Trade mark non-use cases come up a lot. A non-use cancellation action might be filed in response to a threat, such as an infringement claim or a trade mark opposition. Or it may be filed when a company that wants to use a particular trade mark finds that there is a conflicting registration, determines that it is not in use, and decides to seek its removal in order to clear the way.
The law regarding non-use in South Africa is that a trade mark registration can be cancelled by an affected party, such as a competitor, if there has been no bona fide use of that trade mark in relation to the goods or services covered by the registration for a period of five years or longer. This is set out in section 27(1) (b) of the Trade Marks Act.
Much of the argument in non-use cases revolves around the meaning of the term 'bona fide'. Just what is bona fide use? Previous decisions tell us that it means genuine commercial use within the context of the particular product or industry, as opposed to use that is simply intended to keep the registration alive. So, for example, the sale of one luxury yacht over a five-year period might well be regarded as bona fide use, but the sale of one item of clothing would certainly not. Other cases tell us that, in appropriate circumstances, mere planning - such as negotiating with potential distributors or licensees - or mere advertising with a view to creating a market, may be regarded as bona fide use.
In the recent case of Pandora v Truworths (Gauteng High Court, 28 May 2015), the issue of the genuineness of the use did come up. But the more interesting issue was whether the trade mark had been used in relation to goods covered by the registration. The facts were unusual.
Pandora, a Danish company that has a significant international jewellery business under the trade mark Essence, wanted to enter the South African market. A search revealed that the trade mark Essence for jewellery was already taken – Truworths, a South African fashion retailer with some 600 stores, had a registration for the trade mark Essence in class 14 for jewellery. Pandora's investigations showed that Truworths had made no use of the trade mark Essence in respect of jewellery for a period of five years or more.
Truworths responded to the cancellation action by providing evidence of use. Not use in relation to jewellery as such, but use in relation to clothing that features what's described in the judgment as 'embellishments with a jewellery-type appearance'. In other words, Truworths had used the trade mark Essence in relation to a garment that featured a necklace that could be detached and worn separately - the judgment talks of 'an Essence structured shirt with necklace details'. The question that the court had to decide was whether this amounted to use in relation to goods covered by the registration. For those who are not that familiar with trade mark law, it is worth pointing out that jewellery falls into a particular class of the trade mark classification system, class 14, whereas clothing falls into another, class 25.
Pandora naturally claimed that this use by Truworths did not cut it. It argued that Truworths's evidence simply showed use in relation to 'decorations, embellishments and trimmings which are attached to clothing and not sold separately as items of jewellery.' So for Pandora the fact that the necklace was not sold separately was very relevant.
Not so for the judge. Judge Fourie pointed out that jewellery is defined in the Oxford Dictionary as 'gems or ornaments made or sold by jewellers, especially precious stones in mountings; jewels collectively or as a form of adornment.' The judge went on to say that the test is an objective one, aimed at determining what the reasonable customer would think. The judge concluded as follows: 'This particular garment includes an item of jewellery covered by the Class 14 registration and therefore the item constitutes goods in respect of which the trade mark is registered.'
Dealing with Pandora's argument that the sales of the garment had been very small (some 305 items), and therefore did not amount to bona fide use, the judge disagreed. Even if the sales were modest, the 'use took place in the context of commercial activity'. The judge made the point that previous cases tell us that bona fide use means use with the 'object or intention primarily of protecting, facilitating and furthering trade in such goods, and not for some ulterior motive.'
Finally, the judge saw fit to reiterate a point that South African courts have been making a lot of late, namely that it is the owner of the trade mark registration who is best placed to answer the question of whether or not its trade mark has been used, and that the court will expect the trade mark owner to play open cards. This despite the fact that there is an initial obligation on the party applying for cancellation to establish non-use. The judge said that once 'an applicant has brought itself within the parameters of section 27(1)(a) or (b), section 27(3) imposes an onus on the proprietor of the trade mark to prove relevant use... this onus is not a mere shifting of the evidentiary burden, but has the burden of a true onus.'
An unusual set of facts - but probably the right result!
I guess it all goes back to the idea of a "global trade mark". Pandora pretty much sits in a similar situation with Apple Inc. in their recent attempt to obtain a global trade mark registration for their APPLE trade mark in relation to watches, in which Apple faced an obstacle in Switzerland. Pandora may very well have to decide upon an alternative name for this particular range of jewellery in South Africa.
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