Premier Trading Co (Pty) Ltd and Another v Sporttopia (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Hefer JA, Nienaber JA, Schultz JA, Plewman JA, Farlam AJA
• Judgment Date: 01 June 1999
• Citation: 2000 (3) SA 259 (SCA)
• Docket Number: 218/97
• Hearing Date: 20 May 1999
• Counsel: M J D Wallis SC (with him J N Cullabine) for the appellants. D A Gordon SC (with him G E Morley) for the respondent.
• Court: Supreme Court of Appeal

Nienaber JA:

This is a case about passing-off. It commenced as an application by the first appellant for H an interdict in the Durban and Coast Local Division in which it sought to restrain the respondent from

'1.1

dealing in any way in roller skates bearing the trade mark Bladeline or using the brand name Bladeline in connection with the sale of roller skates; I

1.2

interfering in the applicants' business in its roller skates bearing the trade mark Bladeline by asserting to the applicant's customers that the applicant is disentitled to use its Bladeline trade mark and threatening legal proceedings against such customers and/or the applicant on the grounds that the respondent is the only party entitled to use the trade mark Bladeline in respect of roller skates'. J

Nienaber JA

The roller skates concerned are so-called 'in-line' roller skates. In-line roller skates differ from conventional roller skates in that A the four wheels are not mounted in two matching pairs at the front and at the rear but in a line along the chassis of the boot. This configuration, comparable to ice skates, increases their user's manoeuvrability and speed.

This particular product, so it was stated, was developed during about B 1989 in Australia by a firm called 'Skateworks' which registered the trade mark 'Bladeline' in that country in 1992. Skateworks was taken over by, and eventually became a division of, Australian Power Brands (Pty) Ltd (APB). On 23 September 1993 APB concluded a distribution agreement with the respondent. The respondent is a South African company, incorporated two days before, with its principal place of C business in Durban. It operates as an importer of consumer goods, including sports and recreational equipment, which it supplies to retail outlets. In terms of the agreement APB licensed the respondent to market, distribute and sell Skateworks products in South Africa, in particular Bladeline in-line skates. Clause 13 of the agreement granted the respondent the exclusive right to the use of D the trade mark Bladeline in South Africa, including the right to apply for its registration as a trade mark in its own name. The respondent, having determined that it was open to it to do so, duly applied for registration of the trade mark Bladeline in classes 28 and 42 under applications 93/11039 and 93/11040 respectively on 22 November E 1993.

Twenty-one days later, on 12 December 1993, the first appellant filed its application, 93/11832 in class 28 and 93/11833 in class 42, for registration of the trade mark Bladeline.

Both applications are still pending.

The first appellant, a Johannesburg company, is an importer, like the F respondent, of a wide range of consumer durable goods, including sports and recreational equipment, such as roller skates, and, like the respondent, it acts as a supplier to retail distribution chains and independent retail stores.

On 8 July 1993 (before the respondent's incorporation) it acquired, from a notarial bondholder, the assets and goodwill of three G companies, one of which was Jokari (South Africa) (Pty) Ltd (Jokari). Prior to the takeover Jokari had been a prominent supplier of sporting goods (including roller skates) to the mass retail market in South Africa, in relation to which it used the mark 'Jokari'.

Included in the stock Jokari imported were 312 pairs of what was H described in the invoice of the exporter as 'Bladeline Inline Skates: Three Buckles'. The invoice is dated 12 March 1993. The exporter was a Taiwanese company, Ellen East Company Ltd (Ellen East).

How this all came about is explained by one Schneider, an employee of the first appellant who was an employee of Jokari at the time, in an I affidavit in support of the application: He states:

'If my memory serves me correctly, round October/November 1992, Stephen Stone [Jokari's then managing director] visited Jokari's buying agent in Taiwan. When he returned he told Jokari's sales staff, myself included, of an upgraded in-line skate called the ''Bladeline'' which he hoped to launch successfully on the South African market from late 1992 onwards. . . . As far as I can recall, in late J

Nienaber JA

1992 Stephen Stone had samples of both the new ''Bladeline'' skate as well as its packaging.' A

(I shall refer to the product introduced into South Africa by Jokari as the Taiwanese skates and to the respondent's product as the Australian skates, although the latter, so we were informed from the Bar, was also manufactured in Taiwan.) B

The Taiwanese skates resembled but were not identical to the Australian skates. The Australian skates have the name 'Bladeline' prominently depicted on the side of the heel of the boot as well as continuously along the rims of the wheels, separated by a star motif. The Taiwanese skates display the name 'Jokari', although in smaller print, on the side of the boot and the name 'Bladeline' on the C wheels, likewise (at least initially) interspersed with a star motif. The Australian skates have a single buckle with laces and 'mag' wheels whereas the Taiwanese skates have three buckles and solid wheels.

The box in which the Taiwanese skates were packaged was an exact copy of the cardboard box, designed for Skateworks in Australia, in which D the Skateworks' Bladeline in-line skates were marketed. The only difference was in the picture of the boot on the box which was that of the Taiwanese skates. That the package was a direct copy admits of no doubt inasmuch as the technical specifications displayed on the box related to the Australian and not to the Taiwanese skates.

Who the actual manufacturer of the Taiwanese skates was and how it E happened that Ellen East assumed the name Bladeline in Taiwan are matters not explained in the papers. What is certain is that it happened without the consent of APB in Australia.

The following inferences can, I think, safely be drawn:

(i)

that the article imported by the first appellant was manufactured by someone in Taiwan who pirated, but did not exactly F copy, the Australian design. This could have been either Ellen East itself or someone who supplied Ellen East with it;

(ii)

that Ellen East or its supplier appropriated the trade name Bladeline (for which an application for the registration of the trade G mark was pending in Taiwan - the application was made in April and accepted into the register in August 1993);

(iii)

that the product was packaged in a box which, but for one detail, was an exact replica of the Australian package;

(iv)

that the name 'Jokari' was added to the product, and therefore to the picture appearing on its package, by or at the order of Ellen East acting at the instance of Jokari - either at the very H outset, prior to the first delivery of 312 pairs of skates, or some time thereafter.

The first appellant, after the takeover of Jokari, continued to import quantities of the Taiwanese skates which it advertised, promoted and I marketed in South Africa. It also took formal assignment of Jokari as a trade mark on 11 April 1995.

Hoar, the managing director of the respondent, first noticed the Taiwanese skates on the shelves of retailers in November 1993, after the incorporation of the respondent and the conclusion of its agreement with APB in September of that year. On his instructions the respondent's J

Nienaber JA

attorneys thereupon wrote to the first appellant objecting to the first appellant's sales of its Bladeline in-line A skates and claiming for itself all the rights in and to the trade mark. The first appellant's attorneys responded that the first appellant's use of the mark, which it claimed to be extensive, predated the respondent's application for registration of the trade mark. The respondent's attorneys thereupon complained that the box in which the B first appellant's product was packaged was not only a replica of the package used by Skateworks in Australia but...