Thabana Li Meli (Pty) Ltd v Thabani Wine (Pty) Ltd and Another (A552/2008) [2009] ZAWCHC 142 (28 August 2009)

IN THE HIGH COURT OF SOUTH AFRICA (WESTERN CAPE HIGH COURT, CAPE TOWN)

Case No: A552/2008

In the matter between:

THABANA LI MELI (PTY) LTD Appellant

Versus

THABANI WINE (PTY) LTD First Respondent

JABULANI NTSHANGASE Second Respondent

JUDGMENT DELIVERED ON 28 AUGUST 2009

Allie, J

[1] The appeal is against the entire judgment granted by Zondi J the reasons for which were delivered on 16 April 2008.

[2] The parties will be referred to as in the court a quo.

[3] The second applicant built up the brand: "Thabani Vineyards & Winery." The name Thabani was conceived of as an indigenous African name to promote the South African and African identity of the brand. He had labels designed and printed for and on behalf of the first applicant.

[4] During June 2006 the second applicant's attention was drawn to an invoice addressed to the first applicant for courier services

rendered by a company called Inter-Sped (Cape) (Pty) Ltd. He could not recall transacting with the company. Upon further inquiry he established that the invoice was meant to be sent to the respondent. The second applicant also came across a bottle at a wine tasting event which was labelled as "Thabana": Chardonnay. Initially the bottle labelled "Thabana" did not concern him until he considered it together with the mistake in identity that Inter-Sped made between the respondent and first applicant. He then considered the respondent's label to be an infringement of his mark.

[5] The court a quo was requested to grant the following relief and counter relief sought by the applicants and respondent respectively.

[6] The applicants sought the following order:

"That the respondent be interdicted and restrained within the Republic of South Africa from using in the course of trade, the trade mark "Thabani Vineyards & Winery" or "Thabana", "Thabana Wines" or any mark similarto "Thabani

Vineyards & Winery" that so nearly resembles it as to be likely to deceive or cause confusion in relation to goods and

services in classes 33 and 42 under the Trademark Act 194 of 1993 and that the respondent be directed to pay the costs of the application".

[7] In a counter application, the respondent sought the expungement of the applicant's trade marks numbers 1994/13332 and 1994/13333 from the trademarks register.

[8] The court a quo granted the relief sought by the applicants and dismissed the counter application.

[9] The second applicant, Jabulani Ntshangase alleged that he was duly authorised by the first applicant to bring the application and to depose to the necessary affidavits. The second applicant is a managing director of the first applicant and has a 50% share in the first applicant through his family trust, the Mgazi Trust.

[10] The second applicant alleged that he acted on behalf of the first applicant in registering the trademarks. In so doing, he could have acted as principal who intended to do the registration for the benefit of the first applicant.

Expungement:

[11] On behalf of the respondent, it was argued that the second applicant acted in a manner which was adverse to the rights of the first applicant in registering the trademarks in his own name.

[12] Accordingly, the respondent submits that the second applicant has no bona fide claim to ownership of the trademark and the registration falls within the ambit of the type of registration of mark that is to be expunged from the trademark register in terms of Section 10(3) and Section 10(7) of the Trade Marks Act 194 of 1993. Sections 10(3) and 10(7) read as follows:

"10 Unregistrable trade marks. The following marks shall not be registered as trade marks or, if registered, shall, subject to the provisions of section 3 and 70, be liable to be removed from the register:

10(3) a mark in relation to which the applicant for registration has no bona fide claim to proprietorship;

10(7) a mark the application for registration of which was made mala fide."

[13] The essential question for determination here is whether second applicant had a legal basis to register the mark in his own name and to thereafter permit or grant a licence to the first applicant to use the mark. It is clear from the affidavit of the second applicant that he developed the brand and proceeded to register the mark since inception, for the benefit of the first applicant. This is what the second applicant ultimately achieved. The first applicant has not only duly authorised the second applicant to bring the application but it is also a party to the application. The first applicant has been using the mark for the past 5 years at least. On the probabilities, it is clear that the first applicant not only has knowledge that the mark is registered in the name of the second applicant but it has also not taken issue with the registration.

[14] In the circumstances no lack of bona fide intent in registering the mark can be attributed to the second applicant.

[15] I agree with the argument presented on behalf of the applicants that Section 10 was clearly designed to cure the mischief of fraudulent claims of proprietorship by persons who register marks that they have no entitlement to.

[16] In the case of Tie Rack PLC v Tie Rack Stores (Pty) Ltd 1989 (4) SA

427 (T) the court defined a claim to proprietorship as one where the applicant used the mark so extensively as to develop its repute or the applicant must have originated, acquired or adopted the trademark with the intent of using it.

[17] In casu, Mr Ntshangase's allegation that he developed the brand and registered the mark has not been disputed. He would accordingly qualify as a proprietor of the mark on the definition in the Tie Rack Case.

[18] As a director of the first applicant, Mr Ntshangase in registering the mark, acted for the benefit of the company and cannot be said to have acted in a manner adverse to the company.

[19] A further ground for expungement raised on behalf of the respondent is the fact that neither applicants used the mark's full name as registered, namely, Thabani Vineyards & Winery. Instead they used the name Thabani alone.

[20] Section 31(1) of the Act provides as follows:

"When under the provisions of this Act use of a registered trade mark is required to be proved for any purpose, the registrar or the court, as the case may be, may, if and so far as he or it deems fit, accept proof of the use of an associated registered trade mark or of the trade mark with additions or alterations not substantially affecting its identity, as equivalent to proof of the use required to be proved. "

[21] The question to be determined is whether the use of the word "Thabani" alone substantially affects the identity of the trademark.

[22] In Bernstein Manufacturing Co Ltd v Shephardson 1968 (4) SA 386 (T), the court dealt with a section similar to Section 31(1) where certain visual marks were omitted. The court used a test that it referred to as "the arresting features" of the mark to determine whether the name with the omissions did not substantially affect the identity of the mark.

[23] In United Bank Ltd v Standard Bank of SA 1991 (4) SA 810 (T), the

court dealt with the question whether the addition of the word "bond" to the "Access" mark substantially affected the identity of the mark. The court relied on the arresting features test in the Bernstein case to conclude that the addition did not substantially affect the identity of the mark.

[24] On behalf of the appellant, it was argued that the omission of the words "Vineyards & Winery" caused an unacceptable

broadening of the trademark. Such broadened scope is what Section 25 seeks to limit. Section 25 reads as follows:

"Alteration of registered trade mark: (1) The registered proprietor of a trade mark may apply in the prescribed manner to the registrar for leave to add to or alter the trade mark in any manner not substantially affecting the identity thereof, and the registrar may refuse leave or may grant it on such terms and subject to such limitations as he may think fit."

[25] The purpose of Section 25 is to lay down guidelines for the registrar for the amendment to a trademark and to consider the fair usage of an amended trademark. Clearly the disputes in casu, do not fall to be determined with reference to Section 25.

[26] Section 31 however deals with the actual use of a trademark in an altered form without such alteration having been amended by registration. Webster & Page in their work: "South African Law of Trade Marks (fourth edition) at

paragraph 4.8 criticise Bernstein's case as creating a new test but the court merely defines the substantially same identity test.

[27] In determining whether the mark in its altered form substantially affects the identity of the registered trademark, the context in which it is actually used should be compared to the context of its intended registered use.

[28] Since the trademark "Thabani Vineyards & Winery" was registered for use, inter alia, on wine bottles, the words "Vineyards & Winery" perform a merely descriptive function.

[29] The word "Thabani" performs a distinguishing function. Since the word "Thabani" with its descriptive words

omitted, were placed on wine bottles, there can be no basis for finding that its use substantially affected the identity of the

registered trademark.

Infringement:

[30] The issue that requires determination is whether the appellant's mark, name Thabana Li Mele, constitutes an impermissible infringement

of second application's mark.

[31] Section 34(1)(a) of the Act provides as follows:

Section 34(1) Infringement of registered trade mark. (1) The rights acquired by registration of a trade mark shall be infringed by:

(a) "The unauthorized use in the course of trade in relation to goods or services in respect of which the trademark is registered, of an identical mark or of a mark so nearly resembling it as to be likely to deceive or cause confusion."

[32] In Plascon Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3)

SA 623 (A) at 640-641 the court said the following:

"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."

[33] The prospect of confusion in the market was given a similar import in the case of Sabel BV v Puma AG, Rudolf Dassler Sport [1998] RPC199 (ECJ) 224

where the following was said:

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

[34] In Bata Ltd v Face Fashions CC & Another 2001 (1) SA 844 SCA at 850 (para 9) and Cowbell AG v ICS Holdings Ltd 2001 (3) SA 941 (SCA) at 948 (para 10) our courts followed that approach.

[35] Although the respondent uses the words, Thabana Li Mele, on its wines, the word Thabana is bold and prominent and the words Li Mele is in small fine script. Both marks are used on wines in the same market. The average consumer of these wines is not likely to distinguish between Thabani and Thabana. The correct translation of these words is not likely to be known by English or Afrikaans

speaking consumers and they are accordingly unlikely to distinguish them from one another.

[36] In the case of Metcash Trading Ltd v Rainbow Cash & Carry CC (unreported case of 8 November 2001 reported in Webster & Page (4th edition)

at para 7.6) the court held as follows:

"Having on occasion seen the brochures and advertisements of both applicant and respondent, the notional customer with imperfect recall would probably remember that goods can be purchased at a wholesaler with RAINBOW as its name. The addition of "STORE" or "CASH AND CARRY" would merely be indicative of a place where goods are being sold, and lend no particular individual distinctiveness to the marks.

In my view the dominant feature both visually in the advertisement and brochures, and auditory in each of the marks is "RAINBOW.

The uncommon association of "RAINBOW" with wholesale services in relation to the sale of goods tend to imprint the word in the memory. With imperfect recall that is the one striking feature of the mark that will remain in the memory."

[37] The presence of the words "Li Mele" in fine print on the respondent's wines are unlikely to make it distinguishable from Thabana, the distinguishing aspect of the mark.

Acquiescence/Tacit Consent:

[38] The respondent alleged that in 1999 it commenced using the name "Thabana" for wine produced by the Bartinney Cellars. The grapes for wine production is grown on the farm it owns, called "Thabana Li Mele". The appellant does not allege that it informed the appellant that it added the words "Li Mele" nor that the first applicant indicated that it was satisfied with the change.

[39] In or around 2001, the first applicant sent the respondent a facsimile to the farm in which it complained about the use of the name "Thabana." The respondent decided to change the name on the bottles from "Thabana" to "Thabana Li Meli". The latter name was used from 2001 to 2005 then it changed the name to "Thabana Li Mele." Respondent alleged that applicants were aware of the existence of the changed label because the respondent used it for 5 years without receiving an objection from the applicants.

[40] The first applicant's failure to object since 2001 can only amount only be tacit consent or acquiescence if it can be established

unequivocally that it had knowledge of the use of the mark. On the papers such knowledge cannot be concluded.

[41] In the case of Burnkloof Caterers (Pty) Ltd v Horseshoe Caterers (Pty)

Ltd 1974 (2) SA 125 at 137, the court held that conduct amounting to an unequivocal acceptance must be communicated to the other party for acquiescence

to be established.

[42] It is also improbable that the first applicant would acquiesce in the use of the mark for 5 years before objecting to it as it would make no commercial sense to do so.

[43] In the circumstances the respondent has not established the acquiescence upon which it relies.

[44] It is common cause that the court a quo erred in causing the interdict to apply to all goods and services in Class 33 and 42 under the Trade Mark Act No. 194 of 1993. The parties have agreed that the interdict, if granted, ought to be limited to Class 33 only.

[45] The appeal accordingly fails. Paragraph 1 of the order of the court a quo is altered to read as follows:

"The respondent is hereby interdicted and restrained within the Republic of South Africa from using in the course of trade the trade mark "Thabani Vineyards & Winery" or the mark "Thabana", "Thabana Wines" or any mark similar to "Thabani

Vineyards & Winery" that so nearly resembles it as to be likely to deceive or cause confusion, in relation to goods and

services in class 33 under the Trade Marks Act, no. 194 of 1993.

[46] The respondent is ordered to pay the costs in the appeal.

R

ALLIE

BLIGNAULT J: I agree

A.P.BLIGNAULT

ERASMUS J: I agree

N

C ERASMUS