Tie Rack plc v Tie Rack Stores (Pty) Ltd and Another

• Jurisdiction: South Africa
• Judge: Kriegler J
• Judgment Date: 26 June 1989
• Citation: 1989 (4) SA 427 (T)
• Hearing Date: 09 May 1989
• Court: Transvaal Provincial Division

Kriegler J:

This application spans a wide spectrum of the law of incorporeal property, an inherently complex field. The papers are voluminous, comprising some 1 600 pages with well over 80 affidavits. Factual disputes abound. It would therefore be prudent to commence this judgment with an index of a kind. First there will be an introduction C of the principal actors. Then a synopsis of the evidence. This will be followed by a definition and discussion of the issues, both factual and legal. In each instance the discussion will terminate in a conclusion. Lastly I shall deal with peripheral procedural issues.

D 1. Dramatis personae

The applicant, as its name indicates, is a public company incorporated in the United Kingdom. It commenced business in 1981 as a private company with an authorised share capital of £100 000. Its founder, main shareholder, chief executive officer and guiding spirit was and is Mr Roy Bishko, a man colourfully and aptly referred to in the papers as E a 'boykie from Bloemfontein'. He qualified as an attorney in this country and in the 1960s joined the Schlesinger organisation, a group of companies then prominent in South Africa. He was transferred to the United Kingdom and, after some years with the organisation and with others, branched out on his own. In 1981, while operating a heel-bar in London, he struck upon the idea of extending his business to ties and other men's clothing accessories. He invented the name and mark F 'Tie Rack', caused a distinctive logo to be designed and conceived a characteristic shop image, marketing style, range of stock and pricing and siting policy. Mr Bishko's claim in the founding affidavit is that it was

'a phenomenal and resounding success (earning clothes) G international acclaim and reputation... one of the most successful and well-known marks in the clothing manufacturing and retailing industry in the world'.

No doubt there is a good deal of hyperbole in the claim, as first respondent's answering affidavit points out. Nevertheless the applicant's business did prove remarkably successful. Whether it was H due to the wave of relative affluence enjoyed by Britain in the heyday of Thatcherism resulting in a new form of hedonism typified by the term 'Yuppie' or whether it was due to Bishko's genius or a combination of the two, is beside the point. The fact is that the applicant's business was very successful indeed.

I In its first 17 months of trading, it generated a turnover of £937 000 and showed a loss of £4 000. By September of 1982 there were seven shops. By February 1985 there were 26. A year later there were 62. The next February, 115. Of these 18 were run by the applicant itself and the rest were franchise operations. In 1986 the share capital was increased to £1,3 million. In the financial year ending February 1987 the applicant's turnover was £16 886 000 and the profit before tax J £1,843 million. In June

Kriegler J

A 1987 the applicant's share capital was restructured and increased by another £1 million and a listing on the London Stock Exchange was obtained. By the time the current proceedings were launched in July 1988, there were 120 'Tie Rack' outlets in the United Kingdom and 47 abroad, 32 in North America, 11 in Europe and four in Australia. B Many more were planned.

Throughout the applicant ensured that the outlets were strategically placed in high density tourist and transit areas, for example in airport terminals, main railway stations, glossy tourist shopping areas and the like. Each outlet bears applicant's distinctive logogram combining the words 'Tie Rack' in an elegant type-set (known as Caslon), the C colour blue, yellow and white and a stylised collar and tie forming the capital T of the word 'Tie'.

Applicant's standard franchise agreement, forming part of the papers, manifests that applicant maintained close and detailed control over the activities of its franchisee. In the result there were by mid-1988 some 167 strategically placed, distinctively designed and uniformly D stocked 'Tie Rack' shops in several countries around the world. The trade mark was registered in six countries and applications for registration were pending in 18 further countries. One country in which it could not obtain registration was South Africa. More about that E shortly after an introduction of the other main actors.

They are first respondent and Mr Peter Goldman, its managing director and progenitor. Mr Goldman is also a qualified lawyer who grew up in this country and tried his hand in business in the United Kingdom. F After some five years in the importation and distribution of delicatessen foodstuff in England, he returned to South Africa in March 1983. He bought a delicatessen and bakery store in Claremont, Cape, which he conducted until he sold out in September 1986. He then investigated various business opportunities and in approximately February 1987 discussed the opening of 'small specialist clothing shops which were restricted to marketing a wide selection of a very limited G range of goods' with a friend of his, Mr Keith Ferguson. Goldman, during the last years of his sojourn in the United Kingdom, had become aware of the growth of such shops, including applicant's business. Having no experience of the clothing business, he consulted Ferguson who had 30 years' experience in the men's clothing industry in South Africa and who was an expert in the field.

H In due course the two of them and an accountant friend by the name of Schneider decided to incorporate the first respondent. The date of incorporation was 21 May 1987 under the name 'Tie Rack Stores (Proprietary) Limited'. First respondent is the registered proprietor by assignment of the trade mark 'The Tie Rack' in class 25 in respect I of 'clothing, including boots, shoes and slippers, clothes' and class 42 in respect of 'wholesale, retail merchandising and mail order services'. How and why that came about will be discussed later.

The first respondent conducts two shops in Cape Town, one in Sandton and one in Central Johannesburg. All are conducted under the name J 'Tie Rack'.

Kriegler J

A Second respondent, the Registrar of Trade Marks, has been joined for certain technical reasons which need not be discussed further. He abides by the decision and no more need be said about him.

Such subsidiary characters as there may be, would be introduced in the course of the synopsis of the evidence to which I now turn.

B 2. Synopsis of the evidence

It is desirable by way of introduction, and in order to facilitate our appreciation of the significance of the evidence of the numerous witnesses, briefly to mention the nature and grounds of the relief sought in these proceedings.

C Applicant contends that first respondent has infringed its trade mark 'Tie Rack', has infringed its copyright in the logo, has passed off its business as that of or as being associated with applicant's business and has been guilty of unlawful competition. Consequentially applicant seeks expungement of first respondent's trade mark from the register, interdicts against commercial use of applicant's marks, name and D logo; orders for delivery up; an order for a viva voce debatement of damages and costs.

For the purposes of this summary I follow the conventional approach in motion proceedings. Only factual allegations by the applicant that are not denied and those by the respondent are taken as having been established. Later, when analysing the evidence in the context E of particular issues, a more critical appraisal will be made.

The main thrust of the applicant's evidence, both initially and in reply, is that first respondent has unlawfully filched applicant's goodwill in South Africa, unlawfully competing with it as a result. Bishko's founding affidavit, together with the annexures F thereto, excluding the supporting affidavits, run to over 800 pages. His reply, with annexures, add up to a further 140 pages. Clearly Mr Bishko cannot be faulted for undue reticence, nor are modesty and moderation qualities to be laid at his door.

Counsel for respondent rightly stigmatised the following statement by Bishko as 'exaggeration and unjusifiable conclusions which are more appropriate to advertising than affidavits in Court proceedings':

G 'The name "Tie Rack" enjoys international acclaim and reputation. The mark "Tie Rack" is one of the most successful and well-known marks in the clothing manufacturing and retailing industry in the world.'

'There are also "Tie Rack" shops... at key locations in major metropolitan areas throughout the world such as Paris, Amsterdam, Toronto, Sydney, New York and Houston.'

H '... (T)he applicant's business and merchandise is brought to the immediate attention of a very large group of customers of the country in which the outlets are situated.'

'... (T)he business strategy adopted by "Tie Rack" enabled it from that origin to advance its business internationally which was its natural extension.'

I '... (T)he members of the public in those localities where there is an outlet recognise the "Tie Rack" operations throughout the world as a multi-national business group.' ' "Tie Rack" also conducts a trade mark policy which is designed to protect the "Tie Rack" trade mark internationally and to expand into different countries when it is suitable.'

'Not only does this association exist as a fact, but the J public recognises this association.'

Kriegler J

A 'Where a "Tie Rack" store is seen, the interested public believes that that outlet is a "Tie Rack" outlet or a franchised one.'

'Because the mark "Tie Rack" is associated with all other "Tie Rack" outlets and therefore with the applicant, it is distinctive of the applicant in South Africa and in this regard the applicant enjoys a reputation.'

'I personally, with "Tie Rack", have enjoyed extensive coverage in B the South...