Application for cancellation dismissed in golfers' playoff

South Africa
In South African Junior Golf Association v The Registrar of Companies (Case 7187/2008, November 9 2009), the Western Cape High Court has dismissed an application for the cancellation of the trademark SOUTH AFRICAN JUNIOR GOLF ASSOCIATION.
 
The South African Junior Golf Association (SAJGA) directs its focus on underprivileged youths. It provides golf lessons to them, and teaches them the principles, rules and etiquette of the game. SAJGA concerns itself only with junior golf for both young men and women. The South African Golf Association (SAGA) is a national umbrella body whose members consist of provincial golf unions to which golf clubs are affiliated. It is the organizer of various national golf tournaments for adult male golfers and administers the official handicapping system for golfers who belong to clubs.

SAGA filed an objection with the registrar of companies in terms of Section 45 of the Companies Act requesting that SAJGA be ordered to change its name on the basis that such name:
  • was confusingly similar to SAGA;
  • was calculated to cause it damage; and
  • was undesirable. 
The registrar granted the order. SAJGA then applied to the High Court in terms of Section 48 of the Companies Act to set the registrar’s order aside. 
 
This application was met with a counter-application by SAGA for:

  • the cancellation of SAJGA’s registration for the trademark SOUTH AFRICAN JUNIOR GOLF ASSOCIATION; and
  • an injunction to restrain SAGJA from using this mark or any other mark which was confusingly similar to the registered trademarks SOUTH AFRICAN GOLF ASSOCIATION and SAGA SOUTH AFRICA.
Section 48 of the act provides that any person aggrieved by any decision or order of the registrar under Section 45 may, within one month of the date of such order, apply to the High Court for relief. The court has the power to:

  • consider the merits of any such matter,
  • receive further evidence and
  • make an order as it deems fit.
The Cape High Court reiterated the established principle that proceedings under Section 48 take the form not of an appeal, but rather of a re-hearing of the matter. The court is required to reach its own conclusion and does not simply decide whether the registrar’s decision was correct.
 
In considering whether SAJGA’s name was calculated to cause damage to SAGA or was undesirable, the court commenced with the warning that the use of ordinary English words or descriptive words in company names may result in such names not being distinctive of any particular business. The mere fact that such a name is similar to another does not, on that ground alone, justify a finding that the name is undesirable under Section 45.
 
Significantly, the evidence showed that there are other names used by organizations involved in the sport of golf which include the common terms 'South African', 'golf' or 'association'. The court held that, just as the addition of the word 'disabled' sufficiently distinguished the South African Disabled Golf Association from SAGA, the addition of the word 'junior' sufficiently distinguished SAJGA's name from that of SAGA, particularly if regard was had to the many differences in the business of the two bodies.
 
SAGA had placed reliance on a directive of the registrar, which states as follows:
 
            “In particular, a name will be considered undesirable if -
           
1.1  it is identical or very similar to a name already registered;
1.5  words pertaining to a trademark are contained in a name which will be used in regard to a business which relates to the class of goods or services in which the trademark is registered, while the applicant has no proprietary rights in respect of such trademark, nor the consent of the said proprietor to use such words in a name.”
 
The court stated that the directive had no statutory force and held that SAGA could, in any event, not rely on the directive as SAGA’s name (as an unincorporated association) was not registered.
 
Finally, the court held that the fact that SAGA was unable to produce any evidence of actual public confusion demonstrated that there was no likelihood of public confusion. Over the years the golfing fraternity has been able to distinguish between the activities of SAGA and other golfing bodies, and the names merely indicated the particular target market of each body within the wider world of golf.
 
The registrar’s decision ordering SAJGA to change its name was therefore set aside.
  
The court then turned to the counter-application for cancellation. SAGA is the proprietor of the registered trademarks SOUTH AFRICAN GOLF ASSOCIATION and SAGA SOUTH AFRICA, among others. It claimed that the registered trademark SOUTH AFRICAN JUNIOR GOLF ASSOCIATION was wrongly entered in, and wrongly remained on, the register in terms of Section 24(1), read with Sections 10(12) (common law rights) and 10(14) (registered rights) of the Trademarks Act.
 
In reviewing whether the use of SAJGA’s trademark was likely to cause confusion, the court held that, to rely successfully on Section 10(12) or 10(14), SAGA had to show that it had a reputation in the trademark SOUTH AFRICAN GOLF ASSOCIATION. SAGA relied on its long history, the large number of golf players who are affiliated to it and its constitution in its contention that is had acquired a protectable reputation. The court was not convinced by this evidence and held that SAGA had failed to show that it had a protectable right. In arriving at this conclusion, the court said that what had become clear from the evidence was that SAGA and SAJGA did not render the same service. Although they both served the golfing community, they served different sectors of it. In the circumstances, the application for cancellation failed. Although SAGA did not pursue the relief for an injunction against SAJGA, this was also refused.
 
The finding that no evidence of actual confusion demonstrated that there was a likelihood of confusion can be seriously questioned in light of the recent decision of the Supreme Court of Appeal in Polaris Capital (Pty) Ltd v The Registrar of Companies (Case 595/2008). In the Polaris case, the Supreme Court of Appeal held that public uncertainty, as opposed to actual confusion in the true sense, is undesirable and is one factor that needs to be taken into account in determining undesirability of a name under the Companies Act. The court further took note of the possibility of future confusion and public interest. That was not done in the present case.
 
With regard to the cancellation application, two further aspects of concern arise. The first is the court’s finding that SAGA had to show that it had a reputation in its mark to rely successfully on Section 10(14) of the Trademarks Act. Section 10(14) provides a ground of refusal in relation to:
  
“a mark which is identical to a registered trademark belonging to a different proprietor, or so similar thereto that the use thereof in relation to goods or services in respect of which it is sought to be registered and which are the same as, or similar to, the goods or services in respect of which such trademark is registered, would be likely to deceive or cause confusion, unless the proprietor of such trademark consents to the registration of such mark”.
 
The existence of a reputation in a mark is clearly not a requirement of Section 10(14) and it seems that the court erred in this respect.
 
The second concern is whether the court can be understood to have said that services rendered in different sectors of the same industry are not identical or sufficiently similar for the purposes of an enquiry under Section 10(14). It seems that a passing off test was applied, instead of one under the Trademarks Act.
 
However, in light of the descriptiveness of both the company names and trademarks in issue, it seems that the outcome was correct.
 
Werina Griffiths and Chris Job, Adams & Adams, Pretoria

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