A M Moolla Group Ltd and Others v the GAP Inc and Others

• Jurisdiction: South Africa
• Judge: Harms JA, Streicher JA, Brand JA, Lewis JA and Ponnan JA
• Judgment Date: 09 September 2005
• Citation: 2005 (6) SA 568 (SCA)
• Docket Number: 123/2004
• Hearing Date: 19 August 2005
• Counsel: A Findlay SC (with P Ginsburg SC and O A Moosa SC) for the appellants. C E Puckrin SC (with R Michau) for the respondents.
• Court: Supreme Court of Appeal

Harms JA:

Introduction I

[1] This judgment concerns a number of registered South African trade marks, all having the word Gap as a distinctive feature. The first is a word mark The Gap; there are two device marks consisting of Gap and The Gap (in lower case), written in a stylised form; and the word marks Gap J

Harms JA

Stores and Gap Kids. Salt of the Earth Creations (Pty) Ltd, the third appellant, to whom I shall refer as 'the proprietor', is a A local company and the registered proprietor of these marks. The respondents, a holding company called The Gap Inc, and two of its subsidiaries, are companies registered in the state of Delaware in the United States of America. (There is no need in this judgment to distinguish between them and, for the sake of convenience, I intend to refer to each and all of them as 'the respondent'.) B

[2] The respondent claims proprietorship of these marks on the ground that Gap is a well-known trade mark that is entitled, without registration in this country, to protection under s 35(3) of the Trade Marks Act 194 of 1993, which incorporates the provisions of art 6bis of the Paris Convention into our law. C Daniels J, in the Court below, upheld this claim and granted an interdict against the seven appellants, some of the members of a 'group' of companies and enterprises that call themselves the A M Moolla Group (not to be confused with the first appellant, A M Moolla Group Ltd). They were enjoined from using a reproduction or imitation D of the respondent's 'Gap' marks in relation to clothing or retail clothing outlets.

[3] The respondent also applied, successfully, to have the proprietor's trade mark registrations expunged on the ground of non-use. Further subsidiary grounds for expungement based on s 10(3) and s 9(1) read with s 10(12) were raised without success, and this E gave rise to a cross-appeal, but only the s 10(3) case was persisted in during the hearing. In response to the application for expungement, the proprietor, in turn, lodged a counter-application for an interdict for trade mark infringement, which was dismissed in the light of the expungement. This dismissal of the counter-application is another issue F in the appeal. The present proceedings are with the leave of the Court of first instance.

[4] Previously, some members of the group sought to utilise the provisions of the Counterfeit Goods Act 37 of 1997 to prevent the respondent from transhipping clothing bearing a Gap trade mark through South Africa but the attempt failed. The declaratory G order issued in favour of the respondent, which declared that the respondent did not transgress the provisions of this Act by transhipment, was upheld in a case with the same name as the instant case. [1]

[5] The story of Gap began in 1969 when the first Gap store, under the name The Gap, was opened in San Francisco. The H novel concept was the provision of a speciality retail outlet for clothing to exploit the 'generation gap' symbolised by the increased popularity of casual clothing such as jeans. The business expanded and, on 29 February 1972, a predecessor of the respondent applied for the registration in the USA of 'The Gap' as a service mark for I 'retail clothing store services' in class 42 of the international Nice classification. The year 1974 saw the beginning of

Harms JA

the use of 'Gap' in relation to goods and an application for the registration of A 'The Gap' (and design) as a trade mark in class 25 (which relates to clothing). Other Gap trade mark applications followed, both in class 25 and 42, beginning in 1977. As the business expanded, trade mark applications were filed in other jurisdictions, for instance, in the United Kingdom since 1983 and in Canada since 1985. Gap stores were opened in the United Kingdom in 1987 and, by 1991, there B were some 1 000 stores in the USA, Canada and the United Kingdom. By 1992, the Gap trade mark had become one of the largest selling apparel brands in the world measured by unit sales, and it is now the second largest. At present, hundreds of Gap trade marks are registered in countries, alphabetically and otherwise, as far apart as Albania and Zimbabwe. C

[6] Prior to the 1990s, the respondent showed little interest in the local market. The explanation given was that, because of the political climate in this country, as an American company, it was under a number of financial, political and legislative constraints that precluded expansion into South Africa. However, if one considers D that, in 1991, there were Gap stores in only three countries and, since then, the respondent's attempts to enforce its rights locally have been at less than a pedestrian pace, the explanation rings somewhat hollow.

[7] Turning then to the Gap tale in this country: During 1971, at a time when the respondent had 25 'The Gap' retail outlets in E 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 it 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 F registration pre-dates any of the respondent's 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 respondent's use of the 'Gap' name on its stores. During the 1970s, the proprietor, to whom Hirsch in the mean time had assigned this mark, manufactured and sold substantial numbers of jeans under the G mark. A further 'Gap' mark ('the first device mark' TM 80/5548), which consists of the word mark in a stylised form, was registered during 1980.

[8] During 1983, the group obtained control over the proprietor. Capitalising on the fact that South Africa was subject to trade sanctions and that art 6bis protection did not then exist, H the proprietor changed its 1973 'Gap' trade mark to 'The Gap', the corporate and trading name of the respondent. In 1988, the proprietor applied for registration of a second 'The Gap' (TM 88/4994) device mark, a blatant copy of respondent's logo; it also applied for 'Gap Kids' (TM 88/8783), an appropriation of I respondents' name for its children's stores, first begun in 1985; and, in 1989, it applied for 'Gap Stores' (TM 89/5087) in class 42. These applications were all granted. Another application, in respect of 'Gap Star', was filed in 1993 but is pending because of opposition by the respondent. J

Harms JA

The principle of territoriality A

[9] At the outset, I wish to deal with the principle of territoriality applicable to trade marks. Nicholas AJA explained the principle in Victoria's Secret [2] in these terms:

'In the Moorgate judgment Mr Trollip [3] stated that

''. . . a trade mark is purely a territorial concept; it is legally operative or effective only within the territory in which it is B used and for which it is to be registered. Hence, the proprietorship, actual use, or proposed use of a trade mark mentioned in s 20(1) [of the Trade Marks Act 62 of 1963] are all premised by the subsection to be within the RSA.''

It follows that the fact that a trade mark is registered and has been used, even extensively used, by one person in a foreign country does not in itself constitute a bar to its adoption and registration by some C other person in South Africa.'

Nicholas AJA continued:

'In the case of a foreign trade mark, there is no legal bar to its adoption in South Africa unless it is attended by something more. Thus in delivering the unanimous judgment of the Full Court in P Lorillard and Co (supra at 356G - H), [4] Boshoff J said: D

''The basis of the challenge on this ground is that the objector was to the knowledge of the applicant the proprietor of such a trade mark in the United States of America and that the applicant improperly appropriated the mark. In the present state of the law a trade mark is a purely territorial concept and there is, generally speaking, nothing to prevent a person from asserting a proprietary right in a trade mark in relation to which no one else has in the same territory asserted a similar right.''' E

Nicholas AJA also cited a number of judgments from foreign jurisdictions to show that the principle is not peculiar to this country but generally accepted. [5] F

[10] More recently, in the Barcelona.com case, [6] a US Federal District Court of Appeals dealt with the same underlying principle (per Niemeyer, Circuit Judge):

'The relevant substantive provision in this case is art 6(3) of the Paris Convention, which implements the doctrine of territoriality by providing that ''[a] mark duly registered in a country of the [Paris] Union shall be regarded as independent of marks G registered in the other countries of the Union, including the country of origin''.

As one distinguished commentary explains,

''the Paris Convention creates nothing that even remotely resembles a 'world H

Harms JA

mark' or an 'international registration'. Rather, it recognises the principle of the territoriality of trade A marks [in the sense that] a mark exists only under the laws of each sovereign nation.''

J Thomas McCarthy McCarthy on Trademarks and Unfair Competition \s 29:25 (4th ed 2002).

It follows from incorporation of the doctrine of territoriality into United States law through s 44 of the Lanham Act that United States courts do not entertain actions seeking to enforce trademark rights B that exist only under foreign law. See Person's Co Ltd v Christman 900 F 2d 1565, 1568 - 69 (Fed Cir 1990) (''The concept of territoriality is basic to trademark law; trademark rights exist in each country solely according to that country's statutory scheme'').'

[11] Accordingly, the legality and propriety of Hirsch's...