McDonald's Corporation v Joburgers Drive-Inn Restaurant (Pty) Ltd and Another; McDonald's Corporation v Dax Prop CC and Another; McDonald's Corporation v Joburgers Drive-Inn Restaurant (Pty) Ltd and Dax Prop CC

• Jurisdiction: South Africa
• Citation: 1997 (1) SA 1 (A)

McDonald's Corporation v Joburgers Drive-Inn Restaurant (Pty) Ltd and Another;
McDonald's Corporation v Dax Prop CC and Another;
McDonald's Corporation v Joburgers Drive-Inn Restaurant (Pty) Ltd and Dax Prop CC
1997 (1) SA 1 (A)

1997 (1) SA p1

Citation	1997 (1) SA 1 (A)
Case No	547/95
Court	Appellate Division
Judge	E M Grosskopf JA, Corbett CJ, E M Grosskopf JA, Nestadt JA, Schutz JA, Plewman AJA
Heard	May 20, 1996; May 21, 1996; May 22, 1996
Judgment	August 27, 1996
Counsel	C E Puckrin SC (with him A B S Franklin and M M Jansen) for the appellant.; J W Louw SC (with him A J Bester) for the respondents.

Flynote : Sleutelwoorde C

Trade mark — Infringement — Well-known mark — Trade Marks Act 194 of 1993, s 35 — Protection of well-known mark — Claimant for protection to prove that mark D well known as mark having its origin in some foreign country, provided that proprietor a person falling within ss 1(a) or (b) of s 35.

Trade mark — Infringement — Well-known mark — Trade Marks Act 194 of 1993, s E 35 — Protection of well-known mark — Nature of protection; McDonald's Corporation v Dax Prop CC and Another offered by s 35 — Typical of that available under common law of passing off, namely prohibition on use of mark in relation to goods or services in respect of which mark well-known and where its use likely to cause deception or confusion.

Trade mark — Infringement — Well-known mark — Trade Marks Act 194 of 1993, s 35 — Protection of well-known mark — Proof that mark well known in South Africa — Section 35 intending to offer practical solution to foreign business whose marks well known in South Africa but having no business in country — Legislation not achieving purpose if protection granted only to marks known to every F segment of population — Sufficient to prove that mark well known to persons interested in goods or services to which mark relates — Requisite degree of recognition — Similar to that required in existing law of passing-off, namely that substantial number of persons know mark well enough to entitle mark to protection against deception or confusion.

G Trade mark — Infringement — Well-known mark — Trade Marks Act 194 of

1997 (1) SA p2

A 1993, s 36(2) — Protection from interference and restraint by proprietor of well-known mark — Claimant to prove bona fide prior use — Such use to be use for purpose of distinguishing goods and services provided under that mark from same kind of goods or services connected in course of trade with any other person.

B Trade mark — Expungement of — From register in terms of s 36(1)(a) or (b) of Trade Marks Act 62 of 1963 — Court retaining general discretion to refuse to remove trade mark from register even where s 36(1)(a) or (b) applicable — Party showing entitlement to relief under s 36(1) not to be deprived of such relief by exercise of general discretion unless circumstances exceptional.

C Trade mark — Expungement of — From register in terms of s 36(1)(a) or (b) of Trade Marks Act 62 of 1963 — Marks sought to be expunged qualifying for protection as well-known marks in terms of s 35 of Trade Marks Act 194 of 1993 — Even if expungement application granted, applicants for expungement in any event not entitled to use well-known marks — Court using general discretion conferred by s 36(1) of Act 62 D of 1963 to refuse application.

Headnote : Kopnota

The appellant ('McDonald's'), a corporation incorporated in the United States of America, operated its own restaurants, selling hamburgers and other fast foods, and franchised others E to do so. It had operated internationally since 1971 and was one of the largest, if not the largest, franchisers of fast food restaurants in the world. Between 1968 and 1985 McDonald's obtained registration in South Africa, mainly in classes 29, 30 and 42 of the register of trade marks, of 52 trade marks, of which 27 incorporated the word 'McDonald' or 'McDonald's'. When the proceedings commenced in these cases in 1993 McDonald's had F not traded or used any of its trade marks in South Africa.

During 1992 plans were made by one of the respondents ('Joburgers'), a South African company which franchised a chain of 177 fast food restaurants trading as 'Chicken Licken', to establish another chain of fast food restaurants using the trade mark 'McDonalds' and other marks owned by McDonald's. To this end, it applied in 1993 for the registration of G some of the McDonald's trade marks and, in terms of s 36(1)(a) and (b) of the Trade Marks Act 62 of 1963 ('the old Act') for expungement of the marks held by McDonald's.

McDonald's opposed the application for expungement and, in the face of Joburgers' firmly stated intention to register and use the McDonald trade marks, sought and obtained an H interim order preventing Joburgers from infringing its marks, passing-off and unlawful competition. Shortly thereafter, Joburgers bought a fast food outlet in Durban which traded as 'MacDonalds'. When McDonald's became aware in early 1994 that Joburgers was conducting a business in Durban under the name 'MacDonalds', it obtained an order declaring Joburgers in contempt of the earlier order. Joburgers' response was to dispose of I the business to another respondent ('Dax'), a 'Chicken Licken' franchisee operating in KwaZulu-Natal. In May 1994 Dax applied to register the mark 'MacDonalds' in classes 29, 30 and 42 of the register. In August it sought the expungement from the register of the trade marks which McDonald's had asked it to refrain from using. McDonald's brought a counter-application for an interdict preventing Dax from infringing its marks.

J The Trade Marks Act 194 of 1993 ('the new Act') came into force on 1 May

1997 (1) SA p3

A 1995. Section 35(3) of the Act protects 'well-known' trade marks emanating from certain countries from use in South Africa of 'a trade mark which constitutes . a reproduction, imitation or translation of the well-known trade mark in relation to goods or services which are identical or similar to the goods or services in respect of which the trade mark is well known and where the use is likely to cause deception or confusion'. This protection is B extended to the proprietor of a well-known mark 'whether or not such person carries on business, or has any goodwill, in the Republic' (s 35(1)). Prior to the enactment of s 35 the proprietor of a well-known mark was not afforded protection in the absence of goodwill in South Africa, and goodwill was generally held not to exist in the absence of user inside the country.

On 20 June 1995 McDonald's brought an application in terms of s 35 of the new Act for an C order interdicting Joburgers and Dax from imitating, reproducing or transmitting any of its 52 marks which, it claimed, were well-known marks in terms of the section. To prove its claim that its marks were well known, McDonald's tendered evidence by the chairperson of the South African Franchise Association to the effect, inter alia, that (a) at numerous meetings, conferences and seminars on various aspects of franchising conducted by the D Association, the business format adopted by McDonald's was held up as the model for efficient franchising; and (b) that over the years the Association had received numerous requests from prospective franchisees and ordinary members of the public for advice on how to become a McDonald's franchisee. Two market surveys had been commissioned by McDonald's. In addition to the results of the surveys - which indicated that, among young E white adults living in affluent suburbs, a substantial majority was aware of the McDonald's name and/or its logos and trade marks - McDonald's tendered the evidence of the person who had designed the surveys, of the persons who had supervised the interviewers, and of the interviewers who had actually conducted the surveys.

The three applications, namely the two expungement applications in terms of s 36(1)(a) and F (b) of the old Act and the 'well-known marks' application in terms of s 35 of the new Act, were heard together in a Provincial Division. The Court found in favour of Joburgers and Dax. In an appeal, the Court dealt with the well-known marks application first.

Held, that to qualify for the protection afforded by s 35 of the new Act, it would be enough for a claimant to prove that the mark was well known as a mark which had its origin in G some foreign country, provided that, as a fact, the proprietor of the mark was a person falling within ss (1)(a) or (b) of s 35. It was not necessary to show that what was well known was not only the mark itself, but also the nationality, domicile or place of business of the mark's owner, and also the fact that the relevant country was a member of the Paris Convention on the Protection of Industrial Property. (At 15D and 15B/C-C/D.)

H Held, further, that the type of protection offered by s 35 was typical of that available under the common law of passing-off, namely a prohibition on the use of the mark in relation to goods or services in respect of which the mark was well known and where its use was likely to cause deception or confusion. (At 19E/F-F.)

Held, further, as to whether the mark should be well known to all sectors of the population, I that s 35 was intended to provide a practical solution to the problems of foreign businesses whose marks were known in South Africa but which did not have a business in the country. Given the diversity of the South African population, the legislation would not achieve its desired purpose if protection were granted only to marks which were known, let alone well known, to every segment, or even most segments, of the population: there were few marks, J if any, which could pass that test. (At 20B-D.)

1997 (1) SA p4

A Held, accordingly, that, for the purposes of s 35, a mark would be well known in the...