Wednesday, April 11, 2007

Genuine goods: Can there be trade mark infringement?

By Wim Alberts

Section 34(1) of the Trade Marks Act 194 of 1993 enables the proprietor of a registered trade mark to prevent the infringement of the mark through the unauthorised use thereof, or of a confusingly similar mark. Infringement occurs, primarily, where the mark of the proprietor, A, is used by B to refer to his (B’s) goods. Where B uses A’s mark to refer to A’s goods, it would seem to follow that there can be no infringement. The situation where parallel imports take place, is a good illustration of this point of view. In that instance, the Act provides as follows in section 34(2)(d):
"A registered trade mark is not infringed by —

…(d) the importation into or the distribution, sale or offering for sale in the Republic of goods to which the trade mark has been applied by or with the consent of the proprietor thereof;"

The circumstances envisaged by this section are, typically, where goods originating from the proprietor of the mark in South Africa are purchased abroad, and imported. This conduct falls outside the reach of the Act. There is thus a measure of "freedom" to deal with genuine goods.

Altered goods

One situation which can be seen to be a qualification of the above statement is where the goods concerned are altered in some way. This occurred in Television Radio Centre (Pty) Ltd v Sony Kabushiki Kaisha t/a Sony Corporation 1987 (2) SA 994 (A) where video recording machines had to be adapted according to South African requirements. The goods were held to be of an infringing nature.

Consumer legislation

The freedom to sell genuine goods can, secondly, be curtailed by other, non-trade mark legislation. This is for instance the position under the Consumer Affairs (Unfair Business Practices) Act 71 of 1998. In terms of this statute the Minister of Trade and Industry can proclamate legislation to counter unfair business practices. On 9 February 2007, the Minister proceeded to publish such regulations in Government Gazette 29600.

In these regulations the Minister has prohibited (regulation 2) certain practices, defined (regulation 1.8) as follows:

1.8.1 the business practice whereby branded products imported without the trade mark owner’s authority are advertised, promoted and/or offered for sale to end users and where end users have not been alerted by the seller that it:

(a) is not designated by or on behalf of the trade mark owner as an authorised distributor of the branded product; and

(b) that the authorised South African distributor is under no obligation to honour the manufacturer’s warranties/guarantees and/or after-sales support.

1.8.2 the business practice whereby the sellers of unauthorized branded products do not include, in all forms of advertising or promotion, including in-store promotions, websites and brochures, when every such product is advertised or promoted, the following wording in conspicuous size, without change: ’The authorized South African distributor of this product is under no obligation to honour the manufacturer’s guarantees/warrantees or to provide after-sales service"

According to regulation 1.7, "unauthorized branded product" means a branded imported product imported without the express authorization of the owner of the trade mark and includes any tangible object or product promoted or offered in the ordinary course of business for sale or supply to end users. "End users" are in turn defined as persons who purchase a product for their own use and not for purposes of resale (regulation 1.6). Trade mark infringement deals with the unauthorised affixing of a mark to a product. "Unauthorised branded product" however does not refer to the unauthorised (and thus infringing) branding of a product. It merely refers to a product whose importation is not authorised. Such importation is a neutral action. It thus seems that the word "unauthorised" can carry more than one meaning.

These regulations are clearly intended to protect members of the public through the provision of information. On the other hand, it could also hamper the marketing activities of retailers, but weighed agains the interests of consumers, the proposed legislation will come down on the side of consumers. The legislation will force "unauthorized" dealers to set up, for instance, their own repair and maintenance structures, and to provide an internal guarantee. Consumers will then be able to make a choice between a lower price, and the perceived peace of mind of an official factory warranty. It is not known at the time of writing when and if the notice will become law.

Services rendered in relation to genuine goods

It seems possible, thirdly, for infringement to occur through the use of a mark in relation to services, even though the services relate to goods that are genuine. This is illustrated well by the decision in Bayerische Motoren Werke AG v BW Tech 2004 BIP 170 (T). Here the respondent did in fact repair and service BMW vehicles, and used the BMW mark to advertise his services. The respondent relied on the defence created by section 34(2)(c) of the Act, which reads as follows:

"(2) A registered trade mark is not infringed by –


(c) the bona fide use of the trade mark in relation to goods or services where it is reasonable to indicate the intended purpose of such goods, including spare parts and accessories, and such services;

…Provided further that the use contemplated in paragraph ….(c) is consistent with fair practice."

The court however held (page 171 e-f, own emphasis) the following:

"The other point is that in terms of section 34(2)(c) of the Act the respondent is entitled to make use of the applicant’s trademark. I am convinced….that it is clear, that due to the prominence of the applicant’s trademarks given by the respondent, that the use thereof is not bona fide and fair. Furthermore, it is not just descriptive of what the respondent sells but it is in my view a use of the trademark of the applicant."

The point is thus that even though the (service) mark referred to genuine goods, it still amounted to infringement having regard to the prominent manner in which the registered mark was used. The manner in which a trade mark is used is thus important. Another relevant decision is that of the European Court of Justice in Bayerische Motoren Werke AG v Deenik [1999] ETMR 339, where the use of phrases such as "Repairs and maintenance of BMWs", "BMW specialist", and "Specialised in BMWs" was in issue. Article 7(1) of the First Council Directive No. 89/104/EEC of December 21 1988 to approximate the laws of the member states relating to trade marks, provides that a trade mark proprietor is not entitled to prohibit the use of his trade mark in relation to goods which have been put onto the market with his consent.

Article 7(2) in turn determines that this section shall not apply where there exist legitimate reasons for the proprietor to oppose the further commercialisation of the (genuine) goods. If the impression is created that there is a commercial connection between the reseller and the proprietor, and in particular that the reseller’s business is affiliated to that of the trade mark proprietor’s distribution network, that would be a legitimate reason (paragraph 51). Much will thus depend on the nature of the use of a mark in relation to genuine goods, and the mere fact that a mark is used in relation to such goods will not always be a defence when one deals with service marks.

Copyright infringement

It is necessary, fourthly, to mention another exception, though not of the Trade Marks Act. In the event that, for instance, an artistic work as defined in the Copyright Act 98 of 1978, is reproduced without authorisation, the owner of the copyright can take steps to prevent such reproduction (section 7(a) read with section 23(1)). The approach followed by the copyright owner in the decision in Frank & Hirsch (Pty) Ltd v A Roopanand Brothers (Pty) Ltd 279 (A) is often utilised. This is namely that the copyright in a particular work is assigned to a South African company. The hypothetical reproduction of the work in South Africa would have amounted to copyright infringement, so the importation of the relevant work would amount to copyright infringement. The sale of an article that embodies a copyrightable work, which might be a "genuine " product overseas, would thus still amount to copyright infringement.


It appears that the use of a mark in relation to genuine goods are, in general, less likely to attract liability than the use thereof in relation to goods not emanating from the trade mark proprietor. However, consumer legislation, for one, could restrict the "freedom" thus provided. Furthermore, the rendering of services, even though relating to genuine goods, can amount to infringement.