Counterfeit Goods and Transshipment in South Africa

On November 30, 2004, the South African Supreme Court of Appeal gave its ruling in the matter of A M Moola Group Limited and others versus The Gap, Inc and others. The Appeal concerned the Counterfeit Goods Act 37 of 1997. See SALR 2005(2) SA 412.

Moola owns THE GAP trade mark for clothing in class 25 in South Africa. The Gap owns THE GAP trade mark for clothing in class 25 in neighbouring countries and islands. The Gap claimed that the export through or import through (i.e. the transshipment through) South Africa of its goods bearing THE GAP trade mark where the trade mark is placed on the goods outside South Africa and where such goods are NOT for sale in South Africa, is not unlawful in terms of The Counterfeit Goods Act or The Trade Marks Act 194 of 1993.

Moola claimed that the transshipment through South Africa is hit by the provisions of Section 2(1)(f) of the Counterfeit Goods Act. He claimed that goods that are counterfeit may not be transshipped through South Africa.

Counterfeiting, briefly defined, is seen as the fraudulent imitation of goods.

The Court referred to an earlier ruling that held that goods in transit are not imported into South Africa for purposes of the Customs and Excise Act. Reference was also made to the fact that the European Community requires member countries to impound counterfeit goods in transit. The Court found that there was no reason to impound goods, which are not in the ordinary sense of the word ‘counterfeit’, that have to be transshipped through South Africa from islands and landlocked countries, especially if no local rights holder is thereby affected and no intellectual property right infringed. The Court stated that South Africa would not wish to interfere with the legitimate trade of countries that, due to their particular geographical location, are dependent for access and egress on this country. It is not lightly to be presumed that the legislation becomes a barrier to legitimate trade.

The Counterfeit Goods Act is intended to criminalise a particular species of fraud. The Court found that what The Gap does can by no stretch of the imagination be considered as fraudulent. Since The Counterfeit Goods Act is a penal statute it must be interpreted restrictively. The word ‘import’ need not include transshipment. The result may be that truly counterfeit goods might be transshipped through South Africa without hindrance. The Court was of the view that, if the legislature wishes to have South African law conform to the European model, it should do so in clear language.

The appeal by Moola was dismissed.

Stephen Goldberg

Spoor & Fisher

Date published: 2005/04/01
Author: Stephan Goldberg

Tags: counterfeiting transshipment gap south africa