South Africa: High Courts - Gauteng

Trade Marks Act 1993 – Application for the expungement of POLO marks in several classes, based on alleged confusion, dismissed – survey deficient.
Trade Marks of Polo – infringed upon by marks relating to Polo by Ralph Lauren in class 25, not registered in SA, but also not manufactured with the permission of Polo Ralph Lauren; polo player horse device also infringed upon; however not infringed upon by mark with the following words: US POLO ASSN –since 1890.
Counterfeit Goods Act 1997 – attachment in terms of the Act invalid since a case had not been made out in the complaint to the inspector that the goods were counterfeit goods; warrants accordingly also invalid.

[1]This is an application which, in essence, concerns the question whether the applicants’ trade marks (inter alia the POLO mark and a so-called polo horse device relating to the clothes industry, class 25 in the register of trade marks) have been infringed upon by the First Respondent in terms of the Trade Marks Act 1993 (“TMA”) and whether the attachment of about 10 000 shirts from several shops of the First Respondent was justified in terms of the Counterfeit Goods Act 37 of 1997(“CGA”). I shall refer to the two applicants as the LA Group and the First Respondent as “Meltz”. The other Respondents are involved in the attachment and storing of the goods. I shall return to the role of the Minister of Trade and Industry’s employees when I deal with the attachment of the alleged counterfeit goods. The Minister was the Second Respondent in this matter.
[2] Although Meltz in limine attacked the authority of the second applicant and its mandated deponent, Jonathan Ball (“Ball”), to file this application, I am satisfied that Ball was properly mandated to depose to the affidavit, although probably only on later ratification. The Second Applicant is a licensee of the First Applicant and this was supported by way of a licence agreement. The written record of the agreement was back-dated so as to prove this license. Since licensing need not be in writing to be valid, there is no reason to doubt the validity of the agreement, although it was conceded to have been recorded in writing so as to counter the allegations of Meltz that the Second Applicant was not a licensee.

Background
[3] On the 2^nd October 2003 representatives of the LA Group made a purchase of an item of clothing at one of the shops of Meltz. This purchase resulted in an affidavit of complaint being filed by Ball on behalf of Polo Enterprises (Pty) Ltd in terms of section 3 of the CGA against Meltz.

Relief sought by Applicant
[6] In January 2004 the LA Group filed this application seeking, in essence, the following remedies:

1. That the goods seized in terms of the CGA be declared to be counterfeit goods;

1.That the trade mark registrations in the name of the First Applicant be removed from the Register of Trade Marks in terms of section 24(1), read with sections 10(2)(b), 10(12) and 10(13) of the TMA;
2. Alternatively, that the trade mark registrations as set out by the First Applicant, be varied by the entry of a disclaimer reading: “Registration of this trade mark shall give no right to the exclusive use of the word “Polo”, apart from the mark”;  
3. Further alternatively to the above, that the specification of goods for the trade mark registrations as set out by the First Applicant be amended by the exclusion from them of “POLO shirts or POLO neck garments”;
4. That the search and seizure warrants be declared to have been issued wrongfully;
5. That the search and seizure warrants be set aside;
6. That the detention, seizure and removal of the goods listed in the inventories be declared wrongful;
7. That the seized goods be declared not to be counterfeit;
8. That the seized goods be delivered by the Second Respondent to the First Respondent;
9. That the Court order that the Applicants pay damages in an amount determined by the Court to the First Respondent and pay the First Respondent’s costs in terms of section 10(1) (c) and/or section 17(1) of the CGA.

Approach to the Issues
[8] By dealing with the question whether the attachment in terms of the CGA was legally justifiable, the main issues in the application and counter-application may appropriately be dealt with: (1) do the trade marks validly exist in the light of the argument that they should be expunged or amended? (2) if the latter application is dismissed, were the marks infringed upon? (3) even if they were infringed upon, was the attachment justified in terms of the CGA? (4) lastly, what are the remedies?

Should the trade marks of the applicant be expunged or amended?

[9] Meltz seeks to expunge the trade marks relied upon by the LA Group (in addition to other trade marks in other classes, the relevance of which will be dealt with below) in terms of the provisions of section 24(1) of the TMA, as read with the provisions of sections 10(2)(b), 10(12) and 10(13) of the TMA, alternatively he seeks an endorsement against these trade marks in the following terms:“Registration of this trade mark shall give no right to the exclusive use of the word “Polo”, apart from the mark”.

‘a mark which consists exclusively of a sign or an indication which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin or other characteristics of the goods or services, or the mode or time of production of the goods or of rendering of the services”.

Section 10(12) provides that a mark shall not be registered or would be liable to be removed from the register if it is a mark

“which is inherently deceptive or the use of which would be likely to deceive or cause confusion, be contrary to law, be contra bona mores, or be likely to give offence to any class of persons”.

Section 10(13) provides that a mark may be removed if

“the manner, in which it has been used, would be likely to cause deception or confusion.”

[11] Apart from attacking the trade marks relied upon by the LA Group in the main application, Meltz also attacks a number of other trade marks registered in classes 9, 14, 16, 24, 25, 26, 28, 34 and 42 of the register. A person is only entitled to rely on the provisions of section 24(1) of the TMA if he or she is an “interested person”. It was argued by Mr Michau that Meltz had not shown that he is an interested person in regard to the marks other than those in class 25. In Danco Clothing v Nu-Care Marketing Sales and Promotions 1991(4) SA 850(A) Nienaber JA held that in spite of the general interest which the public has in a correct register, this will not be sufficient to make a member of the public a “person aggrieved” in terms of the Trade Marks Act 1963. The applicant will have to be a trade rival or a potential trade rival in the sense of “having at the time of registration some definite and present intention to deal in certain goods or descriptions of goods, and not a mere general intention of extending his business at some future time to anything which he may think desirable”

(J Batt & Company [1898] 15 RPC 534 (CA) at 538, quoted with approval in Ritz Hotel Ltd v Charles of the Ritz Ltd and Another 1988(3) SA 290(A) at 308A and also in the Danco case by Nienaber JA at 855F)

Nienaber JA goes on to say at 855H-I that the applicant must establish this as a reasonable possibility and need not do so on a preponderance of probabilities. This means that the onus to prove locus standi will be less of a burden to an applicant than the onus to prove his case on the merits: “For it is better to hear a man with a bad case than to silence someone with a good case.” There is no reason why what was held to be relevant in regard to the determination of who an “aggrieved” person in terms of the 1963 Act is, should not also be applicable to an “interested person” in terms of the TMA. In the CGA the term is expressly limited in section 3 and I will get back to this aspect when dealing with the complaint filed in terms of the CGA.
Meltz as the respondent in this matter has an interest in the trade marks as to class 25 goods and he has locus standi to be heard on the expungement of trade marks in this class. He did not, however, make out a case that there was a reasonable possibility that he had some definite intention to deal in goods outside class 25. In the light of the conclusion which I have reached on the expungement application, I will, however, assume in favour of Meltz that he has locus standi in regard to the other classes as well.

[12] I will now deal with the basis upon which the expungement was argued by Mr Wheeldon, acting for Meltz. He firstly referred me to judgments which deal with the nature and function of a trade mark: In Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc H [1999] RPC 117 (ECJ) at 133 the function of a trade mark in terms of the 1994 United Kingdom Act is set out in the following terms:

In the European Court of Justice decision in Koninklijke Philips Electronics NV v Remington Consumer Products Limited 2 003 RPC 214 (ECJ) the Court reiterated that the essential function of a trade mark is to guarantee the identity of the origin of the marked product to the consumer or end user by enabling him, without any possibility of confusion to distinguish the product or service from others which have another origin. For a trade mark to fulfil its essential role, it must offer a guarantee that all the goods or services bearing it have originated under the control of a single undertaking which is responsible for their quality.
In Glaxo Group v Dowelhurst Limited 2000 FSR 529 (CHD) at 540-541 the Judge concluded that the purpose of a trade mark was to convey a message about source and responsibility for quality. The judge stated:

[13] It is Meltz’s contention that the LA Group’s POLO trade marks are not being used in accordance with the true function of a trade mark. In so far as section 10(2)(b) of the TMA is concerned, it was argued that first applicant's trade mark POLO which is being used on "Polo" shirts or "Polo" necked garments is a trade mark which designates a kind of shirt or garment. The trade mark indicates a characteristic of the clothing involved. Section 10(2) (b) and its corollary in section 34(2) (b) are intended to protect the rights of traders, so that traders may continue to use words which indicate the kind or characteristic of their goods. Section 34(2) (b) provides as follows:

"A registered trade mark is not infringed by- (b)the use by any person of any bona fide description or indication of the kind, quality, quantity, intended purpose, value, geographical origin or other characteristics of his goods or services, or the mode or time of production of goods or the rendering of the services." (emphasis added)

[14] Mr Wheeldon argued that it was clearly the intention of the Legislature to prevent the registration of trade marks which designate the kind or characteristics of goods and to ensure that a person does not infringe another's mark if using a word in a bona fide descriptive sense. The first applicant's trade mark registrations set out in the counter-application should therefore be removed from the register of trade marks in terms of section 24(1) read with section 10(2). Meltz states as follows in his founding affidavit for the counter-claim:
“Where a polo shirt is marked “Polo by Ralph Lauren” the word “polo” can have no trade significance and it is only the “Ralph Lauren” which is significant. Alternatively the trade marks with POLO should be varied by the entry of a disclaimer reading: "Registration of this trade mark shall give no right to the exclusive use of the word 'Polo' apart from the mark". Further alternatively, the specification of goods for the trade mark registrations should be amended by the exclusion from them of "Polo" shirts or "Polo" necked garments.

[15] The second leg of Mr Wheeldon’s argument on the counter-application focused on subsections 10(12) and (13) of the TMA, which provide as follows:

[18] Mr Wheeldon further argued that it is alleged by Ball that first applicant and Ralph Lauren entered into a confidential agreement regulating the use of the marks. According to this agreement Ralph Lauren is entitled to use the POLO trade mark in relation to class 3 goods and the applicant is entitled to use POLO in respect of class 25 goods. The Polo/Lauren (USA) Company is, indeed, the registered trade mark proprietor of several marks, in the South African register, bearing POLO in other classes than class 25 and even, in a case or two, in class 25. The LA Group is also the proprietor of several other marks which include the POLO mark in class 25, such as POLO JEANS CO, POLO SPORT CO and POLO PRESS.
[19] Meltz also averred that notwithstanding that the POLO trade mark is the registered trade mark of LA Group in South Africa, the POLO RALPH LAUREN trade marks have a reputation in South Africa through travellers who have encountered the POLO RALPH LAUREN trade marks abroad, through the internet and from advertisements which appear in both South African and international magazines circulating in South Africa. An internet search showed, according to Meltz, 265 stores worldwide, the first having been opened in 1971 and the company logo is a polo player on a horse. Meltz regards the following statement as significant: “From luggage to perfume to a restaurant, the Lauren brand is on almost everything.” Several sites were searched and Meltz’s conclusion is : “ The abovementioned sites are freely accessible from South Africa and, therefore, the South African public has access to them….[I]t is clear that the South African public can, by using the internet, access websites from which orders can be made and Polo Ralph Lauren merchandise may be purchased.” In so far as magazines are concerned, several copies with advertisements were annexed to Meltz’s affidavit. The distribution figures of Style, Elle and Vanity Fair were confirmed on affidavit. Some figures range between 1000-2000 per month, with some exceptions which show a distribution of just over 300 or 600 per month.

The conclusion which Meltz arrives at is the following:

“It is my submission that the Ralph Lauren trade marks are well-known in South Africa by virtue of their extensive use and by virtue of its consequent reputation. I further submit that the use by the Applicants of the POLO trade marks is associated with the POLO RALPH LAUREN trade marks. I submit that a substantial number of members of the South African public are routinely deceived or confused into thinking that the Applicants’ Polo goods are in fact Polo Ralph Lauren goods.”

[20] It was also averred by Meltz that the applicants had infringed upon the copyright of the owner of the copyright in the USA in regard to the polo player on horse back. They only changed its direction. He submits that the use of this device of the polo player on horseback is contrary to law, in that it perpetrates a fraud on the public. The device as registered should, accordingly, be removed from the register of trade marks.
[21] Meltz then deals with the word “polo” which indicates a kind of shirt. He accordingly avers that the mark was wrongly registered. Furthermore he avers that there are not sufficient controls on the quality of the products of the licensees by the LA Group: “The mark is therefore deceptive as to source and does not indicate a connection in the course of trade between the goods and the First applicant.”

[22] Based on the averments of deception by Meltz in his countering founding affidavit, it was argued by Mr. Wheeldon that the use by the applicants of the POLO trade marks in relation to clothing and use by Ralph Lauren of virtually identical trade marks openly on cosmetics, is calculated to and in fact does cause deception and confusion amongst members of the public because the nature of the goods are similar and the trade channels are the same. Add to this the overlapping advertising, the copying of get-up, the imitation of brand variants, the well-known nature of the Ralph Lauren trade marks and it is difficult to imagine how anyone who has not had the advantage of reading the pleadings in this matter is not confused. Even Mr Wheeldon still found it difficult to tell the one from the other.
Evaluation of Expungement Argument
[23] In Danco Clothing (Pty) Limited v Nucare Marketing Sales and Promotions (Pty) Limited 1991(4) SA 850 (A). the appellant’s trade mark “French Connection”, registered in respect of clothing, was also the mark of the respondent in respect of cosmetics. The appellant had registered its mark in 1980 in respect of clothing for women and girls and in 1983 amended it to clothing generally. The respondent’s mark was registered at the end of 1987, after the application had been launched in 1985. The applicant had to prove that the notional use of the mark “French Connection” in a fair and normal manner, in the one case by the appellant in respect of clothing, in the other by the respondent in respect of cosmetics, would more likely than not be deceptive or at least confusing in regard to the source of the respective goods. In determining that the likelihood of deception or confusion amongst a substantial number of persons had been established on the probabilities, the court took the following factors into account: the nature of the goods, their respective use and the trade channels through which the goods can notionally be retailed. The Appellate Division, finding that the likelihood of deception or confusion amongst a substantial number of persons had been established on the probabilities, upheld the appeal since the averment of the appellant that, in its experience, the public now Affidavits filed on behalf of the appellant stated that members of the public would associate the mark for clothing with the mark for cosmetics, since this widening of the scope of a trade mark to other classes had become a trend with prestige goods. associated a particular brand of cosmetics, perfumery, toiletries or sun-tan preparations with clothing bearing the same trade name, was not qualified or contradicted by the Respondent. The argument that since the mark “French Connection” contained a quasi-descriptive element (“French”), its use in relation to clothing would not deceive or confuse in its use on cosmetic items, was rejected in the light of the uncontradicted evidence of the appellant. This conclusion was reached in spite of the fact that there was no evidence of actual deception or confusion. However, Nienaber JA remarked at 861D that this was hardly surprising, since the respondent had not marketed its deodorant product through then retail channels used by the appellant.

[24] Procedurally it should be observed that once Meltz launched his counter-application, he should have joined Polo Ralph Lauren as a third respondent in so far as the counter-application is concerned. Since my conclusion on the counter-application does not rest on this procedural point, I will assume in favour of Meltz that Polo Ralph Lauren was joined. This approach would also seem just, since it was not raised during the hearing of this matter. What, however, is crucial to the counter-application is the survey of Bateleur Research Solutions, which was filed by Meltz, That the survey would be filed was envisaged by Meltz when he made the averments. after he had already made the averments referred to above. The survey had been conducted with 150 consumers. The conclusion reached was the following:

“Eleven international fashion houses were then read to the interviewees and they were asked as to whether they associated the POLO label with any of these fashion houses. 23% of the interviewees stated that they associate the POLO label with RALPH LAUREN… When presenting the market survey to Webber Wentzel Bowens attorneys I was requested to contact the interviewees who stated that they did not associate the POLO trade marks with any of the fashion houses mentioned and asked them whether they associated the POLO trade mark with an international or a local fashion house. 15 out of the 20 people contacted said that they associated the POLO label with an international fashion house.”

[25] The reports of two experts were filed by the LA Group to counter the survey. I need not dwell on their very critical observations. They both rejected the survey as being of any value in the present counter-application. Prof Francois E Steffens, emeritus professor of Statistics (UNISA) and Senior Statistical Consultant at the Rand Afrikaans University, rejected the survey on the basis that there was no attempt to obtain a random or even a representative sample of consumers in South Africa; the composition of the sample was suspect from a race and gender perspective; the sample only included Whites and Blacks; there was no mention of attempts to verify that the respondents told the truth; how many prospective respondents were rejected on the basis of the screening question before the required number of suitable respondents could be found ?; the finding that 100% of the respondents said that they knew the POLO brand was suspect; he doubted whether most consumers associated brand names with particular fashion houses – most consumers will at best know which stores stock their favourite brand; the omission of the name of the LA Group/Polo Management from the list of possible answers is a serious flaw, and could be a source of severe bias in the conclusions; there is no way of quantifying the accuracy of the sample if it is not based on a random sample. He concludes as follows: “In conclusion, my assessment of the survey is at best inept and, more probably, misleading.” The view of Miroslav Canak, an associate of Markinor (Pty) Ltd is similarly condemning of the survey: “the actual results (23%) are only applicable to the particular sample achieved, that is 150 interviews and nothing more….Even if the sample was representative, the result applied to the target group is extremely broad and virtually non-conclusive.” The main question, leaving out the LA Group and POLO Management (Pty) Ltd, which are South African companies, listed only international fashion houses as possible options. “We are of the opinion that the question itself was suggestive and provides a limited base for the broad statement that “23% of the South African public associates the mark POLO with Ralph Lauren. The question did not allow for anything but the possibility of the POLO label being associated with international fashion houses.”
[26] I have studied the survey and the two condemning reports closely and have come to the conclusion that the survey does not have sufficient value to support the averments of deception and confusion on a balance of probabilities. The survey is clearly deficient for the reasons mentioned by the experts. I, however, refrain from attaching any weight to the view of Prof. Steffens that the survey is “more probably, misleading”. There are sufficient other very clear signs that the survey is inadequate to sway the matter in favour of the LA Group. I also do not agree that the averments of Meltz as to inadequate control by the LA Group over its licensees are sufficiently strong to sustain the argument that the POLO mark has lost its distinguishing role or that the LA Group has lost its control over quality control. The fact that Ball did not respond to these allegations by setting out what controls were in place, does not support the argument that Meltz has satisfied the onus which rests on him to prove that the use of the mark is likely to deceive or cause confusion in terms of section 10(12) or would, as a result of the manner in which it has been used, be likely to cause deception or confusion in terms of section 10(13). Meltz would have had to back up his averments with more than his ipse dixit and the accompanying evidence as to advertising, the internet and the like before a duty arose for the LA Group to respond.As to the duties to respond: Luster Products Inc v Magic Style Sales CC 1997(3) SA 13(A). Ultimately, the inadequate survey led to the demise of the case of Meltz on these grounds.

[27] I considered whether I should not arrive at a conclusion notionally, as was done in Danco Clothing (Pty) Limited v Nucare Marketing Sales and Promotions (Pty) Limited (supra).The facts in that matter are, however distinguishable: the Court could firstly rely on a most relevant, uncontradicted and unqualified statement of the appellant that customers would associate the mark in regard with the cosmetics and the mark in regard to the clothing. Furthermore the Court also explained why it had “hardly (been) surprising” why there was no evidence as to actual deceit: the respondent did not market its deodorant product through the retail channels used by the appellant. In the present matter it was clear that marketing of shirts by Ralph Lauren would have been through the same channels, in so far as they existed. The attempt by Meltz at backing up his averments by way of the survey was, however, clearly deficient, as mentioned above.

[28] Meltz’s case in terms of section 10(2) (b), which is based on the averment that the POLO mark “consists exclusively of a sign or an indication which may serve, in trade, to designate the kind…or characteristics of the goods” also does not succeed. It is true that “polo” not only refers to the so-called polo-neck shirt but also to a kind of sport. This dual function of the word causes an ambiguity which causes it to rise above the merely descriptive. It no longer “exclusively” consists of a sign or an indication, in trade, to designate the characteristics of the goods.

"The rights acquired by registration of a trademark shall be infringed by

(a)      the unauthorised 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."

"In an infringement action the onus is on the plaintiff to show the probability or likelihood of deception or confusion. It is not incumbent upon the plaintiff to show that every person interested or concerned (usually as customers) in the class of goods for which his trademark has been registered, would probably be deceived or confused. It is sufficient if the probabilities establish that a substantial number of such persons will be deceived or confused. 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, i.e. 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 of the existence or non-existence of such a connection.
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 the 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 marketplace 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 of 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." (emphasis in italics added)

"I come now to compare the marks in this case …Viewed side by side the marks exhibit similarities and differences. They are both tri-syllabic; they both have as their first two syllables the word 'mica'. (Though in respondent's case this is spelt 'mika', phonetically the words are identical.) On the other hand the only similarity between the suffix 'cote' and the suffix 'tex' is that they are both monosyllabic. . . . .

As I have already mentioned, the goods to which Micatex and Mikacote marks were applied, were offered for sale in hardware stores, multiple stores, general dealer stores and similar retail outlets. Potential purchasers include not only persons skilled in the paint trade, such as building and painting contractors, but also persons having specialised knowledge and wanting merely to perform painting work themselves or by means of unskilled employees. I doubt very much whether the former, i.e. persons skilled in the paint trade, will be deceived or confused by respondent's mark Mikacote, but the position of the latter, i.e. persons having no specialised knowledge is by no means so clear.

In my opinion, the dominant impression or idea conveyed by each of the marks centres on the word 'mica'. 'Mica' constitutes in each case the first two syllables of the mark. It is the portion of the mark which makes the initial impact on which stress is laid in pronunciation. It is a known word for a known substance. In the painting trade appellant's use of the word 'mica' in its registered trademark was unique among trade names until respondent commenced using the mark Mikacote. The suffixes 'tex' and 'cote' make less of an impression, particularly as they appear to be derived from the term 'texture coating' or, at any rate would be understood by a substantial number of interested persons as being so derived." (emphasis in italics added)

The Court then concludes that a potential customer with no specialised knowledge will be inclined to call it "Mica-something"; and that at the very least, the resemblance between the marks is sufficient to cause a substantial number of such customers to be confused as to whether or not there was a material connection between the respondent's goods and the proprietor of the Micatex mark.

[32] In Bata Ltd v Face Fashions CC and Another 2001 (1) SA 844 (SCA). the facts were as follows. The appellant, a Canadian company, was the proprietor of several trademarks based upon the word "Power". Thus there was "Power" as well as "Power" and device, both in respect of "all footwear"; "Power Points" in respect of "articles of clothing including footwear of all kinds"; "Power in respect of "articles of clothing" and "Power" and device in respect of "clothing, including boots, shoes and slippers". The appellants' licensee in South Africa used the "Power" and "Power" and device marks on footwear it manufactured and imported for resale in South Africa. It also sold items of clothing on which the marks were displayed. The respondents manufactured and sold clothing under the name "Power House" or "Powerhouse". It was usually, but not invariably, accompanied by a distinctive dog device.

In Bata counsel for the appellant submitted that the common element in both marks, the word "Power", was likely to lead to confusion despite the fact that it is used in combination with the word "House" on the first respondent's clothing. The argument was rejected in the following terms:

"If full effect is given to this argument it would result in the appellant having a virtual monopoly to use the word 'Power' on clothing. According to the evidence, however, there are numerous trademark registrations in South Africa in respect of clothing which incorporate or include the word 'Power'. It is an ordinary word in everyday use as distinct from an invented or made-up word, and it cannot follow that confusion would probably arise if it is used in combination with another word.
What has to be considered, therefore, is whether the notional customer of average intelligence, viewing the marks as a whole or looking at the dominant features of each mark, is likely to be confused or deceived into believing that clothing bearing the words 'Power House' have a connection in the course of trade with the 'Power' trademark. In deciding this issue I have regard only to the respondent's 'Power House" mark without the distinctive dog device. In my view, the common element of the appellant's and the first respondent's marks is of minor significance when the marks are looked at as a whole. It is not possible to ignore the word 'House' in the first respondent's mark. I have considerable difficulty in imagining that the notional purchaser of the first respondent's clothing would focus attention only on the word 'Power'. The word 'House' is as significant as the word 'Power' and the two words used together sufficiently distinguish the first respondent's clothing from that of the appellant.
The result is the same whether the two marks are viewed side by side or in the market place were clothing is sold. The overall impression which is created is that the marks do not resemble each other closely and the average customer would not be confused or deceived into believing that clothing bearing the "Power House" mark is clothing made or sold by the appellant. Accordingly it has not been established that the marks resemble each other so closely that deception or confusion is likely to arise."
(emphasis added in italics)

[33] In comparing Bata with Plascon-Evans, Raath AJ comments as follows in Zimbo Spares Co Pty Ltd t/a Motoquip v Car Quip CC & Another (TPD Case number: 24116/03):

“It is somewhat difficult to fully reconcile this reasoning with the reasoning in regard to the word "mica" in the passage quoted above from Plascon-Evans. On the approach in Bata one may have expected an objection to the effect that a monopoly could not be claimed in regard to the word "mica", being a generic name of a known substance. Perhaps the reasoning in Plascon-Evans was swayed by the consideration that appellant's use of the word "mica" in the painting trade was unique amongst trade names until the respondent in that matter commenced using the mark Mikacote.”

I agree with Raath AJ and when the alleged infringement by US POLO ASSN is discussed hereunder, the Bata approach will be of particular significance.

[34] In Standard Bank of SA Ltd v United Bank Ltd 1991(4) SA 780(T). the competing marks, which were used in the home loan market, were "Equity Access Plan" by United Bank Limited and "Access" of which Standard Bank was the proprietor. It was argued that once it is indicated that the whole of the registered mark appears in the infringing mark, then, and whatever the context or the other feature of that mark, no inquiry into the likelihood of deception or confusion needs to be undertaken. This approach was based on Metal Box South Africa Ltd v Midpak Blow-moulders (Pty) Ltd 1988 (2) SA 446 (T) at 449I-J. where it was held that an applicant is required to prove:(i) the use by the respondent of the applicant's mark;(ii) use as a trademark; (iii)in relation to goods in respect of which the trademark is registered and(iv) such use being unauthorised.

Mr Puckrin, for Standard Bank, argued that if a defendant's mark infringed, it did not avail him to show that he has distinguished his mark by additions extraneous to the mark. Schutz J (as he then was) then inquired whether it is possible to distinguish within the mark itself, in the sense that the difference between the two marks is made such that there is no likelihood of deception or confusion [at 788G-H]. There was no South African authority on this point. After extensive inquiry into foreign case law, Schutz J concluded as follows at 796I:

" ...Standard does not have an 'absolute monopoly' in the sense contended for, that the marks are not identical, ... and that in order to succeed Standard has to prove the likelihood of deception or confusion."

The Supreme Court of Appeal in Bata (supra) See paragraph [6 ]of the judgment. supported the above conclusion of Schutz J. After referring to the Plascon-Evans test concerning confusion, the learned Judge, at 801I - 802C held that United Bank had infringed the mark of Standard Bank:

"Given all these circumstances, do I think that there is a probability that a substantial number of persons will be at least confused, if not deceived? The answer is that I do. Take the case of the man who has watched Standard's notional television advertisement.... Suppose that his interest is aroused in the idea propagated as Standard's Access scheme. Suppose that he is thinking of buying a house and taking out a bond. Suppose that a few days later he sees, somewhere, an advertisement for United's Equity Access Plan. Given the facts that he does not have the two marks before him side by side, and that memory is often imperfect, may this not lead him to a United branch to open discussions, or may he not at least be confused? In the case of an individual I see this as perfectly possible. If that be so, it translates itself into a probability that a substantial number of persons will be so confused. When I say of the one individual that it is merely possible that he will be confused, I postulate that at least a majority will not be confused. But it is the remaining minority that will satisfy the test."

[35] The LA Group is the proprietor of, inter alia, the following marks which are relevant in the present application and relate to class 25, clothing : POLO in regard to shirts; POLO Company, in regard to “articles of clothing, including boots, shoes and slippers; POLO SPORT CO (accompanied by the said words in black on a white background with a larger final black background) for clothing, footwear, headgear, accessories for the afore going; POLO JEANS CO for clothing, footwear, headgear, parts and accessories for the afore going; POLOPRESS for the same articles; the polo player horse device running to the left (left from the position of the person who wears the shirt) ; POLO COMPANY with a double polo player horse device facing right with a banner at the top on which Polo Company appears; a double polo player horse device facing right.

[36] A few examples of articles seized were attached by way of photographic copies: (1) a shirt with U.S. POLO ASSN. on its breast with the words, in smaller letters, to the left below it: SINCE 1890; (2) a shirt with Polo by Ralph Lauren printed on an attached piece of cloth on the rear neck as well as a card attached by what appears to be a piece of cotton wool; the shirt also displays the horse device of a polo player on horseback running to the right ; (3) a shirt with US POLO ASSN on its breast with the words, in smaller letters, to the left below it: SINCE 1890, in this case, however, bearing zig-zag stitches over the words US POLO ASSN; (4) a shirt with collar bearing the Polo by Ralph Lauren with a single horse device facing the right plus a card with the same words plus the horse device facing right. More examples were also attached by Ball in a later affidavit.
[37] The inventories of articles seized describe articles in what often appears to be abbreviated form. It is impossible for me to come to any firm conclusion as to whether the inventories include instances of trade marks other than those of which photographs are attached to the papers. I will limit my judgment to those instances.
[38] I shall now apply the criteria which are to be found in the Plascon-Evans, Bata and Standard Bank judgments. Polo The Polo in the examples has a square black line on all its sides. by Ralph Lauren infringes upon the POLO mark. Some customers might know that Ralph Lauren is a company different from the South African proprietors of POLO, but the accent is on Polo and that lies at the heart of the attached articles with this inscription. A substantial number of customers are likely to be confused by the addition of “by Ralph Lauren”, not knowing or at least being confused as to whether all Polo shirts are not from Ralph Lauren. The Polo is dominant in the mark.

[39] As to the horse device, it is irrelevant whether the horse faces the left or the right. Although the registered single horse faces the right, it is unlikely that more than the highly informed would remember this. In essence the single horse device is reproduced and whether it is identical to the registered device or confusingly similar to it, the reproductions in the photographs is sufficient for an infringement. The colour is also irrelevant. It is irrelevant whether the horse device infringes upon the copyright of Ralph Lauren. That is for Ralph Lauren to complain about in a copyright matter, if it wishes to do so. The survey attempting to show confusion was in any case, as has been held earlier, found to be deficient. Instances in the examples where the double horse device is reproduced, also infringe upon the registered double horse device. They are close enough to the registered device to be likely to confuse.

[40] As to “U.S. POLO ASSN SINCE 1890,” I am not convinced that a substantial number of customers are likely to be deceived or are likely to be confused between POLO and this inscription, which has a strong descriptive sense to it. The US combined with Assn distinguishes it from POLO or POLO Company. The mere fact that POLO appears as part of the mark is, in itself, insufficient to be likely to deceive or confuse. See Bata (supra). The other words neutralize its impact, which it would have had on its own, as the polo mark. The addition of Jeans Co does not alter the conclusion. The accent is on Jeans. Although Polo Jeans Co is a registered mark, Jeans Co is a descriptive phrase and can exist on its own without causing confusion with Polo Jeans Co.
The application accordingly fails insofar as the US Assn (which would include Association) related marks are not held to amount to infringements. Where Jeans Co is added to it or is used as a mark on its own, there is also no infringement. Of course, if a horse device were to appear on such garments, the trade mark will be infringed as a result of that device.
Passing-Off
[41] In the light of my findings in regard to the infringements as set out above, I find it unnecessary to deal with the averments of passing-off and unfair competition. An interdict against future infringement will be granted, so as to ensure that further trade mark infringement does not take place without recourse to the criminal law, by way of a contempt of court order. In so far as US POLO ASSN is concerned, I do not believe that the requirements of passing-off have been met. The mark is sufficiently different from the POLO marks to counter an inference of appropriation of the goodwill of the LA Group. For purposes of establishing passing-off it is, of course, not sufficient to only compare the two marks; a comparison has, for example, to be made between the get-up of the goods as marketed by the LA Group, and the get-up of the Meltz goods. Adidas Sportschuhfabriken Adi Dassler K.G v Harry Walt & Co. (Pty) Ltd. 1976(1) SA 530(T) at 538-9. Although an example or two of the alleged infringing shirts were handed up to me in Court, I had no examples of the LA Group’s shirts before me so that I could compare the get-up of the products. I am, accordingly, unable to come to any decision on passing-off and this prayer is not acceded to.

Unlawful Competition
[42] I also do not believe that a sufficient case has been made out on the grounds of unfair competition. Although the application also included unfair competition as one of the grounds for an order against Meltz, the papers were clearly not focused on this aspect of the case. Ball avers that since the trade marks have been infringed upon, the conduct of Meltz amounts to unlawful competition. The LA Group is already entitled to an interdict as applied for in regard to the infringements. This means that any further trading in goods with the marks held to have been infringing marks, will lead to an application to this Court for contempt of court, if the LA Group chooses to do so. The only further aim which could be attained is to obtain damages for the loss of royalties. I do not believe that a different conclusion could be reached on the US POLO ASSN marks used by Meltz. I have already found that the use of the said mark does not amount to an infringement. The LA Group was, in so far as this mark is concerned, competing within the bounds of the TMA. I am unable to find some additional ground on the papers in common law to hold against Meltz on the ground of unlawful competition. See Neethling, Potgieter and Visser Deliktereg (2002) at 336 et seq; Van Heerden and Neethling Unlawful Competition(1995) 2-3. The LA Group has chosen its remedies in the TMA and succeeded in obtaining an interdict against the use of the infringing marks. It will be senseless to also base the interdict on common law. The LA Group has not claimed other damages than royalties in terms of section 34(4) of the TMA.

[43] The Counterfeit Goods Act 37 of 1997 provides for offences in section 2(1), which range from the production of counterfeit goods to the importation, possession, distribution or exhibition thereof in the course of business. Section 2(2) provides that a person who is so involved is guilty of an offence if at the time of the act or conduct, the person knew or had reason to suspect that the goods to which the act or conduct relates, were counterfeit goods; or the person failed to take all reasonable steps in order to avoid any act or conduct of the nature contemplated in subsection (1) from being performed or engaged in with reference to the counterfeit goods. At least negligence would, accordingly, be the form of mens rea required for the offence. Obviously it would also include that the person should reasonably have known or should have foreseen the possibility that it was an offence.

[44] In terms of section 33> of the CGA any person who has an interest in the protected goods can lay a complaint, if he reasonably suspects that an offence in terms of section 2 of the Act is being committed. Such a complaint is laid with a duly appointed inspector in terms of the CGA terms of section 3(1) of the Act. Section 3(2) (a), and more particularly, 3(2) (b) of the same Act sets out the information and particulars required for the complaint. This includes not just information “from which the essential physical and any other distinctive features, elements and characteristics of the alleged counterfeit goods may be ascertained” but also “sufficient information and particulars as to the subsistence and extent of the intellectual property right” as well as “the complainant’s title to or interest in that right”. This information is required as the inspector has to satisfy herself, before she can proceed in terms of section 4(1) of the said Act that: a person laying the complaint is prima facie entitled to do so; the goods claimed to be protected are prima facie protected goods; the intellectual property right, the subject matter of which is alleged to have been applied to the offending goods, prima facie subsists; and the suspicion on which the complaint is based appears to be reasonable in the circumstances. Section 3(3) of the CGA.
[45] The same affidavit is also employed to obtain a warrant in terms of section 6 of the CGA. Section 6 refers to a warrant as contemplated by section 4(2) read with section 5(1) of the same Act. Such a warrant may be issued by a High Court Judge in chambers or a Magistrate within his or her jurisdiction. The warrant will only be issued if it appears that there are reasonable grounds for believing that an act of dealing in counterfeit goods has taken or is taking place.
[46] From the wording of the CGA it would appear that the Legislature anticipated the fact that it was granting intrusive remedies to the proprietor or licensee of a trade mark and that the application of such remedies would have to be constitutionally justifiable. In an attempt to balance these remedies certain checks and balances were introduced to protect traders against the unconstitutional use of such remedies. In this regard the constant use of the word “reasonable”, when referring to decisions that the complainant, the inspector and the judge or magistrate have to take in the process, sets the threshold that any proprietor must overcome before it is entitled to enjoy the remedies. Obviously these persons can only come to a reasonable decision if they have all the relevant information before them. It cannot be argued that a decision was reasonable if relevant information was not considered, because it was not placed before the decision-maker. For this reason the Act sets out the minimum requirements for the complainant’s affidavit. If they are not met, the decision cannot be reasonable and must be treated as void as it does not comply with the requirements of the Act. Of course, the CGA allows such discretion to be exercised on a prima facie view of the facts. “Prima facie”, however, could never mean that a relevant fact must not be brought before the inspector and judicial officer.

[47] The above situation is similar to the one that exists where a party approaches a Court on an ex parte basis. In this regard Le Roux J in Shlesinger v Schlesinger 1979 (4) SA 342 (W) at 348. quoted the following from Herbstein and Van Winsen The Civil Practice of the Superior Courts of South Africa 2^nd Edition at 94 with approval:

“Although, on the one hand, the petitioner is entitled to embody in his petition only sufficient allegations to establish his right, he must, on the other, make full disclosure of all material facts, which might affect the granting or otherwise of an ex parte order.
The utmost good faith must be observed by litigants making ex parte applications in placing material facts before the court; so much so that if an order has been made upon an ex parte application and it appears that material facts have been kept back, whether wilfully and mala fide or negligently, which might have influenced the decision of the court whether to make an order or not, the court has a discretion to set the order aside with costs on the ground of non-disclosure. It should, however, be noted that the court has a discretion and is not compelled, even if the non-disclosure was material, to dismiss the application or set aside the proceedings”.

[48]The learned Judge then continues at 349 with the following summary regarding ex parte applications:

“1        in ex parte applications all material facts must be disclosed which might influence a Court in coming to a decision;
2        the non-disclosure or suppression of facts need not be wilful or mala fide to incur the penalty of rescission; and
3        the Court, apprised of the true facts, has a discretion to set aside the former order or to preserve it”.

The learned Judge sets forth a two-step enquiry to decide whether an order has to be set aside at 348:

“The enquiry thus falls notionally into two parts namely, first, whether material facts were undisclosed and, secondly, whether a Court should exercise its discretion in favour of the Applicant...”

After having considered the authorities the learned Judge concludes as follows at 350B:

“It appears to me that unless there are very cogent practical reasons why an order should not be rescinded, the Court will always frown on an order obtained ex parte on incomplete information and will set it aside even if relief could be obtained on a subsequent application by the same applicant”.

and at 352 C-D:

“I respectfully associate myself with the learned Judge’s censure that a litigant who approaches a Court ex parte is not entitled to omit any reference to a fact or attitude of his opponent which is relevant to the point in issue merely because he is not prepared to accept the correctness of it”.

“(a)      means, without the authority of the owner of any intellectual property right subsisting in the Republic in respect of protected goods, the manufacturing, producing or making, whether in the Republic or elsewhere, of any goods whereby those protected goods are imitated in such manner and to such a degree that those other goods are substantially identical copies of the protected goods;
(b)     

means, without the authority of the owner of any intellectual property right subsisting in the Republic in respect of protected goods, manufacturing, producing or making, or applying to goods, whether in the Republic or elsewhere, the subject matter of that intellectual property right, or a colourable imitation thereof so that the other goods are calculated to be confused with or to be taken as being the protected goods of the said owner or any goods manufactured, produced or made under his or her licence; or
(c)     

…….

However, the relevant act of counterfeiting must also have infringed the intellectual property right in question"

(emphasis in italics added)

[50] The Act defines “counterfeit goods” as follows:

"goods that are the result of counterfeiting, and includes any means used for purposes of counterfeiting";

“protected goods” means-

(a) goods featuring, bearing, embodying or incorporating the subject matter of an intellectual property right with the authority of the owner of that intellectual property right, or goods to which that subject matter has been applied by that owner or with his or her authority;
(b)     

any particular class or kind of goods which, in law, may feature, bear, embody or incorporate the subject matter of an intellectual property right only with the authority of the owner of that intellectual property right, or to which that subject matter may in law be applied, only by that owner or with his or her authority, but which has not yet been manufactured, produced or made, or to which that subject matter has not yet been applied, with the authority of or by that owner (whichever is applicable)";

[51] In AM Moolla Group Ltd & Others v GAP Inc & Others [2004] JOL 13268(SCA). Harms JA is particularly critical of the definition of “counterfeit goods” and says at para [6] and [7]:

“As indicated, the Act prohibits certain acts in relation to ‘counterfeit goods’ but, although it to some extent follows the wording of footnote 14, it does not distinguish clearly between piracy and counterfeiting in the technical sense. Instead, both are referred to as counterfeiting. In the definition of ‘counterfeiting’ the Act has also changed the wording of the footnote in such a manner as to make the definition unintelligible…..
[7] There are serious shortcomings in the definition. First, the definition tends to equate trade mark infringement with counterfeiting, something contrary to TRIPs The GATT agreement on Trade-Related Aspects of Intellectual property Rights and something completely unnecessary. Counterfeiting, as mentioned, is a fraudulent imitation. The use of the term ‘calculated’ is especially confusing in this context because it has a special meaning in trade mark law, meaning ‘likely’. Why a developing country such as ours should give greater trade mark protection via criminal sanctions than, for instance, the European Community, is not readily apparent. The greater problem though, which is not a matter of policy but one of interpretation, is the meaning of the proviso. What TRIPs did was to define counterfeit trade mark goods (I paraphrase) as goods with marks identical to registered trade marks and which cannot be distinguished from the original and ‘thereby’ infringe a trade mark. The definition in the Act, on the other hand, by means of the proviso, does not draw a conclusion of infringement but adds an additional requirement of infringement (by the use of ‘however’ and ‘also’). To explain by way of an example: the Trade Marks Act (section 34(10)) requires, for infringement, use in the course of trade, obviously in this country since trade marks are territorial. Must that, too, be established in addition to the acts proscribed in section 2(1) of the Act under consideration? If it must, it would mean that transhipment would not amount to a prohibited act because the goods would then not be the result of ‘counterfeiting’…

[8] In the light of the conclusion I have reached it is not necessary to try to solve these problems.”

[52] For the solving of the present dispute it is necessary to interpret “counterfeiting”. I agree that the definition is poorly drafted. I nevertheless have to do the best I can with it since it cannot be presumed that the Legislature enacted a meaningless provision. A starting point is the definition of “counterfeit goods”, which is defined as “goods that are the result of counterfeiting”. The “goods” are the end product of counterfeiting. “Protected goods” are goods which feature, bear, embody, or incorporate the mark with the authority of the owner of the mark. Future goods are not relevant here, so the second part of the definition need not be quoted. If the mere infringement of the trade mark were to have been the only test, the Legislature could readily have said so without much ado. However, there is an addition (referred to as the “additional wording” hereunder) in each part of the definition, which requires either “imitation in such a manner and to such a degree that those goods are substantially identical copies of the protected goods” or “so that the other goods are calculated to be confused with or to be taken as being the protected goods of the said owner or any goods manufactured, produced or made under his or her licence”. And to crown it all, the section adds the sentence: “However, the relevant act of counterfeiting must also have infringed the intellectual property right in question.” Whatever one would wish to say about the poor drafting, my conclusion is that counterfeiting is more than mere infringement of a trade mark and that the additional wording referred to must also be shown, on a prima facie level, to exist before any action may be taken by an inspector with whom the complaint was filed and the court which issues the search and attachment warrant.

[53] I have studied the document filed by Ball for the consideration of the inspectors as well as the documents prepared by the different inspectors.   Ball firstly states his experience in the clothing trade and then lists the registered trade marks involved. He states that “complainant is entitled to restrain the use if a trade mark which constitutes a reproduction, imitation or translation of the well known trade mark in relation to goods or services which are identical or similar to the goods or services in respect of which the trade mark is well-known and where such use is likely to cause deception or confusion.” He states that he has examined a sample purchased as a test purchase of a woman’s t-shirt and confirms that the product does not emanate from the complainant or from any of its authorised licensees or distributors. He further confirmed that none of the complainant’s licensees have any products manufactured in Mauritius (the shirt indicated Mauritius as the country of manufacture). He confirmed that the shirt was counterfeit since it was of inferior material and of poor quality, that Meltz is not a licensed dealer of POLO goods and no licensee manufactures product in any category in Mauritius. He was also advised that persons who deal in counterfeit goods were contravening the CGA. Further details do not take the matter further than infringement and the acts prohibited by the CGA. The following words denote the trend of the statement: “The respondent, in the course of trade for the purpose of dealing in those goods, infringed against the complainant’s intellectual property rights as aforesaid and constitute goods that are the results of counterfeiting within the meaning of the Counterfeit Goods Act.”