDonald's group of companies and it is also the parent company of the group of companies.

The McDonald's group commenced their business activities in South Africa on 1 April 1995. The activities "comprise the running of a chain of fast food outlets and all services associated therewith". These outlets comprise a series of franchise stores and company owned outlets. Mr Moyanga said that there were fifty four outlets which were owned by a subsidiary company and thirty four were owned by franchisees.

A large number of trade marks were registered in South Africa in the name of the appellant. These marks, or a substantial number thereof, incorporate the elements "Mc" or "MAC". Examples of these which appear on the list which is presently before the court, are Mega Mac, MacBurger, McFeast and McDonald's.

Trade marks incorporating the prefix "Mc" or "MAC" have become associated with the appellant's business, or that of McDonald's, in South Africa.

The trade marks have been used extensively in South Africa in relation to the "McDonald's business and its products in South Africa".

The respondent's McBiscuit trade mark is likely to cause the respondent's goods to be connected with those of the appellant. That mark could also, apart from being confused with some of the appellant's individual "Mc/MAC" marks, also be seen as a logical extension of the appellant's series of "Mc" marks. Furthermore, members of the public may be confused or deceived into thinking that the respondent's mark "is connected in the course of trade" with the appellant's business operations in South Africa.

The goods and services in relation to which the appellant's marks are used, are concerned with the "fast-food industry". A wide spectrum of consumers "from the unsophisticated and poorly educated to highly educated people, and from poor people to people in the high income bracket" purchase the goods and services that are provided under the appellant's marks. Especially "ill educated people from the lower income group" are prone to become confused.

The respondent's mark offends against sections 10(12) and 10(14) of the Act and it should be expunged from the register.

THE RESPONDENT'S CASE

[14] The respondent's case can be broadly summarised as follows:

It can be accepted that the respondent's mark McBiscuit is registered in class 30 in respect of foods including biscuits. No certificate was put before the court as proof of the registration of the mark but on the record it is undisputed that the mark was registered in relation to foods, including biscuits.

The mark was registered on 3 January 2002 with effect from 8 June 1998.

The mark has been used for a particular product of biscuit which is marketed for sale through various retail outlets. The various McBiscuit labels that are utilised by the respondent in marketing his product "is distinctly Scottish in flavour". There can therefore be no talk of the McBiscuit product being confused with fast food products which are obtainable "exclusively through the outlets run by the Applicant (Appellant) and its franchisees".

The only similarity between the appellant's "Mc/Mac" marks and the respondent's mark is that both utilise the prefix "Mc".

The appellant cannot claim a monopoly in the use of the prefix "Mc" or "Mac". This is so particularly in view of the fact that there exists in South Africa a "Macrib chain of restaurants". The decision of the Registrar was therefore correct and the appeal ought to be dismissed.

THE REGISTRAR'S DECISION

[15] The Registrar handed down a written judgment. His reasoning is, unfortunately, not helpful and lucid.

The issue before the Registrar was described by him as follows:

"The crisp dispute before the tribunal is whether or not there exists a likelihood of confusion between the McBISCUIT mark, and any of the Applicant's registered marks as a consequence of the applicant's extensive reputation in the Mc/MAC marks, and/or the continued co-existence of the respondent's and the applicant's Mc/MAC marks on the register and the McBISCUIT mark is an entry wrongly made on the Trade Mark register."

[16] According to the judgment the appellant also relied on the so-called "series principle" before the Registrar for the purpose of establishing the reputation, or extensive use, of its various Mac marks.

The Registrar was not impressed with this and decided that it could not be relied upon by the appellant for purposes of its complaint under section 10(14) of the Act.

[17] The Registrar also found that the appellant had not proved "the necessary reputation of various trade marks incorporating the prefix Mc/MAC under the stable of McDonald …"

It was also found in this regard that:

"The applicant did not discharge the onus of providing (sic) (proving?) that 18 of the samples (sic) (marks?) submitted have been extensively used in South Africa on 3rd January 2002 it is most unlikely that the McBISCUIT products would be regarded as another horse from the same stable of the McDonald's products."

[18] 0n my understanding of the judgment it was also found that the appellant had not proved a likelihood of deception or confusion which would be caused by the respondent's mark. This conclusion was reached on a basis of comparing the respondent's mark with the Mc/Mac marks of the appellant. In this context it was also taken into account, apparently, that the notional purchaser of the appellant's Mc/Mac products would not buy those products at any other place "than the McDonald stores or McDonald shelves …"

[19] The Registrar's final conclusion was that the appellant had not discharged the onus which rested on it, "to prove its case for deception or confusion". The application was therefore dismissed.

DISCUSSION AND EVALUATION

[20] In terms of section 10 of the Act the marks referred to in, inter alia, subparagraphs (12) and (14) of the section "shall not be registered as trade marks or, if registered, shall, … be liable to be removed from the register".

The relevant parts of these two subparagraphs read as follows:

"(12) a mark … the use of which would be likely to deceive or cause confusion, …"

"(14) a mark which is identical to a registered trade mark belonging to a different proprietor or so similar thereto that the use thereof in relation to goods or services in respect of which it is sought to be registered and which are the same as or similar to the goods or services in respect of which such trade mark is registered, would be likely to deceive or cause confusion, …"

[21] The common denominator between the two subparagraphs is that the use of the offending mark would be likely to deceive or to cause confusion. Both the subparagraphs therefore involve an assessment of the likelihood of deception or confusion.

For purposes of this case it can be accepted that "deception" means "to cause someone to believe something which is false" and that "confusion" means "to cause bewilderment, doubt or uncertainty" and that "likely" means "proof of a probability of deception or confusion". The deception or confusion must relate to the origin of the goods or to the existence or non-existence of a material connection between the goods and the proprietor of the trade mark. See John Craig (Pty) Ltd v Dupa Clothing Industries (Pty) Ltd 1977 3 SA 144 (T) at 150G H.

In Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 3 SA 623 (A) CORBETT JA, as he then was, said the following at 640H-I of the report, about the concept of deception or confusion in the context of an action based on infringement of a trade mark under the 1963 Act:

"The concept of deception or confusion is not limited to inducing in the minds of interested persons the erroneous belief or impression that the goods in relation to which the defendant's mark is used are the goods of the proprietor of the registered mark, ie the plaintiff, or that there is a material connection between the defendant's goods and the proprietor of the registered mark; it is enough for the plaintiff to show that a substantial number of persons will probably be confused as to the origin of the goods or the existence or non-existence of such a connection."

In the present case the appellant bears the onus to prove that the use of respondent's trade mark falls foul of section 10(12) and (14) of the Act. This is indeed common cause between the parties and rightly so. See also Danco Clothing (Pty) Ltd v Nu-Care Marketing Sales and Promotions (Pty) Ltd and Another, [1991] ZASCA 121; 1991 4 SA 850 (A) at 860E F.

[22] The predecessors of the present section 10(12) and (14) in the Trade Marks Act, 1963, no 62 of 1963, ('the 1963 Act") which was repealed by section 71 of the present Act, were, to all intents and purposes, sections 16(1) and 17(1).

These two sections of the 1963 Act were relied upon by the appellant in Danco Clothing in seeking an order that the respondent's identical mark in respect of goods in a different class than that of the appellant, be expunged. 0n appeal the Appellate Division, per NIENABER JA, found that the appellant had made out a case under section 17(1) for the relief sought. It was therefore not necessary to consider the same issue relating to deception or confusion under section 16(1) of that Act.

In regard to that section NIENABER JA said the following at 861F H of the report:

"In the light of the above conclusion relating to s 17(1) of the Act, it becomes unnecessary to consider the same issue in the context of s 16(1) thereof. The exercise in that case is to contrast the notional use by the respondent of its mark in a normal and fair manner with the reputation of the appellant (encompassing its mark in relation to the goods it sells) in order to determine whether it is more likely than not that a not negligible number of ordinary members of the buying public would be deceived or confused, as a result of the use of the identical mark on the respective goods, as to their origin. … The evidence which is relevant to s 17(1) applies with equal force to s 16(1). The only significant difference between the two sections, on the facts of this case, is that the existence of the appellant's two marks in class 25 of the register presupposes, for the purpose of s 17(1), the very reputation which the appellant has to establish for the purpose of s 16(1)."

In the present case it is therefore incumbent on the appellant to prove, for purposes of section 10(12), inter alia, that it had a reputation in the goods that were sold and marketed through the outlets referred to earlier herein, on 8 June 1998.

It is to that requirement that I now turn.

THE REPUTATION OF THE APPELLANT

[23] 0n behalf of the respondent his counsel submitted that the court must be satisfied on the evidence that has been adduced, that having regard to the reputation of the appellant's trade marks, when used in a normal and fair manner, there will be a reasonable likelihood of deception or confusion amongst a substantial number of persons.

Counsel submitted further that the appellant has not proved that it had a reputation in respect of any of its marks except for the mark McDonald's.

[24] In McDonald's Corporation v Joburgers Drive-Inn Restaurant (Pty) Ltd and Another; McDonald's Corporation v Dax Prop CC and Another; McDonald's Corporation v Joburgers Drive-Inn Restaurant (Pty) Ltd and Dax Prop CC, 1997 1 SA 1 (A) ("the McDonald's case") it was found, at 28H-J of the report, that the appellant's, McDonald's Corporation, principal trade mark, McDonald's, was already in 1993 a well known trade mark in South Africa for the purposes of section 35 of the Act. The appellant was therefore entitled to protection of that mark in South Africa although it had not traded in South Africa during 1993.

[25] It appears from the schedule of appellant's marks that is presently before the court that three of the twenty five trade marks were registered as word marks McDonald's. The particulars of these marks are as follows:

(i) Mark no B1985/07888 was registered in class 30 in respect of, inter alia, bread, pastry and confectionary. The goods do not include biscuits.

(ii) Mark no B1980/01167 was also registered in class 30 in respect of, inter alia, hamburgers, cheese burgers, sandwiches and pies of all kinds. Biscuits were not included.

(iii) Mark no B1974/05463 was also registered in class 30 in respect of, inter alia, hamburgers, cheese burgers, sandwiches and pies of all kinds. Biscuits were not included.

[26] According to the schedule before the court the appellant has the following marks which relate to biscuits also, amongst other goods:

(i) Mark no 1997/05549 registered as Mega Mac in class 30. The mark relates to, inter alia, edible sandwiches and biscuits.

(ii) Mark no 1989/08598 registered as MacBurger in class 30. The mark relates to, inter alia, bread and biscuits.

(iii) Mark no 1995/13546 registered as McChicken in class 30. The mark relates to, inter alia, edible sandwiches and biscuits.

(iv) Mark no 1995/15377 registered as McFeast in class 30. The mark relates to, inter alia, edible sandwiches and biscuits.

(v) Mark no 1995/15378 registered as McRoyal in class 30. The mark relates to, inter alia, edible sandwiches and biscuits.

(vi) Mark no 1993/03315 registered as McChicken in class 30. The mark relates to, inter alia, fast food and biscuits.

(vii) Mark no 1993/03007 registered as McNuggets in class 30. The mark relates to, inter alia, fast foods and biscuits.

[27] The question now is whether the appellant has shown that it had a reputation in any of the twenty five marks that it presently relies on.

According to Mr Moyanga the McDonald's group commenced its business activities in South Africa on 1 April 1995. Those activities comprise the running of a chain of fast food outlets and all services associated therewith. At the time of the institution of the proceedings in December 2004 there were 88 McDonald's stores in South Africa 54 of which were owned by McDonald's SA and 34 by franchisees.

Mr Moyanga stated further that McDonald's SA has used the appellant's marks extensively in relation to the McDonald's business and its products in South Africa. In this regard he referred to a bundle of advertising and promotion material which was utilised by McDonald's in the course of conducting its business in South Africa. He said that that material features the McDonald's SA's manner of use of some of the trade marks.

When regard is had to the advertising material one finds that marks have been promoted which relate to, inter alia, biscuits and also marks which do not include biscuits among the goods the marks relate to. Examples of the first category, ie marks which relate to, inter alia, biscuits, are Mega Mac, McChicken, McFeast and McNuggets. Examples of marks which do not relate to biscuits are Big Mac, McMeal and McFlurry.

Respondent's counsel, as I have said, has criticised the evidence adduced by the appellant in regard to its reputation. Counsel submitted that there is no evidence about the extent of the use of the trade marks, exactly when such use took place, sales figures and, lastly, no evidence of any use whatsoever in relation to biscuits. 0ne is simply left to speculate, submitted counsel.

The respondent's counsel submitted that the crucial date for the establishment of appellant's reputation was 8 June 1998. I agree with that. Counsel submitted further that the allegations made by Mr Moyanga might prove that as at 30 May 2003, the date upon which his affidavit was commissioned, the applicant's marks might have had the necessary reputation, but that does not mean that the reputation also existed on 8 June 1998. The court should also be slow to draw inferences from established facts, especially in this case about the reputation of the marks, in the light of the paucity of evidence about the use of the marks between 1995 and 8 June 1998. In any event, submitted counsel, one should be careful not to equate use of the marks with the distinctiveness thereof. For this proposition counsel relied on Beecham Group plc and Another v Triomed (Pty) Ltd 2003 3 SA 639 (SCA) at 648F; First National Bank of Southern Africa Ltd v Barclays Bank plc and Another, 2003 4 SA 337 (SCA) at 346C G and Die Bergkelder Bpk v Vredendal Koöp Wynmakery and 0thers [2006] ZASCA 5; 2006 4 SA 275 (SCA) at 284A C.

In his answering affidavit the respondent did not take issue with the allegations of Mr Moyanga about the use of the trade marks and the number of outlets through which McDonald's is doing business. Those allegations are therefore undisputed.

The appellant's counsel submitted that because the respondent did not dispute Mr Moyanga's allegations, those allegations should be taken to have been admitted. It was, therefore, not necessary for the appellant to prove, for example, the sales figures in respect of the marks that it relies on.

I think that there is merit in the submissions of respondent's counsel. It behoved the appellant to show that as at 8 June 1998 the marks on which it relies did have the necessary reputation. The reputation was crucial for the purposes of appellant's reliance on section 10(12) of the Act. I do not think that Mr Moyanga's allegations go far enough to establish that as at that date any of the marks that the appellant relies on, other than McDonald's, did have the necessary reputation.

In so far as the appellant relies on the "series principle" ie that certain marks are associated with each other, the respondent's counsel submitted that that principle is also of no assistance to the appellant for purposes of its complaint based on section 10(12) of the Act. The reason for that, submitted counsel, is that there is a dearth of evidence about the reputation of the marks on 8 June 1998. I agree with that submission.

It therefore follows that the application cannot succeed in so far as it is based on section 10(12) of the Act.

In the event, however, of my being wrong in my finding regarding the appellant's reputation in the marks, the question remains whether there is a reasonable probability that a not negligible part of the ordinary members of the public, the consumers, will be deceived or confused, ie will they, at the very least, wonder whether the respondent's mark McBiscuit is not a horse from the McDonald's stable.

The appellant's counsel submitted that there will be, at the very least, such confusion. In this regard it is important to bear in mind, submitted counsel, that the McDonald's marks are well-known and that it must be accepted that consumers will come across biscuits marketed by McDonald's through the same trade channels as those of the respondent. Counsel submitted further in this regard that on the papers as they stand, the court knows nothing about the reputation of the respondent's mark nor of those marks the particulars of which were put before the court by the respondent. There is also no evidence on the papers as to how consumers would view the respondent's mark if they were to be confronted by it in the same outlets where they would encounter the McDonald's marks.

In the light of all this, submitted counsel, the Registrar would have been entitled to infer, and the court too, that the respondent's mark would be viewed by the consumers as a new mark from the McDonald's stable. 0n this basis the court ought to find, submitted counsel, that the appellant had discharged the onus of proving that there is a likelihood of deception or confusion for the purposes of section 10(12) of the Act.

I am convinced, for the reasons that will follow under the next rubric, that there is no likelihood of deception or confusion. For this reason too, the application, in so far as it is based on section 10(12) of the Act, cannot succeed.

[28] The next question to be discussed is whether there is a likelihood of deception or confusion if the marks of the appellant and the mark of the respondent are compared.

COMPARISON OF THE MARKS

[29] Appellant's counsel submitted that when the court determines the likelihood of confusion (or deception) only the competing word marks themselves should be compared and that extraneous detail such as labelling and get-up must be excluded in making the comparison.

The submission is correct. See National Brands Ltd v Blue Lion Manufacturing (Pty) Ltd 2001 3 SA 563 (SCA) at 567E F.

[30] 0n behalf of the respondent it was submitted that for purposes of the complaint pursuant to section 10(14) of the Act, which requires that the offending mark "should be identical to a registered trade mark … or … similar thereto …" the appellant has failed to identify which one of its trade marks is confusingly similar to the respondent's trade mark.

In paragraph 11.1 of his founding affidavit Mr Moyanga said the following:

"The trade mark McBISCUIT bears obvious similarities to the individual 'Mc' trade marks falling within the applicant's portfolio of trade marks in South Africa, both visually and conceptually. Apart from being confused with some of the individual 'Mc/MAC' trade marks owned and used by the Applicant in South Africa through McDonald's SA the Mc trade mark could also be seen as a logical extension of the applicant's series of 'Mc' trade marks."

In my view there is merit in the criticism of respondent's counsel that Mr Moyanga has not explained why there would be confusion with some only of the marks, which implies that in respect of others there will not be confusion.

[31] Mr Moyanga has mentioned the appellant's "series of 'Mc'" trade marks in the passage quoted from his affidavit.

Part of the (new) evidence that has been put before this court by the appellant is a schedule from which it can be established which trade marks of the appellant are associated, directly and indirectly, with each other. That schedule was prepared and put before the court because according to Dr Dean, the fact that the trade marks are associated "is a material fact which appears from the Register of Trade Marks". This fact is relevant, in turn, to "the application of the 'series principle', which is germane to the pending appeal …"

A perusal of this schedule shows that a number of Mc marks of the appellant are associated with one another. The following examples will suffice for the purposes hereof:

(i) The McChicken marks of which no 93/3315 relates to, inter alia, biscuits and which is, incidentally, also associated with the mark McViennas which was registered in class 29 in respect of, inter alia, meat, fish, poultry and game.

(ii) The McMuffin marks of which one was registered in class 30 but not in respect of biscuits, and three in class 29.

(iii) The McFeast mark which was registered in class 30 in respect of, inter alia, biscuits, and which is associated with the McRoyal mark which was also registered in class 30 in respect of, inter alia, biscuits.

The McFeast mark is also associated with a McFries mark which was registered in class 29. The latter mark is associated with the MacFries mark which was registered in class 29. This mark, in its turn, is associated with one of the McDonald's marks which was registered in class 32. The latter mark is associated with at least four other McDonald's marks, none of which was registered in class 30.

(iv) Three McNuggets marks are associated. Two of these were registered in class 29 and one in class 30 in relation to, inter alia, biscuits.

[32] The obvious purpose of this evidence is to persuade the court to find that the respondent's mark will probably cause confusion and deception.

In Juvena Produits de Beaute SA v BLP Import and Export, 1980 3 SA 210 (T) at 218H, GORDON J said the following in regard to a series of marks:

"Counsel for the applicant has submitted, further, that where there are a series of marks registered in the name of the person and having a common feature or common syllables, this circumstance renders the likelihood of deception or confusion resulting from the use by another of a mark containing the same common feature more likely. The public might be led to believe that such a mark indicated goods produced by and emanating from the same source. This is a proposition which seems to me to be clearly correct."

In regard to the complaint based on section 10(14) of the Act the appellant faces the difficulty that the Supreme Court of Appeal has set its face against applying the "series principle" in objections to registration of marks based on that subparagraph. In Cowbell AG v ICS Holdings Ltd 2001 3 SA 941 (SCA) at 950C 951E, HARMS JA, who delivered the judgment of the court, dealt with this "principle" in the context of an objection by a proprietor of registered trade marks to the registration of another trade mark. The objection was founded on section 17(1) of the 1963 Act which was, to all intents and purposes, the predecessor of section 10(14) of the Act. In that case the marks of the objector were not associated. HARMS JA said, in conclusion of this part of his judgment, at 951E that:

"The series argument might have had some merit had the marks been associated. I have in any event a conceptual difficulty.

If A does not resemble B, C or D individually, I fail to understand how it can resemble them collectively."

The learned judge of appeal, in the earlier part of his judgment at 950H-J of the report, also referred to the doubts that he had in the Upjohn matter about the applicability of the principle in matters based on section 17(1) of the 1963 Act.

In their written heads of argument appellant's counsel submitted that this court should hold that the series principle applies in the present case.

For purposes hereof I am prepared to accept, as was argued by appellant's counsel in their written heads of argument, that the remarks of HARMS J in Upjohn were obiter.

In Cowbell the same learned judge again had occasion to deal with this particular aspect. He again, and in no uncertain terms, made his views thereon clear, namely that the series principle is not applicable in applications under section 17(1) of the 1963 Act.

In their written heads of argument appellant's counsel submitted that in Cowbell the learned judge of appeal did not decide that reliance on a series of marks was wholly precluded in proceedings under section 10(14) of the Act. Counsel submitted further that the "conceptual difficulty" that the learned judge of appeal had was not a finding of law, but rather a remark on a question of fact or on principles of comparison which are not matters of law.

Counsel's principal submission was that the Registrar and the court, can have regard to surrounding circumstances when two, or more, marks are compared. The fact that marks are associated with one another and form a series of marks and are distinctive, as in this case because of the Mc or Mac prefixes, would therefore constitute "surrounding circumstances", according to counsel, which would enable the court to apply the "series principle" in the present case in respect of the complaint based on section 10(14) of the Act.

Counsel also submitted, in support of the principal argument, that the courts refer to the register from time to time if there are marks that have already been registered which are similar to a proprietor's mark, for purposes of making a finding that the proprietor has no reason to complain. An example of this occurring would be Bata Ltd in which MELUNSKY AJA referred, at 850H I, to "the evidence … (that) there are numerous trade mark registrations in South Africa in respect of clothing which incorporate or include the word 'Power'" (the bone of contention in that case).

In Plascon-Evans CORBETT JA said, inter alia, at 641B-C that the marks which are compared "must be viewed as they would be encountered in the market place and against the background of relevant surrounding circumstances". This is the phrase that appellant's counsel has selected as the basis for the argument that the series principle can be applied in matters under section 10(14).

I do not agree with counsel's principal submission. Counsel wants to achieve the opposite of what was done by MELUNSKY AJA in Bata Ltd. In cases such as Bata Ltd the court refers to the register not because it provides evidence of surrounding circumstances, but as a source of evidence from which it can be inferred that there is no monopoly in a particular word or syllable. To refer to the register for the purposes for which counsel wants this court to do, amounts, in my view, to letting extraneous matter enter the picture in endeavouring to persuade the court that the marks which are being compared are indeed so similar that the offending one should be expunged or be refused registration. That is certainly not what CORBETT JA had in mind in the phrase quoted from Plascon-Evans.

In any event, even if the remarks of HARMS JA in Upjohn and Cowbell were obiter and not findings of law, I think that the logic thereof is unassailable. I see no reason why this court should adopt a different standpoint.

I therefore refuse counsel's invitation to hold that the series principle is of application in the present case for purposes of the objection under section 10(14) of the Act.

In regard to the complaint based on section 10(12) of the Act, I am prepared to accept in appellant's favour that the principle can be relied upon. It has been stated time and again that in such a case the objector, or applicant for expungement, must establish actual use of each of the marks in the series. See Cowbell at 950C E.

Before this court appellant's leading counsel confined his argument to the appellant's Big Mac mark. As I understood counsel he was obliged to do so in the light of the 23 marks that were registered in the names of different proprietors and all of which had the prefix Mc or Mac as part of their names. That meant that appellant could not claim exclusivity to the prefix Mc or Mac.

In regard to the mark Big Mac counsel submitted that appellant can rely on that mark only because of the combination of the word "Big" with the word "Mac". Appellant was therefore limited, because of the registration of those 23 marks, to use the word Mac in combination with a generic word. That is why respondent's mark McBiscuit is deceptively or confusingly similar to appellant's Big Mac mark, submitted counsel. The respondent's mark also consists of the prefix Mc and a generic word, Biscuit, which is descriptive of its product.

The reason why appellant would like to market biscuits under the mark Bic Mac, which does not relate to biscuits, and not under one of its marks, like Mega Mac or MacBurger which relate to biscuits, is that the mark Big Mac is better known than the other marks and is conceptually less confusing than, for example, MacBurger.

Appellant's counsel relied on Sabel BV v Puma AG, Rudolf Dassler Sport, (1998) RPC 199 (ECJ) ("Sabel") and Red Bull GMBH v Rizo Investments (Pty) Ltd 2002 BIP 319 (T) ("Red Bull") as authorities for the submissions that he made.

In Red Bull VAN DER WALT J had to decide whether or not the applicant's mark "Red Bull" was deceptively or confusingly similar to the respondent's mark "Mad Bull". The learned judge applied the test enunciated by CORBETT JA in Plascon-Evans, and by the court in Sabel, and concluded that the respondent's mark was an offending mark. The court granted interdicts in favour of the applicant in that matter to restrain the respondent from using the mark "Mad Bull".

Although SPOELSTRA J found in Khan's Chemical Industry CC v Unilever PLC 2004 BIP 107 (RTM) that the applicant's mark "Star-Lite" was not deceptively or confusingly similar to the respondent's mark "Sunlight", and that the respondent's objection to the registration of the mark based on section 10(14) of the Act, could not be sustained, and that courts in this country are not bound by cases such as Sabel, it is not necessary for present purposes to refer to, or to rely on, this judgment any further.

The gist of Mr Morley's argument was that the respondent had taken the word Mc, which sounds similar to Mac, and has added a generic word, Biscuits, to it. That the respondent cannot do because the appellant's Big Mac mark has a wide reputation. The respondent's mark will therefore be perceived to be something out of the McDonald's stable.

[33] This brings me to the exercise of comparing the appellant's marks with that of the respondent.

In Cowbell it was said by HARMS JA, at 947H-I, that in deciding whether or not the offending mark would be likely to deceive or cause confusion, the court has to make a value judgment based on a comparison of the competing marks, and "Likelihood" refers to a reasonable probability.

According to the learned judge of appeal, at 947J-948D of the report, the court must also have regard to the essential function of a trade mark, namely that it indicates the origin of the goods in connection with which it is used. It is, in other words, a badge of origin. The likelihood of confusion must also "be appreciated globally" which means that the:

"global appreciation of the visual, aural or conceptual similarity of the marks in question must be based on the overall impression given by the marks, bearing in mind, in particular, their distinctive and dominant components."

The approach of a court, or test to be applied, in comparing marks has been authoritatively set out by CORBETT JA in Plascon-Evans at 640 in fin – 641E as follows:

"The determination of these questions involves essentially a comparison between the mark used by the defendant and the registered mark and, having regard to the similarities and differences in the two marks, an assessment of the impact which the defendant's mark would make upon the average type of customer who would be likely to purchase the kind of goods to which the marks are applied. This notional customer must be conceived of as a person of average intelligence, having proper eyesight and buying with ordinary caution. The comparison must be made with reference to the sense, sound and appearance of the marks. The marks must be viewed as they would be encountered in the market place and against the background of relevant surrounding circumstances. The marks must not only be considered side by side, but also separately. It must be borne in mind that the ordinary purchaser may encounter goods, bearing the defendant's mark, with an imperfect recollection of the registered mark and due allowance must be made for this. If each of the marks contains a main or dominant feature or idea the likely impact made by this on the mind of the customer must be taken into account. As it has been put, marks are remembered rather by general impressions or by some significant or striking feature than by a photographic recollection of the whole. And finally consideration must be given to the manner in which the marks are likely to be employed as, for example, the use of name marks in conjunction with a generic description of the goods."

This test has been applied by our courts since the judgment in Plascon-Evans. See eg Bata Ltd v Face Fashions CC and Another, 2001 1 SA 844 (SCA) at 850D G, and Cowbell.

[34] In Plascon-Evans it was made clear by CORBETT JA at 641E G that the court should also include in its comparison the "notional use" of the competing marks. That means that the court "may have regard to how they (the proprietors) can use the marks in a fair and normal manner". The court is therefore "not confined to the manner in which the parties have actually used their respective marks …"

Appellant's counsel submitted that the appellant would therefore be entitled to sell its goods and, more particularly, biscuits, through ordinary commercial outlets and supermarkets and not only through exclusive McDonald's outlets. I think that that submission is correct in principle but I have my doubts whether it will ever materialise in practice. I do not think that there is a reasonable prospect of that ever happening.

[35] In their written heads of argument appellant's counsel emphasised the use of the prefix Mac or Mc which is used in conjunction with a description of the product, as a particular feature of appellant's marks. I agree that that is a feature of the marks. They all consist of the prefix Mac or Mc followed by a descriptive suffix or prefix, or generic word, or generic description of the goods. Counsel submitted further that the prefix Mac or Mc is a common and dominant feature of appellant's trade marks. Therefore, submitted counsel, it can be inferred that the public would be deceived or confused by the respondent's McBiscuit mark to believe that the respondent's biscuits have as their origin the well-known McDonald's fast food chain. That is so, submitted counsel, because the prefix Mac or Mc has become distinctive of appellant's products.

[36] It is true that the prefix Mc in the respondent's mark is similar to the prefix Mc in appellant's marks. It is also true that the non-descriptive element of the respondent's mark is Mc and that that element is common to respondent's mark and appellant's marks. That, however, is not the test. The court certainly must have regard to the similarities between the marks but the court must also take other aspects into account in comparing the marks as a whole and mark for mark.

If one starts with the visual similarity of the marks, as was done in Cowbell, I do not think that deception or confusion is probable. The mark McBiscuit is markedly different from not only the appellant's Mac marks, eg MacBurger and Big Mac, but also from the Mc marks like McChicken, McChips, McFeast and McDonald's.

In regard to the sound, or similarity thereof, I am of the view that there is no auditory relationship between the competing marks. The words McBiscuit and, for example McFeast, sound differently. There is no single mark of the appellant that approximates the sound of the respondent's mark.

In regard to conceptual similarity counsel for the appellant submitted in their written heads of argument that the marks McMuffin and McTreat, for instance, are extremely similar in conception to McBiscuit. The three marks are used in relation to very similar goods performing the same function, submitted counsel. That is why the dominant and distinctive feature of appellant's marks, the Mc prefix, becomes so important, submitted counsel, and because it is also used in the respondent's mark, the probability of deception or confusion is present.

I do not agree with this approach. I agree with respondent's counsel's submission that a muffin is a very different article from a biscuit and that the marks are not similar in concept because the only conceptual similarity is the fact that they relate to food. That fact cannot make them confusingly similar; they are both registered in class 30 in respect of food products.

The fact that the prefixes Mac or Mc is non-descriptive and the dominant feature of appellant's marks and that the first syllable of a word mark, in this case Mac or Mc, has from time to time been regarded as important by the courts, as in, for instance, 0rganon Laboratories Ltd v Roche Products (Pty) Ltd 1976 1 SA 195 (T) at 203G-H, does not detract from the basic principle that was reiterated by NUGENT AJA, as he then was, in National Brands Ltd v Blue Lion Manufacturing (Pty) Ltd 2001 3 SA 563 (SCA) at 568D E (par [10]), that:

"A word mark, and particularly one that makes use of ordinary language, is not merely a combination of abstract symbols … but is usually recognisable as a whole, and for what it conveys … In that respect, in my view, its visual appearance cannot be separated alltogether from its sense. Where the sense of one word mark differs markedly from that of another … and in particular where the registered trade mark is well known, it seems to me that the scope for deception or confusion is reduced, though these are always matters of degree."

If one applies this dictum to the present case it is abundantly clear that there can be no deception or confusion caused by the respondent's mark.

The emphasis placed by counsel for the appellant on the prefix Mac or Mc and its distinctiveness and the fact that it is the dominant part of appellant's marks, is, in my view, aimed at distracting one's attention from the second part, or suffix, of appellant's marks and that of the respondent and to focus exclusively on the common element Mc. That one cannot do. If full effect is given to counsel's submissions it would result in the appellant being given a virtual monopoly to use the prefix Mac or Mc in the field of food stuffs. If one focuses on the marks as wholes then this is also a case, like Bata Ltd, where "the common element of the appellant's and the … respondent's marks is of minor significance when the marks are looked at as a whole." (Per MELUNSKY AJA at 851A-B.)

In the present case one cannot, as in Bata, ignore the suffix Biscuit in respondent's mark. This is also a case, like Bata Ltd, where the notional purchaser of the respondent's product would not focus attention only on the prefix Mc.

[37] I conclude, therefore, that the appellant has not proved that there is a likelihood of confusion or deception if the respondent's mark is not expunged from the register. That means that the appeal must be dismissed.

SIMILAR GOODS

[38] In terms of section 10(14) of the Act the goods or services in respect of which the offending mark will be used, must be "the same as or similar to" the goods or services in respect of which the registered mark is used.

[39] The word "similar" in the context of a trade mark itself has been interpreted to mean "a marked resemblance or likeness" and it has been said that "marked" in turn means "easy to recognise". See National Brands at 568H-I.

[40] In the light of my conclusion that the application cannot, in any event, succeed, it is not necessary to consider what the precise meaning of the word "similar" in the context of section 10(14) of the Act is. It is also not necessary to consider the question whether or not the respondent's product is the same as, or similar to, the goods in respect of which the appellant uses its marks.

ORDER

1. An order is granted in favour of the applicant/appellant in terms of prayers 3 and 4, as amended, of the notice of motion of 7 September 2007.

2. The appeal is dismissed.

3. The appellant is ordered to pay the first respondent's costs of suit including the costs of the application to adduce further evidence.

4. The respondent is ordered to pay the wasted costs occasioned by the cross-appeal which costs will be taxable up to, and including, 29 August 2007 and which will include the costs of two counsel for the appellant.

S J MYNHARDT

JUDGE OF THE HIGH COURT

I agree

J R MURPHY

L J L VISSER

ACTING JUDGE OF THE HIGH COURT

A566-2006

HEARD ON: 17 SEPTEMBER 2007

FOR THE APPELLANT: ADV G E MORLEY SC AND ADV S W DAVIES

INSTRUCTED BY: SPOOR & FISHER, PTA

FOR THE 1ST RESPONDENT: ADV R MICHAU

INSTRUCTED BY: ATKINSON, TURNER & DE WET LAW FIRM, DURBAN

C/O ADAMS & ADAMS, PRETORIA