Mark owners must provide clear evidence of sales to defend expungement actions

South Africa

In New Balance Athletic Shoe Inc v Dajee NO (251/11) [2012] ZASCA 3, March 2 2012), the Supreme Court of Appeal has dismissed an appeal by New Balance Athletic Shoe Inc against a decision of the registrar of trademarks (upheld in first appeal to the North Gauteng High Court) to expunge the trademarks P-F FLYERS (Registration 1972/1361) and P-F (Registration B1965/02999) on the grounds of non-use in terms of Section 27(1)(b) of the Trademarks Act (194/1993).

In expungement proceedings, in terms of Section 27(1)(b), the onus of proving relevant use of the trademarks under attack falls on the trademark proprietor. The relevant period is defined as a five-year period ending three months before the expungement application is launched. The Supreme Court of Appeal was given an opportunity to examine the evidence provided in defending the expungement application, and made various findings relating to the level of evidence that is required of a trademark holder in order to defend a non-use expungement application.

The Supreme Court of Appeal referred to the onus with approval, as it was to be expected that the trademark proprietor would have comprehensive and peculiar knowledge of the use of the trademark.

In defending its trademarks, New Balance claimed use of the marks “during the past five years”, and provided pictures of its South African store, pictures of footwear in the store and pictures of models displaying footwear. It also claimed turnover in the last five years of R700,000 and promotional expenditure of R250,000 in South Africa. These claims were made by the general manager in South Africa and corroborated by three executives of New Balance South Africa.

The Supreme Court of Appeal noted that the evidence did not include:

  • any invoices or delivery notes recording purchases or receipt of stock that was claimed to have been sold;
  • any invoices recording sales;
  • any accounting records of transactions; or
  • any other documentary evidence to prove that products had been sold.

The court went on to state that what is required to overcome the burden of proof in defending non-use claims is “ the least, clear and unambiguous factual evidence that brings the matter within the terms of the section”. The court found that the evidence advanced by New Balance was insufficient to carry the burden of proof required to defend the trademarks under attack.

The important lesson to be learnt from this case is that the trademark proprietor will need to provide clear documents evidencing proof of sales of goods (or receipt of stock) in order to defend expungement proceedings. Trademark proprietors should consider evaluating their current receipts to ensure that these documents clearly indicate the trademarks used in relation to the products sold/received, as such documents will be crucial in defending non-use expungement attacks.

The Supreme Court of Appeal also re-affirmed the principle of territoriality and confirmed that a person can adopt a mark as their own, in South Africa, even if it has been used in a foreign country.

Gerard du Toit, Spoor & Fisher, Pretoria

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