Verimark (Pty) Ltd v BMW AG BMW AG v Verimark (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Harms ADP, Streicher JA, Cloete JA, Ponnan JA and Combrincke JA
• Judgment Date: 17 May 2007
• Citation: 2007 (6) SA 263 (SCA)
• Docket Number: 250/06
• Hearing Date: 02 May 2007
• Counsel: G E Morley SC (with A M Annandale) for the appellant C E Puckrin SC (with R Michau) for the respondent
• Court: Supreme Court of Appeal

Harms ADP:

[1] This case is about trade mark infringement. The well-known BMW logo [1] is registered in different classes and those in contention are registered (a) in class 3 for, amongst others, cleaning and polishing preparations and vehicle polishes (the polish mark, TM F 1987/05127); and (b) in class 12 for vehicles, automobiles and the like (the car mark, TM 1956/00818/1). G

The owner of the mark, the present respondent (Bayerische Motoren H Werke AG, in short 'BMW') applied in the High Court under the provisions of s 34(1) of the Trade Marks Act 194 of 1993 [2] for an I

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interdict restraining the respondent (the present appellant, Verimark (Pty) Ltd) from infringing these two trade marks. A The Court (per De Vos J) found in favour of BMW in relation to its claim based on the polish mark (a) but dismissed the application in relation to its car mark (b). [3] This gave rise to an appeal and cross-appeal with the leave of that Court. B

[2] Verimark is the market leader in the field of direct-response television marketing in which demonstrative television commercials are used. Two of its many products are its Diamond Guard car-care kit and Diamond Guard car polish. These have been widely advertised and sold since 1996. Throughout this period Verimark used vehicles of different makes, but more particularly BMW cars, to C demonstrate the wonders of these products. In one particular television flight a BMW car is first treated with Diamond Guard and then an inflammable liquid is poured onto the hood of the car and set alight without causing any damage to the car's paintwork. In another instance an older and cheaper car is treated with Diamond Guard and it then D metamorphoses into a shining BMW. The complaint of BMW is that its logo on the BMW car is clearly visible and because of this its case is that Verimark is infringing its trade mark registrations. The same complaint is directed at the use of a clip from the first flight as background on its packaging material and in its internet advertisement. A representation of the packaging material is annexed to this judgment. E

[3] BMW relies on the provisions of s 34(1)(a) for its allegation that its class 3 trade mark for polishes has been infringed. This paragraph provides (to the extent relevant) that the rights acquired by registration of a trade mark are infringed by the F unauthorised use of an identical mark in the course of trade in relation to goods in respect of which the trade mark is registered. The argument is simply that the BMW logo appears on the packaging material and in the advertisements; the logo is

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identical to the registered trade mark; the use by Verimark is not authorised; and it is use in the course of trade in relation to A polishes. Therefore there is infringement.

[4] Verimark, on the other hand, argues that 'use' in this context must be 'trade mark use' meaning B

'use of a registered trade mark for its proper purpose (that is, identifying and guaranteeing the trade origin of the goods to which it is applied) rather than for some other purpose' [4]

and that its use of the BMW logo does not amount to trade mark use because it is not used as and cannot be perceived to be a badge of origin. It argues that the product is clearly identified as Diamond C Guard and nothing else and that the BMW logo identifies the car on which the product is being used and not the polish. In this regard Verimark relies on recent developments in the European Court of Justice (the ECJ) and the English Courts [5] and on a dictum of this Court in Bergkelder. [6] Against this are two High Court D judgments [7] that were based on a literal interpretation of the provision and on the reasoning in British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281 (Ch), which has since been overruled in this regard.

[5] It is trite that a trade mark serves as a badge of origin and that trade mark law does not give copyright-like protection. G Section 34(1)(a), which deals with primary infringement and gives in a sense absolute protection, can, therefore, not be interpreted to give greater protection than that which is necessary for attaining the purpose of a trade mark registration, namely protecting the mark as a badge of origin. In Anheuser-Busch [8] the ECJ was asked to determine the conditions under which the proprietor of a trade mark has an exclusive right to prevent a third party from using his trade mark without his consent under a primary infringement provision. The ECJ affirmed (in para 59) that

'the exclusive right conferred by a trade mark was intended to enable the trade mark proprietor to protect his specific interests as proprietor, that is, to ensure that the trade mark can fulfill its functions and that, therefore, the exercise of that right must be reserved to cases in which a third party's use of the sign affects or is liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods'. H

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That is the case, the ECJ said (in para 60), where the use of the mark is such that it creates the impression that there is a A 'material link in trade between the third party's goods and the undertaking from which those goods originate'. There can only be primary trade mark infringement if it is established that consumers are likely to interpret the mark, as it is used by the third party, as designating or tending to designate the undertaking from B which the third party's goods originate.

[6] As far as English Courts are concerned, I do not intend to trawl through the development of the law [9] but shall limit myself by referring to some of the observations of the House of Lords in Johnstone. [10] Lord Nicholls of Birkenhead stated (in para...