Protective Mining & Industrial Equipment Systems (Pty) Ltd (Formerly Hampo Systems (Pty) Ltd) v Audiolens (Cape) (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Corbett JA, Hoexter JA, Grosskopf JA, Nestadt JA and Nicholas AJA
• Judgment Date: 30 March 1987
• Citation: 1987 (2) SA 961 (A)
• Hearing Date: 23 February 1987
• Court: Appellate Division

Grosskopf JA:

This is an appeal from a judgment by Schock J in the Cape Provincial Division, reported sub nom Hampo Systems I (Pty) Ltd v Audiolens (Cape) (Pty) Ltd 1985 (4) SA 257 (C). Subsequent to the hearing in the Court a quo the appellant changed its name from Hampo Systems (Pty) Ltd to Protective Mining and Industrial Equipment Systems (Pty) Ltd, and this latter name has accordingly been substituted on the record. At the commencement of the hearing on appeal the appellant applied for, and was granted, condonation of the late provision of J security for costs.

Grosskopf JA

A I turn now to the relevant facts in this appeal. They are briefly as follows.

A Japanese company, Asahi Kogaku Kogyo Kabushiki Kaisha (hereinafter called Asahi), is the manufacturer of, inter alia, photographic and optical products, which are sold under the B name Pentax in many parts of the world, including South Africa. Asahi is the proprietor in the Republic of South Africa of the trade mark 'Pentax' registered pursuant to the Trade Marks Act 62 of 1963, in Part A, class 9, of the register, in respect of

'photographic, cinematographic, optical, measuring and surveying machines, apparatus and instruments; parts, fittings and accessories for all the aforegoing goods'.

C The marketing, distribution, export and licensing arm of Asahi is a wholly owned subsidiary called Asahi Optical Corporation. The latter company appointed the appellant as the exclusive distributor in South Africa and certain adjacent territories of all single-lens reflex cameras, lenses, photographic accessories, binoculars and telescopes D manufactured by Asahi, and sold under the trade mark 'Pentax'. In the argument on appeal nothing turned on the difference between the two Asahi companies, and in what follows I shall treat them as a single entity. The appellant's exclusive distributorship commenced in 1956 and has continued ever since. When proceedings were instituted in the present matter a E distributorship agreement of 19 October 1981 was in force, but prior to the hearing in the Court a quo this had been superseded by one dated 25 September 1984. Both these agreements were placed before the Court.

Towards the end of 1982 the appellant became aware that the respondent, a Cape Town company selling inter alia cameras and other optical equipment by retail, was importing or about to F import and sell Pentax-brand products in South Africa. This import, it transpired later, was of genuine Asahi products purchased in Hong Kong. These articles could be sold profitably by the respondent at prices lower than those charged in the retail trade for similar articles imported by the appellant. On 4 November 1982 the appellant and Asahi wrote a letter of G demand through their attorneys to the respondent. This letter is quoted fully in the judgment of the Court a quo at 259 - 60 of the report, and need not be repeated herein. Briefly, it sets out the relationship between Asahi and the appellant; refers to the 'considerable reputation' of the mark 'Pentax'; stresses the measures taken by Asahi and the appellant to safeguard and promote this reputation; and records that the H importation or sale by the respondent of Pentax-branded products was unauthorised. Paragraphs 11, 12 and 13 of the letter then read as follows:

'11.

Inasmuch as the use of the trade mark is unauthorised, this constitutes an infringement of the rights of our client's aforementioned trade mark, particularly in the light of s 44(1)(b) of the Trade Marks Act.

12.

Now that the rights of our clients have been drawn to your I attention, we would like to mention that a repetition by you will constitute an infringement of our client's rights.

13.

May we, therefore, have your assurance that you will not import or sell "Pentax" branded goods into South Africa. You are, of course, perfectly free to obtain the goods from the authorised dealer in South Africa'.

By letter dated 15 November 1982 the respondent, through its J attorneys, declined to give the assurance requested in para 13 quoted above. This

Grosskopf JA

letter is quoted at 260 - 1 of the reported judgment of the A Court a quo. As appears from the letter, the respondent's attitude was that it had 'obtained the Pentax cameras through a legitimate and reliable source' and that 'the articles concerned (were) genuine Pentax cameras, manufactured by your client in Japan'. The respondent could not see how the relationship between Asahi and the appellant, and the measures B taken to protect the reputation of the trade mark, were of any concern to the respondent. It had 'legitimately obtained the articles for re-sale, and (would) proceed to re-sell them accordingly'. The respondent denied that in doing so it would in any way be infringing Asahi's trade mark.

Almost a year later, on 22 October 1983, Mr B Bacon, a partner in the firm of attorneys acting for the appellant, purchased a C Pentax ME Super camera from the respondent. It is common cause that this camera had not been supplied by the appellant but had been imported by the respondent from Hong Kong as explained above. The salesman was Mr H Wertheim, a director of the respondent, who deposed to the opposing affidavit on this matter. I shall at a later stage have to deal in greater detail D with what passed between Mr Bacon and Mr Wertheim.

Thereafter, by notice of motion dated 3 April 1984, the appellant (not joined by Asahi) applied for various orders against the respondent substantially in the terms set out at 258 of the judgment a quo. The relevant claims for present purposes were those for orders interdicting the respondent from E unlawfully competing with the appellant in two respects, viz first, by selling foreign products under the trade mark 'Pentax' and, second, by informing purchasers that such foreign products were warranted against defects and that such warranty would be honoured by the appellant or its agents or distributors. The Court a quo dismissed the application with F costs and, with its leave, the matter now comes on appeal before us.

On appeal, the appellant's contentions in support of the abovementioned claims were succinctly formulated as follows in its heads of argument:

'That the respondent is representing to the public that the G appellant will honour a guarantee in respect of the product sold by it (the respondent) and is thereby passing-off its business a being connected in the course of trade with the business of the appellant;

and

that the respondent is unlawfully competing with the appellant by infringing Asahi's trade mark "Pentax".'

H I propose dealing with these contentions in turn.

The first cause of action relied upon by the appellant is based on the factual allegation that the respondent is misrepresenting to the public that the appellant will honour a guarantee in respect of Asahi products sold by the respondent. On this basis the applicant contends that it is entitled to a final interdict prohibiting a repetition of the I misrepresentation. The legal ground for this claim is said in the above-quoted passage to be passing-off, but in argument before us Mr Plewman, who appeared for the appellant, submitted that a more satisfactory ground would be the general law of unlawful competition. Before it becomes necessary to enter into these legal questions, I must however first determine what the relevant facts are.

It is common cause that all Pentax cameras enjoy a 12 months' J warranty

Grosskopf JA

A against defective material or workmanship. It is, however, not always easy to determine the exact document in which this warranty is embodied. It appears that all products in the Pentax range, whether distributed by the appellant or not, are accompanied by operating manuals which contain Asahi's so-called 'warranty policy'. This warranty policy commences B with the sentence:

'All Pentax cameras purchased through authorized bona fide photographic distribution channels are guaranteed against defects of material or workmanship for a period of 12-months from date of purchase.'

The warranty policy then continues by defining the ambit of the guarantee. Thereafter, under the heading 'Procedure during C 12-month warranty period', it reads:

'Any Pentax which proves defective during the 12-month warranty period should be returned to the dealer from whom you purchased the equipment or to the manufacturer. If there is no representative of the manufacturer in your country, send the equipment to the manufacturer, with postage prepaid.'

Later it continues:

D 'To prove the date of your purchase when required, please keep the receipts or bills covering the purchase of your equipment for at least a year before sending your equipment for servicing, please make sure that you are sending it to the manufacturer's authorized representatives or their accredited repair shops, unless you are sending it directly to the manufacturer.'

The warranty policy concludes with the following sentences:

E 'This warranty policy does not apply to Pentax products purchased in the USA, UK, or Canada. The local warranty policies available from Pentax distributors in those countries supersede this warranty policy.'

On the face of it, this warranty policy applies to all Pentax cameras sold through authorised channels, and would therefore F cover cameras sold by the appellant. It is therefore not surprising that, in terms of the 1981 distributorship agreement, the appellant undertook the following obligation (clause 2(d)(iv)):

'In accordance with the warranty policy and procedure detailed in the operating manual for the products, Hampo warrants the products against material and workmanship defects and performs G the servicing of the products. Hampo, being a member distributor of the Pentax International Warranty Service Obligation agrees to service the...