Payen Components SA Ltd v Bovic CC and Others

• Jurisdiction: South Africa
• Judge: Corbett CJ, Hefer JA, M T Steyn JA, F H Grosskopf JA, Schutz JA
• Judgment Date: 25 May 1995
• Docket Number: 448/93
• Court: Appellate Division
• Hearing Date: 09 May 1995
• Citation: 1995 (4) SA 441 (A)

Schutz JA:

The appellant ('Payen' - applicant below) and the first respondent ('Bovic' - first respondent below) are competitors in the market for gaskets used in assembling and repairing motor vehicles. The customary aspersions are cast. Payen complains that Bovic's products are G of inferior quality and that it does not keep a full range of gaskets, which allows it to concentrate on the more lucrative part of the market. The result is that it undercuts Payen. Bovic counters by ascribing Payen's higher prices to inefficiency, and charges that Payen is trying to establish a monopoly. However all that may be, the legal grounds on which Payen relies to curb Bovic's activities are copyright, unlawful H competition, and, lastly and faintly, contract. There is no reliance on trade mark or passing off, although many expressions associated with these disciplines are used. Resort to the Merchandise Marks Act 17 of 1941 and the Trade Practices Act 76 of 1976 was abandoned in this Court.

I The second respondent ('Bodell' - second respondent below) is a 50% member and the controlling force in Bovic. Three further persons were cited as respondents below but the claims against them were abandoned in this Court, so that their participation in these proceedings is now confined to their claim for costs.

J The activity of which Payen complains is the use by Bovic in its price

Schutz JA

A lists and catalogues and on the wrappers containing its gaskets of the Payen code for identifying the huge range of gaskets in use in South Africa. Each code consists of five digits, the first two being letters and the other three numbers. The first letter indicates the type of gasket, so that, for instance, all cylinder head gaskets commence with an A or a B. B To give examples of complete codes, AF 240 denotes a cylinder head gasket for an Alfa Romeo 1300, and CJ 494 a head set for a Nissan L 185. There is nothing novel about such a system, but its utility is such that Bovic contends that it has become the language of the trade when identifying gaskets, so much so that it is necessary for any trade to use it (so it is contended).

Copyright work? C

First, the facts. Payen's essentially uncontested case is based on the evidence of five witnesses, Ellis, Thomas and Butler who depose to the code's English origins, and Parker-Nance and Galloway who describe its South African adaptations and accretions.

D Companies not only enjoy perpetual succession but some also undergo changes of name and parentage. The 'Payen Group' in the United Kingdom is a good example, which tends to render the exposition following rather tortuous.

Coopers Mechanical Joints Ltd ('CMJ') was a subsidiary of another Payen E Group company, namely Engineering Components Ltd ('EC'). The coding system for gaskets in use in 1970, although partly computer based, was unsatisfactory in several respects. One Machin, the management services manager of EC, tackled the problem first. What he did was to work out the mathematical basis for what was to become the new Payen coding system. He F prepared a table of significance ('the table') which contains an outline of the later system, although there were some departures from the outline. The table is skeletonic in form and is in no sense the final embodiment of the work. No copyright was claimed in it. It is neither a catalogue nor a price list.

G The next step was taken by one Butler, the chief systems analyst working at EC under Machin. Using the table he 'devised a computer program for allocating new reference numbers in place of the old' ('the program'). That is all that we are told about this important step.

Thomas took over the co-ordination of the project in October 1971. The old H numbers were grouped in accordance with the classes of gasket, which were described. This data, which was to be fed into the computer, was then meticulously checked and re-arranged. Then, to quote the words of Thomas, also echoed by Butler, 'the data was entered into the computer to generate new numbers in accordance with (the) program devised by Mr Butler'. That is all we are told about this other important step. Although the bulk of I the new numbers was generated in this way, a significant part was formulated manually. This was done 'by the staff of the Payen technical department' where the old number was not in the standard format. This technical department appears to have been that of EC.

The next important step is not expressly stated at all, namely the J printing out by the computer of the list of new numbers. However, I

Schutz JA

A suppose that it is implicit in the narration. What followed next, after many months, was two lists giving cross-references from the old numbers to the new, and the new to the old ('the lists'). They were first used internally and were then published in February and April 1972. Although there is confusion and contradiction in the affidavits, it seems that it is the originals that no longer survive, not the printed B ones. Five named persons prepared these lists. They were all British subjects employed by EC or CMJ. The lists were necessary for the transitional period.

They were used for the preparation of the first master catalogue, which was published in October 1972. The format was that of the old catalogue C but the numbers were new. Four other named persons prepared it. They too were British subjects and employees of EC or CMJ. All the later catalogues were based on the 1972 master.

After a master list had been entered into the computer it was thereafter kept up to date. This work was done by Butler and employees of EC, CMJ and Coopers Payen Ltd ('CP' - the new name for CMJ after 1980, and thus still D a subsidiary of EC).

As both South Africa and the United Kingdom give effect to the Berne Convention, the various Payen companies and their employees are to be treated as if they were here.

Although there is a challenge on this point by Bovic, I think that it is E obvious from the recitation of the facts so far that the preparation of the new English catalogue involved much labour and at least some skill.

On 11 March 1988 EC and CP (formerly CMJ) assigned copyright and rights of a like nature in the numbering system to Payen International Ltd ('PI'). EC is the wholly owned subsidiary of PI. What was not ceded was Butler's F program. What was ceded was the 'original works' consisting of the table, the 1972 and later catalogues, the computer printout of the summer of 1971 (here mentioned with Butler as the author), and the 'New reference/Old reference'. This last pair and the printout are shown as having been authored by Butler and being no longer in existence. Their best available reference is given as the 'Interchange lists February and April 1972'. G This last no doubt refers to the published cross-reference lists, whereas the 'New reference/Old reference' presumably refers to the original manuscript or part manuscript form.

Although Payen (the applicant - Payen Components South Africa Ltd - a H subsidiary of PI's holding company, Turner and Newall Ltd) has been the exclusive licensee of the numbering system for a long time, a written licensing agreement was concluded with PI (by now the copyright holder) only in 1989. Nemo dat quod non habet. Payen's rights can be no better than PI's rights.

Parker-Nance has been involved in the production of the South African I version of the catalogues and price lists using the new system since the first local edition in 1973. It had to be adapted to the South African market and has had to be kept up to date. Doing this has entailed 'a vast amount of work'. Among other things he has to keep abreast of new models as also modifications. New gaskets are referred either to CP in the United J Kingdom or Components Eastern Ltd ('our Far East

Schutz JA

A Associate'), depending on the country of origin of the new engine. Numbers are allocated by the one or other of those companies. The new numbers are then included in the catalogue. Nothing more is said about the nature of the association with the Far East associate. One additional task has had to be undertaken in South Africa, namely the translation of the material into Afrikaans.

B The catalogue cum price list is of a kind as may qualify as a 'literary work' in the generous sense that that phrase is...