LA Sport 4x4 & Outdoor CC v Sergio's Auto Electrical CC

• Jurisdiction: South Africa
• Judge: Landman J
• Judgment Date: 12 March 2009
• Docket Number: 989/08
• Hearing Date: 12 February 2009
• Court: North West High Court, Mafikeng

Landman J:

Introduction

[1]

The applicants, LA Sport 4X4 & Outdoor CC and Lionel Mark Lewis, apply, inter alia, for an interdict prohibiting Sergio's Auto Electrical CC, LA Sport Rustenburg/Platinum and James Henry Ferreira, (the respondents) from continuing to infringe the applicants' statutory and common law trademarks. The application is opposed.

The facts

[2]

The applicants rely on the following registered trade marks:

(a)

number 2003/07811 LA Sport 4X4 & Outdoor, registered in class 12 in respect of "vehicle accessories (4WD)"; and

(b)

number 2003/07810 4WD Megastores, registered in clause 12 in respect of "vehicle accessories (4WD)".

[3]

The applicants also rely on the following unregistered trade marks (in respect of which applications for registration have, however, already been lodged in various goods and services classes):

(a)

TJM;

(b)

TJM Products;

(c)

TJM Products SA;

(d)

LA Sport;

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(e)

LA Sport Pro;

(f)

LA Sport 4X4 Action;

(g)

LA Sport 4X4 & Outdoor; and

(h)

4WD Megastores.

[4]

Five years ago the applicants and the respondents (Sergio's Auto Electrical CC, first respondent, La Sport Rustenburg/Platinum second respondent and James Henry Ferreira third respondent) entered into an oral interim, temporary, LA Sport franchise. The second respondent is the name under which the first and second respondents traded. See respondents' attorney's letter dated 21 November 2007.

[5]

The applicants say they were frustrated with the respondents' vacillation, excuses and dilatory tactics for failing to conclude a written agreement. The applicants, by letter dated 1 November 2007 cancelled the interim, temporary oral franchise agreement with effect from 15 November and consequently also the authorisation for the respondents to use the trademarks.

[6]

The first and third respondents oppose the relief sought upon the basis that:

(a)

the applicants have not shown, at the time of the launch of the application, a continued, unauthorized use by the respondents of the trade marks; and

(b)

there is a substantial factual dispute as to the payment

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allegedly due by the respondents to the applicants.

Statutory remedies

[7]

The statutory provisions relating to infringement of registered trade marks and the remedies are found in section 34 of the Trade Marks Act 194 of 1993 ("the Act"). Section 34(1)(a) provides that:

"The rights acquired by registration of a trade mark shall be infringed by . . . the unauthorised use in the course of trade in relation to goods or services in respect of which the trade mark is registered, of an identical mark or of a mark so nearly resembling it as to be likely to deceive or cause confusion."

[8]

Where an infringement of a registered trademark is shown, the High Court, having jurisdiction, may grant the proprietor of the trademark:

(a)

an interdict;

(b)

an order for the removal of the infringing mark from all material and where the infringement mark is inseparable or incapable of being removed from the material, an order that all such material be delivered up to the proprietor. See section 34(3) of the Act.

Common law trademarks and remedies

[9]

The registration of a registered trademark is prima facie proof of ownership and validity. The second applicant is, ex facie, the

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registration certificates, prima facie, the proprietor of the registered trade marks, both of which are also prima facie valid and in force.

[10]

Under the common law similar relief is granted for the infringement of an unregistered trademark.

[11]

The applicants have adduced evidence of the extensive use, over many years, of the unregistered trade marks, throughout the Republic of South Africa, in relation to 4X4 vehicle accessories and equipment. This includes the rendering of services in relation to such accessories and equipment, including the sale and the fitment of accessories and equipment.

[12]

The evidence of use (and the extent of that use) are not disputed by the respondents. The applicants have shown the acquisition of protectable proprietary rights in the unregistered trade marks.

The issues

[13]

The applicants do not persist in these proceedings, with their monitory claim. Only two issues need be decided. The first is when did the authority which was extended to the respondents to use the applicants trade marks terminate. The second is whether the respondents used the trade marks after this authority terminated.

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Unauthorised use

[14]

The use of the trademarks was authorised by virtue of an oral agreement. The parties entered into an oral agreement pending the finalisation of a written agreement. The parties could not agree on the terms of the written agreement nor did the respondent pay what it owed.

Termination of the right of use: cancellation by the applicants

[15]

On 1 November 2007 the applicants wrote a letter to the respondents terminating the oral agreement on notice. The sheriff served the letter on the respondents on 8 November 2007. According to its terms the termination came into effect on 15 November 2007.

[16]

The respondent's attorney responded to the letter on 21 November 2007 denying that the applicants were entitled to cancel the agreement. This letter reads as follows:

"We act on behalf of our client, Sergio's Auto Electrical CC trading as LA Sport Platinum. Your letter of the 1st instant has reference.

Firstly, your recordal of the salient features of the verbal agreement between the parties, are not correct, nor complete. In fact, it is your client that is in breach of the agreement in that you client is:

1.

not able to make supplies of equipment readily available;

2.

failing to account and reconcile timeously the

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accounts relating to our client;

3.

interfering in our client's commercial arrangements with suppliers with the intention to deliberately undermine those arrangements. Your client has no interest in communicating with the suppliers, not interfering in those arrangements;

4.

in breach with the obligations as stipulated by our client in his e-mail dated 25 October 2007 (of which a copy is attached hereto).

Furthermore, our client denies that your client is entitled to cancel the agreement summarily or otherwise on the basis as alleged. Our client continues to hold your client bound to the verbal agreement and will do so with the assistance of the court, should it be necessary. If need be, our client will also seek the assistance of the court to stop your client's unwarranted interference in our client's business and related arrangements. In fact, your client must advise all those suppliers, manufacturers and LA dealerships in writing before Monday, 26 November 2007 of unconditional withdrawal of the original notification.

Lastly, our client records that all outstanding amounts as claimed by TJM Products SA (Pty) Ltd have been settled. The outstanding franchise fee, R75 200.00 presently held in trust by us, will be paid to your client subject to:

1.

receipt of written confirmation of the unconditional withdrawal of the notification referred to above;

2.

receipt of an acceptable dealership agreement;

3.

receipt of a written withdrawal of your letter under reply, by your client.

As we thought that discussion is the more advisable manner in dealing with the dispute, writer has on a number of occasions tried to contact Mr Bekker telephonically, but unfortunately it would seem that there is not intention to discuss matters on this basis. In the circumstances, we will continue to communicate in writing, however should you or your client have a change of heart you are welcome to contact us telephonically."

[17]

In the answering affidavit, the respondents put an interpretation on this letter, which is intended to demonstrate that they did not use the trademarks. I intend to traverse this aspect later. But at this

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stage the inquiry is whether, and if so, when did the contract terminate?

[18]

The respondents have adopted the stance, borne out by the letter, that the oral agreement could not be terminated by notice. I think that this approach is wrong. The oral agreement was intended to be a stop gap contract until a written agreement could be negotiated or failed to be negotiated. It was a contract for an indefinite duration and one which lends itself to termination on reasonable notice. See Trident Sales (Pty) Ltd v A H Pillman and Sons (Pty) Ltd 1984 (1) SA 433 (W) and Putco Ltd v TV and Radio Guarantee Co (Pty) Ltd 1985 (4) SA 809 (A) at 828A.

[19]

In Amalgamated Beverage Industries Ltd v Rond Vista Wholesalers 2004 (1) SA 538 (SCA) at para 13 Streicher JA held that:

"The question is whether a tacit term to that effect should by implication be read into the contract. That would be the case if the common intention of the parties at the time when they concluded the contract, having regard to the express terms of the contract and the surrounding circumstances, was such that, had they applied their minds to the question whether the contract...