“Use it or lose it”. It’s one of the fundamental principles of trade mark law – if a trade mark registration is not used, it’s liable to be lost. The principle makes perfect sense considering that a trade mark registration is effectively a monopoly (albeit one with limitations) to a name, logo or other form of branding. Monopolies should not and are not granted lightly.
In South African trade mark law, the “use or lose it” principle is found in section 27(1) of the Trade Marks Act, 1993. This section provides that an “interested person” (generally a competitor) can apply to remove a trade mark registration if there’s been no genuine use of the trade mark in South Africa for a continuous period of five years or longer from the date that the registration was granted, unless special circumstances exist in the trade and not to any intention not to use or to abandon the trade mark, or the trade mark is well known. The South African Supreme Court of Appeal (“SCA”) has considered the “use it or lose it” principle on a number of occasions. In the famous case of Gulf Oil Corporation v Rembrandt Fabrikante en Handelaars, the SCA said that genuine use means use “with the object or intention primarily of protecting, facilitating and furthering trading in such goods, and not some other, ulterior motive.” European courts have said that in order to determine whether or not use is genuine, it needs to be established that the use is “not merely token use, serving solely to preserve the rights conferred by the mark.”
In a recent South African case, Westminster Tobacco Co v Philip Morris Products SA, the SCA considered to what extent the motive behind the use is relevant. In this case, an application was made to expunge the registration for the cigarette mark Parliament. The evidence suggested that the use that had occurred of this mark was aimed at disrupting the activities of a competitor, rather than building the brand. Interestingly, the SCA felt that this use was sufficient and genuine, saying that it was use “for the purposes of establishing, creating or promoting trade in the goods to which the mark is attached…Genuineness is to be contrasted with use that is merely token, but the line is a fine one, because the use may be minimal… it may in part be prompted by the fear of removal from the register and be directed at protecting the proprietor’s trade generally or preventing the mark from falling into the hands of a competitor."
Any thoughts that the SCA might have gone “soft” on the issue of use were, however, dispelled with its latest decision, Morris Material Handling Limited v Morris Material Handling SA (Pty) Ltd. The facts were unusual. The registrations under attack were for the trade mark Morris registered in respect of goods such as cranes. The evidence of use that was submitted showed use of the trade mark in South Africa. The SCA accepted that the use was genuine in the sense that it was made in the furtherance of trade in the goods. Yet, it wasn’t enough to defeat the cancellation application.
But why? The evidence showed use of the trade mark Morris by a South African company called Kronecranes SA, yet the UK company, Morris Material Handling, owned the registrations. A clear explanation was not provided as to the link between the companies, although there were vague suggestions that the UK company had, at one time, transferred its trade mark to another company, and that the UK company may have been incorporated into a larger Finnish company, concrete evidence was not provided. Judge Wallis said that it was “wholly unclear who was making use of the Morris mark in South Africa."
Judge Wallis said that this lack of detail was unacceptable, given that in “enterprises of that size records are kept of such matters in formal agreements.” He went on to say this: “No attempt was made to place before the court information showing the relationship between these various aspects of the overall group or to explain how they now conduct business.”
Perhaps we shouldn’t be surprised, as the SCA has expressed similar sentiments before. In a famous non- use case involving the trade mark Gap, A M Moolla Group Ltd and Others v Gap Inc and Others, the court was very critical of evidence that was “not only vague to such an extent that it smacks of evasiveness, but is also contradictory... the problem lies in the loose structure of the group... the group, it appears, tends to ignore corporate identities.”
So, when a trade mark registration is attacked for non-use, the matter should be taken very seriously. Play open cards with the court, remembering the words from a SCA non-use case involving the New Balance trade mark, New Balance Athletic Shoe Inc v Dajee NO: “What is called for at the least is clear and unambiguous factual evidence.”