South Africa: High Courts - Gauteng

In the matter between:

SALT OF THE EARTH CREATIONS (PTY) L TD

First Applicant

KINGSGATE CLOTHING (PTY) LTD PAUL VIVALDI FASHIONS (PTY) LTD

Second Applicant

Third Applicant

and

STUTTAFORDS STORES (PTY) LTD First Respondent

STUTTAFORDS INTERNATIONAL FASHION

CO (PTY) LTD Second Respondent

THE GAP, INC Third Respondent

GAP (APPAREL) LLC Fourth Respondent

GAP (ITM), INC Fifth Respondent

JUDGMENT

BASSON,J

This application is brought for urgent interim relief based on passing-off.

The third, fourth and fifth Respondents (collectively hereinafter referred

to as "The Gap") have sought leave to intervene in these proceedings.

Considering The Gap's direct and substantial interest in the application,

such leave was granted.

The Applicants aver that the first Applicant (hereinafter referred to as

"Salt") has used the Gap mark in South Africa on clothing since 1974

and the second and third Applicants (hereinafter referred to as

"Kingsgate" and "Vivaldi") have used the mark in South Africa on

clothing since 2001.

In an action instituted out of the Durban and Coast Local Division of the

High Court, The Gap states, inter alia, that on or about 1 August 2006

the first and second Respondents (collectively referred to as

"Stuttafords") were appointed as a distributor of The Gap's merchandise

in South Africa.

The Applicants aver that this conduct by the Respondents was

characterised by stealth.

Stuttafords have never previously traded in Gap branded merchandise

in South Africa and have only commenced trading in such merchandise

since 2 March 2007. The Applicants seek to urgently restore the status

quo ante. After the judgment of the Supreme Court of Appeal in A M

Moolla Group Ltd and Others v The Gap Inc and Others 2005 (6) SA

588 (SCA) (referred to below), letters were addressed to The Gap

advising, inter alia, that all persons who attempted to use the Gap mark

in South Africa would be interdicted based, inter alia, on passing-off.

On learning towards the end of 2006 that The Gap were in exploratory

discussions with one or more clothing retail chain stores in the country,

the Applicants addressed letters to a host of retail chain stores including

Stuttafords. It is not disputed that Stuttafords received such a letter and

did not respond to it.

During January 2007, an advertisement and a series of articles

appeared in the press concerning the alleged impending introduction of

The Gap's Gap branded merchandise in South Africa. Pursuant thereto,

a letter was addressed by the Applicants to The Gap on 26 January

2007 seeking, inter alia, an unequivocal undertaking, by no later than 5

February 2007, that The Gap would not attempt to trade in Gap branded

merchandise in South Africa.

A letter was also sent to Stuttafords on 26 January 2007 seeking, inter

alia, a response as to whether Stuttafords was planning to trade in Gap

branded merchandise and an undertaking that if that was planned they

would not do so. Stuttafords was also required to respond by no later

than 5 February 2007.

In the answering affidavit, The Gap acknowledges receipt of also the

letter addressed to Stuttafords. The Applicants contend that this was

done so as to avoid either of the deponents to the affidavits of

Stuttafords having to address the issue of their failure to respond.

The respondents (The Gap) instituted the so-called main action (supra)

on 2 February 2007, that is, just prior to the launch of the present

proceedings. In this action The Gap avers, inter alia, that on or about 1

p..ugust 2006 Stuttafords was appointed as a distributor of The Gap's

Gap branded merchandise in South Africa. Neither the Gap or

Stuttafords can explain why the Respondents' first letters (supra) went

unanswered.

The Applicants argue that the irresistible inference is that both The Gap

and Stuttafords deliberately sought to withhold any intimation of their

agreement on the impending launch of The Gap's Gap branded

merchandise in order to obtain a tactical advantage.

Such tactical advantage would be twofold: to avoid any determination of

rights prior to the date on which the goods were to be sold in the

country; and to ensure that trading was already underway at the time of

the hearing off proceedings such as the present proceedings in order to

contend for prejudice should an interdict be sought against any of them.

This stealth has persisted until the day of the launch of these

proceedings. The Respondents waited for the last possible day, in order

to take up more time before the launch of the merchandise.

It is important to note at the outset that the said launch through

Stuttafords took place at the Stuttafords shop in Sandton. Such action

was therefore committed within the jurisdiction of his Court.

On the other hand, the Applicants argue that they approached the Court

with due expedition.

The application was launched on 9 February 2007 and was originally

set down for hearing on 28 February 2007 considering that from the

advertisement which had appeared in the local press it was announced

that The Gap's Gap branded merchandise would be available in the

country from March 2007. The law requires a party seeking interim relief

to move with reasonable expedition. The Applicants in the instant case

have clearly moved with more than reasonable expedition, regard being

had to what is set out above.

In all the circumstances, it does not lie in the mouth of the Respondents

to contend that the matter is not urgent or that the Applicants did not

approach. the Court with due expedition for the purposes of being

entitled to interim relief.

In essence the Applicants ask that the application is heard as one of

urgency. In part A of the notice of motion (paragraph 2 of the notice of

motion), they pray for an Order that the first and second Respondents

(Stuttafords) are restricted and restrained from passing-off the articles

of clothing that they sell, propose to sell, advertise or offer for sale as

those of the Applicants or as being connected or associated in the

course of trade with the Applicants by using, in relation to the mark Gap

or any other mark confusingly or deceptively similar thereto.

In terms of paragraph 3 of the notice of motion the Order sough in

paragraph 2 (supra) is to operate with immediate effect pending: 3.1 the

final determination of the relief sought in part B hereunder (see the

discussion below), alternatively: 3.2 The final determination of the action

instituted out of the Durban and Coast Local Division of the High Court

(supra) under case number 1109/2007. They also ask that the said

Respondents be directed to pay the costs of the application for relief,

jointly and severally, such costs to include the costs consequent upon

the Applicants' employment of two counsel.

Part B of the notice of motion is made up of paragraphs 6 and 7

(paragraph 7 dealing with a similar costs order, referring to final relief).

Paragraph 6 reads as follows: "That a final Order be granted against the

Respondents interdicting and restraining them from passing-off the

articles of clothing that they sell, propose to sell. Advertise or offer for

sale as those of the Applicant or as being connected or associated in

the course of trade with the Applicants by using, in relation thereto the

mark Gap or any mark confusingly or deceptively similar thereto”.

Paragraph 8 of the notice of motion reads as follows: "The Respondents

be directed to deliver up to the Applicants for destruction alternatively

for the removal of the offending Gap mark (or any mark confusingly or

deceptively similar thereto) from any or all articles of clothing in

possession of the Respondents or which are under their control".

The relief sought by the Applicants in Part A is interim both in form and

substance.

The Applicants only seek to restore the status quo ante pending the

final adjudication of the dispute between the ultimate protagonists,

namely the Applicants and The Gap. This will be done in the action

instituted by The Gap out of the Durban and Coast Local Division of the

High Court or, in terms of paragraph 3.1 above (the notice of motion) in

this Court.

See:African Wanderers FC v Wanderers FC 1977 (2) SA 38 (AD) at 47A - H; Metlika Trading Limited and Others v Commissioner, SARS 2005 (3) SA 1 (SCA) at 11H - 12A

The interim relief sought by the Applicants is not a Judgment or Order in

that:­

(a) It will not be final and will also be susceptible to alteration by the

Court of first instance.

(b) It is not definitive of the rights of the parties.

(c) It does not have the effect of disposing of a substantial portion of

the relief claimed in the main proceedings.

See: Zweni v Minister of Law and Order 1993(1) SA 523 (AD) at

532J - 533A.

The fact that any interim relief granted may prove prejudicial to a party

does not mean that such relief amounts to a final and definitive order.

In this regard see African Wanderers supra at 48G - H where the

Court said:­

"The fact that the order made by HOWARD J, could well

prove to be prejudicial to the company does not therefore

justify a contention that the order was a final and definitive

order and not merely an order ad servandam causam.

Indeed, it very often happens that, when a court is asked to

grant a temporary interdict, and the right which it is sought

to protect is not clear, the court weighs, inter alia, the

prejudice to the applicant, if the interdict is refused, against

the prejudice to the respondent if it is granted (Eriksen

Motors (Welkom) Limited -v- Protea Motors, Warrenton

and Another, supra at page 691)."

See also: Zweni supra at 5338 - C.

The requirements for interim relief are:­

(a) The right sought to be protected is clear, or

(b)

That the right is prima facie established, and

(i)

There is a well-grounded apprehension of irreparable harm to

the applicant if the relief is not granted and it ultimately succeeds

in establishing its right, and

(ii)

That the balance of convenience favours the applicant, and

(iii)

That the applicant has no other satisfactory remedy.

See: Pietermartizburg City Council v Local Road Transportation Board 1959 (2) SA 758 (N) at 772C - E; Setlogelo v Setlogelo 1914 AD 221 at 227; Olympic Passenger Service (Pty) Ltd v Ramlagan

1957 (2) SA 382 (D) at 383A - E. L F Boshoff Investments v Cape Town Municipality 1969 (2) SA 256 (C) at 267B - D.

Where an applicant's right is clear and the other requisites are present,

no difficulty presents itself about granting an interim interdict.

See: Olympic Passenger Service supra at 383C - D.

Where the right is not clear on the affidavits, then the test for whether

the applicant has established a prima facie case for an interim interdict

appears from Webster v Mitchel/1948 (1) SA 1186 (W) at 1189 as

modified in Gool v Minister of Justice 1955 (2) SA 682 (C) at 688.

At the aforesaid citation, the Court in the Webster case supra said:­

"...the right to be set up by an applicant for a temporary

interdict need not be shown by a balance of probabilities. If

it is "prima facie established though open to some

doubt" that is enough. ... (emphasis added).

The proper manner of approach I consider is to take the

facts as set out by the applicant, together with any facts set

out by the respondent which the applicant cannot dispute,

and to consider whether, having regard to the inherent

probabilities, the applicant could ("should" per the Gool

case) on those facts obtain final relief at the trial. The facts

set up in contradiction by the respondent should then be

considered. If serious doubt is thrown upon the case of the

applicant he could not succeed in obtaining temporary

relief, for his right, prima facie established, may only be

open to some doubt."

In considering the inherent probabilities, as articulated in the Webster

case, the Court must also look at the question of the ultimate onus. As

part of the overall test however, Webster's case and Goal's case,

when the Court comes to consider whether the evidence tendered by

the Respondents casts a serious doubt on the Applicants' prima facie

case, the Court, in considering that particular aspect, namely whether

the case put up by the Respondents, casts a serious doubt, the Court is

enjoined, as part of that exercise, to take into account any onus which

the Respondents would carry in the principal case, that is when final

relief is sought.

See also: Godbold v Tompson 1970 (1) SA 61 (O)at 63C - O.

As to the manner in which the requisites for an interim interdict are to be

considered, these must not be viewed separately or in isolation but in

conjunction with one another in order to determine whether the Court

should exercise its discretion in favour of the grant of the interim relief

sought.

See: Cambridge Plan AG and Another v Moore and Others 1987 (4) SA 821 (0) at 833F.

Furthermore, there is, in particular, a clear interaction between the

balance of convenience and the strength of the prima facie case

required.

See: the Cambridge case supra at 833G - H.

Olympic Passenger Service case supra at 383F.

As regards a consideration of legal issues at the stage of interim relief,

the correct approach would appear to be that ordinary questions of law

should be decided at the interim stage whereas involved issues of law

should be left for determination by the trial Court.

Johannesburg Municipal Pension Fund v City of Johannesburg 2005 (6) SA 273 ~at 2818- 2838.

The Applicants contend that they have established the requirements

for interim relief in the matter.

Prima facie right

Considering that the Applicants' case is premised on passing-off,

Applicants are required to show:­

(a) A requisite reputation in the mark Gap.

(b) That the Respondents are committing the wrong of passing-off in

that they misrepresent their merchandise as that of the

Applicants, that is, whether there is a reasonable likelihood that

members of the public may be confused into believing that the

goods of the one is, or is connected with, that of another.

The delict of passing-off was described in the following terms in the

case of Capital Estate and General Agencies (Pty) Ltd v Holiday

Inns Inc 1977 (2) SA 916 (A) 929C:­

"The wrong known as passing-off consists in a representation by

one person that his business (or merchandise, as the case may

be) is that of another, or that it is associated with that of another,

and in order to determine whether the representation amounts to

a passing-off, one enquires whether there is a reasonable

likelihood that members of the public may be confused into

believing that the business of the one is, or is connected with,

that of another."

See also: Caterham Car Sales and Coach Works Ltd v Sirkin Cars (Pty) Ltd [1998] ZASCA 44; 1998 (3) SA 938 (SCA) at 947E.

Premier Trading Company (Pty) Ltd v Sportopia (Pty) Ltd 2000 (3) SA 259 (SCA).

Jennifer Williams and Associates v Lifeline Southern Transvaal

1996 (3)SA 408 (A).

What is protected is the goodwill of the business concerned. Goodwill

or the attractive force which brings in custom is comprised of a number

of components and the only component of the goodwill of a business

that can be damaged by means of a passing-off is its reputation.

See: Caterham supra at 947G-1

The Applicants establish their reputation by virtue of:­

(a) Evidence from people within the industry as to their

association of the Gap mark with the Applicants.

(b) Sales of merchandise under the Gap mark.

(c) Dicta of the Supreme Court of Appeal in the previous

proceedings - the case of Moolla (supra) is discussed infra.

The Applicants have put up copies of affidavits which were tendered by

people within the industry in the previous proceedings.

These affidavits were from leading persons within the industry as

evidenced by the affidavits of, inter alia:­

(a) Beeton, the Managing Director of Edgars Stores, the largest clothing

retail chain in South Africa, between 1991 and 1995.

(b) Snyman, the Marketing Director of Clothing and Textiles of the OK

Bazaars Limited from 1987 to 1992.

(c) Ratner, the Managing Director of procurement of Woolworths (Pty)

Ltd, during 1999.

Many more affidavits put up in the previous proceedings have been

included in the founding papers and these have been supplemented by

a host of affidavits from people within the industry.

Applicants have also put up evidence of their use of the Gap mark.

As far as Salt's use is concerned:­

(a) The Supreme Court of Appeal in the Moolla case supra, at

page 574E - G of its judgment in the previous proceedings said

the following:­

'Turning then to the Gap tale in this country: During 1971,

at a time when the respondent had 25 'The Gap' retail

outlets in six states in the USA, and had not yet used a

'Gap' trade mark in respect of clothing, one Hirsch 'coined'

the trade mark 'Gap' and began using in locally on clothing,

and, on 21 March 1973, he applied for the registration of

the trade mark 'Gap' in Class 25 in relation to articles of

clothing, including footwear (TM 73/1378). This registration

pre-dates any of the respondents' trade marks in Class 25,

even in the USA, and there is nothing on record to suggest

that Hirsch had copied or derived his inspiration from the

respondents' use of the 'Gap' name on its stores. During

the 1970's, the proprietor to who Hirsh had in the meantime

assigned this mark, manufactured and sold substantial

numbers of jeans under the mark. "

(b) That use continued throughout the 1980's.

(c) Detailed records exist of Salt's use from 1989 to 1996, and again

in 2007. These total nearly R8,000,000.00.

Sales of Gap branded merchandise by Kingsgate the second Applicant

for the period February 2002 to January 2007 amount to in excess of

R25,000,000.00.

Sales of Gap branded merchandise by Vivaldi for the period February

2002 to January 2007 amount to nearly R12,000,000.00.

These sales appear from supporting documents constituting some 76

lever arch files which have been specifically incorporated into evidence

in the founding affidavit.

Evidence has also been tendered, inter alia, of:­

(a) The actual marks used.

(b) Copies of labels and swing tallies utilized.

(c) A list, identifying some 141 customers to whom the Applicants

sell Gap branded merchandise.

(d) The fact that the Gap mark is featured in the annual financial

statements.

In light of the aforegoing, it is submitted by the Applicants that they have

established a clear right consisting of their reputation and goodwill in

and to the Gap trade mark in South Africa.

Alternatively, and at the very lowest, the Applicants have established a

strong prima facie right and have shown a reasonable apprehension of

irreparable harm.

Although the Applicants maintain that at the very lowest they have

established a strong prima facie right, it is so that no more than a

prospect of success is required before the Court is required to move

onto a consideration of the other elements of an interim interdict. In

Ferreira v Levin NO and Others; Vreynhoek and Others v Powell

NO and Others 1995 (2) SA 813 (W) at 832J - 833A the Court said the

following:­

" 1.

A prima facie right though open to some doubt

exists when there is a prospect of success in the

claim for the principal relief albeit that such prospect

may be assessed as weak by the Judge hearing the

interim application.

2.

Provided that there is a prospect of success, there

is no further threshold which must be crossed

before proceeding to a consideration of the other

elements of an interim interdict."

As set out in the Webster case supra, the Court, in determining

whether a prima facie case has been made out for the grant of interim

relief, must also consider what is set out in the Respondents' papers to

determine if any doubt is thrown on the case of the Applicants.

The Respondents contend that Salt's use prior to 1999 is inadmissible

in evidence on the basis that the Supreme Court of Appeal in the

Moolla cas supra has, in its judgment in the previous proceedings,

already found that Salt, since becoming part of the Group, was dormant.

(This, in turn, is relevant to the Applicants' reputation).

The short answer to that contention is that any such finding cannot be

res judicata on the basis that whilst the previous proceedings involved

relief sought under the Trade Marks Act, the present proceedings seek

passing-off relief under common law. The distinction between the two

has been maintained in our law by the relevant Trade Marks Statute

from time to time as interpreted by the Courts.

Section 33 of the Trade Marks Act provides that:­

"No person shall be entitled to institute any proceedings under

Section 34 in relation to a trade mark not registered under this

Act:

Provided that nothing in this Act shall affect the rights

of any person, at common law, to bring any action

against any other person." (emphasis added)

In the case of passing-off in So/mike (Pty) Ltd v West Street Trading

Co (Pty) Ltd 1981 (4) SA 706 (D), the Court said the following at 710H -711B:­

"He relied upon the decision of Bristowe J in Glenton and

Mitchell v Ceylon Tea Co 1918 WLD 118 at 126 - 127 in

support of his submission that, where the applicant for relief

on the ground of passing-off sought to restrain the use of a

registered trade mark, it was necessary for him, before he

could succeed, to show that that registration was prima

facie liable to expungement. This submission in my view is

totally at variance with the proviso to s 43 of the Trade

Marks Act 62 of 1963 which reads as follows:

"Provided that nothing in this Act shall affect the rights of

any person, at common law, to bring an action against

any other person for passing-off goods or services as

those of another person. ""

and also at 711H - 712A:­

"There is no authority quoted for the proposition that it is

incumbent upon the person seeking relief for passing-off

under these circumstances to show that he is prima facie

entitled to a rectification of the register. It seems to me,

with great respect, that the postulation of this requirement

constitutes the introduction of an unnecessary and

irrelevant element into the plaintiff's cause of action. If the

fact that the defendant is the proprietor of a registered trade

mark is irrelevant to passing-off proceedings, the question

of whether it is liable to expungement or not is equally

irrelevant. "

The concluding remarks of the Supreme Court of Appeal, in the

previous proceedings (Moolla case supra) put the issue beyond doubt,

in the Appplicants' submission.

At para 51 the following is stated:

"I am conscious of the fact that the result may satisfy neither party

because their respective ability to prevent the other from using the Gap

marks in this country hangs in the air and further litigation may be on

the cards."

There are several other grounds upon which the Applicants rely to

contend that there is no merit in Respondents' submissions on the

question of res judicata.

Clearly, the party against whom the Applicants seek substantive relief in

these proceedings, namely Stuttafords, was not a party to the prior

proceedings and Suttafords cannot accordingly rely on any defence

based on res judicata. The short answer to any argument that the

Applicants may not rely on evidence of Salt's use of the Gap mark prior

to 1999 on the grounds of res judicata, is that Applicants seek

substantive relief in the present proceedings against a completely new

""

party, namely Stuttafords, and res judicata according finds no

application in this matter.

All Applicants' contentions in this regard have been compellingly

summarised by the Supreme Court of Appeal in a judgment delivered

on Friday, 23 March 2007.

The judgment has been marked reportable and is to be found on the

website of the Supreme Court of Appeal under case number 536/05 in

the matter between Smith v Porritt and Four Others.

It is a Judgment

of Scott J A. At para 10 of the judgment, the Court says the following:­

"Following the decision in Boshoff v Union Government

1932 TPO 345 the ambit of the exceptio rei judicata has

over the years been extended by the relaxation in

appropriate cases of the common law requirements that the

relief claimed and the cause of action be the same (...) in

both the case in question and the earlier Judgment. . Where

the

circumstances justify

the

relaxation

of these

requirements those that remain are that the parties must be

the same (...) and the same issue (...) must arise. Broadly

stated, the latter involves an enquiry whether an issue of

fact or law was an essential element of the Judgment on

which reliance was placed. Where the plea of res judicata

is raised in the absence of a commonality of cause of action

and relief claimed it has become common place to adopt

the terminology of English law and to speak of the issue

estoppel.

But, as was stressed by Botha J A in

Kommissaris van Binnelandse Inkomste v ABSA Bank

Beperk 1995 (1) SA 653 (A) at 6690, 670J - 671 B, this is

not to be construed as implying an abandonment of the

principles of the common law in favour of those of English

law;

the defence remains one of res judicata.

The

recognition of the defence in such cases will however

require careful scrutiny. Each case will depend on its own

facts and any extension of the defence will be on a case by

case basis.

Relevant considerations will include

questions of equity and fairness not only to the parties

themselves but also to others. As pointed out by De Villiers

C J as long ago as 1893 in Bertram v Wood 10 SC 177 at

180, 'unless carefully circumscribed, [the defence of res

Judicata] is capable of producing great hardship and even

positive injustice to individuals'."

In effect, the Supreme Court of Appeal has turned its face clearly away

from placing form above substance and will not allow the interests of

justice to be tyrannized by exceptios which have their origins in

principles of equity.

Further, Res judicata is an equitable defence in law and one that cannot

be raised where a Court comes to a finding which it was unnecessary

for it to arrive at. The Supreme Court of Appeal (in the Moolla case

supra expunged Salt's registered trade marks on the basis that in the

affidavits before it, neither use by Salt nor any licence by Salt to any

other entity had been proved. It was, in those circumstances, wholly

unnecessary for the Supreme Court of Appeal to have come to the

conclusion that from the time that it had become part of the Group Salt

was dormant.

See: Kommissaris van Binnelandse Inkomste v ABSA Bank Beperk 1995 (1) SA 653 (A).

Furthermore, where a Court makes a finding of fact on which there is no

evidence before it, it misdirects itself.

Although no details were

provided in the affidavits in the previous proceedings concerning Salt's

use of the Gap mark (the only averment being a general one that Salt

had used the mark since becoming part of the Group), the invoices and

documents which are relied upon in the founding papers herein were

available to the Court on the previous occasion and these invoices and

documents clearly evidenced the fact that Salt was not dormant. While

the result in the Supreme Court of Appeal in regard to the expungement

cannot now be reversed, that is quite distinct from the contention that

that Court, with respect, misdirected itself on a finding of fact which is

not binding on the parties.

See:Groenewald NO and Another v Swanepoel 2002 (6) SA 724

(ECD) at 726J - 727A.

Quite apart from anything else, it is clear on the face of it that at best for

the Respondents the question of res judicata is an involved one which,

in terms of the principles relating to how a Court should deal with

involved questions of law at the interim stage, ought to be left over for

determination at the hearing of the action in due course. The Applicants

submit that, for purposes of interim relief, the Court ought, in the

circumstances, to accept Applicants' contentions as being at least prima

facie correct and sustainable for the purposes of interim relief.

The defence of res judicata raised by the Respondents is also one in

respect of which the Respondents bear the onus being in the nature of

a special defence. This is also a factor which the Court is enjoined to

take into consideration in deciding whether the Respondents' version

casts a serious doubt on the prima facie case established by the

Applicants.

As to whether the Applicants, as a fact, have made use of the Gap

mark, this is not disputed by the Respondents. Instead, an accountant

employed by the Respondents testifies, inter alia, that:­

(a)

He has had insufficient time to properly consider the evidence put

up by the Applicants in the 76 lever arch files.

(b)

He has found certain discrepancies in the figures relating to

turnover.

(c)

He has found sales allegedly effected by entities which no

longer exist.

All his contentions have been comprehensively dealt with in the affidavits of Moolla and Dhai.

The Respondents also contend that the Applicants' use of the Gap mark

is characterised by absence of quality control.

Those contentions have been comprehensively answered in the

affidavits delivered on behalf of the Applicants by Karachi.

The question of quality control applied in regard to Gap branded

merchandise manufactured by the Applicants is, in any event, taken

beyond all doubt by the affidavit of Barnes, an employee of Edcon from

1981 to 2006, who testifies that all garments manufactured by the

Group, including those under the Gap label, were always in line with the

standards and procedures that were required to meet customer

satisfaction.

Barnes' testimony is also corroborated by that of Gottschalk, an

employee of both Edcon and Woolworths between the period 1974 to

1999, who testifies that all garments supplied by the Group (Applicants)

were of an acceptable quality and accordingly met the standards that

were required.

The Applicants argue that the argument of lack of quality control is in

any event legally misplaced and cannot affect the strength of the case

for the Applicants. This follows from the following dicta from the

judgment of Harms J A in the case of Moolla - supra (albeit in the

context of registered trade marks):

"Put differently, although in the ordinary course of events a trade

mark owner would wish to ensure the consistency of the quality

of the goods or services marketed under its mark, nothing

prevents the owner from providing under one mark goods or

services of differing, inconsistent or poor quality. The customer

has, in the event of the purchase of a substandard product or the

the provision of substandard services, no redress based on

trade mark principles. Market forces may eventually exact their

toll. All a trade mark does, in the words of Laddie J in Glaxo, is

to identify the enterprise that is responsible for the quality of the

goods or services. Again Lord Nicholls:

'This

approach

accords

with

business reality and

customers' everyday expectations. Customers realise there

is always the prospect that, unbeknown to them, the

management of a business may change. To confine the

use of a trade mark to the original owner of a business

would be to give the concept of a business origin or

business source an unrealistically narrow and impractical

meaning. Of course, the new management, the new

owners, may not adhere to the same standards as the

original owner. But the risk of an unannounced change of

standards is ever present, even when there has been no

change in management. An owner may always decide to

change his quality standards. As already noted, customers

rely on it being in the owner's self-interest to maintain the

value of his mark. The self-interest of the owner of a trade

mark in maintaining its value applies as much to a

purchaser of the mark as it does to the original owner.'

There is no dispute that there is no difference in the Gap mark as used

by the Applicants and the Gap mark of The Gap.

There is also no dispute that the Gap mark as used by any of the

parties will be used in the same field of activity in the country, namely

on clothing and in that industry.

In this regard, the then Appellate

Division said in Brian Boswell Circus (Pty) Ltd and Another -v­

Boswell-Wilkie Circus (Pty) Ltd 1985 (4) SA 466 (A) at 479A - B:­

"Engagement in the same field of business activity is not a

prerequisite to success (Capital Estate case supra at 929E

- G), but clearly the existence of this factor would tend to

enhance the likelihood of confusion or deception as far as

the general public is concerned."

The question of confusion or deception is, in any event, placed beyond

any doubt by the say so of The Gap itself.

In the previous litigation, Fisher, the then Chairman and the founder of

The Gap said the following:­

"In my view, this suggests the majority of persons associated the trade mark with my company but are confused by the availability, from time to time, of GAP branded products in South Africa. It would seem that such consumers see the products as wholly imported products of my company. Additionally the consumers may be confused into believing a licensing agreement of some sort is in place between my company and one or more of the Respondents. "

(b)

And further:

"In addition thereto, I submit that the Respondents' alleged use of the GAP mark has been deceptive and confusing to the public who associate it with my company in particular:

20.5. 1 my company is the true proprietor of the trademark

GAP'

,

20.5.2 the trade mark GAP is well-known in South Africa, as being the trade mark of my company, within the meaning of Section 35 of the Act;

20.5.3 that the trade mark GAP, which one or more of the Respondents allegedly have used, constitutes a reproduction or imitation of my company's we 11­known trade mark and will be used in relation to goods which are identical or similar to goods in respect of which my company's trade mark is well­known;

20.5.4 such use by the Respondents is likely to cause

deception or confusion; and

20.5.5 such use has never been authorised by my

company. "

(c) And further:

"The contents of paragraph 3.10 and 3. 11 of my earlier Affidavit are repeated, and I submit that the Third Respondent does not have a bona fide claim as a true proprietor of the GAP trade mark, or any subsequent trade marks registered incorporating the word GAP, and further submit that the sale of GAP branded products in South

Africa by the Respondents is likely to cause deception and/or confusion amongst a substantial number of persons in South Africa as to the origin or source of the goods, in view of the reputation of the Applicants' GAP marks. "

(d)

And further:

"17.1 Section 9(1) of the Trade Marks Act, I am advised, requires that a trade mark be capable of distinguishing the goods or services of a person in respect of which it is registered, or proposed to be

registered, from the goods or services of another person either generally or, where the trade mark is registered or proposed to be registered subject to limitations, in relation to use within those limitations. "

"17.2 I submit that the Third Respondent's trade marks are not capable of distinguishing their products from those of my company, in light of the reputation which my company has in the GAP trade mark in South Africa and worldwide. . . . . .. "

The Gap have repeated those contentions in the action instituted out of

the Durban and Coast Local Division of the High Court supra where the

following is alleged in paragraph 1 of the Particulars of Claim:­

"The aforegoing conduct of the Defendant constitutes a

misrepresentation, in that members of the public seeing the

Defendant's merchandise bearing the trade mark GAP will

be led to believe that the said merchandise is merchandise

emanating from the First Plaintiff, alternatively the Plaintiffs

jointly or which is associated in the course of trade with the

First Plaintiff, alternatively the Plaintiffs jointly."

The question of confusion or deception is accordingly common cause

between the parties. The attempt by The Gap and by Stuttafords, in

the answering papers, to establish that there will be no confusion or

deception, on the alleged basis that the parties operate in different

segments of the market with no overlap, is without any merit.

Until The Gap's answering evidence in the present proceedings,

including in the action instituted by The Gap out of the Durban and

Coast Local Division on 2 February 2007, it has been common cause

that there will be confusion or deception.

Seen in that light, the attempt to contend for segmented markets is both

contrived and disingenuous.

The disingenuous stance is exacerbated when The Gap tries to explain

why, if as it contends their market and that of the Applicants is

segmented, they have sought to interdict the Applicants from allegedly

passing-off in the Durban action. If The Gap had any conviction in

regard to segmentation, they ought to have been quite content to permit

the Applicants to operate in an allegedly different segment of the

market from that of The Gap.

In order to explain away the obvious inconsistency, The Gap avers that

their customers may well be confused on seeing the Applicants'

products but that the Applicants' market is highly unlikely to be

confronted with The Gap’s products.

There is clearly no substance in the latter contention.

If the Applicants' alleged customers, being on the Respondents' version

at the lower end of the economic scale, are unlikely to venture into

"mainstream retail outlets", there is no warrant for assuming that people

who patronise such outlets would venture into the "very low end

commercial areas" where they would feel "unsafe due to the

environment.

The Respondents' contention that persons from the lower economic

sector will not frequent or venture into mainstream retail outlets is, in

any event, seriously disputed by the expert Professor De Wet.

De Wet testifies, inter alia, that:­

(a)

The central business districts in many of the South African urban

centres are now considered to represent poorer areas and yet

contain retail outlets such as Foschini and Edgars.

(b)

The last number of years has seen a dramatic change in trends

including a trend for people, previously disadvantaged and

coming from impoverished and lower economic environments,

to venture in substantial numbers to regional shopping centres.

This in turn has been made possible by the increasing mobility

of people including mobility offered by taxi operators in South

Africa.

It is also apparent that The Gap, historically and internationally, have

had as their target market the middle segment being the same target

market for the Applicants' merchandise and that the suggestion that

The Gap is targeted to the upper segment or exclusive end of the

market is untrue and contrived.

37

As The Gap did in the previous proceedings, they have devoted much

of their paper in the present matter on trying to establish that they have

an international reputation.

As the Supreme Court of Appeal

reconfirmed in its judgment in the previous proceedings (Moolla's case

supra at paragraphs 9 - 11), trade mark rights, and by necessary

implication any reputation, is a territorial concept and The Gap are

required to establish, if relevant to any proceedings, a reputation within

South Africa.

Whether or not The Gap have a reputation in the Republic is not a

relevant issue in the present case. The short answer to any reputation

contended for by The Gap is that any such reputation cannot overtake

the Applicants' reputation.

To the extent that The Gap contends that their alleged reputation in the

Republic is indeed a relevant consideration in these proceedings, then

again it must be pointed out that the onus to establish such a reputation

is clearly on The Gap and that this must weigh with the Court in its

determination of whether Respondents' version has disturbed the prima

facie case established by the Applicants.

There are, in any event, serious doubts that The Gap have established

that they have a reputation in the country even as at 2007, bearing in

mind that they concede that they failed to establish any reputation in

the Republic as at the time of the institution of the previous proceedings

in 1999.

The Gap contend that the situation has altered dramatically since their

evidence was filed in the previous litigation and that from the evidence

filed in these proceedings it is allegedly manifest that at least from 2000

The Gap's Gap marks have become well-known in South Africa.

A consideration of The Gap's evidence in these proceedings

demonstrates that this is not so.

In the previous proceedings The Gap relied on a market survey. In

order to disingenuously inflate the alleged reputation of their mark, The

Gap kept eliminating from their sample of interviewees those

interviewees who could not identify the Gap mark or associate it with

clothing.

On this occasion, The Gap have not tendered any market survey but

have sought to rely on two seriously and fatally flawed "surveys".

The unreliability of these surveys have been comprehensively dealt

with by the experts, Corder and De Wet.

39

As pointed out in the replying papers those surveys were self-serving

considering that they were conducted at the Stuttafords shop in

circumstances where on the evidence of Cicario of Stuttafords himself

every effort was made to make it clear to the customers of Stuttafords

that the Gap goods in those stores emanated from the United States of

America.

Annexure "MC3" to Cicario's affidavit includes display

material at Stuttafords shop which in bold print advise that the Gap

goods in store emanate from San Francisco, California, USA.

The Resondents argue that this was not a market survey but it is the

manner in which customers in the Stuttafords shop are alerted to the

fact that they are, indeed, selling the merchandise of The Gap.

Nevertheless, if The Gap believed that they had a reputation in the

Republic, it is likely that they would have commissioned a new market

survey. The fact that they have put up no such survey leads to the

inference that such a survey may well have been commissioned but

that the results were clearly unfavourable to The Gap.

Although a party trying to establish a reputation may rely on other

indiciae to do so, The Gap's reliance on such other paraphernalia has

40

failed to demonstrate any legally recognised reputation for The Gap in

the country. Briefly, these are as follows:­

(a) The Gap has attempted to rely on spill-over advertising without

offering any evidence as to what advertisements appeared in

which publications with what frequency of publication and with

what readership or the impact that such advertising might have

had on the readers of those magazines.

See: Victoria's Secret Inc v Edgars Stores Ltd [1994] ZASCA 43; 1994 (3) SA 739 (AD) at 753C - H; Slenderella Systems Inc v Hawkins 1959 (1) SA 519 (T) at 522A.

(b)

In regard to the number of South Africans travelling abroad,

Respondents have delivered almost a complete volume of

papers dealing with incomprehensible statistics, tables and

graphs.

Furthermore, they have failed to provide any

breakdown of the number of South Africans travelling to

countries where Gap branded merchandise emanating from The

Gap is available. Also these statistics are a globular figure of

the number of exits from the country without providing

information as to the actual number of different persons

travelling abroad considering that the same people often travel

repeatedly in course of a year.

(c) In respect to credit card sales, these clearly relate to credit cards issued in South Africa. Such sales could well arise from credit cards used by the hundreds of thousands if not million or two South Africans living abroad.

(d) In respect of The Gap's Gap merchandise which may have found its way into motion pictures or television programmes, The Gap fails to provide information as to what product allegedly appeared in what programme, with what degree of prominence the product so appeared in the programme, whether in fact the product had any identifying feature that clearly connected it with The Gap's Gap merchandise, when the programme was broadcast, what the

viewership for the programme was, the profile or demographics

of the viewership or the impact that the appearance of the product had on The Gap's alleged target market.

(e) In regard to the number of alleged hits on The Gap's website, these statistics are wholly not meaningful and unhelpful for, inter alia, the reasons that they record as hits each time a page within the website is opened and it is so that persons sitting anywhere in the world are able to access The Gap's website via South Africa.

(f) In respect of evidence put up by way of affidavits in support of

the awareness of The Gap in South Africa, these affidavits are

not from any significant persons within the industry, either at the

retail or manufacturing level, but rather are, inter alia, from

persons associated with fashion magazines, with branding, with

photography, with lecturing, with website developing, with sales

and marketing, with designing of apparel, with copyrighting, with

fashion shows.

In conclusion, the Applicants submit that a consideration of the Respondents' affidavits do not cast any serious doubt or disturb the prima facie case established by the Applicants, that is, that the Applicants have a recognised reputation and goodwill; .that there will be confusion should The Gap sell its goods in the South African market; and that such confusion will lead to irreparable harm to the goodwill of the Applicants.

Irreparable Harm

If the Court had concluded that the Applicants have established a clear

right, then there will be no need to consider the question of irreparable

harm.

However, the Court concluded that the Applicants have established a

prima facie right which is not open to serious doubt. The Applicants

submit that they have established a reasonable apprehension of

irreparable harm in and to their reputation and goodwill in the Gap mark

in South Africa.

43

There can be no doubt that there will be confusion in the market and

that the Respondents' use of the Gap mark in the country will lead to

diversion of custom away from the Applicants (see the discussion

supra).

It is the Respondents' contention that there will be an absence of

confusion in the present matter due to two not unrelated notions,

namely (i) that the market is segmented and Applicants and

Respondents operate in different segments and (ii) that Respondents

have succeeded in distinguishing their goods, to wit that their goods

emanate from the United States of America.

Market Segmentation

It is Respondents' case that there will be no confusion as customers of

Applicants' goods are not likely to venture into "mainstream retail outlets

such as Stuttafords, Foschini, Edgars and make purchases in these

stores" .

The short answer to that contention, that it is made by a private

investigator with no recognised expertise to do so The answer to this

question is to be found in the expert testimony of Professor de Wet. I

wish to reiterate that Professor de Wet says two very salient things:­

44

a.

The central business districts of many of the South African urban

centres are now considered to represent poorer areas as it were

and yet contain retail outlets such as Foschini and Edgars which

he says contradicts Reichman's contention that people in the

lower economic strata will not venture into such stores.

b.

There has been a dramatic change in trends, over the last

number of years, particularly under the new dispensation, for

people,

previously

disadvantaged

and

coming

from

impoverished and lower economic environments, to venture in

substantia! numbers to regional shopping centres and which has

been made possible by the increasing mobility of such people.

Alleged Distinguishing of Respondents' Goods

The Respondents argue that there will also be an absence of confusion

because they have succeeded in distinguishing the source of their

goods from that of the Applicants.

It is clear that the Respondents have no conviction in that argument and

that they postulate same only because they believe it is convenient to

do so.

If the Respondents genuinely believed that the market was segmented

and that they had succeeded in distinguishing the source of their goods,

they would have been content to permit the Applicants to continue

trading in Gap branded merchandise as, on Respondents' version,

there will be no confusion in the market place.

Instead, what Respondents did was to institute an action out of the

Durban Court on 2 February 2007 (supra) in 'Nhich Respondents:­

a.

Rely on garments bought from outlets to which the Applicants

have supplied Gap branded merchandise.

b.

Contend that members of the public, on seeing such Gap

branded merchandise emanating from the Applicants, will be led

to believe that the merchandise is merchandise emanating from

The Gap or that it is associated in the course of trade with The

Gap.

Those allegations are wholly contradictory and destructive of

Respondents' arguments both that the market is segmented and that

they have succeeded in distinguishing their goods. If, on their version,

they had so succeeded, The Gap could never have made those

allegations in the Particulars of Claim as at 2 February 2007.

It is all too convenient for the Respondents to aver that the

Respondents may abandon their cause of action based on passing-off.

Are the Respondents genuinely going to abandon that cause of action

considering that their action based on Section 35 of the Trade Marks

Act, included in the same proceedings, is stillborn having regard to the

judgment of the Supreme Court of Appeal (Moolla’s case supra) in the

previous proceedings in regard to The Gap's Section 35 claim.

In any event, not only do those allegations in the particulars of claim

demonstrate that The Gap continues to contend, as at February 2007,

for confusion, much as Fisher did in the previous proceedings as at

1999, but The Gap have, in addition, repeated the allegations of

confusion under oath in their affidavits in the present proceedings. The

Gap's deponent, Gruber, says the following:­

"The Respondents' customers may well be confused on

seeing the Applicants' shoddy and cheap products, but the

converse will never be true, for the Applicants' market is

highly unlikely to be confronted with genuine Gap branded

products. "

If Respondents had indeed succeeded in distinguishing their products,

as they say they have, there would be no prospect of their customers

being confused on seeing Applicants' products.

The fact that Respondents contend for such confusion is an

unequivocal acceptance of the argument postulated by Applicants in

their opening, which is that the moment that you are outside of the

Stuttafords' stores, this so-called attempt to distinguish the goods is of

no value and that there will be confusion.

Furthermore, on Respondents' version such confusion will persist

notwithstanding alleged price and quality differentials.

It is also a clear endorsement of the Applicants' example, postulated in

opening, to the effect that a person wearing a Gap garment, purchased

from a Stuttafords' store, and attending a soccer match in Soweto will

cause confusion as to the source of that product. It is at that stage that

the Respondents will be making the misrepresentation giving rise to

deception or confusion which lies at the heart of a passing-off claim. It

was wrong to suggest, as counsel for the respondent's did, that this

misrepresentation would not lead to damage as it was removed from

the point of sale. Damage is indeed likely as the misrepresentee will

purchase the desired goods at Stuttafords and the Applicants will loose

the sale. In any event, for the purposes of interdictory relief actual

damage is not necessary, likelihood thereof is sufficient.

This demonstrates that the attempt by the Respondents to distinguish

their goods does not meet the established legal test for doing so.

In this regard there are two relevant dicta which are of importance.

The first appears in Weber-Stephen Products Company v A/rite

Engineering (Pty) Ltd [1992] ZASCA 2; 1992 (2) SA 489 (AD) at 498G - 499E and

reads as follows:­

"The Court a quo further accepted that the respondent's

notices do no more than to inform the reader that the

product to which the notices are attached (the Mirage

Oven) is from a South African source which has not

connection with the American source of the Weber Grill.

Having regard to the facts thus accepted by the Court a

quo, the appellant argued in this Court and the Court a quo

that the notice was ambiguous and accordingly failed to

distinguish the Mirage Oven clearly from the appellant's

Weber Grill. Stegmann J set out this argument as follows

(at 7278 - F):

'The ambiguity of the notice results from the fact that the

reputation of the Weber Grill was proved to attach

principally to the shape and not to the name or to the

products American source. The potential purchaser, on

seeing the Mirage Oven with its notice, and knowing that

the product with the reputation has the shape in

question, must remain confused after reading the

respondent's notice. For the notice merely alerts him to

the fact that there are two unconnected sources of

products having the same shape. It does not enable him

to know which of such two sources is the one that has

built up the reputation of which he is aware and which he

has learned to connect with the shape alone. Therefore,

Mr Ginsburg's first argument concluded, the respondent's

notice fails to distinguish the respondent's Mirage Oven

from the applicant's product which enjoys the reputation,

50

and it is accordingly inadequate to prevent a passing-off.

Without the notice, the identity of shapes of the two

products is the source of likely confusion. With a notice

which does no more than to draw attention to the fact

that there are two sources of the same shape, the

identity of shapes remains the source of likely confusion.

For, according to Mr Ginsburg's argument, the interdict

requires that the likely confusion should be cleared up by

the respondents.

It is not enough, according to the

argument, for the respondents merely to alert the

potential purchaser to the need to make further enquiries

in order to find out to which of the two products the

reputation that he knows of attaches. '

This argument seems to me to be unanswerable. The first

respondent has been interdicted from passing-off its

product as that of the appellants. In these circumstances, if

it wishes to continue selling its product, it is required to

make it 'perfectly clear to the public that (it) is not selling the

goods of the original manufacturer. (...). The notice by

itself did not suffice.

The features of the respondent's

Mirage Oven which created the confusion were its shape

and configuration, and the notice did not do anything

effectively to eliminate this confusion."

In the present case, the reputation attaches to the mark Gap and by the

Respondents simply putting up posters indicating that the Respondents'

Gap branded merchandise emanates from the United States of

America, they achieve nothing more than alerting members of the public

to the fact that there may be two unconnected sources of products

bearing the name Gap. It does not enable those persons, particularly

those entering Stuttafords' stores, to know which of such two sources is

the one that has built up the reputation of which they are aware" In the

words of the Supreme Court of Appeal, the Respondents' notice does

not do anything effectively to eliminate the confusion.

In the Weber-Stephen case, four large and prominently placed notices

were attached to the product itself in an attempt to distinguish the

infringing products from that of those applicant...

Notwithstanding, the Supreme Court of Appeal held that the notices did

not suffice as set out above.

At the very least, the party attempting to distinguish in the Weber­

Stephen matter recognised that to even contend that a notice had value

such notice had to be on the product itself and not on some

accompanying advertising material dehors the product at the point of

sale. There has been no such attempt in the present matter, nor would

that suffice in any event.

The consequence of that, and to answer the question posed by

Respondents in their oral argument, namely "what damage or prejudice

would the applicants suffer' if a member of the public were to see his

neighbour at the Soweto soccer match wearing a Gap t-shirt for

example, that if the member of the public were to enquire from his

neighbour as to where the neighbour had acquired the Gap t-shirt from

and was given the answer Stuttafords, the member of the public, if he

were interested in acquiring such a t-shirt, would go to Stuttafords to do

so and not to an outlet to which the Applicants supply their Gap branded

merchandise.

If the Respondents' contentions in regard to their allegation that they

have succeeded, on the facts of the present matter, in clearly identifying

their goods as being distinct from those of the Applicants were accepted

as being correct, this would result in the total emasculation of passing­

off as a remedy in law.

Furthermore, what the Respondents say in the present proceedings is

that they undertake to sell Gap branded merchandise with the

accompanying advertising material or in some other way which makes it

clear that the goods emanate from the United States of America

pending the outcome of the present proceedings.

In effect then what Respondents are saying to this Court is that no

interdictory relief, interim or final, should be granted against Stuttafords

based on an absence of confusion on the grounds that Respondents

have distinguished their Gap branded merchandise but that once relief

to the il\pp!icants has been denied, the clear implication is that

Respondents will be free to sell their products without any attempt at

distinguishing same.

The apposite dictum is to be found in the case of Brian Boswell Circus

v Boswell-Wilkie Circus 1985 (4) SA 466 (A) at 4831 - 4848 which

reads as follows:­

"The submission that in circumstances such as these all

that the appellants need to do is to take reasonable steps to

obviate deception and/or confusion - irrespective of the

success of these steps - is in my opinion without

substance.

In Policansky's case supra at 103 in fine

(quoted above) Wessels C J stated that where a business

name has acquired a secondary meaning another person

'cannot use that name in connection with a similar class

of goods unless he makes it perfectly clear- to the public

that he is not selling the goods of the original

manufacturer'.

Translated to the facts of this case, this means that

appellants cannot use the name Boswell in connection with

its circus business unless they make it perfectly clear to the

circus-going public that their circus is not that of the

respondent and is not connected with the respondent's

circus. In my opinion, any disclaimer or other steps taken

to thus enlighten the public must be sufficient to eliminate

the likelihood of deception or confusion."

55

The Respondents' duty is a most onerous one, namely to eliminate the

likelihood of deception or confusion.

This they have palpably failed to do. The Applicants submit that in a

situation like the present where the same mark is used on the same

goods, it is not possible to distinguish infringing goods from the goods of

an aggrieved applicant.

In regard to the authority in Brian Boswell Circus supra, it is

instructive that the then Appellate Division found the employment of the

prefix "Brian" before the words "Boswell Circus" as being insufficient to

distinguish the name “Brian Boswell Cirus” from “Boswell-Wilkie

Circus" at 482H - 483B.

The Appellate Division held that the dominant feature of the name

adopted by the Appellants in that matter was the word "Boswell'-supra

at 483B.

The present matter goes even further in that it is not even a question of

the dominant feature of the name adopted by the Respondents as the

very name adopted, namely Gap, is precisely the name used by the

Applicants.

It is self-evident that it is simply not possible, in the circumstances of the

present matter, for the Respondents to identify or distinguish their Gap

branded merchandise as being distinct from those of the Applicants in a

manner which accords with established principle and law.

Conclusion re market segmentation and distinguishing of

Goods

Once it is accepted that there is no merit in the Respondents' contention

either that the market is segmented or that Respondents have

succeeded in distinguishing their goods, the Court is left with

Respondents' own admission that the marks used by the Applicants and

Respondents are confusing.

Shared Reputation

To even contend for a shared reputation, Respondents are required to

establish, as a starting point, that they have a reputation in the Republic

at the time of the institution of these proceedings.

Although Respondents have argued that the Court ought not to dissect

each portion of the evidence advanced on which Respondents rely to

contend that they have established a reputation, but that the Court

57

should look at the conspectus of evidence, the fact of the matter is that

The Gap has put up considerably less evidence in these proceedings as

compared to that put up in the previous proceedings (including, inter

alia, the fact that Respondents have put up no fresh market survey, the

litmus test for reputation, in these proceedings) but, notwithstanding,

asks this Court to make a finding which the Supreme Court of Appeal

was singularly un-persuaded to make.

In any event, Respondents accept that they established no reputation in

the Republic as at the date of the institution of the previous proceedings

in 1999 but argue that they have done so since at least from about

2000.

Since res judicata finds no application in the present matter, even if the

Respondents were able to show a reputation since at least 2000, such

reputation cannot overtake that of the Applicants. By this is meant that

any factual reputation which the respondents may have established will

have no legal consequences and cannot therefore sustain a defence to

passing-off.

The Respondents' fallback position is that, assuming that The Gap have

established a reputation and there is no question of that reputation

attempting to overtake that of the Applicants, they have a shared

reputation with the Applicants and ought therefore to be allowed to use

the Gap mark in South Africa alongside such use of the mark by the

Applicants.

There is no merit in that contention because without the Respondents

establishing a waiver of the Applicants' right to sue for passing-off or an

estoppel against the Applicants, a shared reputation is no defence to

passing off in the circumstances of the present matter. The respondents

do not even attempt to establish or to rely upon a waiver or an estoppel.

Although the law recognises that independent parties may have a

shared reputation, there are very circumscribed circumstances under

which this may arise.

None of the authorities relied upon and glossed over by the

Respondents during argument assist the Respondents in advancing the

argument of shared reputation.

In substance, it is clear from the authorities that a shared reputation,

between competing parties, can only arise where there is an absence of

confusion. In effect then, the Respondents' argument in regard to a

shared reputation is not a distinct argument from their argument based

on an alleged absence of confusion.

Once it is accepted that there is no merit in Respondents' contentions

that there will be an absence of confusion in the present matter, their

argument re a shared reputation must also be rejected.

The first case cited by the learned authors Webster and Page at the

paragraph dealing with shared reputation and relied upon by the

Respondents, namely Para 15. 13 at Page 15-32 of the text, is that of

Horseshoe Caterers (Greenpoint) (Pty) Ltd v Burnkloof Caterers

Limited 1975 (2) SA 189 (C), says the following at 205C:­

"In my view one trader is entitled to LIse a sign identical to

that of another unless the former by so doing deceives the

public into thinking that his business is or is connected with

that of the other. Proof of this deception has not in my

opinion been produced in the instant case."

(This case clearly dealt with competing parties).

Many of the authorities relied upon by the Respondents deal with

circumstances where the parties concerned are not competing with

each other in regard to the use of the mark.

. So for example there are instances where parties with a shared

reputation have acquired that joint reputation from a common source,

be it a common geographical area or a common originator. This is not at

all the situation in this matter where the parties are antagonists.

The case of Bollinger v Costa Brava [1960] R.P.C. 16 dealt with

producers of Champagne. The passing-off suit had been brought by a

host of plaintiffs, each of whom was a French company carrying on

business as a producer of wine in the Champagne district of France. It

is clear from that case that all the Plaintiffs accepted that they all shared

a reputation in the name Champagne as they all carried on business in

the Champagne district.

They sought to interdict defendants who

purported to use the trade description Champagne even though

Defendants did not carry on business in that district.

The case of Dent v Turpin (1861) 2 J & H 139 dealt with one of the two

stepsons of one E J Dent, the originator of the Dent watch business,

who sought to interdict a third party from using the name Dent. Both the

stepsons of E J Dent had a reputation in the name Dent relating to

watches. They clearly derived this reputation from the founder, E J

Dent, who bequeathed places of business operated by him during his

life to both of his stepsons.

In those circumstances, there was no

argument between the two stepsons that they shared a reputation in

that name.

Even where parties have derived their trading name from a common

originator, as in the case of Sir Robert McAlpine Limited v Alfred

McAlpine pic [2004] EWHC 630; [2004] RPC 36 711 (CA), cited by the authors Webster

and Page at Para 15. 13 at Page 15-32 of the text relied upon by the

Respondents, however, it is so that having thus acquired a shared

reputation, the one party is not permitted to do something which would

cause confusion. So in that case the Court held that a passing-off had

been established where Alfred McAlpine p/c sought to remove the prefix

"Alfred" from its trading name.

The case of Habib Bank Ltd v Habib Bank AG Zurich [1982J RPC1

(CA) 24 also involved parties who had derived their name from a

common source. Two salient features emerge, inter alia, from that

case. The first is that the Court found absence of misrepresentation.

The second is that the Habib Bank Ltd had assisted the Habib Bank AG

Zurich to set up business in the United Kingdom and then subsequently

sought to contend for passing-off.

The Court held that those

circumstances gave rise to an estoppel.

In the present matter, it is apparent that the Applicants and The Gap

have been at loggerheads for nearly a decade now and that it is

common cause between them that there will be -confusion. There is

also no suggestion of any waiver or estoppel on the part of the

Applicants.

Quite apart from the previous litigation, the present litigation

demonstrates that the Applicants moved expeditiously to interdict the

Respondents from trading in Gap branded merchandise. Clearly there

has been no waiver or consent on the part of the Applicants as it were.

There will also be confusion or deception as to the source of Gap

branded merchandise in the country and the reputation and goodwill

built up by the Applicants, and Salt in particular for over thirty years, will

be irreparably harmed.

Quite apart from diversion of custom and confusion as to the source of

Gap branded merchandise in South Africa, the Applicants' reputation

will also be irreparably harmed if The Gap are permitted to continue

trading only to find that their foray into the South African market was a

- -- -­

65

Balance of Convenience

One or more of the Applicants, individually and collectively, have been

using the Gap mark in regard to clothing in South Africa for over thirty

years.

In those circumstances, the Applicants stand to be severely prejudiced

if the Respondents are not interdicted and restrained from using the

Gap mark in the country.

By contrast, at the date of institution of these proceedings, on 9

February 2007, the Respondents had never used the Gap mark in the

course of trade in South Africa.

In any event, the alleged damages, in the form of loss of profits or

damage to reputation, which the Respondents might suffer as a result

of any relief granted herein is a direct consequence of the stealth with

which the Respondents have conducted themselves in this matter. Had

the Respondents

been bona fide and responded to earlier

correspondence, a determination of the present dispute could have

taken place well prior to the date on which it was planned that The Gap

66

would make available its Gap branded merchandise through

Stuttafords.

In the premises, it does not lie in the mouth of the Respondents to

contend that they will suffer prejudice as such prejudice is of their own

making.

It is disputed by the Applicants that the Respondents have put up any

evidence to show that they will suffer prejudice by the grant of any

interdictory relief herein.

The Respondents aver that they will suffer a loss of profits.

In the first instance, Stuttafords seeks to claim that it will suffer a loss of

profits over the next two years.

There is no suggestion anywhere in the papers that any lost revenue

arising from Stuttafords being interdicted in trading in Gap branded

merchandise will not be compensated by sales in other brands effected

by Stuttafords.

Although the Respondents have not put up either the terms of the

agreement between them or a copy of the agreement itself, it appears

from the Affidavit of Young on behalf of The Gap that The Gap

furnished some kind of indemnity to Stuttafords that in the event of

Stuttafords being restrained from dealing in Gap branded merchandise,

The Gap would repurchase from Stuttafords the goods sold to it by The

Gap.

In all those circumstances, it appears evident that not only will

Stuttafords not suffer any loss but that they have made out no case that

they will suffer any such loss.

Instead Stuttafords' case on this score is that the Court should allow

Stuttafords the opportunity of trying to make a profit from the Sale of

Gap branded merchandise (where there is no suggestion that an

equivalent profit will not be made by Stuttafords through the sale of

other merchandise) notwithstanding the rights of the Applicants in and

to the reputation and goodwill to the Gap mark in South Africa which

has persisted for over thirty years.

Any loss or damage to the reputation of Stuttafords if they are

prevented from dealing in Gap branded merchandise after Stuttafords

placed advertisements, is loss or damage of Stuttafords' own making

considering their stealth in this matter.

68

In regard to The Gap, clothing is never manufactured two years in

advance. In those circumstances, if an interdict were granted and The

Gap could not place the relevant product anywhere else in the world,

The Gap would simply not produce the merchandise in question and

there would be no question of costs attendant upon the repurchasing of

product from Stuttafords and/or redistributing or destroying it.

According to The Gap, they have Gap trade mark registrations in 118

countries and they have an active presence (by which I understand that

their goods are available) in some 50 jurisdictions. Furthermore, they

have in excess of 1,570 stores worldwide.

There is no suggestion anywhere on the papers that the Gap branded

merchandise which The Gap proposes to sell to Stuttafords has been

or will be uniquely designed and manufactured for Stuttafords and that

it will not find a market anywhere else in the world.

Considering The Gap's numerous retail outlets and the numerous

jurisdictions in which Gap says it operates, The Gap, should have no

difficulty in redirecting the merchandise intended for Stuttafords to such

other outlets or jurisdictions.

69

If the turn around time for clothing ranges is six weeks for The Gap as

contended by Young, then, in the event of an interdict being granted,

there will be nothing stopping The Gap from directly sending any goods

manufactured for Stuttafords to other such outlets or jurisdictions.

There is also no suggestion in the papers on the part of The Gap that

any lost revenue or profits which might accrue to The Gap as a result of

an interdict being granted herein will not be made up by The Gap in the

various other jurisdictions in which it trades around the world.

For the sake of completeness, it should also be pointed out that neither

Stuttafords nor The Gap have put up any acceptable evidence

concerning loss of net profits which is the calculation of profits which a

Court would normally consider when determining the quantum of

damages.

In the case of Stuttafords, the calculations conducted Cicario are wholly

flawed as pointed out by the Applicants' Financial Director, Chetty.

In the case of the Stuttafords, they only refer to their alleged profits on

the projected US$6.1 million sales to Stuttafords without furnishing any

evidence as to the anticipated loss of net profits.

70

In light of all the aforegoing, it is submitted that the balance of

convenience clearly favours the Applicants.

The Respondents raise one further contention in respect of the balance

of convenience, namely that The Gap's applications for registration of

Gap trade marks in South Africa will succeed and that the consequence

of such registrations will be that all use of the Gap mark by the

Applicants will be rendered unprotected.

As indicated in the founding papers, Salt is not only opposing The

Gap's applications for registration but has itself lodged fresh

applications with the Registrar.

The Applicants contend that it is Salt's applications for registration of

the Gap mark which will eventually proceed to registration on the

grounds, inter alia, that:­

(a) The Gap has no bona fide claim to proprietorship of the Gap

mark in South Africa, pursuant to the provisions of Section 10(3)

of the Trade Marks Act, on the basis that when The Gap applied

for registrations in 1995 it was not using the Gap mark in the

country and had no legally recognised intention of so using

it in the future.

71

(b) Salt made continuous and bona fide use of its Gap marks from

1974 up until the date on which The Gap applied for registrations

in 1995, meaning that, pursuant to the provisions of Section

10(16) of the Trade Marks Act, Salt's fresh applications will

prevail over those of The Gap.

In any event, as set out above, Section 33 of the Trade Marks Act

expressly protects the right to bring passing-off proceedings even as

against the holder of a registered mark.

Furthermore, the provisions of Section 36(2) of the Trade Marks Act

protects the prior user of a trade mark against any applicant for

registration thereof.

The Gap's contentions in regard to the likelihood or otherwise of their

applications for registration succeeding are also in the form of a special

defence in respect of which the onus is on The Gap and involve

complex questions of law and fact which should be left to the trial Court

to determine. For purposes of interim relief, this Court is enjoined to

accept Applicants' contentions in this regard as being matters of gravity

giving rise to a triable issue.

Damages

It is clear that generally an interdict is the most appropriate remedy in

respect of passing-off.

See: Webster and Page, South African Law of

Trade Marks, Butterworths, at Para 15.31, Page 15 - 9.

In the case of Cambridge Plan supra, the Court said the following at

847J - 848A:­

"An award of damages will almost certainly be a poor substitute

for such an order. Damages resulting from loss of sales by

reason of use of the offending marks and names are notoriously

difficult to prove, whilst those resulting from dilution of the

distinctiveness of the applicant's marks and names will be nigh

impossible to establish."

Respondents contend that they will keep accurate records and this will

accordingly make it practical for the Applicants to quantify their

damages.

73

In the first instance, an account of profits is not competent in passing­

off proceedings.

Amler's Precedents of Pleadings, Sixth Edition, Butterworths Page 277; ABSA Bank Beperk v Janse van Rensburg 2002 (3) SA 701 (SCA) at 70BE - F.

Secondly, and as pointed out in the extract from the Cambridge case

supra, damages in passing off matters are not confined to loss of sales

that is diversion of custom but also include dilution of the

distinctiveness of the aggrieved party's marks.

In the circumstances of the present case, there is also the very

reasonable

apprehension

of

loss

arising

from

The

Gap's

experimentation in South Africa failing and the Gap mark being

irreparably harmed by The Gap's exit after much fanfare.

In all the circumstances, it is submitted that damages are not an

appropriate alternative remedy to interdictory relief.

The Respondents raise, under the rubric of so-called unclean hands,

the contention that Applicants have infringed The Gap's copyright in the

Gap mark.

Under this heading, The Gap again raise the contention which they

raised in the previous proceedings to the effect that the Applicants'

conduct in allegedly copying The Gap's marks was tainted with

impropriety.

In respect of the alleged copying of The Gap's marks, this matter has

already been disposed of by the Supreme Court of Appeal in its

Judgment in the previous proceedings.

As to the allegations concerning copyright:­

(a) The Gap, during the course of the previous proceedings,

abandoned any claim based on copyright. No basis has been set

out in the present papers for The Gap to now rely on copyright

following on such abandonment.

(b) No copyright has been put up in the papers in respect of the Gap

mark as presently used. Instead, the evidence relates to the

stylisation of marks no longer in use and is of academic interest

only.

On the question of unclean hands, it was The Gap that, in blatant

contravention of Section 64 of the Trade Marks Act, sourced Gap

branded merchandise from South Africa in circumstances where Salt

was the registered proprietor of Gap marks in the country. This was

raised in the previous proceedings and the Applicants notice, from The

Gap's present papers, that The Gap continued to so unlawfully source

during 2000 and 2001.

Security is never tendered or directed for its own sake but rather to

protect a litigant in the event that such litigant is successful in a

damages claim.

Respondents have two fundamental difficulties with contending that no

security has been tendered in this matter:­

(a) Their complete failure to properly quantify their projected net

profit on their sales, which would be the true measure of their

damages, if any, which is in any event denied.

(b) There is no suggestion, whatsoever, in the Respondents' papers

that any damages which the Respondents contend they will

suffer will be irrecoverable from the Applicants.

In all the circumstances, there is no warrant for any contention that

security ought to have been tendered.

76

In light of all the aforegoing, the Applicants submit that they have

established a case for interim relief in the matter and that such relief

should be granted pending final determination of the action instituted

out of the Durban and Coast Local Division of the High Court.

Although there is no merit in the Respondents' argument that it is not

competent for the Applicants to seek interdictory relief in this Court

pending the determination of the action in Durban, in order not to

burden the Court with a determination of issues which are peripheral or

might not necessarily require to be decided, the Applicants are content

to ask for interim relief pending a determination of final relief, in due

course, in this Court under the terms of the Order sought in paragraph

3.1 of the Notice of Motion (Quoted supra).

It is common cause that, as a result of disputes of fact which have

arisen on the papers, the determination of the final relief should be

referred to trial. The Applicants are content to pursue final relief in this

Court

The appropriate Order then, following on the grant of interim relief,

would be that as set out in Haupt t/a Soft Copy v Brewers Marketing

Intelligence [2006] ZASCA 40; 2006 (4) SA 458 (SCA) at the footnote to Para 19 on Page

469, namely:­

The Notice of Motion in this matter shall stand as simple summons, the

Applicants are directed to deliver their declaration within twenty days of

the date of this Order with the Uniform Rules dealing with pleadings

and the conduct of trials applying thereafter.

The Respondents contend that it is not competent for the App!icants to

seek interim relief pending the determination of the action in Durban on

the grounds that Stuttafords is not presently a party to those

proceedings and any Judgment there will not be res judicata vis-a.-vis

Stuttafords. The consequence, the Respondents argue, will be that any

interim relief obtained against Stuttafords in this Court will be

immutable.

There are several reasons why that argument is devoid of any merit.

Interim Orders are Variable bv the Court of First Instance

This Court would clearly have the authority and the jurisdiction to vary

or set aside any interim relief granted by it.

Stuttafords does not claim any independent right to the use of the Gap

mark in South Africa. Instead it relies on and derives its rights from The

Gap.

In the circumstances if an interim interdict was granted against

Stuttafords in this Court and The Gap's rights were vindicated in the

Durban Court, Stuttafords would simply apply to this Court to have the

interim interdict set aside. Applicants would not be able to resist that

application on the basis that the finding of the Durban Court would be

that The Gap's rights trump those of the Applicants" Since Stuttafords'

rights derive from those of The Gap, Stuttafords' rights would prevail

over those of the Applicants"

On the contrary, if the Applicants' rights are vindicated in the Durban

hearing, then Stuttafords will not be in a position to resist any

application for a final interdict against it.

An interim Order, by its nature, is susceptible to variation by the Court

that granted such Order (clearly on good cause shown).

Duncan N.D. v Minister of Law and Order, 1985 (4) SA 1 (T) at 3A ­B.

80

There is therefore no substance in the contention that any interim relief

granted by this Court against Stuttafords, pending determination of the

proceedings in Durban, will either be a wandering interdict or final in

effect.

Stuttafords to be joined in Durban

The Respondents contend that The Gap will not join Stuttafords in the

Durban proceedings and that it is the Applicants' position that

Stuttafords will be joined in the Durban proceedings only when

Stuttafords trades in Gap branded merchandise within the jurisdiction of

the Durban Court.

The fact that The Gap says that it will not join Stuttafords in the Durban

action is purely tactical and the Court ought to take a dim view of that

approach.

Stein Brothers Ltd v Dawood and Another 1980 (3) SA 275 (W) at 282C - D.

The Gap says that the reason why they will not join Stuttafords in

Durban is that Stuttafords has no locus standi to bring passing-off

proceedings against the Applicants and that Stuttafords' interest is

purely financial. While Stuttafords may not have locus in the passing­

off, they seek to assert the right to use the Gap mark in South Africa

and therefore have a direct legal interest in the outcome of the Durban

proceedings.

It is also not correct that Applicants will only join Stuttafords in the

Durban action when Stuttafords trades in Gap products within the

jurisdiction of that Court. Such trading would amount to a delict and

would entitle the Applicants to counterclaim for interdictory relief against

Stuttafords in Durban. In the absence of such trading, the Applicants will

be able to seek final declaratory relief against Stuttafords on the basis

that the jurisdictional requirements for such relief will be satisfied in the

Durban Court.