Introduction
Facts
Decision
Comment
Incorporating a geographical name into a trademark is not an ideal way of enhancing its distinctiveness. The Supreme Court of Appeal's judgment in Century City(1) exacerbated uncertainty among owners of trademarks which are also geographical names as to whether their rights could be enforced. While the court held that Century City Property Owners Association's device marks incorporating the name Century City were not vulnerable, most of their word marks were revoked on the grounds that the name Century City "consists exclusively of a sign or an indication which may serve, in trade, to designate the geographical origin of services".(2)
The recent judgment in Group LFE (SA) (Proprietary) Limited v Swartland Winery Limited and the Registrar of Trademarks(3) has illuminated some areas of certainty in this dark realm (in Afrikaans the word 'Swartland', at issue here, means 'black land').
The case concerned a dispute between a winery and a wine exporter over the use of the name Swartland to describe their respective wines. The Swartland is a geographic area in the Western Cape province and is well known for the production of wine. This is a prima facie ground for expungement of a trademark registration.(4) The Swartland has also been proclaimed an area for the production of wines of origin under the Liquor Products Act (60/1989).
Swartland Winery Limited (SWL) is a winery founded in 1948 as a wine cooperative, with its principal place of business being in Malmesbury, the largest town in the Swartland. It has traded continuously as a winery since 1948. On December 13 2004 SWL obtained Trademark Registration 2004/22804, SWARTLAND, for wines. In 2006 SWL became a public company.
SWL annually procures about 18 million litres of wine from farms in the region, mainly from independent farm owners. Since the latter half of the 17th century, the area has been known as Het Zwarte Land in Dutch, and subsequently as Swartland in Afrikaans, ostensibly in reference to the effect of the winter rain, which causes plants to turn black. SWL exports wine to Europe, particularly the Netherlands, where its products have been sold on a large scale for around 13 years.
Group LFE (SA) (Proprietary) Limited is a company registered in South Africa, with its principal place of business in Somerset West (outside the Swartland), which markets and exports South African wines to Europe, primarily the Netherlands. It decided to start bottling wine under the SWARTLAND label.
SWL sought an interim injunction against LFE preventing it from infringing SWL's registered SWARTLAND trademark by using it on the labels of wine that it was producing and exporting. LFE opposed and brought a counter-application for expungement of SWL's registered trademark. LFE was unsuccessful in the High Court and appealed to the Supreme Court of Appeal.
Since the main application depended on the validity of SWL's trademark registration, the High Court dealt with the counter-application first. LFE contended that the SWARTLAND mark was vulnerable to expungement as the Swartland is a geographical area. Prima facie, such a mark is prohibited from registration within the meaning of Section 10(2)(b) of the act because it falls within the description quoted above.
However, Section 10 ends with the following clause:
"Provided that a mark shall not be refused registration by virtue of the provisions of paragraph (2) or, if registered, shall not be liable to be removed from the register by virtue of the said provisions if at the date of the application for registration or at the date of an application for removal from the register, as the case may be, it has in fact become capable of distinguishing within the meaning of section 9 as a result of use made of the mark."
SWL, in the opinion of the High Court and the Supreme Court of Appeal, demonstrated that its mark had in fact become "capable of distinguishing" by relying on its 60-year existence as a winery and its use of SWARTLAND as its trademark in marketing its wine over this period, either standing alone or in conjunction with the word 'winery'. SWL claimed that it had won several awards and had established a substantial reputation. SWL maintained that its trademark had become associated with its products. No other winery had used the word 'Swartland' in its name or incorporated the mark SWARTLAND into the name of its wines. LFE did not dispute these claims.
SWL submitted photographs of its wine bottles produced in 1969 and 1972 bearing the trademark SWARTLAND, without any other words of equal prominence on its labels. The use and reputation of the SWARTLAND mark in the Netherlands was established by an affidavit from the managing director of SWL's distributor in the Netherlands.
The High Court found that SWL had shown that the mark had become capable of distinguishing within the meaning of Section 9 as a result of use made of the mark, considering:
- SWL's unchallenged use of its trademark over a period of 60 years;
- the scale of its production and sale of wine; and
- the fact that no other winery, wine estate or wine producer had used the word 'Swartland' in its name or had incorporated the trademark in the name of any of its wines.
LFE's second ground for expungement relied on Section 10(12) of the act, which provides that a trademark that is contrary to law may not be registered and is liable to revocation if it is registered. LFE also alleged that the registration of the trademark was in conflict with Section 11(3)(a) of the act, which states that no one may use a wine of origin designation in connection with the sale of wine unless so authorised. It argued that since the area known as the Swartland has been demarcated as a production area by virtue of the Liquor Products Act and its predecessor statute from as early as 1975, the use of the trademark SWARTLAND was manifestly unlawful.
However, SWL pointed to Section 11(6) of the act, which states that the provisions of the section are not to be construed as restricting the use of 'a trademark', as defined in Section 2(1) of the act, which "is used or is intended for use in connection with the sale of a liquor product" that was "registered, used or established" on the date of commencement of this section of the act (July 1 1990). Since the facts submitted by SWL proved that the SWARTLAND trademark was an established unregistered trademark at the relevant date, the court dismissed the counter-application.
Accordingly, since the High Court found the registration to be valid and not liable to expungement, it confirmed the interim relief and granted a final interdict. The Supreme Court of Appeal held that the High Court was correct to dismiss the counter-application and dismissed the appeal with costs.
This case demonstrates how modern trademark law is concerned more with the reality of an acquired meaning attached to a mark than a pedantic technical approach, as characterised by the YORK decision in the United Kingdom.
For further information on this topic please contact Ron Wheeldon at Ron Wheeldon Attorneys by telephone (+27 11 646 6666), fax (+27 11 646 8895) or email ([email protected]).
Endnotes