Thursday, August 07, 2008

 If the proposed Consumer Protection Bill is enacted into law, it will set up an extensive administrative structure for the protection of consumers, with numerous provisions dealing with the obligations that businesses have, and, conversely, actions that they may not take.  One of the obligations that will apply is that businesses providing goods or services to consumers, to be registered (section 79(1)).  Three scenarios are envisaged by the Bill.  Firstly, a person (“individual”) may conduct business under his full name, as disclosed in his identity document (section 79(1)(a)(i)).  Incidentally, if use of such a name is bona fide, and consistent with fair practice, it could also constitute, in certain circumstances, an exemption from infringement in terms of the Trade Marks Act 194 of 1993 (section 34(2)(a)).  Secondly, business may be conducted, in the case of a juristic person, if it has been registered in terms of a “public regulation” (section 79(1)(a)(ii)).  The term “public regulation” will probably include an entity registered in terms of the Companies Act 61 of 1973, or the Close Corporations Act 69 of 1984.  The third situation is where a business is registered in terms of the (eventual) Consumer Protection Act, or other legislation).
It seems that section 79(1) will force many entities, which currently conducts business as partnerships or as “one-man shows” to now register under the Act.  This might enable intellectual property law firms to police their clients’ trade marks more effectively, and to object where appropriate.  The mechanisms that would be relevant in such an instance are discussed later.  If business is conducted under any other name than those set out above, the National Consumer Commission (NCC) may issue a compliance notice, with the effect that business must be discontinued under that name – section 79(3)(a)(i)(bb).  If a person conducts business under another person’s name, the latter may obtain a court order to stop the use of the name – section 79(3)(c).  The court may make any order that is “just, equitable and expedient in the circumstances” – section 79(4).
 A business name is registered with the Registrar of Companies (section 80(1)).  The important norm for determining the registrability of a business name is section 81.  Section 81 states, amongst others, that a business name may not:
 be the same as, or confusingly similar to, a company or close corporation 

be the same as, or confusingly similar to a registered trade mark, or an application filed in South Africa, or a well-known trade mark 
a name the use of which is restricted in terms of the Merchandise Marks Act 
be misleading, or falsely imply or suggest, that the business: 

-  is part of, or associated with another business; or
            -  is associated with a state organ; or
            -  is managed by persons having a particular educational designation, qualification, or skills. 
With regard to the objection procedure, there is some uncertainty, e.g. it is not stated whether the names will be published in the Government Gazette, or within which time an objection can be lodged.  It might be possible that the existing procedure would be taken to apply, in view of the following.  Section 80(3) determines that if Registrar believes that a name does not comply with the Act, he will inform the applicant, and then “the procedures set out in the Companies Act….for resolving disputed names of companies, read with the changes required by the context, [will] apply to the resolution of the disputed business name.”  This could mean that the time periods of one year and two years for the lodging of an objection, with the Registrar of Companies, or the High Court, respectively, will apply (see section 45(1) and (2A) of the Companies Act).  It is not clear whether there will also be a right of appeal, from the Registrar’s decision to the High Court.  In a provision in close proximity, namely section 80(4), there is indeed an option to apply to the National Consumer Tribunal (NCT) to review a determination of the Registrar.  A similar provision ought to apply to name objections, but it is preferable that it should be spelled out.   
How will an order of the Registrar be enforced?  This is a frustrating issue in terms of current practice under the Companies and Close Corporation Acts.  One approach might be to adopt the view that the NCC is charged with the enforcement of the Act, on the first level.  That much is stated by the Act (section 99).  The NCC’s jurisdiction relates, amongst others, to someone engaged in “prohibited conduct” (section 100(1)).  The latter concept is defined, in section 1, to refer to “an act or omission in contravention of this Act.”  The NCC can issue a compliance notice in regard to the prohibited conduct (section 100(1)).  It is an offence not to act in accordance with a compliance notice (section 110(2)).  If a person fails to comply therewith, the NCC can either refer the matter to the NCT, or the National Prosecuting Authority (section 100(6)).  The problem with this view is that it is not clearly stated what the consequences of a refusal to comply with the Registrar’s order will be.  However, if the refusal to comply with an order of the Registrar is seen as a “contravention” of the Act, it would seem that the above route can be followed.      
Also noteworthy is section 80(4) which deals with deregistration.  This section determines that if the Registrar believes that a person has not carried on business for six months, he may, subject to certain procedures, cancel the business name registration.  
Brief reference can be made to the repeal of legislation.  The Act repeals the Trade Practices Act 76 of 1976, and the Business Names Act 27 of 1960 (section 121(2)(b) and (d)).  The Act also repeals sections 2-13, and 16-17 of the Merchandise Marks Act 17 of 1941 (section 121(2)(f)).  The following sections are thus maintained: section 15 – prohibition of use of flags etc, section 15(A) – declaration of protected event/ambush marketing, and section 16 -  implied warranty on sale of marked goods.   
In summary, the position regarding name objections would have to be clarified.  If this procedure is functioning well, it could enhance, as stated, the ability of trade mark proprietors to enforce their rights more effectively.
Wim Alberts is a consultant in the Intellectual Property Department at Bowman Gilfillan.