Enforcement

Trademark enforcement proceedings

What types of legal or administrative proceedings are available to enforce the rights of a trademark owner against an alleged infringer or dilutive use of a mark, apart from previously discussed opposition and cancellation actions? Are there specialised courts or other tribunals? Is there any provision in the criminal law regarding trademark infringement or an equivalent offence?

Trademark infringement proceedings must be instituted before the High Court, alternatively before an arbitrator if the parties can agree to arbitration. There are no specialised courts. There are no criminal trademark infringement provisions, apart from counterfeiting.

Procedural format and timing

What is the format of the infringement proceeding?

High Court trademark infringement proceedings typically proceed on application. Papers are exchanged covering evidence and legal argumentation, and there is an aural hearing before a judge. Alternatively, if there are factual disputes, an action is pursued, in terms of which evidence is lead aurally via live witness testimony before a judge. Typically, application proceedings take roughly one year to judgment, and actions up to two years to judgment in the first instance, excluding appeals.

Burden of proof

What is the burden of proof to establish infringement or dilution?

The burden of proof falls on the plaintiff or claimant, and is a civil burden on balance of probabilities.

Standing

Who may seek a remedy for an alleged trademark violation and under what conditions? Who has standing to bring a criminal complaint?

The trademark owner and licensees (subject to agreement) have standing to sue for infringement.

Border enforcement and foreign activities

What border enforcement measures are available to halt the import and export of infringing goods? Can activities that take place outside the country of registration support a charge of infringement or dilution?

Customs recordals for brand holders are permitted, which often result in infringing products being detained. Customs officials can be required to interdict shipments of counterfeit or infringing goods. Extraterritorial actions cannot be pursued in South Africa unless the offending goods are imported into the country.

Discovery

What discovery or disclosure devices are permitted for obtaining evidence from an adverse party, from third parties, or from parties outside the country?

In general, discovery is only permitted once formal proceedings have been instituted, in the form of an action or application. Pre-action discovery is allowed in limited circumstances where the requester has shown the ‘element of need’ or ‘substantial advantage’ of access to the requested information in the pre-action stage (ie, where the information requested would be decisive of the dispute between the parties).

Importantly, once formal proceedings have commenced, discovery cannot be required from a party that is not joined in the proceedings.

In action (trial) proceedings, any party may require any other party to the action to make discovery of all documents and tape recordings relating to any matter in question in the action that are or have at any time been in the position or control of the other party; and of any document intended to be used at trial (this can include documents in the possession of third parties). The definition of 'tape recording' is wide enough to encompass different kinds of material on which visual images, sound and other information can be stored. A litigant may refuse to disclose a document if it is privileged (ie, if discovery would lead to self-incrimination (if it merely establishes a debt or exposes the litigant to civil action, discovery cannot be resisted)), be contrary to marital privilege, pertains to statements without prejudice or are the subject of legal professional privilege or if the disclosure would be injurious to the public interest. Further, a litigant can refuse to disclose a document that is irrelevant to the issues on the pleadings.

In action and application (on affidavit) proceedings, a party may require the disclosure of any document that is referred to in general terms in a party’s pleadings or affidavits. The entitlement to discovery of such documents arises automatically once reference is made thereto in pleadings or affidavits. No detailed or descriptive reference to the document is required; however, reference by deduction or inference does not constitute a ‘reference’.

Discovery proceedings can become difficult or costly in the event that the party from whom discovery is requested refuses to disclose a document (or documents). In that case, an application must be brought to compel discovery, alternatively, to strike out the claim or defence relying on such document. This can result in a delay in the proceedings, insofar as the interlocutory application to compel discovery or strike out may take a number of months to be finalised (unless urgency can be shown).

Timing

What is the typical time frame for an infringement or dilution, or related action, at the preliminary injunction and trial levels, and on appeal?

If unopposed and in the normal course (ie, not on an urgent basis), the time frame for application proceedings is approximately two to three months. If opposed and in the normal course, the time frame is usually six to 12 months. For action proceedings, these time frames are considerably longer (approximately 18 to 36 months) as oral evidence must be led in court. For an appeal, the time frame is approximately 12 to 18 months after the judgment appealed against is handed down.

Limitation period

What is the limitation period for filing an infringement action?

There is no statute of limitations for filing trademark infringement actions. It has been confirmed by our courts on a number of occasions that acquiescence is not a defence to trademark infringement and that a delay in the launching of infringement proceedings does not result in the trademark proprietor forfeiting its right to enforce the trademark. However, damages or reasonable royalties flowing from the infringement can be claimed for up to only three years before the institution of the proceedings.

Litigation costs

What is the typical range of costs associated with an infringement or dilution action, including trial preparation, trial and appeal?

For a typical infringement claim, which would ordinarily be brought by way of application (affidavit) proceedings, and which is opposed, the costs would be in the region of $25,000 to $40,000. For dilution proceedings, the costs would generally be higher insofar as the trademark proprietor is required to prove that the trademark in question is wellknown and this often requires a market survey. The costs in those circumstances would typically be between $40,000 and $60,000. In both instances, if an enquiry into damages is ordered, further costs would be associated with pursuing the damages claim which must be done by way of action (trial) proceedings. For action (trial) proceedings generally, the costs can be considerably higher depending on the length of the trial required.

In terms of recovering costs, the general rule is that the unsuccessful litigant must pay the costs. The court does, however, have a discretion to deprive a successful party of a portion or all of the costs and in certain circumstances to order him or her to pay a portion or all of the costs of the unsuccessful party.

The general award is for party and party costs. These are such costs as the taxing officer can allow according to a legislated tariff. Party and party costs will almost never cover all of the costs incurred by the successful party, and generally only covers between 40 to 60 per cent of costs. In cases where such special grounds exist to justify a higher cost award - such as where there has been dishonesty, fraud, vexatiousness, recklessness, malice, frivolousness or unreasonableness - a court may award costs on an attorney and client basis, which entitles the successful party to claim all costs that the attorney representing the successful party is entitled to recover. A court can also order costs de bonis propriis, in which case the unsuccessful party’s legal representative must pay the costs. This is, however, very unusual and not easily awarded. It is only awarded in exceptional circumstances where there is evidence of ‘negligence to a serious degree’ on the part of the representative.

Appeals

What avenues of appeal are available?

Leave to appeal against a single judge of the High Court’s decision may be obtained by filing a statement on the grounds of which leave to appeal is requested. Appeal can be sought to a full bench, being three judges in the same High Court where the appealed order was handed down. If leave to appeal is granted, the notice of appeal must be delivered to all parties within 20 days of the date on which leave to appeal was granted. A notice of cross-appeal may be filed by any party within 10 days of delivery of the notice of appeal. If leave to appeal to a full bench is refused, the appellant has the opportunity to petition the Supreme Court of Appeal for leave to appeal.

Defences

What defences are available to a charge of infringement or dilution, or any related action?

Statutory defences to trademark infringement include:

  • good-faith use of own name;
  • good-faith descriptive use;
  • good-faith use to indicate intended purposes;
  • use on genuine products;
  • good-faith use of utilitarian features;
  • use to which the registration does not extend; and
  • concurrent registration.

Estoppel can also form the basis of a defence to infringement claims.

Remedies

What remedies are available to a successful party in an action for infringement or dilution, etc? What criminal remedies exist?

The available remedies in civil proceedings include:

  • obtaining an injunction to restrain use of the infringing mark, which injunction can be preliminary (pending a return date on which argument for a permanent injunction will be heard) or permanent;
  • ordering for removal of the infringing mark from all material and, where the infringing mark is inseparable or incapable of being removed from the material, ordering that all such material is delivered up to the owner;
  • claiming damages; or
  • in lieu of damages, claiming a reasonable royalty that would have been payable by a licensee for use of the trademark concerned.

For the purposes of determining the amount of damages or a reasonably royalty to be awarded, the court may direct an enquiry to be held and may prescribe the procedures for conducting such an enquiry as it deems fit. Generally, damages would be based on the plaintiffs proven loss of profits, but this is almost always impossible to quantify. For calculating a reasonable royalty, the plaintiff will have to prove what a reasonable royalty is (as a percentage of price), the price in question and the total number of sales. Any outstanding information required for this calculation can generally be obtained through discovery proceedings. Ultimately, what constitutes a reasonably royalty will depend on the facts of the case, and could include factors such as the royalties which the plaintiff might obtain from its own licensees or the accepted royalties in the particular trade in question. In a claim for a reasonable royalty, proof of actual loss is not required.

There is no provision for criminal proceedings to be instituted in respect of trademark infringement; however, there is provision for criminal proceedings where the infringer is dealing in counterfeit products.

ADR

Are ADR techniques available, commonly used and enforceable? What are the benefits and risks?

Parties engaged in a dispute can elect to refer the dispute to arbitration or mediation.

For mediation, the parties elect to refer the dispute to mediation. In this instance, the mediator does not have the authority to impose an order or settlement on the parties, but rather encourages the parties to reach a settlement agreement. The settlement agreement only becomes legally binding once it has been reduced to writing and signed by or on behalf of the parties. The benefit of mediation is that matters can often be settled amicably and swiftly, with costs - usually at a set fee for the mediator - significantly less than court or arbitration proceedings. The settlement agreement reached will also be kept confidential, unless otherwise agreed by the parties.

For arbitration, the parties enter into an arbitration agreement, which then becomes binding on the parties and may only be terminated by agreement or set aside by a court on good cause shown. There are many benefits to arbitration, including the option of the parties to choose an arbitrator with the requisite skills and knowledge, expeditions dispensation of justice (as opposed to an often lengthy court process), confidentiality of the proceedings and awards, less formal and rigid procedures, cost effective proceedings, and relative ease of enforceability of awards (arbitration awards are enforceable by a court). The only downside to arbitration is generally the cost involved, insofar as the parties bear not only the cost of legal representatives, but also the cost of the arbitrator. There are, however, moves by many arbitral centres to provide specific fee structures for commercial arbitrations so as to curb costs.