SUNLG WORLDWIDE INVESTMENT VS WU ZHUO INVESTMENT CO LTD COMM CASE NO

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (COMMERCIAL DIVISION) AT PAR ES SALAAM COMMERCIAL CASE NO. 592 OF 2024 SANLG WORLDWIDE INVESTMENT.............................. 1st PLAINTIFF GUANGZHOU HETIAN AUTO PARTS CO. LIMITED.................................................................. 2nd PLAINTIFF VERSUS WU ZHOU INVESTMENT COMPANY LIMITED............ ...DEFENDANT JUDGMENT Date oflast order: 03/07/2024 Date ofjudgment: 23/08/2024 AGATHO, J.: The Plaintiffs filed this suit against the Defendant claiming infringement of their trademark SanLG and passing off thereof. It is the plaintiffs' case that the trademark known as SanLG in respect of motorcycles and its accessories is owned by the plaintiffs. They allege that the defendant is infringing their rights of ownership by using the trademark SanLG in business without their consent. The Plaintiffs in their plaint sought the following reliefs: i a) Payment of specific damages of TZS 600,000,000/= as special damages for wrongful use of the 1st plaintiff trademark. b) Payment of TZS 3,000,000,000/= as general damages and punitive damages for wrongful use of the 1st plaintiff's mark. c) The defendant be ordered to pay the 1st plaintiff the amount of 12% of the awarded amount from the date of the judgement to the date of the due payment. d) Grant of a permanent injunctive order against the defendant on production, importation, distribution of the products with trademark resembling to the 1st plaintiff's trademark. e) Costs of this suit. f) Any other reliefs that this Court deems fit to grant. Upon being served with a copy of the plaint, the defendant filed her Written Statement of Defence denying any wrongdoing with respect to the use of the trademarks SanLG. She stated further that she is legally entitled to the use of the trademark SanLG as per the established agreement with the original owner of the trademark. She in the end prayed for the dismissal of the suit with costs. In terms of legal representation, both parties enjoyed the services of learned counsel. Whereas Mr. Benedict Magoto Mayani appeared for the 2 plaintiffs, Mr. John Mponela and Mr. Hakieli Mgonja represented the defendant. With assistance of the parties the Court framed the following issues as points for determination of the suit: 1. Whether or not the defendant is engaged in counterfeiting involving goods or products branded SanLG. 2. Whether the defendant infringed upon the plaintiffs' SanLG trademark? 3. Whether there was passing off the Trademark with the word SanLG by the defendant. 4. Whether the defendant is a parallel importer of goods and products branded SanLG. 5. To what reliefs are the parties entitled to. In a bid to prove their claims, the plaintiffs called two witnesses to testify. These were: PW1 - Donghai Liu, and PW2 - Shadrack Julius Nghuku. PW1 took oath and tendered his witness statement which was received and recorded as his testimony in chief. He tendered 9 exhibits (Pl - P9). Exhibit Pl is SanLG registered trademark certificate in the name of Zeng Cheng Ben Ma; P2 - the deed of assignment between Zeng Cheng Ben Ma and the second plaintiff dated 25th January 2019; P3 - the distribution agreement between Zeng Cheng Ben Ma and the defendant dated 12th July 2016; P4 - a copy of Business Registrations and Licensing Agency (BRELA) search 3 results dated 2nd November 2018; P5 - a copy of a letter from KKB attorneys on behalf of Zeng Cheng Ben Ma which was sent to Fair Competition i Commission dated 27th August 2019; P6 - Chief Inspector of Merchandise Mark seizure notice of defendant's SanLG counterfeit goods dated 1st October 2019; P7(a) - ruling of the Fair Competition Commission hearing committee dated 16th January 2020, revising the Chief Inspector merchandise marks seizure notice of defendant's counterfeit goods. The ruling also released the said counterfeit goods; P7(b) is the Fair Competition Tribunal's judgment dated 30th April 2020 reversing the Fair Competition Commission Hearing Committee's decision and upholding Chief Inspector of Merchandise Marks Seizure Notice. Exhibit P7(c) is BRELA ruling dated 10th June 2020 deregistering defendant's trademark because of being confusingly similar or identical to registered SanLG trademark. Exhibit P8 is a copy of a motorcycle registration card with registration number MC 639 DXT in the name of the defendant. And lastly is P9, a photo of counterfeited SanLG products and genuine SanLG products. PW1 testified during cross examination regarding passing off claim that the defendant in September 2018 advertised, distributed and sold SanLG motorcycles and accessories. These products were not manufactured by the plaintiffs. PW1 admitted that at that time the deeds of assignment were yet to be executed. The owner by then was Zeng Cheng Ben Ma. This is clear from PWl's testimony during cross examination where he stated that the letter sent to Fair Competition Commission's Chief Inspector Merchandise 4 Mark came from the lawyer of Zeng Cheng Ben Ma, SanLG trademark owner. PW1 claimed that they submitted their deed of assignment to Fair Competition Commission. PW1 went on testifying during cross examination that termination of defendant's distribution agreement was set to be on 11th July 2021. Regarding status of Zeng Cheng Ben Ma, PW1 insisted that Zeng Cheng Ben Ma has been dissolved in China. However, he did not tender any documentary evidence to support that. The witness also admitted that he was called Bahari Leo when he was working at Zeng Cheng Ben Ma (not a party to the present case). He further testified that he is now the operations manager of the 1st plaintiff. The second witness was PW2, Shadrack Julius Nghuku. His testimony was on the 1st plaintiff's revenue or financial projection for five years, from 2020/2021, and financial reports, that is annual audited financial statements. PW2 tendered exhibits: P10(a), 1st plaintiff's financial projections report for 2020/2021, and P10(b), 1st plaintiffs'financial statements for the year ending 2021/2022. PW2 testified that the 1st plaintiff was incapable of attaining their targets or revenue projections because she found the defendant supplying same SanLG products in the market. The witness admitted that he does not know when SanLG trademark was assigned to the 1st plaintiff. He went on conceding that the projection in exhibit P10(a) was done in 2021 before the 5 SanLG trademark was assigned to the 1st plaintiff from the 2nd plaintiff because the assignment was done in April 2022. PW2 testified that the first plaintiff imported motorcycles and accessories in 2021 and the large part of 2022. She was importing under the name SanLG Worldwide Investment. The witness testified that the arrangement of SanLG trademark does not include January - March 2022. It was his testimony that the financial projections were for five years. The criteria for projection according to him were trend of the audited financial statements of three years back, and the revenues as well as number of products sold in each year. PW2 testified further that although the 1st plaintiff did not have monopoly in the market the defendant's wrong was to sell same products as that of the 1st plaintiff. He testified that the existing SanLG products from the defendant were of poor quality. This led to customers doubting SanLG trademark products, hence reducing profits projected. That marked the end of the plaintiffs' case. Thereafter, the defendant's case opened. The defendant on her side she had two witnesses: DW1 - Hang Li, and DW2 - Magreth Sebastian Ndanshau. In his testimony, DW1 tendered six exhibits. DI - Sales agreement contract number 0008 between Zeng Cheng Ben Ma and the defendant. D2 - China court civil judgment of case (2019) Yue 0191 Min Chu No. 19 between Wu Zhou Investment Company Limited and Zeng Cheng Ben Ma. D3 - Trademark licensing contract (in Tanzania) Trademark licensor party A: Zeng Cheng Ben Ma, and trademark licensee Party B: Wu Zhou Investment Company Limited dated 15th December 2022; 6 D4 - Supplementary trademark usage authorization agreement (Tanzania region) Signed on 15th December 2023; D5 - Settlement agreement by all parties involved in Settlement signed on 22nd, 23rd, and 27th January 2024. The parties here are Party A: Administrator of Zeng Cheng Ben Ma; Party B: Jiangmen Zhenghao; Party C: Wu Zhou Investment Company Limited; and D6 - The letter of clarification and the request for facilitation of trademark from Administrator of the estate of Zeng Cheng Ben Ma to the Chief Executive of BRELA dated 6th July 2023. In cross examination DW1 testified that they got a trademark license from Zeng Cheng Ben Ma. He also told the court that he is aware that jurisdiction on issues of trademark is territorial. When the witness was asked about the decision at Fair Competition Commission and Fair Competition Tribunal, he testified that the defendant won at Fair Competition Commission committee. But that decision was later reversed by the Fair Competition Tribunal. He confirmed that the defendant did not appeal against the Fair Competition Tribunal's decision. As to the trademark licence, DW1 told the court that the SanLG trademark license the defendant got from the Administrator of Zeng Cheng Ben Ma was exclusive. It authorized the defendant to produce, assemble and the distribute SanLG products. DW1 went on testifying that he is aware that the trademark has been transferred from Zeng Cheng Ben Ma to the 2nd plaintiff. He also said that he is aware that the trademark has been transferred from the 2nd plaintiff to 7 the 1st plaintiff. As for exhibit P8 - SanLG motorcycle registration card, he admitted that the defendant commissioned its manufacturing. When probed about the defendant's own trademark, without explaining more, the witness admitted that the defendant's trademark was removed from the trademark register at BRELA. Regarding exhibit D6 - A letter from administrator of Zeng Cheng Ben Ma to BRELA on clarification of SanLG trademark position in China and in Tanzania, DW1 admitted that there is no indication if it was received by BRELA. And On exhibit D2 - China court judgment, the witness was of the view that despite the dispute that led to said decision emerged in China and not in Tanzania, it has relevancy to the latter. He added that he is aware that trademark protection is territorial. DW1 claimed in his testimony during cross examination while referring to exhibit P9 that he knows genuine products, and that the defendant's products are genuine. According to him if SanLG products are different from the defendant's products then they are counterfeited. In what it seems to be an attempt to confuse the Court, the witness testified that he knows that there was a company with the identical name to the second plaintiff that was commissioned to manufacture SanLG products in China. He added that a container containing SanLG products manufactured by that company was seized by China customs. But no documentary evidence was tendered to substantiate this allegation. 8 The Court also noted that DWl's testimony confirms that at Fair Competition Commission and Fair Competition Tribunal the dispute was between Zeng Cheng Ben Ma and the defendant. DW1 further testified that the motorcycle registration card that was tendered belongs to the defendant. Without hesitation he concluded that the defendant produced it because she had exclusive license. The second and last witness for the defendant was Ms Ndanshau, DW2. Her testimony was brief. She did not tender any exhibits. DW2 testified that she works in clearing and forwarding at Transpark Company Limited. She added that she was clearing and forwarding defendant's goods that were labelled SanLG at Dar es salaam port. However, the witness knew nothing about the cases at Fair Competition Commission and Fair Competition Tribunal. DW2 told the Court that she was briefed by DW1 about the disputes before this Court. It was her view that SanLG trademark was owned by the defendant. The witness further claimed that she knows SanLG trademark. But she completely erred when she testified that SanLG trademark is the cycle with the name SanLG while we know for fact that SanLG trademark is a three-pointed star in a triangle with a word SanLG underneath. The witness testimony creates doubt as to whether she indeed cleared and forwarded the defendants goods or if at all she knew the defendant products. The DW2's testimony marked the closure of the defence case. That done, the Court allowed the parties to file their closing submissions. Gladly, they filed them timely. In the following section, issues 9 framed are depicted and analysed in lieu of evidence adduced and in the perspective of the relevant laws. The issues framed were that: 1. Whether or not the defendant is engaged in counterfeiting involving goods or products branded SanLG. 2. Whether the defendant infringed upon the plaintiffs' SanLG trademark. 3. Whether there was passing off the Trademark with the word SanLG by the defendant. 4. Whether the defendant is a parallel importer of goods and products branded SanLG. 5. To what reliefs are the parties entitled to. Before delving into the issues raised, there are a few points the court observed and worth highlighting from the outset. First and foremost, Zeng Cheng Ben Ma is not a party to this case. Second, as per exhibit P7(b), the Fair Competition Tribunal judgment, the tribunal declined to grant the appellant (Zeng Cheng Ben Ma) damages because that was never sought when the matter was before the Chief Inspector of Merchandise Marks. It should also be noted that the plaintiffs were not a party to the proceedings before the Fair Competition Commission's Chief Inspector of Merchandise Marks, at the Fair Competition Commission Hearing Committee and at the Fair Commission Tribunal. The matter involved the defendant and Zeng Cheng Ben Ma, the owner of the trademark SanLG. io Now turning to the issues for determination, there are several points revolving around the dispute at hand. These are counterfeiting cases, trademark infringement and passing off claims. Besides that, whether this court has jurisdiction to deal with counterfeiting goods or products disputes is another controversy worth clarity. Disputes about counterfeited good or products are regulated by the Merchandise Marks Act [Cap 85 R.E. 2018], and Merchandise Marks Regulations, GN 89. And as to whether this court has jurisdiction to deal with counterfeiting goods or products cases there are case laws that dealt with that issue. As per the case of Godrej Consumer Products Limited v Target International (T) Limited, Commercial Case No. 60 of 2019, TZHCComD at DSM under regulation 12 of the Merchandise Marks Regulations, GN 89; and part IV of the Merchandise Marks Act [Cap 85 R.E. 2018] the Chief Inspector of Merchandise Marks has original jurisdiction to deal with cases involving counterfeit marks goods or products but that is optional because the said provision of the law uses the word may. In addition to that, the Merchandise Marks Act provides for criminal remedies and does not provide for civil remedies. Nevertheless, the Chief Inspector of Merchandise Marks can grant compensation. But his powers do not extend to granting other civil remedies. Generally, counterfeiting is a crime as prescribed under the Merchandise Marks Act. Moreover, and understandably, all counterfeiting amount to trademark infringement because it involves use of trademark in manufacturing goods or importation of goods without trademark owner's li authorisation. On the first issue, whether or not the defendant is engaged in counterfeiting involving goods or products branded SanLG, PW1 testified that the defendant counterfeited plaintiffs' SanLG products. He tendered seizure notice issued by Chief Inspector of Merchandise Marks. He also tendered Fair Competition Commission Hearing Committee's decision, and Fair Competition Tribunal's judgment. Along with that he tendered exhibit P8, a copy of a motorcycle registration card with registration number MC 639 DXT in the name of the defendant. And lastly is P9, a photo of counterfeited SanLG products and genuine products with intent to prove that the defendant is continuing to produce or to distribute SanLG counterfeited products. To counter that, DW1 testified that the motorcycle registration card belongs to the defendant, but their product is genuine because they have exclusive licence as supported by exhibits tendered. These are exhibits DI - Sales agreement contract number 0008 between Zeng Cheng Ben Ma and the defendant, D3 - Trademark licensing contract (in Tanzania) Trademark licensor party A: Zeng Cheng Ben Ma, and trademark licensee Party B: Wu Zhou Investment Company Limited dated 15th December 2022, and D4 - Supplementary trademark usage authorization agreement (Tanzania region) Signed on 15th December 2023. That evidence was not challenged by the plaintiffs. Since as per exhibits D3 and D4 the defendant has SanLG trademark licence she cannot be said to be dealing in counterfeited SanLG products. But no evidence was given to show that these licences have been registered at BRELA, with exception of the 2016 distribution agreement. 12 As for claim that the defendant was dealing with counterfeiting SanLG products, it is evident that in the past as confirmed by notice of seizure of counterfeited SanLG products issued by the Chief Inspector of Merchandise Marks in 2019, and the Fair Competition Tribunal's judgment of 2020 the defendant was distributing counterfeited SanLG products. This gives rise to a question regarding the 12th July 2016 distribution agreement between Zeng Cheng Ben Ma and the defendant, exhibit P3. That is whether the agreement was still in force until 11th July 2021 as claimed by the defendant or it expired in 2018 as claimed by the plaintiffs. It is sensible that if the agreement would have been valid or not breached there would not have been the notice of seizure of SanLG counterfeit products by Chief Inspector of Merchandise Mark, exhibit P6, and the Fair Competition Tribunal's judgment upholding inter alia the seizure notice, exhibit P7(b). I am saying so because the complainant at the Chief Inspector of Merchandise Mark, and later an appellant at Fair Competition Tribunal was SanLG trademark owner, Zeng Cheng Ben Ma and the respondent was Wu Zhou, the defendant herein. Surprisingly, the defendant never appealed against the Fair Competition Tribunal's decision. Further to that the defendant adduced evidence that she has trademark licences from the administrator of SanLG trademark owner Zeng Cheng Ben Ma, exhibit D3 and D4. That in my view was an attempt to pre-empt claims that she is distributing counterfeit SanLG products. To appreciate this controversy, it is worthwhile to revisit its underlying history. As hinted earlier, SanLG trademark owner, Zeng Cheng Ben Ma complained before the Chief Inspector Merchandise Mark on the defendant distribution of counterfeit SanLG products which led to seizure of counterfeit 13 SanLG products. The defendant challenged the notice of seizure, exhibit P6 before the Fair Competition Commission Hearing Committee that ruled in favour of the defendant. It was revealed in that ruling that the defendant herein had exclusive distribution licence (exhibit P3) dated 12th July 2016 set to expire on 11th July 2021. But it was undisputed in that case that the defendant (Wu Zhou Investment Company Ltd) was distributing SanLG products with added word WU ZHOU. It is also a fact that the defendant registered at BRELA a trademark similar or nearly resembling SanLG but with the name WU ZHOU. According to the Chief Inspector of Merchandise Marks' notice of seizure, these products bearing that mark were counterfeited. However, the said notice of seizure was revoked by the Fair Competition Commission's Hearing Committee - exhibit P7(a). While the committee was making its decision there was a pending matter before BRELA challenging registration of WU ZHOU trademark. It is on record that the BRELA ruling dated 10th June 2020 - exhibit P7(c) removed or expunged from register of trademarks the defendant's trademark No. TZ/T/2018/610 which in this case is exhibit P4. Prior to that on 30th April 2020, the Fair Competition Tribunal had delivered its judgment (exhibit P7(b)) reversing the Fair Competition Commission Hearing Committee's decision and upheld the Chief Inspector of Merchandise Mark notice of seizure of counterfeited SanLG products. From that it goes without saying that the defendant's SanLG distribution licence lost its substratum. It could not be operative while the defendant clearly violated it. The Court is unsurprised that the defendant sought shelter under other defences such as being a parallel importer which will be disposed in due course. 14 Interestingly, the legislature foresaw the risk of distributing counterfeit products under the guise of trademark licence. It enacted Trade and Service Marks Act [Cap 326] Section 44(1), requiring the owner of the trademark to control quality of trademark products under licence. This provision of the law imposes an obligation on the proprietor of trademark to guarantee control of quality of products to which trademark is licensed to registered user/licensee. Of importance here is the argument by the defendant that she is a licensee. Had she been the registered user then the licensor or the owner (Zeng Cheng Ben Ma) would have an obligation to control quality of SanLG trademark products produced under licence. In the present case with exception of counterfeit claim and decisions before Chief Inspector Merchandise Marks, Fair Competition Commission Hearing Committee and Fair Competition Tribunal, there is no evidence that the trademark owner, Zeng Cheng Ben Ma controlled quality of SanLG products as required by the Trade and Service Marks Act. Besides, Zeng Chen Ben Ma is not a party to this case. That is further complicated by the 2nd plaintiff and 1st plaintiff's claim that they are assignees of SanLG trademark since 2019 and 2022 respectively. To cement that PW1 testified that he sent copies of deeds of assignment to the Fair Competition Commission. But nothing was tendered in Court to substantiate that. Even in the decision of Fair Competition Commission nowhere assignment of the trademark SanLG is mentioned. To contradict the plaintiffs' evidence the defendant through DW1 tendered See exhibits D3 and D4 SanLG trademark licences for the years 2022 and 2023. In the end, the evidence given on allegation that the defendant is engaged in counterfeiting involving SanLG 15 goods and products is inconclusive. The plaintiffs have failed to prove on the balance of probability that the defendant is counterfeiting SanLG products. The answer to the first issue is thus inconclusive and hence negative. But whether the defendant is a registered user of SanLG trademark in Tanzania as required by Section 42 of the Trade and Service Marks Act that is another question that will be answered after a short while. The second issue is whether the defendant infringed upon the plaintiffs' SanLG trademark. Trademark infringement briefly means is a use or exploitation of registered trademark without the consent or authorization of the owner. Section 32 of the Trade and Service Marks Act provides for infringement of trademark. That occurs when a third party without authorization of the owner of trademark interferes with the exclusive right granted to the owner by either manufacturing, importing, or distributing goods bearing the registered trademark to confuse or deceive the consumers. But there cannot be infringement if the trademark is unregistered. In such situation, one can only claim passing off if she is a first user or prior user of the trademark. In addition to that, one may have a licence be it exclusive or non-exclusive to use the trademark. Therefore, if one has a licence to use the mark then there is no infringement. SanLG trademark was registered in Tanzania on 29th September 2015 by Zeng Cheng Ben Ma. That is visible in exhibit Pl - SanLG trademark with certificate No. TZ/2015/1687. Later, on 12th July 2016 the trademark SanLG was licensed to the defendant (Wu Zhou) through exhibit P3 - exclusive distribution agreement between the Zeng Cheng Ben Ma (the owner) and 16 the defendant. Intriguingly, unanswered question here is whether that exclusive distribution agreement was registered with the Registrar of trademark at BRELA. Along with that we ask whether the defendant is a registered user as per Section 42 of the Trade and Service Marks Act? The evidence of DW1 and DW2 never answered this question. A chronology of events reveals that after execution of SanLG trademark distribution agreement on 12th July 2016, Zeng Cheng Ben Ma assigned the trademark SanLG in Tanzania to the 2nd plaintiff on 15th January 2019. That is visible in exhibit P2 - a deed of trademark SanLG assignment. The evidence also shows that on 6th April 2022 the 2nd plaintiff assigned the trademark SanLG to the 1st plaintiff. However, that deed of assignment was unadmitted in evidence. The DW1 attempted to tender the said deed of assignment but failed because it was a photocopy, and no satisfactory explanation was given as to whereabout of the original or as to why photocopy is sought to be tendered in evidence. It is equally unclear whether the 1st and 2nd plaintiffs registered SanLG trademark in Tanzania after being assigned the same from Zeng Cheng Ben Ma. It should be remembered that there is no exhibit tendered in court showing that the assignment of SanLG trademark has been registered in Tanzania. Moreover, the Court asked itself, if the plaintiffs did not register their SanLG trademark in Tanzania who is the owner of that trademark as per BRELA records. Considering exhibit Pl - Certificate of registration of trademark dated 12th July 2016, SanLG trademark belongs to Zeng Cheng 17 Ben ma. That is also fortified by 15th January 2019, BRELA and Fair Competition Tribunal decisions. However, as grasped from the evidence adduced, on 12th July 2016 trademark SanLG in Tanzania was licensed to the defendant, Wu Zhou. In contrast, the plaintiff submitted that the said licence expired in 2018 while the defendant relying on exhibit P3 claims that exclusive distribution licence expired on 11th July 2021. For the reasons stated hereinabove and counterfeited product case from Chief Inspector of Merchandise Marks to the Fair Competition Tribunal, the distribution licence appears to have been terminated. Nevertheless, the trademark SanLG registered in 2015 in the name of Zeng Cheng Ben Ma was set to expire on 28th September 2022. It is unclear if it has been renewed. Nevertheless, testimony of PW1 shows that SanLG trademark was assigned to 2nd Plaintiff on 15th January 2019 and later on 6th April 2022 the 2nd Plaintiff assigned it to the 1st Plaintiff. The Court is alive to the fact that since the defendant never questioned or discredited the deed of assignments nor was there a question as to whether the 1st plaintiff's title in SanLG trademark acquired via assignment has been registered with the Registrar of trademark at BRELA then the plaintiff ought to have a good case. Nonetheless, registration of trademark assignment with BREUX being a matter of compliance with the law in Tanzania, as per Section 40 of the Trade and Service Marks Act this Court cannot shut its eyes to such non-compliance. Since there is no evidence that the assignment of trademark SanLG to the 2nd plaintiff and from the latter to the 1st plaintiff was registered at BRELA, the Court holds that there was no 18 such registration done. Hence the plaintiffs did not comply with the Trade and Service Marks Act requiring registration of trademark assignment in Tanzania. The non-compliance with the provisions of the Trade and Service Marks Act was a fault committed by the defendant too. DW1 testified that the defendant had SanLG exclusive distribution licence, and a parallel import licence as well as trademark SanLG use licence. He tendered exhibits to that extent. But Sections 42 and 43 of the Trade and Service Marks Act require any trademark licensee to be registered with the Registrar of trademark and become a registered user. In my view since the defendant raised a defence that she is a licensee, it was incumbent upon her to lead evidence before the court that she is a registered user in Tanzania in accordance with the provision of Section 42 of the Trade and Service Marks Act [Cap 326]. Section 110 of the Evidence Act [Cap 6 R.E. 2019] provides that he who alleges must prove. The defendant failed to prove that she is registered user. Hence, legally speaking she is not a licensee of SanLG trademark in Tanzania. Making headway on the second issue whether the defendant infringed upon the plaintiffs' SanLG trademark, it is understandable that a claim for trademark infringement may be preferred by the owner of the trademark due to third party's interference with his exclusive right, or use of the trademark without authorisation. Section 31 of the Trade and Service Marks Act provides for exclusive rights granted to a trade or service mark proprietor. Section 32 of the Act is on infringement of trademark. 19 As obiter dictum, this Court has not dealt with a peripheral issue of joining the Registrar of Trademark as a party or a witness because looking at the reliefs sought, nowhere the plaintiffs are seeking rectification of the register of trademarks or any other reliefs against that officer. The case at hand is thus distinguished from East African Spirits(T) Limited and Gaki Investment Limited v Double Diamond Holdings Limited, Civil Appeal No. 63 of 2021 CAT at DSM where joining of the Registrar of Trademark was deem necessary due to the reliefs sought in the plaint, that included rectification of register of trademarks. Expounding further the law, Section 40 of Trade and Service Marks Act deals with assignment and transmission of Trade and Service Marks. Section 40 (3) of the same Act sets an obligation of the assignee of trademark to apply to the Registrar of trademark at BRELA to register his title. There is no evidence adduced by the plaintiffs that they have registered assignment of SanLG trademark with the Registrar of trademark at BRELA. Section 40(5) of the Trade and Service Marks Act provides that if the assignee's title in trademark is pending registration, it shall have no effect against third parties until the same is registered. Therefore, even if the plaintiffs would claim that they have made an application for registration at BRELA which they have not done, that will not have any effect on the third parties as registration is still pending. Aside from the above provision, Section 42 of the Trade and Service Marks Act provides for registered user or licensing of trademark. It covers trademark licensees by recognizing users of trademark other than owners. 20 Along with the foregoing provision, Section 43 of the Act provides for requirement of registration of registered user at the registrar of trademark at BRELA. Besides that, Section 21 of Trade and Service Marks Act imposes a general obligation to any person who or whose proposed registered user uses or proposes to use a trade or service mark to apply for registration of trade or service mark. Although the trademark SanLG have been registered in Tanzania by Zeng Cheng Ben Ma, the licenses and assignment have not been registered as per evidence adduced in this case. As discussed above, the defendant was duty bound to register her SanLG trademark licenses at BRELA. Therefore, the second issue is answered in the negative. The third issue is whether there was passing off the Trademark with the word SanLG by the defendant. Passing off is common law tort. It is an action by the owner or user of unregistered trademark. In Reckitt and Colman Products Ltd v Borden Inc [1990] ALL ER 873 elements of passing off were stated as follows: (i) Goodwill owned by the trader; (ii) misrepresentation; and (iii) damage to goodwill. In Reckitt's case (supra) it was held at page 880 reaffirming the classic test for passing off/ First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying "get-up" (whether it consists simply of a brand name or a 21 trade description, or the individual | features oflabelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff's 'goods or services. Second, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff.... Third, he must demonstrate that he suffers or... that he is likely to suffer damages by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of the defendant's goods or services is the same as the source of those offered by the plaintiff. It will be superfluous to explain the above elements as that has already been done in several cases such as Reckitt's case (supra). Kenafric Industries Limited v Lakairo Industries Limited and 4 Others, Commercial Case No. 132 of 2018 HCCD at Dar es salaam at page 24. The general law applicable to passing off was enunciated in 1842 by Lord Langdaie M.R. in PERRY V. TRUEFITT (1842) 6 BEA V. 66, 73 in the following words: "A man is not to sell his own goods under the pretence that they are the goods of another man..." Accordingly, a misrepresentation achieving or intended to achieve such a 22 result is actionable because it constitutes an invasion of proprietary rights. Back to the case at hand, it is opportune time to examine whether there was passing off the trademark with the word SanLG by the defendant. The doctrine of passing off in Tanzania is captured by Section 30 of the Trade and Service Marks Act providing for unregistered trademark. The right of unregistered Trade and Service Marks owner is protected via doctrine of passing off. The owner of unregistered trademark claim for passing off is based on the right of prior use. That he was using the mark prior to its registration by the claimant. If unregistered trademark is exploited or used without authorization, the owner may institute an action for passing off. Intriguingly, the plaintiffs in the case at hand testified that they were assigned SanLG trademark. According to exhibit Pl, the trademark assigned to them is a registered trademark in Tanzania. The registered trademark grants exclusive rights (in respect of production, importation, distribution, licensing, etc.) to the owner of the mark. It is the law that whenever a registered trademark is infringed a trademark owner has actionable cause of for trademark infringement. For clarity, the issue of passing off arises if the trademark is unregistered. From the evidence gathered in this case, the SanLG trademark was registered in Tanzania on 29th September 2015 by Zeng Cheng Ben Ma. See exhibit Pl - SanLG trademark with certificate No. TZ/2015/1687. The said trademark was licensed to the defendant in 2016. It is my considered view that in this case, an allegation of the defendant passing off the plaintiffs' 23 SanLG mark as claimed in the plaint is unfounded because the plaintiffs were not using the mark SanLG prior to 2016 when the same was licensed to the defendant. Again, since the trademark SanLG is a registered trademark in Tanzania, a claim of passing off cannot stand. That said the third issue is briefly answered in the negative. The fourth issue for determination is whether the defendant is a parallel importer. Section 44(2) of the Trade and Service Marks Act allows grant of non-exclusive licence for production, importation and distribution of trademark goods, products or services. As per the testimony of DW1, the defendant claimed that she is a parallel importer. If the same is registered in Tanzania, operating as parallel importer is not illegal under Section 44(2) of the Trade and Service Marks Act if the licensee is a registered user. However, the Court observed that the plaintiffs erroneously submitted that the law does not allow parallel import licence. That view is misconceived because Section 44(2) of the Trade and Service Marks Act allows granting of non-exclusive licence. Section 44 (3) of Trade and Service Marks Act allows grant of trademark exclusive licence under which production, importation and distribution licences are covered. The defendant through testimony of DW1 and exhibit P3 testified that she has SanLG trademark exclusive distribution licence which was granted on 12th July 2016. Even though that licence is allowed by the law, apparently its expiry date was on 11th July 2021. Therefore, the defendant's exclusive distribution licence was legal under afore cited provision of the law. However, as shown in the evidence the 24 defendant's exclusive licence granted in 2016 expired in 2021. The defendant though tendered exhibits D3 and D4 showing that she has SanLG trademark use authorisation. It is worth noting that the evidence adduced does not tell whether the defendant is a registered user of SanLG TM in Tanzania under the Act. It is axiomatic that possessing a trademark licence is one thing, and its registration and approval by the registrar of trademark constitute another requirement of the law in Tanzania. Section 45 of the Trade and Service Marks Act provides for requirement of approval of trademark licensing contracts by the Registrar of Trademark at BRELA. Besides requirement for trademark licensee to be registered as registered user, Section 45 of the Act adds that the trademark licensing contracts shall be approved by the Registrar of trademarks. Looking at evidence on record, none of the defendant's trademark licenses have been registered by the Registrar of trademarks. Nor was there any evidence showing the approval of the licensing by the Registrar of Trademark. Besides SanLG trademark licensing, the defendant claimed that she is a parallel importer. The court found this to be unsubstantiated. In Tanzania, for one to be a parallel importer under Trade and Service Marks Act is not a mere existence of a trademark licensing agreement between the parties. Rather, the said licence must be registered at BRELA. As it stands, looking at testimonies of DW1 and DW2, there is no evidence of compliance with Trade and Service Marks Act requiring the parallel importation licence like other licences to be registered. In the court's view the submission by the 25 plaintiffs'counsel that parallel importation licence is illegal in Tanzania is also unfounded. That is because the law under Section 44(2) of the Trade and Service Marks Act allows non-exclusive licensing of trademark which in this context includes the parallel importation licence. Therefore, what matters is presence of evidence to substantiate the existence of parallel importation licence as well as compliance with provision of Trade and Service Marks Act requiring registration of licensee to become a registered user. The defendant has not tendered any evidence to prove that she is a registered user in Tanzania. Since trademark is territorial and in absence of evidence that she is the registered user of SanLG trademark in Tanzania, the defendant's argument of being a parallel importer crumble. Interestingly, the defendant tendered a letter from Administrator of Zeng Cheng Ben Ma in China to BRELA that purported to inform the latter about the defendant SanLG trademark licence. However, there is no evidence that the said letter was received by BRELA, this was confirmed by testimony of PW1. Nor is there evidence that the defendant is SanLG trademark registered user in Tanzania. Apart from that, another critical issue is whether the assignment of SanLG trademark from the 2nd Plaintiff to the 1st Plaintiff was registered at BRELA as required by the Trade and Service Marks Act. Section 40 of the Act sets a requirement for registration of the assignment of trademark. A question which has been hinted earlier, is whether the SanLG trademark assigned to the 2nd plaintiff in 2019 was registered at BRELA, and whether 26 the assignment of SanLG trademark from the 2nd plaintiff to 1st plaintiff in 2022 was as well registered at BRELA. Regarding SanLG trademark dispute in China, the Court noted that trademark being territorial, the SanLG trademark dispute that arose in China may not affect its validity in Tanzania unless the laws were not observed. Also, there is no evidence given that SanLG trademark was invalidated either in China or in Tanzania. Trademark's territoriality implies that a proprietor of trademark in one country can enforce his rights in another country if he has complied with the laws of the latter country. In case of Tanzania, the said trademark has to be registered at BRELA. As obiter dictum, the defendant raised an interesting point as to whether her interest was considered in the assignment of SanLG trademark from the Zeng Cheng Ben Ma to the 2nd plaintiff and from the latter to the 1st plaintiff. In my view, the assignment of SanLG trademark between these parties has nothing to do with the defendant's licensing of SanLG trademark. It should be noted that the defendant's licensing arrangement with Zeng Cheng Ben Ma, the original proprietor of SanLG trademark is none of the plaintiffs' business. If the defendant has any question regarding assignment of SanLG trademark she ought to have inquired from Zeng Cheng Ben Ma, the proprietor (licensor) or its administrator. Besides, the trademark licensing cannot operate as an encumbrance to assignment of the trademark. Not of least importance is the defendant's counsel submission that the proceedings and the decision at Fair Competition Commission and Fair Competition Tribunal were per incuriam because the trademark SanLG was 27 already assigned or transferred to the 2nd plaintiff in 2019 who was not a party to those proceedings. Although this point is an afterthought it sounds interesting because exhibit P2 shows that the assignment of trademark SanLG to the 2nd plaintiff was done on the 25th January 2019. It is on record that Zeng Cheng Ben Ma through her lawyer sent a letter date 27th August 2019 to Chief Inspector of Merchandise Mark complaining about the defendant's counterfeiting goods. If SanLG assignment from Zeng Cheng Ben Ma to 2nd defendant was done in January 2019, then why would Zeng Cheng Ben Ma, complain to the Chief Inspector of Merchandise Marks instead of the plaintiffs. Moreover, the defendant was a party to proceedings at the Chief Inspector of Merchandise Marks up to the Fair Competition Tribunal why she did not raise this point. That is also controversial considering that the plaintiffs have not tendered any evidence of registration of the SanLG trademark assignment at BRELA. The evidence on the record is exhibit Pl SanLG trademark registration certificate in the name of Zeng Cheng Ben Ma. Therefore, in as far as Trade and Service Marks Act is concerned, Zeng Cheng Ben Ma is the lawful owner that registered SanLG trademark in Tanzania. Another controversial point worth pondering before closing is the financial projection report, exhibit P10(a), tendered by PW2. That report was prepared in 2020/2021. In the court's view that report was prepared at the time when the SanLG trademark was yet to be assigned to 1st plaintiff because the assignment was executed in 2022. One may ask, how can a person do the revenue projections for a trademark which she neither has ownership nor license. 28 From the analysis above, the Court is satisfied that the plaintiffs have failed to prove that the purported assignments of SanLG from Zeng Cheng Ben Ma to them was registered with the Registrar of Trademarks at BRELA. It is also the Court's view that passing off cannot stand where there is evidence, especially exhibit Pl indicating that SanLG trademark is registered in Tanzania. And there is no evidence of prior use of the trademark. It is the court's view that the passing off claim would have been convincing if the plaintiffs had adduced evidence showing that they have been using SanLG trademark prior to its registration in Tanzania. There was no such evidence given to prove prior use of SanLG trademark. The doctrine of prior use of trademark also known as common law tort of passing off is recognised under Section 30 of the Trade and Service Marks Act. The same has been well elaborated by this Court in Kenafric Industries Limited v Lakairo Industries Group Co. Ltd and 4 Others, Commercial Case No. 132 of 2018 [2022] TZHCComD162 (30 May 2022). Similar position has been held in other Common law jurisdictions such as India. The Delhi High Court has held in Dongguan Huali Industries Co Ltd v Anand Aggarwal and Others (Neutral Citation: 2024: DHC:4878) decided on 1st July 2024 that an unregistered mark triumph over the registered trademark in a passing off action if there is evidence that the unregistered mark was used prior to the registered trademark. Supreme Court of India has further held in Neon Laboratories Ltd v Medical Technologies Ltd. & Others., (Civil Appeal No. 1018 of 2006, October 5, 2015) that Section 34 of India Trademark Act protects a mark which is used first in time from those who 29 may have obtained a registration of a similar or identical mark at a later point in time. The above Section is somewhat like Section 30 of our Trade and Service Marks Act. Further to that it is the law under Section 110 of the Evidence Act [Cap 6 R.E. 2019] that he who alleges must prove. The burden of proof lies on a party who alleges existence of certain fact. The evidence of prior use of the mark and even compliance with Trade and Service Marks Act are serious deficiencies in the case at hand. Based on the conclusion drawn from above analysis that the plaintiffs case lacks substance, it will be superfluous to examine in detail the last issue, namely, to what reliefs are the parties entitled to. Nevertheless, I will restate the reliefs sought by the parties. The plaintiffs in their plaint sought the following reliefs: (a) Payment of specific damages of TZS 600,000,000/= as special damages for wrongful use of the 1st plaintiff trademark. (b) Payment of TZS 3,000, 000,000/= as general damages and punitive damages for wrongful use of the 1st plaintiff's mark. (c) The defendant be ordered to pay the 1st plaintiff the amount of 12% of the awarded amount from the date of the judgement to the date of the due payment. (d) Grant of a permanent injunctive order against the defendant on production, importation, distribution of the products with trademark resembling to the 1st plaintiff's trademark. (e) Costs of this suit. (f) Any other reliefs that this Court deems fit to grant. 30 While the plaintiffs in vain sought the above reliefs, the defendant on her side prayed for a dismissal of the suit with costs. Now, this court after considering, the above disposition declares and orders that the suit lacks merit and it is dismissed with costs. Order accordingly. DATED at DAR ES SALAAM this 23rd Day of August 2024. Date: 23/08/2024 Coram: Hon. U.J. Agatho J. For Plaintiffs: Esther Mlimandago, Advocate For Defendant: Hakieli Mgonja, Advocate. C/Clerk: E. Mkwizu Court: Judgment delivered today this 23rd August 2024 in the presence of Esther Mlimandago, counsel for the Plaintiffs, and Hakieli Mgonja learned counsel for the Defendant. JUDGE 23/08/2024 31