Truworths Ltd v Primark Holdings

• Jurisdiction: South Africa
• Judge: Maya P, Wallis JA, Willis JA, Dambuza JA and Van Der Merwe JA
• Judgment Date: 05 September 2018
• Docket Number: 989/2017 [2018] ZASCA 108
• Hearing Date: 05 September 2018
• Counsel: AR Sholto-Douglas SC (with M Maddison) for the appellant. CE Puckrin SC (with LG Kilmartin) for the respondent.
• Court: Supreme Court of Appeal

Wallis JA B (Maya P, Willis JA, Dambuza JA and Van der Merwe JA concurring):

[1] The appellant, Truworths Ltd (Truworths), is a long-established and C well-known fashion retailer in South Africa. The respondent, Primark Holdings (Primark), is the fashion-retail subsidiary of Associated British Foods plc, an international company with a range of interests, principally in food and agriculture. Primark originated in Ireland, where it is still based, but it has expanded from there into the United Kingdom and also into Spain, Portugal, Belgium, the Netherlands, Germany, Austria and D France. When these proceedings commenced, it was contemplating establishing its first store in the United States of America. Although it has never established a store in South Africa, in 1976 it registered the trademark PRIMARK, registration No TM 1976/04952, in class 25 of the Trade Marks Register, in respect of 'clothing; boots, shoes and slippers E included in this class'.

[2] Truworths wishes to register the mark PRIMARK in class 25, and proposes to sell clothing under that brand. Relying on s 27(1)(a) and (b) of the Trade Marks Act 194 of 1993 (the Act), it brought an application for the removal of Primark's mark from the register. It did so on the F grounds that there was never a bona fide intention to use it on the goods or services in respect of which it was registered, and that there had been no bona fide use of the mark for the statutorily defined period. The application was dismissed by Monama J and the appeal is with his leave.

The issues G

[3] The statutory provisions on which Truworths relied provide for a mark to be removed from the register for non-use, either because there was never any bona fide intention to make use of the mark or, more simply, because there had been no bona fide use of the mark for five H years preceding a date three months prior to the date of the application for its removal. Under both sections there must have been no bona fide use of the mark in the period up to three months prior to the bringing of the application. The onus of proving bona fide use rests on the proprietor of the mark in terms of s 27(3) of the Act.

[4] I Primark contended that there had been bona fide use of the mark during the relevant period, but the principal focus of its argument was that Truworths was not entitled to invoke the provisions of ss 27(1)(a) and (b), because the Primark mark was a mark entitled to protection under the Paris Convention for the Protection of Industrial Property (1883). Section 27(5) of the Act provides that s 27(1)(a) and (b) do not J apply to a trademark in respect of which protection may be claimed

Wallis JA (Maya P, Willis JA, Dambuza JA and Van der Merwe JA concurring)

under the Paris Convention as a well-known trademark within the A meaning of s 35(1) of the Act. In other words, a well-known mark is not subject to expungement from the register on the grounds of non-use in terms of those sections. Primark's contentions in this regard will be addressed first because, if correct, the question of bona fide use of the mark does not arise.

Section 35(1) of the Act B

[5] The background to the Act's provisions concerning well-known marks was set out by Harms JA in The Gap [1] and need not be repeated. They had their origins in art 6bis of the Paris Convention, and ss 35 and 36 of the Act are the statutory means whereby South Africa complies C with its obligations under that article. A well-known trademark entitled to protection under the Act is, in terms of s 35(1)(a) —

'a mark which is well known in the Republic as being the mark of —

(a)

a person who is a national of a convention country; or

(b)

a person who is domiciled in, or has a real and effective industrial D or commercial establishment in, a convention country,

whether or not such person carries on business, or has any goodwill, in the Republic'.

Section 27(5) reinforces the protection afforded to well-known marks by s 35, by precluding their expungement from the register on the grounds of non-use. This enables the proprietor of the mark to enjoy the E protection of a registered mark without the need in every case of possible infringement to prove that it is a well-known mark under s 35.

[6] The only dispute as to Primark's entitlement to claim the protection of the Paris Convention is whether PRIMARK is a well-known mark in South Africa. In determining that question s 35(1A) provides that — F

'due regard shall be given to the knowledge of the trade mark in the relevant sector of the public, including knowledge which has been obtained as a result of the promotion of the trade mark'.

This provision was inserted into the Act [2] after the decision of this court in McDonald's. [3] That held that the requirement that a mark be G a well-known mark in the Republic under s 35(1) did not mean that the mark needed to be well known among the whole population of South Africa. It merely needed to be well known to persons interested in the

Wallis JA (Maya P, Willis JA, Dambuza JA and Van der Merwe JA concurring)

goods A or services to which the mark related. [4] The amendment made this approach applicable as a matter of statute. As to how many persons in that class must be aware of the mark, this court held that it had to be a substantial number, similar to that required in the law of passing-off. What would constitute a substantial number was a question of fact. [5]

[7] B Section 35(1A) refers to knowledge of the mark 'in the relevant sector of the public'. This too flows from the judgment in McDonald's, where the court held that potentially there might be more than one sector of the public interested in the goods or services of the proprietor of the mark. [6] If there are two or more sectors so interested, they may overlap C to some degree, or be entirely distinct. The first task is therefore to identify the relevant sector or sectors of the public and then to determine whether the mark is well known within those sectors. [7] The evidence may show that the mark is well known among the persons constituting one, but not another, relevant sector of the public. I will in due course D consider how that situation is to be resolved.

[8] There was a sharp difference in approach between the parties on the identification of the relevant sector of the public. Primark describes its business as that of a discount fast-fashion clothing retailer. Truworths contended accordingly that the relevant sector of the public in South Africa E was 'all South Africans interested in clothes and accessories'. In argument this effectively became all South African consumers who buy clothing. Primark for its part identified a narrower sector of the South African public in the form of those people who are interested and active in the fashion and retail industry, such as retailers of fast-fashion F clothing and fashion writers, bloggers and their readers. It said that knowledge of its mark extended to members of the public, who had encountered its stores while travelling, or in references in fashion magazines, blogs and internet searches.

Well-known G marks and the relevant sector of the public

[9] Identification of the relevant sector of the public was a central issue in McDonald's. [8] The court held that there were two categories that could constitute the relevant sector, namely potential customers interested in purchasing hamburgers and related fast food, and potential franchisees of McDonald's restaurants. The former category would be more extensive H than the latter. It was potentially a large group, as such food was not expensive, although it would be out of the reach of the extremely poor. The second group would be far smaller, consisting of people who knew of the brand's international reputation and success and were interested in exploring the business opportunity afforded by operating a franchise.

Wallis JA (Maya P, Willis JA, Dambuza JA and Van der Merwe JA concurring)

[10] The court in McDonald's did not need to decide which of these two A possibilities was the relevant sector of the public because it held that there was substantial knowledge of the McDonald's marks among sufficient members of both groups. Thus, virtually every potential franchisee would know McDonald's and its marks as evidenced by numerous enquiries made to McDonald's itself and to a national B franchising association. Awareness among consumers would be lower, but was nonetheless sufficiently extensive among people who were interested in the purchase of fast food, and sufficiently well off to do so, to justify a finding that a substantial portion of such persons would probably have heard of McDonald's and know its marks or some of them. C

[11] In The Gap the respondents identified the relevant sector as being individuals aged between 16 and 50 living in A+ income suburbs. It sought to establish knowledge in this sector of the public by reference to evidence of a market survey. The judgment [9] highlighted the fact that D potentially there were other sectors of the public that would be relevant in determining whether a mark was well known. It referred to the 'Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks, adopted by the Assembly of the Paris Union for the Protection of Industrial Property and the General Assembly of the World Intellectual Property Organization (WIPO)' (1999). Article 2(2)(a) recommended: E

'Relevant sectors of the public shall include, but shall not necessarily be limited to:

(i)

actual and/or potential consumers of the type of goods and/or services to which the mark applies;

(ii)

persons involved in channels of distribution of the type of goods F and/or services to which the mark applies;

(iii)

business circles dealing with the type of goods and/or services to which the mark applies.'

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