Adcock-Ingram Laboratories Ltd v SA Druggists Ltd and Another; Adcock-Ingram Laboratories Ltd v Lennon Ltd

• Jurisdiction: South Africa
• Judge: Nicholas J, Franklin and Van Reenen J
• Judgment Date: 16 February 1983
• Court: Transvaal Provincial Division
• Citation: 1983 (2) SA 350 (T)

Nicholas J:

F These two appeals were heard together by a Court composed of FRANKLIN and VAN REENEN JJ and myself. On 24 January 1983 there occurred the untimely death of FRANKLIN J. In terms of s 17 (2) of the Supreme Court Act 59 of 1959, my judgment in the first of these appeals (with which VAN REENEN J concurs) and VAN REENEN J's judgment in the second (with which G I concur) are the judgments of the Court.

Adcock-Ingram Laboratories Ltd v South African Druggists Ltd

and the Registrar of Trade Marks

(Case No A526/82)

Adcock-Ingram Laboratories Ltd ("Adcock") is the registered H proprietor of the trade mark "Stopayne". South African Druggists Ltd ("Druggists") is and has at all material times been the registered proprietor of trade mark No 59/3969 "Stilpane".

Adcock applied in the Divisional Court for an order directing the Registrar of Trade Marks to rectify the trade mark register by expunging and removing therefrom the trade mark "Stilpane". The application was based on two grounds:

Nicholas J

(a)

up to a date one month before the application a continuous period of five years or more elapsed during which there was no bona fide use of the trade mark by the proprietor thereof (s 36 (1) (b) of the Trade Marks Act 62 of 1963);

(b)

A if the Court should find that there has been use of the mark, such use offends against the provisions of s 16 (1) of the Act and should therefore be expunged from the register in terms of s 33.

It was held by McCREATH J that Adcock was not entitled to rely on either of these grounds, and the application was dismissed B with costs including the costs consequent upon the employment of two counsel. The judgment is reported: Adcock-Ingram Laboratories Ltd v South African Druggists Ltd and Another 1982 (1) SA 856 (T).

Adcock now appeals.

Section 36 (1) of the Act provides that a registered trade mark may on application to the Court be taken off the register in C respect of any of the goods or services in respect of which it was registered on the ground either -

"(a)

............; or

(b)

that up to the date one month before the date of the application a continuous period of five years or longer elapsed during which the trade mark was a registered trade D mark and during which there was no bona fide use thereof in relation to those goods or services by any proprietor thereof for the time being; or

(c)

............"

It was common cause that Druggists did not itself use the trade mark at any time during the period of five years. Its answer was, however, that it had used the trade mark "through Lennon", E its wholly owned subsidiary; and that Lennon was de facto the registered user and that its use of the mark was deemed to be use by Druggists in terms of s 48 (2) of the Act.

If it had been alleged and proved that, in using the trade mark "Stilpane", Lennon was acting as the agent of Druggists, there F might have been substance in the contention that Druggists had used the mark "through Lennon". That is not, however, the case which is made out in the answering affidavit filed by Druggists.

Druggists said that it was the holding company of a group of companies (including Lennon) which were active in the pharmaceutical industry. It was the policy of Druggists to G ensure that, when a trade mark was used by a company in the group, the trade mark was registered in the name of that company. Because of an omission or oversight the trade mark "Stilpane" was not assigned to Lennon when that company began using it in 1970. Lennon is controlled by Druggists. At least one of the directors of Druggists has been a director of H Lennon. The managing director of Lennon is appointed by the board of directors of Druggists and is dismissible by the latter. Druggists maintains complete financial and budgetary control over Lennon. It also exercises control over the introduction of pharmaceutical products by Lennon. Lennon was permitted to use the "Stilpane" mark only on condition that the product complied with the standards of quality, specifications and procedures determined by Druggists, which by virtue of Lennon's subsidiary status was entitled to inspect the

Nicholas J

"Stilpane" product before the sale thereof and to be supplied with samples of the product on request.

All of this falls far short of proof that in using the trade mark lennon was acting as the agent of Druggists. The mere fact that Lennon is subject to the control of Druggists does not A mean that there is between them the relation of agent and principal. There is no evidence that any contract of agency was concluded, either expressly or impliedly, between Druggists and Lennon. Indeed, the fact that it was because of an omission or oversight that the trade mark was not assigned by Druggists to B Lennon is inconsistent with any intention that Lennon should use the mark as Druggists' agent.

Subsections (1) and (2) of s 48 provide as follows:

"(1) (a)

Subject to the provisions of this section a person other than the proprietor of a trade mark may be registered as a registered user thereof in respect of all or any of the C goods or services in respect of which it is registered (otherwise than as a defensive trade mark), and either with or without conditions or restrictions.

(b)

The use of a trade mark by a registered user thereof in relation to goods or services with which he is connected in the course of trade and in respect of which for the time being the trade mark remains registered and he is registered as a registered user, being use such as to comply with any conditions or D restrictions to which his registration is subject, is in this Act referred to as the 'permitted use' thereof.

(2)

The permitted use of a trade mark shall be deemed to be use by the proprietor thereof, and shall not be deemed to be use by a person other than the proprietor for the purposes of s 36 or for any other purpose for which such use is material under this Act or at common law."

Subsections (4) to (11) provide for the procedure in regard to E the registration of a person as a registered user.

It is common cause that Lennon was not registered as a registered user in terms of s 48. It was contended on behalf of Druggists, however, that Lennon satisfied all the requirements for registration under s 48; that "Lennon is a de facto F candidate for registered user but is not a de jure one"; and that use by a de facto registered user will protect the proprietor from expungement in terms of the Act.

That contention was accepted by McCREATH J in his judgment at 860F - H:

"If the de facto position is such that the user by a person other than the proprietor will not be contrary to the public G interest, because all that could be required in terms of the provisions of s 48 has been fulfilled other than actual registration, then to adopt the view that the failure to register nevertheless renders the mark subject to removal from the register in terms of s 36, is a formalistic approach which in my opinion cannot be justified. It is true that s 48 provides a system of control by the Registrar, but the safeguard of removal from the register under ss 16 and 33 H remains to cater for those cases where use by a person other than the proprietor is calculated to cause deception or confusion. And if the requirements of s 48 have de facto been met with regard to the requisite trade connection between the proprietor and the user of the mark, including control over the nature and quality of the goods sold under the mark, then, in my view, the acceptance that such use is that of the proprietor, through the medium of the actual user, is in accordance with the broader concept of the meaning of a trade mark within the present definition thereof in the Act. It follows that the use would then not be hit by the provisions of s 36 of the Act."

Nicholas J

I am constrained to respectful disagreement. The language of s 48 is clear and unambiguous. In terms of ss (2) it is "the permitted use" of a trade mark which is deemed to be use by the A proprietor thereof for the purposes of s 36. "Permitted use" is defined in ss (1) (b) as "the use of a trade mark by a registered user thereof". Whether a person is a registered user can be ascertained in only one way, namely by reference to the register of trade marks. If a person has not been registered as such he is not a registered user either de facto or at all. Counsel for Druggists relied strongly on the case of Bostitch B Trade Mark 1963 RPC 183. That case is not in point. It was not an application for the expungement of a trade mark because there had been no bona fide use thereof. It was concerned with an attack upon a trade mark based upon an allegation that the trade mark had become deceptive or confusing because of the use C by someone other than the registered proprietor or registered user thereof. The case does not therefore afford any support for the contention regarding "a de facto bona fide user".

In my opinion therefore Adcock made out the first of the grounds for the application for the expungement of the trade mark "Stilpane".

(b) In view of this conclusion, the second ground for the D application to expunge does not arise. I think, however, that it should be considered because it is relevant to the question of the costs of the application.

Druggists' mark "Stilpane" was registered in part A of the register on 25 November 1959. In terms of s 49 of the Act, because more than seven years have elapsed since the date of E registration, the original registration of the trade mark is open to attack in legal proceedings only on the ground that the trade mark was obtained by fraud or that it offends against the provisions of either s 16 or s 41. Adcock contends that the trade mark "Stilpane" offends against the provisions of s 16 (1), namely

"(1)

F It shall not be lawful to register as a...