Paper Anniversary of the New South African Trade Marks Act

Introduction

The new South African Trade Marks Act (No. 194 of 1993) will celebrate its first anniversary on 1 May 1996. By 29 February 1996, 12330 applications had been filed under the new Act and it is expected that the combination of South Africa’s political and economic revival in these post-apartheid times, together with its modernised Trade Marks Act, will see a definite increase in trade mark filings in the future. The Act was aimed at ensuring compliance by South Africa with its obligations under TRIPS and the Trade Mark Law Treaty. We deal below with some of the welcome features of the new Act.

What Constitutes a Trade Mark

Trade mark proprietors are already taking advantage of the broader definition of what constitutes a mark which includes anything capable of being represented graphically including shape, colour etc. by filing applications for features of the get-up of their products which, under the repealed Act, might not have constituted a mark.

Furthermore, under the new Act any mark which is inherently capable of distinguishing, or which has become capable of distinguishing by reason of prior use, is registrable. This does away with the unfortunate situation under the repealed Act where a mark, once it was deemed to be not inherently adapted to distinguish, was not registrable even it was distinctive in fact.

Accordingly trade mark proprietors now have the flexibility to apply for registration of any feature of their products or services which serves the function of distinguishing their goods or services from those of their competitors.

Licensing

The dilemma faced by the proprietor of a trade mark who only intended to use his mark through a licensee has been resolved with the recognition of what constitutes permitted use under the new Act. In the past, in order to avoid possible invalidation of his mark, the proprietor was required to file a simultaneous registered user recordal. Under the current Act, as long as the use or proposed use is with the licence of the proprietor, such use will be deemed to be use by the proprietor.

There are, however, still advantages in recording a registered user namely (i) the registration shall be prima facie evidence that the use is permitted use and (ii) the registered user will have locus standi to sue infringers.

Assignment and Hypothecation

The commercial value of a trade mark is recognised by the fact that a registered trade mark may be hypothecated by a Deed of Security. The valuation of trade marks is also a growing area of activity in trade mark law.

It is no longer necessary, on recording an assignment, to indicate whether the assignment is with or without the goodwill of the business. This simplifies the recordal of an assignment, especially where one is not aware of the full details of the underlying transaction.

Expungement of Trade Marks

In favour of the registered proprietor is the fact that while the five year non-use period has been retained, it only commences running from the date of registration. As it typically takes at least three years after the filing date before a trade mark is registered this affords the trade mark proprietor a much longer period to commence use of his mark in South Africa.

In favour of the applicant for expungement is the fact that he is relieved from the onus of proving a negative as the onus of proving, if alleged, that there has been relevant use of the trade mark rests on the proprietor.

Special circumstances in the trade may still be relied upon to justify non-use and the Registrar of Trade Marks has accepted that economic sanctions imposed against apartheid South Africa qualify as special circumstances. Regrettably, the Supreme Court did not rule on this issue when it was raised in the McDonald’s case.

Trade Mark Infringement

The scope of infringement has been broadened by recognising that use in respect of similar goods or services constitute infringement. This is simply a statutory recognition of the common law of passing-off which has recognised this principle for some time.

Most important for trade mark proprietors is the ability to claim damages based on a reasonable royalty which would have been payable by a licensee for the use of the trade mark concerned.

Dilution and Well-known Trade Marks

For the first time South African law recognises dilution as a form of trade mark infringement. While no case law has yet developed around this cause of action, trade mark proprietors are welcoming this extra weapon in the arsenal against infringers.

While the new Act specifically provides for the protection of well-known trade marks under the Paris Convention the value of this protection has been queried by trade mark proprietors worldwide after the narrow view taken by the Court in the notorious McDonald´s judgment. In that case the Transvaal Provincial Division of the Supreme Court held that a trade mark cannot be well-known in South Africa "unless knowledge of it pervades the country to a substantial extent" and concluded that the trade mark McDONALD’S (surely one of the big five of well-known trade marks) was not a well-known trade mark in South Africa. The appeal of this judgment is being heard by the Appellate Division in May 1996 and it is hoped that the Appellate Division will put a more realistic interpretation of what constitutes a well-known trade mark.

Conclusion

It is still too soon to judge how successful the marriage between the commercial requirements of trade mark proprietors and the new Trade Marks Act will be. There will inevitably be problems in the formative years as trade mark proprietors, practitioners, the Registrar of Trade Marks and the courts learn to deal with the new Trade Marks Act but initial signs are encouraging that the relationship will be a long and fruitful one.

Charles Webster

SPOOR & fISHER

Date published: 1990/01/01
Author: Charles Webster

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